EXHIBIT 2.0
AGREEMENT AND PLAN
OF
REORGANIZATION
DATED AS OF NOVEMBER 3, 1999
BY AND AMONG
AMERICAN REALTY INVESTORS, INC.,
NATIONAL REALTY, L.P.
AND
AMERICAN REALTY TRUST, INC.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of November 3, 1999 (the
"Agreement"), by and among AMERICAN REALTY INVESTORS, INC., a newly-formed
Nevada corporation ("Newco"), NATIONAL REALTY, L.P., a Delaware limited
partnership ("NRLP"), and AMERICAN REALTY TRUST, INC., a Georgia corporation
("ART").
WHEREAS, (i) Newco is a newly formed corporation organized and existing
under the laws of the State of Nevada, (ii) NRLP is a limited partnership
organized and existing under the laws of the State of Delaware and (iii) ART is
a corporation organized and existing under the laws of the State of Georgia;
WHEREAS, Newco has formed a wholly owned subsidiary called ART Acquisition
Corp., a corporation organized under the laws of the State of Georgia ("Sub I"),
and a wholly owned subsidiary called NRLP Acquisition Corp., a corporation
organized under the laws of the State of Delaware ("Sub II"), and all the
outstanding capital stock of each of Sub I and Sub II is owned by Newco;
WHEREAS, the Board of Directors of each of Newco and ART and the general
partner of NRLP deem it advisable and in the best interests of their
stockholders and unitholders, as applicable, that each of NRLP and ART become
subsidiaries of Newco pursuant to the Mergers (as hereinafter defined)
hereinafter provided for, and desire to make certain representations, warranties
and agreements in connection with such Mergers; and
WHEREAS, as part of a single plan to be effectuated pursuant to this
Agreement, the ART Merger Agreement and the NRLP Merger Agreement, it is
intended that the transactions described in such agreements be treated for
federal income tax purposes as an integrated transaction described in Section
351 of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder (and any similar provision of state law).
NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties, covenants and agreements set forth herein and such other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
Section 1.1 "Acquisition Proposal" shall have the meaning set forth in
Section 7.1.
Section 1.2 "Affiliate" shall mean, as to any person, any other person that
directly or indirectly controls, or is under common control with or is
controlled by such person.
Section 1.3 "ART Balance Sheet" shall have the meaning set forth in
Section 5.5.
Section 1.4 "ART Common Stock" shall have the meaning set forth in
Section 2.1.
Section 1.5 "ART Designees" shall have the meaning set forth in
Section 2.5.
Section 1.6 "ART Merger" shall have the meaning set forth in Section 2.1.
Section 1.7 "ART Merger Agreement" shall have the meaning set forth in
Section 2.1.
Section 1.8 "ART Plans" shall have the meaning set forth in Section 5.10.
Section 1.9 "ART Preferred Stock" shall have the meaning set forth in
Section 5.2.
Section 1.10 "ART SEC Reports" shall have the meaning set forth in
Section 5.5.
Section 1.11 "ART Special Stock" shall have the meaning set forth in
Section 2.1.
Section 1.12 "ART Stock" shall have the meaning set forth in Section 2.1.
Section 1.13 "ART Stock Option" shall have the meaning set forth in
Section 7.7.
Section 1.14 "Certificate of Merger" shall have the meaning set forth in
Section 2.3.
Section 1.15 "Code" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.16 "DGCL" shall have the meaning set forth in Section 2.3.
Section 1.17 "DRLPA" shall have the meaning set forth in Section 2.2.
Section 1.18 "Effective Time" shall have the meaning set forth in
Section 2.3.
Section 1.19 "ERISA " shall mean the Employee Retirement Income Security
Act of 1974, as amended.
Section 1.20 "ERISA Affiliate" with respect to any party, shall mean any
trade or business, whether or not incorporated, that together with such party
would be deemed a "single employer" within the meaning of section 4001(a)(15) of
ERISA.
Section 1.21 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
Section 1.22 "Form S-4" shall mean the Registration Statement on Form S-4
to be filed with the SEC under the Securities Act in connection with the Mergers
for the purpose of registering the shares of Newco Common Stock to be issued in
the Mergers.
Section 1.23 "GBCA" shall have the meaning set forth in Section 2.1.
Section 1.24 "Governmental Entity" shall mean any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign.
Section 1.25 "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
Section 1.26 "Material Adverse Effect" with respect to any party, shall
mean a material adverse effect (or any development which, insofar as reasonably
can be foreseen, in the future is reasonably likely to have a material adverse
effect) on the business, assets, financial or other condition, results of
operations or prospects of such party and its Subsidiaries taken as a whole.
Section 1.27 "Mergers" shall mean the ART Merger and the NRLP Merger.
Section 1.28 "Merger Agreements" shall mean the ART Merger Agreement and
the NRLP Merger Agreement.
Section 1.29 "Newco Board" shall have the meaning set forth in Section 2.5.
Section 1.30 "Newco Bylaws" shall have the meaning set forth in
Section 2.5.
Section 1.31 "Newco Common Stock" shall have the meaning set forth in
Section 2.1.
Section 1.32 "NRLP Balance Sheet" shall have the meaning set forth in
Section 4.5.
Section 1.33 "NRLP Designees" shall have the meaning set forth in
Section 2.2.
Section 1.34 "NRLP Merger" shall have the meaning set forth in Section 2.5.
Section 1.35 "NRLP Merger Agreement" shall have the meaning set forth in
Section 2.2.
Section 1.36 "NRLP Partnership Agreement" shall have the meaning set forth
in Section 2.2.
Section 1.37 "NRLP Plan" shall have the meaning set forth in Section 2.2.
Section 1.38 "NRLP SEC Reports" shall have the meaning set forth in
Section 4.10.
Section 1.39 "NRLP Units" shall have the meaning set forth in Section 2.2.
Section 1.40 "Proxy Statement" shall mean the joint proxy statement/
prospectus to be distributed to holders of shares of ART Common Stock and
holders of NRLP Units in connection with the meetings of such holders to be held
in connection with the transactions contemplated by this Agreement and the
Merger Agreements.
Section 1.41 "SEC" shall mean the Securities and Exchange Commission.
Section 1.42 "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
Section 1.43 "Significant Subsidiary" shall have the meaning set forth in
Rule 1-02 of Regulation S-X of the SEC.
Section 1.44 "Sub I" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.45 "Sub II" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.46 "Subsidiary" shall have the meaning set forth in Rule 1-02 of
Regulation S-X of the SEC.
Section 1.47 "Termination Date" shall have the meaning set forth in
Section 9.1.
Section 1.48 "Third Party" shall mean any person or group that is deemed to
be a "person" within the meaning of Section 13(d) of the Exchange Act.
ARTICLE II
THE MERGERS
Section 2.1 ART Merger.
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(a) Newco and Sub I have executed and delivered, and ART has
executed and delivered, and agrees, subject to the terms and conditions of this
Agreement and the ART Merger Agreement, to submit to its shareholders for
adoption and approval as required under the Georgia Business Corporation Code
(the "GBCA"), together with this Agreement, in accordance with Article II
hereof, the Agreement of Merger, a form of which is set forth as Exhibit A
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hereto, with such further changes as may be mutually agreed upon by the parties
hereto (the "ART Merger Agreement"), providing for the merger of Sub I with and
into ART (the "ART Merger") and the conversion of each outstanding share of ART
common stock, par value $0.01 per share (the "ART Common Stock"), into shares of
Newco common stock, par value $0.01 per share (the "Newco
Common Stock") and the conversion of each outstanding share of ART special
stock, $2.00 par value per share (the "ART Special Stock" and, together with the
ART Common Stock, the "ART Stock") into one share of Newco preferred stock,
$2.00 par value per share. As provided in the ART Merger Agreement, ART shall be
the surviving corporation in the ART Merger and shall become a wholly owned
subsidiary of Newco. From and after the Effective Time, the identity and
separate existence of Sub I shall cease, and ART shall succeed, without other
transfer, to all the rights, properties, debts and liabilities of Sub I.
(b) In connection with the ART Merger, Newco shall take such action as
may be necessary to reserve sufficient shares of Newco Common Stock, prior to
the ART Merger, to permit the issuance of shares of Newco Common Stock (i) to
the holders of ART Common Stock as of the Effective Time in accordance with the
terms of the ART Merger Agreement and (ii) upon the exercise of ART Stock
Options to be assumed by Newco in accordance with Section 7.7 hereof. Each of
Newco and ART shall use its reasonable efforts to cause the ART Merger to be
consummated in accordance with the terms of this Agreement and the ART Merger
Agreement.
Section 2.2 NRLP Merger.
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(a) Newco and Sub II have executed and delivered, and NRLP has
executed and delivered, and agrees, subject to the terms and conditions of this
Agreement and the NRLP Merger Agreement, to submit to its holders of units of
partnership interest (the "NRLP Units") for adoption and approval, as required
under the terms of the First Amended and Restated Agreement of Limited
Partnership of NRLP, as amended (the "NRLP Partnership Agreement"), and the
Delaware Revised Limited Partnership Act (the "DRLPA"), together with this
Agreement, in accordance with Article II hereof, the Agreement of Merger, a form
of which is set forth as Exhibit B hereto, with such further changes as may be
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mutually agreed upon by the parties hereto (the "NRLP Merger Agreement"),
providing for the merger of Sub II with and into NRLP (the "NRLP Merger") and
the conversion of the outstanding NRLP Units held by all limited partners, other
than ART and its wholly-owned subsidiaries, into shares of Newco Common Stock.
As set forth in the NRLP Merger Agreement, (i) all NRLP Units held by ART and
its wholly-owned subsidiaries will remain issued and outstanding and (ii) NRLP
shall be the surviving entity in the NRLP Merger and shall become a subsidiary
of Newco. From and after the Effective Time, the identity and separate
existence of Sub II shall cease, and NRLP shall succeed, without other transfer,
to all the rights, properties, debts and liabilities of Sub II.
(b) In connection with the NRLP Merger, Newco shall take such action
as may be necessary to reserve sufficient shares of Newco Common Stock prior to
the Merger to permit the issuance of shares of Newco Common Stock to the holders
of NRLP Units as of the Effective Time in accordance with the terms of the NRLP
Merger Agreement. Each of Newco and NRLP shall use its reasonable efforts to
cause the NRLP Merger to be consummated in accordance with the terms of this
Agreement and the NRLP Merger Agreement.
Section 2.3 Filing of Merger Agreements and Related Certificates.
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Immediately after all conditions to this Agreement have been satisfied or
waived, the certificates of merger pertaining to
the ART Merger and the NRLP Merger, respectively (together the "Certificates of
Merger"), or such other documents necessary to effect the Mergers, shall be
executed and filed in accordance with the GBCA or the DRLPA and the Delaware
General Corporation Law (the "DGCL"), as the case may be, and the Mergers shall
become effective substantially simultaneously (and shall be treated as occurring
simultaneously for tax purposes) in accordance with the terms of the Merger
Agreements (such time and date are referred to herein as the "Effective Time").
Section 2.4 Effect of Mergers. The parties agree to the following
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provisions with respect to the Mergers:
(a) Names of Surviving Entities. The names of ART and NRLP, as the
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surviving entities in the Mergers, from and after the Effective Time shall be
"American Realty Trust, Inc." and "National Realty, L.P.," respectively, until
changed or amended in accordance with applicable law.
(b) Charter Documents. At the Effective Time (i) the articles of
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incorporation and bylaws of ART, as in effect immediately prior to the Effective
Time, shall be amended so that the operative provisions read in their entirety
exactly as the articles of incorporation and bylaws, respectively, of Sub I,
except that the name of the corporation specified therein shall be "American
Realty Trust, Inc." and (ii) the agreement of limited partnership of NRLP, as in
effect immediately prior to the Effective Time, shall be the partnership
agreement of NRLP and NRLP shall be the surviving entity in the NRLP Merger.
(c) Other Effects. The ART Merger shall have such other effects as
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are set forth in the ART Merger Agreement and the GBCA and the NRLP Merger shall
have such other effects as are set forth in the NRLP Merger Agreement and the
DRLPA and the DGCL.
(d) Tax Effects. The parties intend that the transactions described
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in this Agreement, the ART Merger Agreement and the NRLP Merger Agreement
constitute a single plan that is treated for federal income tax purposes as an
integrated transaction described in and satisfying each of the requirements of
Section 351 of the Code and the regulations thereunder (and any similar
provisions of state laws) pursuant to which (i) each shareholder of ART is
treated as transferring all of its ART stock to Newco in exchange for Newco
stock, (ii) each limited partner of NRLP, other than ART (and its wholly owned
subsidiaries), is treated as transferring all of its NRLP Units to Newco in
exchange for Newco stock and (iii) immediately after the transactions described
in (i) and (ii), the former shareholders of ART and the former limited partners
of NRLP, other than ART (and its wholly owned subsidiaries), as a group, are in
"control" of Newco (as such term is defined in Section 368(c) of the Code). The
parties intend that no transactions other than the transactions described in
this Agreement, the ART Merger Agreement and the NRLP Merger Agreement be
considered part of the integrated transaction for purposes of determining the
group in "control" of Newco immediately after these transactions.
Section 2.5 Name of Newco, Directors and Officers of Newco.
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(a) Name. The name of Newco, as the parent of ART and NRLP following
the consummation of the Mergers, from and after the Effective Time, shall be
"American Realty, Inc." until changed or amended in accordance with applicable
law.
(b) Newco Governance.
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(i) The directors comprising the full board of directors of
Newco (the "Newco Board") at the Effective Time to be comprised of six
directors. Initially, four of such directors shall be designated by ART and two
of such directors shall be designated by NRLP. ART hereby designates the persons
listed as such on Exhibit C hereto as its initial designees to the Newco Board
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(the "ART Designees"). NRLP hereby designates the persons listed as such on
Exhibit C hereto as its initial designees to the Newco Board (the "NRLP
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Designees"). If, prior to the Effective Time, any of the ART Designees or the
NRLP Designees shall decline or be unable to serve as a Newco director, ART (if
such person was so designated by ART) or NRLP (if such person was so designated
by NRLP) shall designate another person to serve in such person's stead, which
person shall be reasonably acceptable to the other parties or party as the case
may be.
(ii) At or prior to the Effective Time, ▇▇▇▇ ▇. ▇▇▇▇▇ shall
be designated as President and Chief Executive Officer of Newco, provided, that
if he is unwilling or unable to serve in such capacity, his replacement shall be
selected by the Newco Board as constituted at the Effective Time. Newco shall
also have such other officers as may be elected by the Newco Board.
(c) Tenure. The foregoing officers and directors of Newco, shall hold
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their positions until their resignation or removal or the election or
appointment of their successors in the manner provided by Newco's charter
documents and applicable law.
Section 2.6 Approval of Mergers by Newco. Newco, as the sole shareholder
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of each of Sub I and Sub II, has heretofore executed a formal written consent
under Section 14-2-704 of the GBCA and Section 228 of the DGCL, approving,
authorizing and adopting the ART Merger Agreement and the NRLP Merger Agreement.
Section 2.7 Newco Certificate of Incorporation and Bylaws. Prior to the
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Effective Time, the shareholder of Newco shall cause Newco to amend its articles
of incorporation to read in its entirety as set forth in Exhibit D hereto and to
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amend its Bylaws to read in their entirety as set forth in Exhibit E hereto.
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Section 2.8 Sub I Articles of Incorporation and Bylaws. Prior to the
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Effective Time the articles of incorporation and bylaws of Sub I shall be
amended in a manner reasonably acceptable to ART.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco represents and warrants to ART and NRLP as follows:
Section 3.1 Organization and Qualification. Newco is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Nevada and has the requisite power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
so qualify or be in good standing would not have a Material Adverse Effect on
Newco. True, accurate and complete copies of the articles of incorporation and
bylaws of Newco as in effect on the date hereof, including all amendments
thereto, have heretofore been delivered to ART and NRLP.
Section 3.2 Capitalization.
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(a) The authorized capital stock of Newco consists of 1,000 shares of
Newco Common Stock. As of the date hereof, there were 1,000 shares of Newco
Common Stock issued and outstanding, all which are owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as the sole incorporator of Newco, and all of which are validly issued, fully
paid and nonassessable and are not subject to and were not issued in violation
of any preemptive rights.
(b) Except for this Agreement and the Merger Agreements, there are not
now, and at the Effective Time there will not be, any options, warrants, calls,
rights, subscriptions, convertible securities or other rights or agreements,
arrangements or commitments of any kind obligating Newco to issue, transfer or
sell any securities of Newco. There are no outstanding contractual or other
obligations of Newco to purchase, redeem or otherwise acquire any shares of
Newco Common Stock. There is not now, and at the Effective Time there will not
be, any stockholder agreement, voting trust or other agreement or understanding
to which Newco is a party or bound relating to the voting of any shares of the
capital stock of Newco.
Section 3.3 Authority. Newco has all requisite corporate power and
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authority to execute and deliver this Agreement and the Merger Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Merger Agreements, and the consummation by
Newco of the transactions contemplated hereby and thereby, have been duly
authorized by Newco's board of directors and no other corporate proceedings on
the part of Newco are necessary to authorize the execution and delivery of this
Agreement and the Merger Agreements and the consummation by Newco of the
transactions contemplated hereby and thereby, except for the approval thereof by
the stockholders of Newco. This Agreement has been and, as of the Effective
Time, the Merger Agreements will have been, duly and validly executed and
delivered by Newco and, assuming the due authorization, execution and delivery
hereof and thereof by ART and NRLP, constitute or will constitute, as the case
may be, valid and binding agreements
of Newco, enforceable against Newco in accordance with their terms, except that
such enforceability may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (b) by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 3.4 Consents and Approvals; No Violation. None of the execution
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and delivery of this Agreement or the Merger Agreements, the consummation by
Newco of the transactions contemplated hereby and thereby or compliance by Newco
with any of the provisions hereof will (a) conflict with or result in a breach
of any provision of the articles of incorporation or bylaws of Newco, (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (i) pursuant
to the Exchange Act, the Securities Act and the HSR Act and (ii) for filing the
Certificate of Merger with respect to the Mergers pursuant to the GBCA or the
DRLPA and the DGCL, as applicable, (c) result in a default (or an event which
with notice or lapse of time or both would become a default) or give to any
third party any right of termination, cancellation, amendment or acceleration
under, or result in the creation of a lien or encumbrance on any of the assets
of Newco pursuant to any note, license, agreement or other instrument or
obligation to which Newco is a party or by which Newco or any of its assets may
be bound or affected, or (d) violate or conflict with any order, writ,
injunction, decree, statute, rule or regulation applicable to Newco or any of
its properties or assets, other than (i) such defaults, rights of termination,
cancellation, amendment or acceleration, liens and encumbrances, violations and
conflicts and (ii) such consents, approvals, authorizations, permits or filings
that are not obtained, as set forth pursuant to (b) above, which, in the
aggregate, would not have a Material Adverse Effect on Newco.
Section 3.5 No Prior Activities. Except for obligations or liabilities
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incurred in connection with their respective incorporation or organization or
the negotiation and consummation of this Agreement and the Merger Agreements and
the transactions contemplated hereby and thereby, none of Newco, Sub I or Sub II
has incurred any obligations or liabilities nor engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity. Newco, Sub I and Sub II are newly
created corporations. Sub I and Sub II were established, as wholly owned
subsidiaries of Newco, solely to effectuate the transactions described in this
Agreement.
Section 3.6 Information Supplied. The information supplied or to be
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supplied by Newco for inclusion in (a) the Form S-4 will not, either at the time
the Form S-4 is filed with the SEC or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (b) the Proxy Statement, including any
amendments and supplements thereto, will not, either at the date mailed to
shareholders of ART and unitholders of NRLP or at the times of the meetings of
ART and NRLP to be held in connection with the transactions contemplated by this
Agreement and the Merger Agreements contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement and the Form S-4
will each comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act, except that
no
representation is made by Newco with respect to information supplied by ART
or NRLP for inclusion therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NRLP
NRLP represents and warrants to ART and Newco as follows:
Except as otherwise disclosed to ART and Newco in a letter delivered to
them prior to the execution hereof (which letter shall contain appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "NRLP Disclosure Letter"), NRLP
represents and warrants to ART and Newco as follows:
Section 4.1 Organization and Qualification. Each of NRLP and its
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Significant Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business and in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to so qualify or be
in good standing would not have a Material Adverse Effect on NRLP. True and
complete copies of the NRLP Partnership Agreement and the articles of
incorporation of NRLP Management Corp., NRLP's general partner, each as in
effect on the date hereof, including all amendments thereto, have heretofore
been made available or delivered to ART and Newco.
Section 4.2 Capitalization.
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(a) As of the date hereof, there were 6,321,577 NRLP Units issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
are not subject to and were not issued in violation of any preemptive rights.
Except as disclosed in Section 4.2 of the NRLP Disclosure Letter, no Subsidiary
of NRLP holds any NRLP Units.
(b) Except for this Agreement and the NRLP Merger Agreement there are
not now, and at the Effective Time there will not be, any options, warrants,
calls, rights, subscriptions, convertible securities or other rights or
agreements, arrangements or commitments of any kind obligating NRLP or any of
its Subsidiaries to issue, transfer or sell any securities of NRLP. All NRLP
securities subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There
are no outstanding contractual or other obligations of NRLP or any of its
Subsidiaries to purchase, redeem or otherwise acquire any NRLP Units. There is
not now, and at the Effective Time there will not be, any agreement, voting
trust or other agreement or understanding to which NRLP or any of its
Subsidiaries is a party or bound relating to the voting of any securities of
NRLP.
Section 4.3 Authority. NRLP has all requisite power and authority to
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execute and deliver this Agreement and the NRLP Merger Agreement and, subject to
approval of this Agreement and the NRLP Merger Agreement by the unitholders of
NLRP, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, the NRLP Merger Agreement and the
consummation by NRLP of the transactions contemplated hereby and thereby have
been duly authorized by NRLP's general partner and no other partnership
proceedings on the part of NRLP are necessary to authorize the execution and
delivery of this Agreement, the NRLP Merger Agreement and the consummation by
NRLP of the transactions contemplated hereby and thereby, except for the
approval thereof by the unitholders of NRLP. This Agreement has been, and as of
the Effective Time, the NRLP Merger Agreement will be, duly and validly executed
and delivered by NRLP and, assuming the due authorization, execution and
delivery hereof and thereof by Newco, Sub I, Sub II and ART, constitute or will
constitute, as the case may be, valid and binding agreements of NRLP,
enforceable against NRLP in accordance with their terms, except that such
enforceability may be subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (b) by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
Section 4.4 Consents and Approvals; No Violation. Except as disclosed in
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Section 4.4 of the NRLP Disclosure letter, none of the execution and delivery by
NRLP of this Agreement, the NRLP Merger Agreement, the consummation by NRLP of
the transactions contemplated hereby and thereby or compliance by NRLP with any
of the provisions hereof will (a) conflict with or result in a breach of any
provision of the respective partnership agreements, charters or bylaws (or
similar governing documents) of NRLP or any of its Subsidiaries, (b) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) pursuant to the Exchange Act, the
Securities Act and the HSR Act and (ii) for filing the Certificate of Merger
with respect to the NRLP Merger pursuant to the DRLPA and the DGCL, (c) result
in a default (or an event which with notice or lapse of time or both would
become a default) or give to any third party any right of termination,
cancellation, amendment or acceleration under, or result in the creation of a
lien or encumbrance on any of the assets of NRLP or any of its Subsidiaries
pursuant to, any note, license, agreement or other instrument or obligation to
which NRLP or any of its Subsidiaries is a party or by which NRLP or any of its
Subsidiaries or any of their respective assets may be bound or affected, or (d)
violate or conflict with any order, writ, injunction, decree, statute, rule or
regulation applicable to NRLP or any of its Subsidiaries or any of their
respective properties or assets, other than (i) such defaults, rights of
termination, cancellation, amendment or acceleration, liens and encumbrances,
violations and conflicts and (ii) such consents, approvals, authorizations,
permits or filings, as set forth pursuant to (b) above, that are not obtained,
which, in the aggregate, would not have a Material Adverse Effect on NRLP and
would not materially impair NRLP's ability to consummate the transactions
contemplated by this Agreement and the NRLP Merger Agreement.
Section 4.5 SEC Reports and Financial Statements. Each form, report,
------------------------------------
schedule, registration statement and definitive proxy statement filed by NRLP
with the SEC since January 1, 1993 as such documents have since the time of
their filing been amended, the "NRLP SEC Reports"), which include all the
documents (other than preliminary material) that NRLP was required to file with
the SEC since such date, as of their respective dates, complied in all material
respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
applicable to such NRLP SEC Reports. None of the NRLP SEC Reports contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except for such
statements, if any, as have been modified by subsequent filings prior to the
date hereof. The financial statements of NRLP included in such reports comply as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject in the case of
the unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of NRLP and its Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows (or
changes in financial position prior to the approval of FASB 95) for the periods
then ended. Except as set forth in Section 4.5 of the NRLP Disclosure Letter,
since December 31, 1998, neither NRLP nor any of its Subsidiaries has incurred
any liabilities or obligations, whether absolute, accrued, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due, except
(a) as and to the extent set forth on the audited balance sheet of NRLP and its
Subsidiaries as at December 31, 1998 (including the notes thereto) (the "NRLP
Balance Sheet"), (b) as incurred in connection with the transactions
contemplated, or as provided, by this Agreement, (c) as incurred after December
31, 1998 in the ordinary course of business and consistent with past practices,
(d) as described in the NRLP SEC Reports or (e) as would not, individually or in
the aggregate, have a Material Adverse Effect on NRLP.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the NRLP SEC Reports filed prior to the date hereof or otherwise disclosed
pursuant to this Agreement, since December 31, 1998, NRLP and its Subsidiaries
have conducted their respective businesses only in the ordinary course,
consistent with past practice, and there has not occurred or arisen any event,
individually or in the aggregate, having or which, insofar as reasonably can be
foreseen, in the future is likely to have, a Material Adverse Effect on NRLP.
Section 4.7 Litigation. As of the date of this Agreement, except as
----------
disclosed in the NRLP SEC Reports filed prior to the date of this Agreement or
otherwise disclosed to Newco and ART prior to the date hereof, there is no
claim, suit, action or proceeding pending or, to the best knowledge of NRLP,
threatened against or affecting NRLP or any of its Subsidiaries, which is
reasonably likely to have a Material Adverse Effect on NRLP, nor is there any
judgment, decree, order, injunction, writ or rule of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
outstanding against NRLP or any of its Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future is likely to have, any such effect.
Section 4.8 Disclosure. No representation or warranty of NRLP contained in
----------
this Agreement or the NRLP Merger Agreement, and no statement contained in any
certificate or schedule furnished or to be furnished by or on behalf of NRLP to
Newco and ART or any of its representatives pursuant thereto, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading
or necessary in order to fully and fairly provide the information required to be
provided in any such document, certificate or schedule.
Section 4.9 Information Supplied. The information supplied or to be
--------------------
supplied by NRLP or its Subsidiaries for inclusion in (a) the Form S-4 will not,
either at the time the Form S-4 is filed with the SEC or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (b) the Proxy
Statement, including any amendments and supplements thereto, will not, either at
the date mailed to unitholders or at the time of the meeting of unitholders of
NRLP to be held in connection with the transactions contemplated by this
Agreement and the Merger Agreements, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement and the Form S-4
will each comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act, except that
no representation is made by NRLP with respect to information supplied by Newco
and ART for inclusion therein.
Section 4.10 Affiliate Agreements. Except as disclosed in the NRLP SEC
--------------------
Reports filed prior to the date of this Agreement, except for this Agreement and
except as disclosed in Section 4.10 of the NRLP Disclosure Letter, as of the
date of this Agreement neither NRLP nor any of its Subsidiaries is a party to
any oral or written agreement with any of its Affiliates, other than with any of
its Subsidiaries.
Section 4.11 Compliance with Law. NRLP is not in violation of any
-------------------
Federal, state, local or foreign law, ordinance or regulation or judgment, order
or decree (including, but not limited to, those relating to the environment),
the violation of which, individually or in the aggregate, would have a Material
Adverse Effect on NRLP.
Section 4.12 Taxes. Except as disclosed in Section 4.12 of the NRLP
-----
Disclosure Letter, NRLP and each of its Subsidiaries have duly filed all
material tax returns required to be filed (or such tax returns have been
properly extended) other than those tax returns the failure to file would not
have a Material Adverse Effect on NRLP, and have paid all taxes and other
charges shown to be due on such returns, and there are no tax liens upon any
property or assets of NRLP or any of its Subsidiaries. There are no outstanding
agreements or waivers extending the statutory period of limitations applicable
to any Federal income tax return for any period. There does not exist any issue
that, if raised by any taxing authority with respect to any fiscal period,
would, singly or in the aggregate, be expected to result in an assessment
against NRLP that would have, or is reasonably likely to have, a Material
Adverse Effect on NRLP.
Section 4.13 Opinion of Financial Advisors. NRLP has received the opinion
-----------------------------
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") to the effect that, as of November
3, 1999, the consideration to be received in the NRLP Merger by the holders of
NRLP Units is fair to such holders from a financial point of view.
Section 4.14 Brokers and Finders. Other than ▇▇▇▇▇▇▇▇, none of NRLP or any
-------------------
of its Subsidiaries nor any of their respective partners, directors, officers or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or similar payments in
connection with the transactions contemplated by this Agreement, or the NRLP
Merger Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ART
ART represents and warrants to NRLP and Newco as follows:
Except as otherwise disclosed to NRLP and Newco in a letter delivered to
them prior to the execution hereof (which letter shall contain appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "ART Disclosure Letter"), ART
represents and warrants to NRLP and Newco as follows:
Section 5.1 Organization and Qualification. Each of ART and its
------------------------------
Significant Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business and in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to so qualify or be
in good standing would not have a Material Adverse Effect on ART. True and
complete copies of the articles of incorporation and bylaws of ART as in effect
on the date hereof, including all amendments thereto, have heretofore been
delivered to NRLP and Newco.
Section 5.2 Capitalization.
--------------
(a) The authorized capital stock of ART consists of 100,000,000 shares
of ART Common Stock and 20,000,000 shares of ART Special Stock. As of August 31,
1999, (i) 10,563,434 shares of ART Common Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable and are not subject to
and were not issued in violation of any preemptive rights, (ii) 340,000 shares
of ART Common Stock were reserved for issuance upon the exercise of Options
granted pursuant to the ART Stock Option Plan and (iii) 3,401,000 shares of ART
Special Stock were issued and outstanding, all of which are validly issued,
fully paid and non-assessable and were not issued in violation of any preemptive
rights. Except as disclosed in Section 5.2(a) of the ART Disclosure Letter, no
Subsidiary of ART holds any shares of ART Stock. There has been no material
change in the information set forth in the second sentence of this Section 5.2
between the close of business on August 31, 1999 and the date hereof.
(b) Except for this Agreement, the ART Merger Agreement and the ART
Stock Options specified in Section 5.2(a) hereof and except as otherwise
disclosed in Section 5.2(b) of the ART Disclosure Letter, there are not now, and
at the Effective Time there will not be, any options,
warrants, calls, rights, subscriptions, convertible securities or other rights
or agreements, arrangements or commitments of any kind obligating ART or any of
its Subsidiaries to issue, transfer or sell any securities of ART. All shares of
ART Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual or other obligations of ART or any of its
Subsidiaries to purchase, redeem or otherwise acquire any shares of ART Stock.
There is not now, and at the Effective Time there will not be, except as
disclosed in Section 5.2(b) of the ART Disclosure Letter, any stockholder
agreement, voting trust or other agreement or understanding to which ART or any
of its Subsidiaries is a party or bound relating to the voting of any shares of
the capital stock of ART or any of its Subsidiaries.
Section 5.3 Authority. ART has all requisite corporate power and authority
---------
to execute and deliver this Agreement and the ART Merger Agreement and, subject
to approval of this Agreement and the ART Merger Agreement by the stockholders
of ART, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, the ART Merger Agreement and the
consummation by ART of the transactions contemplated hereby and thereby have
been duly authorized by ART's board of directors and no other corporate
proceedings on the part of ART are necessary to authorize the execution and
delivery of this Agreement, the ART Merger Agreement and the consummation by ART
of the transactions contemplated hereby and thereby, except for the approval
thereof by the stockholders of ART. This Agreement has been, and as of the
Effective Time, the ART Merger Agreement will be, duly and validly executed and
delivered by ART and, assuming the due authorization, execution and delivery
hereof and thereof by Newco, Sub I, Sub II and NRLP, constitute or will
constitute, as the case may be, valid and binding agreements enforceable against
ART in accordance with their terms, except that such enforceability may be
subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally and (b) by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
Section 5.4 Consents and Approvals; No Violation. Except as disclosed in
------------------------------------
Section 5.4 of the ART Disclosure Letter, none of the execution and delivery by
ART of this Agreement, the ART Merger Agreement, the consummation by ART of the
transactions contemplated hereby and thereby or compliance by ART with any of
the provisions hereof will (a) conflict with or result in a breach of any
provision of the respective charters, bylaws or partnership agreements (or
similar governing documents) of ART or any of its Subsidiaries, (b) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) pursuant to the Exchange Act, the
Securities Act and the HSR Act and (ii) for filing the Certificate of Merger
with respect to the ART Merger pursuant to the GBCA, (c) result in a default (or
an event which with notice or lapse of time or both would become a default) or
give to any third party any right of termination, cancellation, amendment or
acceleration under, or result in the creation of a lien or encumbrance on any of
the assets of ART or any of its Subsidiaries pursuant to, any note, license,
agreement or other instrument or obligation to which ART or any of its
Subsidiaries is a party or by which ART or any of its Subsidiaries or any of
their respective assets may be bound or affected, or (d) violate or conflict
with any order, writ, injunction, decree, statute, rule or regulation applicable
to ART or any of its Subsidiaries or any of their respective properties or
assets, other than (i) such defaults, rights of termination, cancellation,
amendment or acceleration, liens and encumbrances, violations and conflicts and
(ii) such consents, approvals, authorizations, permits or filings, as set forth
pursuant to (b) above, that are not obtained, which, in the aggregate, would not
have a Material Adverse Effect on ART and would not materially impair ART's
ability to consummate the transactions contemplated by this Agreement and the
ART Merger Agreement.
Section 5.5 SEC Reports and Financial Statements. Each form, report,
------------------------------------
schedule, registration statement and definitive proxy statement filed by ART
with the SEC since January 1, 1993, (as such documents have since the time of
their filing been amended, the "ART SEC Reports"), which include all the
documents (other than preliminary material) that ART was required to file with
the SEC since such date, as of their respective dates, complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, applicable to such ART SEC Reports. None of the ART SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, except
for such statements, if any, as have been modified by subsequent filings prior
to the date hereof. The financial statements of ART included in such reports
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of ART and its Subsidiaries as
at the dates thereof and the consolidated results of their operations and cash
flows (or changes in financial position prior to the approval of FASB 95) for
the periods then ended. Except as set forth in Section 5.5 of the ART Disclosure
Letter, since December 31, 1998, neither ART nor any of its Subsidiaries has
incurred any liabilities or obligations, whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due, except (a) as and to the extent set forth on the audited balance sheet of
ART and its Subsidiaries as at December 31, 1998 (including the notes thereto)
(the "ART Balance Sheet"), (b) as incurred in connection with the transactions
contemplated, or as provided, by this Agreement, (c) as incurred after December
31, 1998 in the ordinary course of business and consistent with past practices,
(d) as described in the ART SEC Reports or (e) as would not, individually or in
the aggregate, have a Material Adverse Effect on ART.
Section 5.6 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the ART SEC Reports filed prior to the date hereof or otherwise disclosed
pursuant to this Agreement, since December 31, 1998, ART and its Subsidiaries
have conducted their respective businesses only in the ordinary course,
consistent with past practice, and there has not occurred or arisen any event,
individually or in the aggregate, having or which, insofar as reasonably can be
foreseen, in the future is likely to have, a Material Adverse Effect on ART.
Section 5.7 Litigation. As of the date of this Agreement, except as
----------
disclosed in the ART SEC Reports filed prior to the date of this Agreement or
otherwise disclosed to Newco and NRLP prior to the date hereof, there is no
claim, suit, action or proceeding pending or, to the best knowledge of
ART, threatened against or affecting ART or any of its Subsidiaries, which is
reasonably likely to have a Material Adverse Effect on ART, nor is there any
judgment, decree, order, injunction, writ or rule of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
outstanding against ART or any of its Subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future is likely to have, any such effect.
Section 5.8 Disclosure. No representation or warranty of ART contained in
----------
this Agreement or the ART Merger Agreement and no statement contained in any
certificate or schedule furnished or to be furnished by or on behalf of ART to
Newco and NRLP or any of its representatives pursuant thereto contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading
or necessary in order to fully and fairly provide the information required to be
provided in any such document, certificate or schedule.
Section 5.9 Information Supplied. The information supplied or to be
--------------------
supplied by ART or its Subsidiaries for inclusion in (a) the Form S-4 will not,
either at the time the Form S-4 is filed with the SEC or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (b) the Proxy
Statement, including any amendments and supplements thereto, will not, either at
the date mailed to shareholders or at the time of the meeting of shareholders of
ART to be held in connection with the transactions contemplated by this
Agreement and the Merger Agreements, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement and the Form S-4
will each comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act, except that
no representation is made by ART with respect to information supplied by Newco
or NRLP for inclusion therein.
Section 5.10 Stock Option Plans. ART has delivered or made available to
------------------
Newco and NRLP full and complete copies or descriptions of each, stock option,
stock appreciation right, restricted stock, phantom stock and performance stock
plans of ART (such plans being referred to herein as the "ART Plans"). Each of
the ART Plans is in material compliance with all applicable laws.
Section 5.11 Affiliate Agreements. Except as disclosed in the ART SEC
--------------------
Reports filed prior to the date of this Agreement and except for this Agreement
and except as otherwise disclosed in Section 5.11 of the ART Disclosure Letter,
as of the date of this Agreement neither ART nor any of its Subsidiaries is a
party to any oral or written agreement with any of its Affiliates, other than
with any of its Subsidiaries.
Section 5.12 Compliance with Law. ART is not in violation of any Federal,
-------------------
state, local or foreign law, ordinance or regulation or judgment, order or
decree (including, but not limited to, those
relating to the environment), the violation of which, individually or in the
aggregate, would have a Material Adverse Effect on ART.
Section 5.13 Taxes. Except as disclosed in Section 5.13 of the ART
-----
Disclosure Letter, ART and each of its Subsidiaries have duly filed all material
tax returns required to be filed (or such returns have been properly extended)
other than those tax returns the failure to file would not have a Material
Adverse Effect on ART, and have paid all taxes and other charges shown to be due
on such returns, and there are no tax liens upon any property or assets of ART
or any of its Subsidiaries. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any Federal income
tax return for any period. There does not exist any issue that, if raised by any
taxing authority with respect to any fiscal period, would, singly or in the
aggregate, be expected to result in an assessment against ART that would have,
or is reasonably likely to have, a Material Adverse Effect on ART.
Section 5.14 Opinion of Financial Advisors. ART has received the opinion
-----------------------------
of Fieldstone, Inc. ("Fieldstone") to the effect that, as of November 3, 1999,
the consideration to be received in the ART Merger by the holders of shares of
ART Common Stock is fair to such holders from a financial point of view.
Section 5.15 Brokers and Finders. Other than Fieldstone, none of ART or
-------------------
any of its Subsidiaries nor any of their respective partners, directors,
officers or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
similar payments in connection with the transactions contemplated by this
Agreement or the ART Merger Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business of NRLP Pending the Effective Time. Except
------------------------------------------------------
as expressly permitted or contemplated by this Agreement or the Merger
Agreements, until the Effective Time, NRLP shall, and shall cause each of its
Subsidiaries to, conduct its operations in the ordinary and usual course of
business consistent with past practice and use its commercially reasonable
efforts to preserve intact their respective business organizations' goodwill,
keep available the services of their respective present officers and key
employees, and preserve the goodwill and business relationships with suppliers,
distributors, customers and others having business relationships with them.
Without limiting the generality of the foregoing, and except as otherwise
permitted by this Agreement, prior to the Effective Time, without the consent of
ART, which consent shall not be unreasonably withheld, NRLP will not, and will
cause each of its Subsidiaries not to:
(a) amend or propose to amend their respective, partnership
agreements, charters or bylaws (other than as contemplated by this Agreement);
or split, combine or reclassify their outstanding securities or declare, set
aside or pay any dividend or distribution in respect of any securities (other
than the payment to NRLP or any of its Subsidiaries of any such dividend or
distribution) or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for the NRLP Units;
(b) (i) issue or authorize or propose the issuance of, sell, pledge or
dispose of, or agree to issue or authorize or propose the issuance of, any
additional NRLP Units, or any options, warrants or rights of any kind to acquire
any NRLP Units, or any debt or equity securities convertible into or
exchangeable for such NRLP Units, other than any such issuance pursuant to
options, warrants, rights or convertible securities outstanding as of the date
hereof in accordance with their terms; (ii) acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets in each
case which are material, individually or in the aggregate, to NRLP and its
Subsidiaries taken as a whole; (iii) sell (including by sale-leaseback), lease,
pledge, dispose of or encumber any assets or interests therein, which are
material, individually or in the aggregate, to NRLP and its Subsidiaries taken
as a whole, other than in the ordinary course of business and consistent with
past practice; (iv) incur or become contingently liable with respect to any
material indebtedness for borrowed money or guarantee any such indebtedness or
issue any debt securities or otherwise incur any material obligation or
liability (absolute or contingent) other than short-term indebtedness in the
ordinary course of business and consistent with past practice; (v) redeem,
purchase, acquire or offer to purchase or acquire any (x) NRLP Units (or other
outstanding securities) or (y) long-term debt, other than as required by the
governing instruments relating thereto; or (vi) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(c) enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other arrangements or
agreements with any partners, directors, officers or key employees;
(d) adopt, enter into or amend any, or become obligated under any new,
bonus, profit sharing, compensation, unit option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any employee or
retiree, except as required to comply with changes in applicable law occurring
after the date hereof and except, with respect to all plans other than bonus
plans, in the ordinary course of business and consistent with past practice; or
(e) take any action that would, or is reasonably likely to, result in
any of its representations and warranties set forth in this Agreement becoming
untrue, or in any of the conditions to the Mergers set forth in Article VIII not
being satisfied.
Section 6.2 Conduct of Business of ART Pending the Effective Time. Except
-----------------------------------------------------
as expressly permitted or contemplated by this Agreement or the Merger
Agreements until the Effective Time, ART shall, and shall cause each of its
Subsidiaries to, conduct its operations in the ordinary and usual course of
business consistent with past practice and use their commercially reasonable
efforts to preserve intact their respective business organizations' goodwill,
keep available the services of
their respective present officers and key employees and preserve the goodwill
and business relationships with suppliers, distributors, customers and others
having business relationships with them. Without limiting the generality of the
foregoing, and except as otherwise permitted by this Agreement, prior to the
Effective Time, without the consent of NRLP, which consent shall not be
unreasonably withheld, ART will not, and will cause each of its Subsidiaries not
to:
(a) amend or propose to amend their respective charters, bylaws or
partnership agreements (other than as contemplated by this Agreement); or split,
combine or reclassify their outstanding capital stock or partnership interests
or declare, set aside or pay any dividend or distribution in respect of any
capital stock (other than the payment to ART or any of its Subsidiaries of any
such dividend or distribution) or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for shares of
its capital stock or partnership interests;
(b) (i) issue or authorize or propose the issuance of, sell, pledge or
dispose of, or agree to issue or authorize or propose the issuance of, any
additional shares of, or any options, warrants or rights of any kind to acquire
any shares of, their capital stock of any class or any debt or equity securities
convertible into or exchangeable for such capital stock, other than any such
issuance pursuant to options, warrants, rights or convertible securities
outstanding as of the date hereof in accordance with their terms;
(ii) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets in each
case which are material, individually or in the aggregate, to ART and its
Subsidiaries taken as a whole;
(iii) sell (including by sale-leaseback), lease, pledge,
dispose of or encumber any assets or interests therein, which are material,
individually or in the aggregate, to ART and its Subsidiaries taken as a whole,
other than in the ordinary course of business and consistent with past practice;
(iv) incur or become contingently liable with respect to
any material indebtedness for borrowed money or guarantee any such indebtedness
or issue any debt securities or otherwise incur any material obligation or
liability (absolute or contingent) other than short-term indebtedness in the
ordinary course of business and consistent with past practice;
(v) redeem, purchase, acquire or offer to purchase or
acquire any (x) shares of its capital stock or (y) long-term debt, other than as
required by the governing instruments relating thereto; or
(vi) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(c) enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other arrangements or
agreements with any directors, officers or key employees;
(d) adopt, enter into or amend any, or become obligated under any
new, bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any employee
or retiree, except as required to comply with changes in applicable law
occurring after the date hereof and except, with respect to all plans other than
bonus plans, in the ordinary course of business and consistent with past
practice; or
(e) take any action that would, or is reasonably likely to, result in
any of its representations and warranties set forth in this Agreement becoming
untrue or in any of the conditions to the Mergers set forth in Article VIII not
being satisfied.
Section 6.3 Cooperation. Subject to compliance with applicable law, from
-----------
the date hereof until the Effective Time, each of NRLP and ART shall confer on a
regular and frequent basis with one or more representatives of the other party
to report operational matters of materiality and the general status of ongoing
operations and shall promptly provide the other party or its counsel with copies
of all filings made by such party with any Governmental Entity in connection
with this Agreement, the Merger Agreements and the transactions contemplated
hereby and thereby.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
Section 7.1 No Solicitation.
---------------
(a) Without the prior written consent of ART, NRLP and its
Subsidiaries will not, and will use their best efforts to cause their respective
partners, officers, directors, employees and agents not to, initiate or solicit,
directly or indirectly, any inquiries or the making of any proposal with respect
to or, except to the extent required by their fiduciary duties, engage in
negotiations concerning, provide any confidential information or data to or have
any discussions with, any Third Party, other than ART or any Affiliate of ART,
relating to any Acquisition Proposal (as hereinafter defined) with respect to
NRLP or any of its Subsidiaries. NRLP will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. NRLP shall
immediately notify ART if any such negotiations, or providing of confidential
information or data or discussions, are entered into or made or any such
inquiries are received in respect thereof, and shall provide details with
respect thereto.
(b) Without the prior written consent of NRLP, ART and its
Subsidiaries will not, and will use their best efforts to cause their respective
partners, officers, directors, employees and agents not to, initiate or solicit,
directly or indirectly, any inquiries or the making of any proposal with
respect to or, except to the extent required by their fiduciary duties, engage
in negotiations concerning, provide any confidential information or data to or
have any discussions with, any Third Party, other than NRLP or any Affiliate of
NRLP, relating to any Acquisition Proposal with respect to ART or any of its
Subsidiaries. ART will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. ART shall immediately notify NRLP if any
such negotiations, or providing of confidential information or data or
discussions, are entered into or made or any such inquiries are received in
respect thereof, and shall provide details with respect thereto.
(c) The term "Acquisition Proposal" as used herein means any offer or
proposal for, or any indication of interest in, a merger or other business
combination involving ART or NRLP, or any of their respective Subsidiaries, or
the acquisition of any equity interest in, or a substantial portion of the
assets of, any such party, other than the transactions contemplated by this
Agreement.
Section 7.2 Access to Information. Subject to compliance with applicable
---------------------
law, upon reasonable notice ART and NRLP shall each (and shall cause each of
their respective Subsidiaries to) afford to the other and the officers,
employees, accountants, counsel, financial advisors and other representatives of
the other access during normal business hours throughout the period prior to the
Effective Time to all of its properties, books, contracts, commitments and
records and, during such period, each of ART and NRLP shall (and shall cause
each of their respective Subsidiaries to) furnish promptly to the other (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of Federal
securities laws, and (b) all other information concerning its businesses,
properties and personnel as such other party may reasonably request. Unless
otherwise required by law, the parties will hold any such information which is
nonpublic in confidence until such time as such information otherwise becomes
publicly available through no wrongful act of either party and, in the event of
termination of this Agreement for any reason, each party shall promptly return
all nonpublic documents obtained from any other party, and any copies made of
such documents, to such other party. In addition, in the event of such
termination, all documents, memoranda, notes and other writings whatsoever
prepared by each party based on the information in such material shall be
destroyed (and each party shall use its commercially reasonable efforts to cause
its advisors and their representatives to similarly destroy their respective
documents, memoranda and notes), and such destruction (and commercially
reasonable efforts) shall be certified in writing to the other party by an
authorized officer supervising such destruction.
Section 7.3 Registration Statement and Proxy Statement. As soon as is
------------------------------------------
reasonably practicable after the date hereof, ART and NRLP shall prepare and
file the Proxy Statement with the SEC, and Newco shall promptly prepare and file
the Form S-4 with the SEC in which the Proxy Statement will be included. Newco
shall use its best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing. Newco
shall take any action required to be taken under applicable state securities and
blue sky laws in connection with the issuance of shares of Newco Common Stock in
the Mergers and as contemplated by this Agreement. ART and NRLP shall promptly
furnish to each other all information, and take such
other actions, as may reasonably be requested in connection with any action by
any of them in connection with this Section 7.3.
Section 7.4 Approval of Agreements. Each of ART and NRLP shall call a
----------------------
meeting of its stockholders and unitholders, respectively, to be held as
promptly as practicable for the purpose of voting upon this Agreement and the
NRLP Merger Agreement in the case of NRLP and the ART Merger Agreement in the
case of ART. Subject to the exercise of their respective fiduciary obligations,
the board of directors of ART and the general partner of NRLP shall recommend to
their respective stockholders and unitholders approval of such matters. NRLP
and ART shall coordinate and cooperate with respect to the timing of such
meetings and shall use their best efforts to hold such meetings on the same day
and as soon as practicable after the date hereof. ▇▇▇▇▇▇▇ agrees to vote its
shares of Newco Common Stock for adoption and approval of this Agreement, the
Merger Agreements and the transactions contemplated hereby and to take all
additional actions necessary to adopt and approve this Agreement, the Merger
Agreements and the transactions contemplated hereby and thereby.
Section 7.5 Agreement to Cooperate; Further Assurances. Subject to the
------------------------------------------
terms and conditions of this Agreement, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement and the Merger Agreements, subject to the appropriate vote of
unitholders of NRLP and stockholders of ART described in Section 8.1 (a) hereof,
including providing information and using reasonable efforts to obtain all
necessary or appropriate waivers, consents and approvals, and effecting all
necessary registrations and filings (including filings under the HSR Act);
provided that nothing herein shall require Newco, ART or NRLP to hold, manage or
operate any assets separately in order to obtain any such consent or approval or
to enter into any sale or divestiture of assets. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or the Merger Agreements, the proper partners,
officers and directors of each party to this Agreement shall take all necessary
actions to the extent not inconsistent with their other duties and obligations
or applicable law.
Section 7.6 Stock Options.
-------------
(a) To the extent that acceleration of the exercisability of any
outstanding option to purchase shares of ART Common Stock (an "ART Stock
Option"), any outstanding unit based on the value of ART Common Stock or the
stock of an ART Subsidiary is permitted but not required by the applicable
governing instrument, then ART shall take all necessary action to cause such
acceleration not to occur. In connection therewith, at the Effective Time, to
the extent permitted by the terms of the relevant governing instruments, each
ART Stock Option, whether vested or unvested, shall be assumed by Newco. Unless
ART and NRLP shall otherwise agree, each such ART Stock Option shall be deemed
to constitute an option to acquire, on the same terms and conditions as were
applicable under such ART Stock Option, the same number of shares of Newco
Common Stock as the holder of such ART Stock Option would have been entitled to
receive pursuant to the ART Merger had such holder exercised such option in full
immediately prior to the Effective Time.
(b) As soon as practicable after the Effective Time, Newco shall file
a registration statement on the appropriate form with respect to the shares of
Newco Common Stock subject to such options and shall use its best efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. Newco shall
administer the ART Plans assumed pursuant to this Section 7.6 in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act to the extent the
ART Plans complied with such rule prior to the ART Merger.
Section 7.7 Public Statements. The parties shall consult with each other
-----------------
prior to issuing any public announcement or statement with respect to this
Agreement, the Merger Agreements or the transactions contemplated hereby or
thereby and shall not issue any such public announcement or statement prior to
such consultation, except as may be required by law or by the rules of the
exchange on which the ART Common Stock or NRLP Units are currently listed for
trading.
Section 7.8 Letter of NRLP's Accountants. NRLP shall use its best efforts
----------------------------
to cause to be delivered to ART a letter of BDO ▇▇▇▇▇▇▇, LLP, dated a date
within two business days before the date on which the Form S-4 shall become
effective and addressed to ART, in form and substance reasonably satisfactory to
ART and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
Section 7.9 Letter of ART's Accountants. ART shall use its best efforts to
---------------------------
cause to be delivered to NRLP a letter of BDO ▇▇▇▇▇▇▇, LLP, dated a date within
two business days before the date on which the Form S-4 shall become effective
and addressed to NRLP, in form and substance reasonably satisfactory to NRLP and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
Section 7.10 Expenses. All costs and expenses incurred in connection with
--------
this Agreement and the Merger Agreements and the transactions contemplated
hereby and thereby shall be paid by the party incurring such expenses, except
that those expenses incurred in connection with printing and mailing the Proxy
Statement and the Form S-4, as well as the filing fee relating thereto, shall be
shared equally by ART, on the one hand, and NRLP, on the other hand.
Section 7.11 Newco Activities. Until the Effective Time, except in
----------------
connection with or furtherance of the transactions contemplated by this
Agreement and the Merger Agreements, Newco will incur no obligations or
liabilities nor engage in any business or activities of any type or kind
whatsoever or enter into any agreements or arrangements with any person or
entity.
7.12 Reporting. Newco, ART and NRLP shall for federal income tax purposes
---------
report the transactions contemplated by this Agreement, the ART Merger Agreement
and the NRLP Merger Agreement pursuant to which Newco stock is issued to ART
shareholders and limited partners of NRLP (other than ART and its wholly owned
subsidiaries) as a transaction governed by Section 351 of the Code. Newco shall
comply with the reporting and record keeping requirements of Treasury Regulation
Section 1.351-3 with respect to such transactions. Newco shall inform each
recipient of Newco stock pursuant to such transactions of such recipient's
reporting and record keeping requirements as specified in Treasury Regulation
Section 1.351-3 with respect to such transactions.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Mergers.
-----------------------------------------------------------
The respective obligations of each party to effect the Mergers shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement, the Merger Agreements and the transactions
contemplated hereby and thereby shall have been approved and adopted by the
affirmative vote of a majority of the outstanding shares of ART Common Stock and
NRLP Units entitled to vote;
(b) The waiting period, if any, applicable to the consummation of the
Mergers under the HSR Act shall have expired or been terminated;
(c) The parties hereto shall have made the requisite filings with all
Governmental Entities as shall be required pursuant to applicable laws, rules
and regulations, and such Governmental Entities, to the extent required by
applicable law, shall have approved the transactions contemplated by this
Agreement; except where the failure to obtain any such approval would not,
individually or in the aggregate, have a Material Adverse Effect on ART and
NRLP, and their respective Subsidiaries, taken as a whole, or upon the
consummation of the transactions contemplated hereby;
(d) The Form S-4 shall have become effective in accordance with the
provisions of the Securities Act, and no stop order suspending such
effectiveness shall have been issued and remain in effect;
(e) No temporary restraining order, preliminary or permanent
injunction or other order or decree by any court of competent jurisdiction which
prevents the consummation of the
Mergers or imposes material conditions with respect thereto shall have been
issued and remain in effect (each party agreeing to use its reasonable efforts
to have any such injunction, order or decree lifted);
(f) No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or Federal government or
governmental agency which would prevent the consummation of the Mergers or
impose material conditions with respect thereto; and
(g) The shares of Newco Common Stock required to be issued hereunder
shall have been approved for listing on the New York Stock Exchange, subject to
official notice of issuance.
Section 8.2 Conditions to Obligation of NRLP to Effect the NRLP Merger.
----------------------------------------------------------
The obligation of NRLP to effect the NRLP Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) ART shall have performed in all material respects its agreements
contained in this Agreement and the Merger Agreements required to be performed
on or prior to the Effective Time and the representations and warranties of ART
contained in this Agreement and the Merger Agreements shall be true and correct
in all material respects on and as of the date of this Agreement and on and as
of the Effective Time as if made on and as of such date, except as contemplated
or permitted by this Agreement and the Merger Agreements, and NRLP shall have
received a certificate of the President or of an Executive Vice President of ART
to that effect;
(b) ART shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not, individually or
in the aggregate, have a Material Adverse Effect on ART or upon the consummation
of the transactions contemplated hereby;
(c) NRLP shall have received the letter of BDO ▇▇▇▇▇▇▇, LLP referred
to in Section 7.8 hereof; and
(d) NRLP and Newco shall have received an opinion from ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP substantially to the effect that the NRLP Merger shall be treated for
federal income tax purposes as part of a transaction that satisfies the
requirements of Section 351 of the Code.
Section 8.3 Conditions to Obligation of ART to Effect the ART Merger. The
--------------------------------------------------------
obligation of ART to effect the ART Merger shall be subject to the fulfillment
at or prior to the Effective Time of the following additional conditions:
(a) NRLP shall have performed in all material respects its agreements
contained in this Agreement and the Merger Agreements required to be performed
on or prior to the Effective Time and the representations and warranties of NRLP
contained in this Agreement and the Merger Agreements shall be true and correct
in all material respects on and as of the date of this Agreement
and on and as of the Effective Time as if made on and as of such date, except as
contemplated by this Agreement and the Merger Agreements, and ART shall have
received a certificate of the general partner of NRLP to that effect;
(b) NRLP shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument, except for which
failure to obtain such consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on NRLP or upon the consummation of
the transactions contemplated hereby;
(c) ART shall have received the letter of BDO ▇▇▇▇▇▇▇, LLP referred to
in Section 7.9 hereof; and
(d) ART and Newco shall have received an opinion from ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP substantially to the effect that the ART Merger shall be treated for
federal income tax purposes as part of a transaction that satisfies the
requirements of Section 351 of the Code.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time, whether before or after approval by the shareholders of
ART or the unitholders of NRLP:
(a) by the mutual written consent of ART and NRLP;
(b) by either ART or NRLP if (i) the Mergers shall not have been
consummated on or before March 31, 2000 (the "Termination Date"); (ii) any
Governmental Entity, the consent of which is a condition to the obligations of
ART and NRLP to consummate the transactions contemplated hereby or by the Merger
Agreements, shall have determined not to grant its consent and all appeals of
such determination shall have been taken and have been unsuccessful; or (iii)
any court of competent jurisdiction in the United States or any State shall have
issued an order, judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting either of the Mergers and such
order, judgment or decree shall have become final and non-appealable;
(c) by NRLP if (i) in the exercise of its good faith judgment as to
its fiduciary duties to its unitholders imposed by law, the general partner of
NRLP determines that such termination is required by reason of an Acquisition
Proposal having been made to it on terms more favorable to NRLP's unitholders
than the transactions contemplated hereby, (ii) the ART Merger shall have been
voted on by holders of ART Common Stock at a meeting duly convened therefor, and
the votes shall not have been sufficient to satisfy the condition set forth in
Section 8.1(a) hereof, (iii) there has been a material breach by ART of any
representation, warranty, covenant or agreement set forth in this
Agreement or the ART Merger Agreement, which breach has not been cured within
ten business days following receipt by the breaching party of notice of such
breach; or (iv) the Board of Directors of ART should fail to recommend to its
stockholders approval of the transactions contemplated by this Agreement and the
ART Merger Agreement or such recommendation shall have been made and
subsequently withdrawn;
(d) by ART if (i) in its exercise of its good faith judgment as to its
fiduciary duties to its stockholders imposed by law, the Board of Directors of
ART determines that such termination is required by reason of an Acquisition
Proposal having been made to it on terms more favorable to ART's shareholders
than the transactions contemplated hereby, (ii) the NRLP Merger shall have been
voted on by holders of NRLP Units at a meeting duly convened therefor and the
votes shall not have been sufficient to satisfy the condition set forth in
Section 8.1(a), (iii) there has been a material breach by NRLP of any
representation, warranty, covenant or agreement set forth in this Agreement or
the NRLP Merger Agreement, which breach has not been cured within ten business
days following receipt by the breaching party of notice of such breach; or (iv)
the general partner of NRLP should fail to recommend to its unitholders approval
of the transactions contemplated by this Agreement and the NRLP Merger Agreement
or such recommendation shall have been made and subsequently withdrawn;
provided that the right to terminate this Agreement (x) under Section 9.1(b)(i)
hereof shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date and (y) under
Section 9.1(c) and (d) hereof shall not be available to any party who at such
time is in material breach of any representation, warranty, covenant or
agreement set forth in this Agreement or the Merger Agreements.
Section 9.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either ART or NRLP as provided in Section 9.1 hereof, this
Agreement shall forthwith become void (except as set forth in this Section 9.2
and in Sections 7.2 and 7.10 hereof which shall survive the termination) and
there shall be no liability on the part of Newco, ART or NRLP or their
respective officers, directors or partners except for any breach of any of its
obligations under this Section 9.2 and Sections 7.2 and 7.10. Notwithstanding
the foregoing, no party hereto shall be relieved from liability for any willful,
material breach of this Agreement.
Section 9.3 Amendment. This Agreement and the Merger Agreements may be
---------
amended by the parties hereto at any time before or after approval hereof by the
shareholders of ART or unitholders of NRLP, respectively, provided that after
any such approval, no amendment shall be made which (a) changes the ratios at
which shares of ART Stock or NRLP Units are to be converted into shares of Newco
Common Stock pursuant to the Merger Agreements hereof, (b) in any way materially
adversely affects the rights of holders of shares of ART Stock or holders of
NRLP Units or (c) changes any of the principal terms of this Agreement or the
Merger Agreements, in each case without the further approval of such
shareholders or unitholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time, the parties
------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and Agreements.
----------------------------------------------------------
None of the representations, warranties and agreements in this Agreement shall
survive the Effective Time.
Section 10.2 Notices. Any notices or other communications required or
-------
permitted hereunder shall be in writing and shall be deemed duly given upon (a)
transmitter's confirmation of a receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(c) the expiration of five business days after the day when mailed by certified
or registered mail, postage prepaid, addressed at the following addresses (or at
such other address as the parties hereto shall specify by like notice):
If to ART, to:
American Realty Trust, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, President
If to NRLP, to:
National Realty, L.P.
c/o NRLP Management Corp.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President
In either case, with a copy (which shall not constitute notice) to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Section 10.3 Interpretation. The headings contained in this Agreement are
--------------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 10.4 Miscellaneous. This Agreement (including the documents and
-------------
instruments referred to herein) (a) together with the Merger Agreements,
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof; (b) is not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Texas (without giving effect to the provisions thereof relating to
conflicts of law). The parties hereby acknowledge that, except as otherwise
specifically agreed to in writing, no party shall have the right to acquire or
shall be deemed to have acquired shares of common stock or units of partnership
interest of the other party pursuant to the Mergers until consummation thereof.
Section 10.5 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 10.6 Parties in Interest. Subject to the provisions of Section
-------------------
10.4(c) hereof, this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns and, except as set forth in Section 10.4 hereof, nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.7 Successors and Assigns; Assignment. This Agreement and all of
----------------------------------
the provisions hereof shall be binding upon, and inure to the benefit of, each
of the parties hereto and each of their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by the parties hereto without the prior
written consent of the others, nor is this Agreement intended to confer upon any
other persons except the parties hereto any rights or remedies hereunder.
Section 10.8 Waiver of Compliance; Consents. Except as otherwise provided
------------------------------
in this Agreement, any failure of any party hereto comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 10.9 Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 10.10 Attorneys' Fees. If any action at law or equity, including an
---------------
action for declaratory relief, is brought to enforce or interpret any provision
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and expenses from the other party, which fees and expenses shall
be in addition to any other relief which may be awarded.
IN WITNESS WHEREOF, Newco, ART and NRLP have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
AMERICAN REALTY INVESTORS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Title: Executive Vice President
--------------------------
AMERICAN REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Title: Executive Vice President
---------------------------
NATIONAL REALTY, L.P.
By: NRLP Management Corp.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Title: Senior Vice President
-------------------------
EXHIBIT A
---------
FORM OF AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated November ___, 1999 (the "Agreement"), by and
among American Realty Investors, Inc., a newly formed Nevada corporation
("Newco"), American Realty Trust, Inc., a Georgia corporation ("ART"), and ART
Acquisition Corp., a newly formed Georgia corporation and a wholly owned
subsidiary of Newco ("Sub I").
WHEREAS, Newco, ART and National Realty, L.P., a Delaware limited
partnership ("NRLP"), have entered into an Agreement and Plan of Reorganization
(the "Plan of Reorganization"), which provides for this Agreement of Merger;
WHEREAS, the Boards of Directors of Newco, ART and Sub I have approved the
merger of Sub I with and into ART and the consummation of the transactions
contemplated hereby and by the Plan of Reorganization, upon the terms and
subject to the conditions set forth herein and in the Plan of Reorganization;
WHEREAS, the Boards of Directors of Newco and NRLP Acquisition Corp., a
newly formed Delaware corporation ("Sub II"), and the general partner of
National Realty, L.P. ("NRLP") have approved the merger of Sub II with and into
NRLP pursuant to an Agreement of Merger (the "NRLP Merger Agreement"); and
WHEREAS, as part of a single plan to be effectuated pursuant to this
Agreement, the Plan of Reorganization and the NRLP Merger Agreement, it is
intended that the transactions described in such agreements be treated for
federal income tax purposes as an integrated transaction described in Section
351 of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder (and any similar provision of state law).
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein and in the Plan of Reorganization, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of this
----------
Agreement and the Plan of Reorganization, at the Effective Time (as hereinafter
defined) in accordance with the Georgia Business Corporation Act (the "GBCA"),
Sub I shall be merged with and into ART and the separate existence of Sub I
shall thereupon cease (the "ART Merger"). ART shall be the surviving corporation
in the ART Merger (hereinafter sometimes referred to as the "Surviving
Corporation").
Section 1.2 Effective Time of the ART Merger. The ART Merger shall become
--------------------------------
effective as of the date and at such time (the "Effective Time") as a
certificate of merger pursuant to Section
14-2-1105 of the GBCA and any other documents necessary to effect the ART Merger
in accordance with the GBCA shall be filed with the Secretary of State of the
State of Georgia and become effective. Such filings shall be made, and shall
provide that the instruments filed therewith shall become effective, in
accordance with the Plan of Reorganization.
Section 1.3 Effects of Merger. The Merger shall have the effects set forth
-----------------
in Section 14-2-1106 of the GBCA.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation. At the Effective Time, the articles
-------------------------
of incorporation of ART, as in effect immediately prior to the Effective Time,
shall be amended so that the operative provisions read in their entirety exactly
as the articles of incorporation of Sub I as in effect immediately prior to the
Effective Time, except that the name of the corporation specified therein shall
be "American Realty Trust, Inc."
Section 2.2 Bylaws. At the Effective Time, the bylaws of ART, as in effect
------
immediately prior to the Effective Time, shall be amended so that they read in
their entirety exactly as the bylaws of Sub I, as in effect immediately prior to
the Effective Time, except that the name of the corporation specified therein
shall be "American Realty Trust, Inc."
Section 2.3 Directors and Officers. At and after the Effective Time, the
----------------------
board of directors of the Surviving Corporation shall be comprised of the
persons so designated in Exhibit A hereto and the officers of the Surviving
---------
Corporation shall be the persons so designated in Exhibit A hereto, in each case
---------
until their respective successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's articles of incorporation and bylaws.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Shares. At the Effective Time, by virtue of the
--------------------
ART Merger and without any action on the part of any holder of any capital stock
of ART or Sub I:
(a) each share of common stock, par value $.01 per share (the "ART
Common Stock"), of ART (other than any shares of ART Common Stock that are
held in the treasury of ART) issued and outstanding immediately prior to
the Effective Time shall, subject to Section 3.3 hereof, be converted into,
and become exchangeable for, .91 shares of common stock, par value $.01 per
share, of Newco (the "Newco Common Stock");
(b) each share of special stock, par value $2.00 per share (the "ART
Special Stock" and, together with the ART Common Stock, the "ART Stock") of
ART (other than any shares of ART Special Stock that are held in the
treasury of ART and any shares of ART Special Stock that are owned by any
of ART's direct or indirect wholly owned Subsidiaries),
issued and outstanding immediately prior to the Effective Time, shall be
converted into, and become exchangeable for, one (1) share of preferred
stock, par value $2.00 per share of Newco (the "Newco Preferred Stock");
(c) each share of ART Stock that is held in the treasury of ART
shall be cancelled and cease to exist at and after the Effective Time and
no consideration shall be delivered with respect thereto;
(d) each share of common stock, par value $.01 per share, of Sub
I, shall be converted into and become one share of common stock, par value
$.01 per share, of the Surviving Corporation; and
(e) each share of Newco Common Stock issued and outstanding
immediately prior to the Effective Time and owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall be cancelled and cease to exist at and after the Effective Time and
no consideration shall be delivered with respect thereto.
Section 3.2 Exchange of ART Certificates.
----------------------------
(f) From and after the Effective Time, (i) each holder of a
certificate that immediately prior to the Effective Time represented a
share of ART Common Stock (other than those shares of ART Common Stock held
in the treasury of ART) shall be entitled to receive in exchange therefor
(or upon the provision of an appropriate affidavit of lost certificate and
an indemnity bond), upon surrender thereof to an exchange agent selected by
ART and NRLP (the "Exchange Agent"), a certificate or certificates
representing the number of whole shares of Newco Common Stock into which
such holder's shares of ART Common Stock were converted pursuant to Section
3.1 hereof and (ii) each holder of a certificate that immediately prior to
the Effective Time represented a share of ART Special Stock (other than
those shares of ART Special Stock held in the treasury of ART) shall be
entitled to receive in exchange therefor (or upon the provision of an
appropriate affidavit of lost certificate and an indemnity bond), upon
surrender to the Exchange Agent, a certificate or certificates representing
the number of shares of Newco Preferred Stock into which such holder's
shares of ART Special Stock were converted pursuant to Section 3.1 hereof.
From and after the Effective Time, Newco shall be entitled to treat each
certificate formerly representing ART Stock (each an "ART Certificate"),
which has not yet been surrendered for exchange, as evidencing the
ownership of the number of full shares of Newco Common Stock into which the
ART Stock represented by such ART Certificate shall have been converted
pursuant to Section 3.1 hereof, notwithstanding the failure to surrender
such ART Certificate. However, notwithstanding any other provision of this
Agreement, until holders or transferees of ART Certificates formerly
representing ART Stock have surrendered them for exchange as provided
herein (i) no dividends or other distributions, if any, without interest,
shall be paid with respect to any shares of Newco Common Stock represented
by such ART Certificates and no payment for fractional shares shall be
made, and (ii) without regard to when such ART Certificates are surrendered
for exchange as provided herein, no interest shall be paid or payable on
any dividends, if any, or any amount payable in respect
of fractional shares of Newco Common Stock. Upon surrender of an ART
Certificate, which immediately prior to the Effective Time represented ART
Stock, there shall be paid to the holder of such ART Certificate the amount
of any dividends, if any, which theretofore became payable, but which were
not paid by reason of the foregoing, with respect to the number of whole
shares of Newco Common Stock represented by such ART Certificate (or
certificates) issued upon such surrender. If any certificate for shares of
Newco Common Stock is to be issued in a name other than that in which the
ART Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange that the person requesting such exchange shall
pay any transfer or other taxes required by reason of the issuance of
certificates for such shares of Newco Common Stock in a name other than
that of the registered holder of the ART Certificate surrendered, or shall
establish to the satisfaction of Newco that such tax has been paid or is
not applicable.
(g) As soon as practicable after the Effective Time, Newco shall
make available to the Exchange Agent the certificates representing shares
of Newco Common Stock required to effect the exchange referred to in
Section 3.2(a) hereof. The shares of Newco Common Stock into which ART
Stock shall be converted in the ART Merger shall be deemed to have been
issued at the Effective Time.
(h) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each person who was a holder of record of ART Stock
immediately prior to the Effective Time whose shares were converted into
the right to receive shares of Newco Common Stock pursuant to Section 3.1
hereof (i) a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to any ART Certificate shall
pass, only upon actual delivery of the ART Certificates to the Exchange
Agent and shall be in such form and have such other provisions as ART and
NRLP may reasonably specify) and (ii) instructions for use in effecting the
surrender of ART Certificates in exchange for certificates representing
shares of Newco Common Stock. Upon surrender of an ART Certificate for
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal and such other documents as the Exchange Agent shall require,
the holder of such ART Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Newco
Common Stock into which the ART Stock theretofore represented by the ART
Certificates so surrendered shall have been converted pursuant to the
provisions of Section 3.1 hereof, and the ART Certificates so surrendered
shall forthwith be cancelled. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of ART
Stock for any shares of Newco Common Stock or dividends or distributions
thereon, if any, delivered to a public official pursuant to applicable
abandoned property, escheat or similar law.
Section 3.3 No Fractional Shares. Notwithstanding any other provision of
--------------------
this Agreement or the Plan of Reorganization, no certificates or scrip for
fractional shares of Newco Common Stock shall be issued upon the surrender for
exchange of an ART Certificate pursuant to this Article III and no dividend or
other distribution, stock split or interest with respect to shares of Newco
Common Stock, if any, shall relate to any fractional share, and such fractional
interests shall not entitle the owner thereof to vote or to any other rights of
a stockholder. In lieu of any such fractional shares,
each holder of ART Stock who would otherwise have been entitled to a fraction of
a share of Newco Common Stock upon surrender of an ART Certificate for exchange
pursuant to this Article III shall be entitled to receive from the Exchange
Agent a cash payment (without interest) in lieu of such fractional share equal
to such fraction multiplied by the average closing price per share of Newco
Common Stock on the New York Stock Exchange, Inc. or on such exchange as the
Newco Common Stock shall be listed, during the five trading days immediately
following the Effective Time.
Section 3.4 Closing of Transfer Books. From and after the Effective Time,
-------------------------
the stock transfer books of ART (but not of the Surviving Corporation) shall be
closed and no transfer of ART Stock shall thereafter be made. If, after the
Effective Time, ART Certificates are presented to Newco, they shall be cancelled
and exchanged for certificates representing shares of Newco Common Stock as set
forth in Section 3.1 hereof.
Section 3.5 Tax Effects. The parties intend that the transactions
-----------
described in this Agreement, the NRLP Merger Agreement and the Plan of
Reorganization constitute a single plan that is treated for federal income tax
purposes as an integrated transaction described in and satisfying each of the
requirements of Section 351 of the Code and the regulations thereunder (and any
similar provisions of state laws) pursuant to which (i) each shareholder of ART
is treated as transferring all of its ART stock to Newco in exchange for Newco
stock, (ii) each limited partner of NRLP, other than ART (and its wholly owned
subsidiaries), is treated as transferring all of its NRLP Units to Newco in
exchange for Newco stock and (iii) immediately after the transactions described
in (i) and (ii), the former shareholders of ART and the former limited partners
of NRLP, other than ART (and its wholly owned subsidiaries), as a group, are in
"control" of Newco (as such term is defined in Section 368(c) of the Code). The
parties intend that no transactions other than the transactions described in
this Agreement, the NRLP Merger Agreement and the Plan of Reorganization be
considered part of the integrated transaction for purposes of determining the
group in "control" of Newco immediately after these transactions.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Termination. Prior to the Effective Time, this Agreement
-----------
shall terminate in the event of and upon the termination of the Plan of
Reorganization.
Section 4.2 Amendment. This Agreement may be amended by the parties
---------
hereto, at any time before or after approval hereof by the stockholders of Newco
or ART, provided that after any such approval, no amendment shall be made which
(a) changes the ratio at which shares of ART Stock are to be converted into
shares of Newco Common Stock pursuant to Section 3.1 hereof, (b) in any way
materially adversely affects the rights of holders of ART Stock or (c) changes
any of the principal terms of this Agreement or the Plan of Reorganization, in
each case, without the further approval of such stockholders. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 4.3 Notices. Any notices or other communications required or
-------
permitted hereunder shall be in writing and shall be deemed duly given upon (a)
transmitter's confirmation of a receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or by hand delivery or (c)
the expiration of five business days after the day when mailed by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address as the parties hereto shall specify by like notice):
(a) If to Newco or Sub I to:
American Realty Investors, Inc.
c/o Basic Capital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
(b) If to ART, to:
American Realty Trust, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
President
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Section 4.4 Interpretation. As used in this Agreement, the word
--------------
"Subsidiary" means, with respect to any party, any corporation or other entity
of which outstanding securities having ordinary voting power to elect a majority
of the board of directors of such corporation or a majority of the voting power
of the voting equity interest of such other entity is owned, directly or
indirectly, by such party. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 4.5 Miscellaneous. This Agreement (including the documents and
-------------
instruments referred to herein) (a) together with the Plan of Reorganization,
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof; (b) is not intended to confer upon any
other person any rights or remedies hereunder; (c) shall not be assigned by
operation of law or otherwise
without the prior written consent of the other parties hereto, except that Sub I
may assign, in its sole discretion, all or any of its rights, interests and
obligations hereunder to any direct or indirect wholly owned Subsidiary of
Newco; and (d) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Georgia (without giving
effect to the provisions thereof relating to conflicts of law).
Section 4.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 4.7 Parties in Interest. Subject to the provisions of Section
-------------------
4.5(c) hereof, this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 4.8 Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
Section 4.9 Reporting. Newco, ART and Sub I shall for federal income tax
---------
purposes report the transactions contemplated by this Agreement, the NRLP Merger
Agreement and the Plan of Reorganization pursuant to which Newco stock is issued
to ART shareholders and limited partners of NRLP (other than ART and its wholly
owned subsidiaries) as a transaction governed by Section 351 of the Code. Newco
shall comply with the reporting and record keeping requirements of Treasury
Regulation Section 1.351-3 with respect to such transactions. Newco shall
inform each recipient of Newco stock pursuant to such transactions of such
recipient's reporting and record keeping requirements as specified in Treasury
Regulation Section 1.351-3 with respect to such transactions.
IN WITNESS WHEREOF, Newco, ART and Sub I have caused this Agreement of
Merger to be signed by their respective officers thereunto duly authorized as of
the date first written above.
AMERICAN REALTY INVESTORS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
AMERICAN REALTY TRUST, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
ART ACQUISITION CORP.
By:_____________________________________
Name:________________________________
Title:_______________________________
EXHIBIT B
---------
FORM OF AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated November ___, 1999 (the "Agreement"), by and
among American Realty Investors, Inc., a newly formed Nevada corporation
("Newco"), National Realty, L.P., a Delaware limited partnership ("NRLP"), and
NRLP Acquisition Corp., a newly-formed Delaware corporation and a wholly owned
subsidiary of Newco ("Sub II").
WHEREAS, Newco, NLRP and American Realty Trust, Inc., a Georgia corporation
("ART") have entered into an Agreement and Plan of Reorganization (the "Plan of
Reorganization"), which provides for this Agreement of Merger;
WHEREAS, the Boards of Directors of Newco and Sub II and the general
partner of NRLP have approved the merger of Sub II with and into NRLP and the
consummation of the transactions contemplated hereby and by the Plan of
Reorganization, upon the terms and subject to the conditions set forth herein
and in the Plan of Reorganization;
WHEREAS, the Boards of Directors of Newco, American Realty Trust, Inc., a
Georgia corporation ("ART") and ART Acquisition Corp., a Georgia corporation
("Sub I") have approved the merger of Sub I with and into ART pursuant to an
Agreement of Merger (the "ART Merger Agreement"); and
WHEREAS, as part of a single plan to be effectuated pursuant to this
Agreement, the ART Merger Agreement and the Plan of Reorganization, it is
intended that the transactions described in such agreements be treated for
federal income tax purposes as an integrated transaction described in Section
351 of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder (and any similar provision of state law).
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein and in the Plan of Reorganization, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
----------
this Agreement and the Plan of Reorganization, at the Effective Time (as
hereinafter defined) in accordance with the Delaware Revised Limited Partnership
Act ("DRLPA") and the Delaware General Corporation Law (the "DGCL") Sub II shall
be merged with and into NRLP and the separate existence of Sub II shall
thereupon cease (the "NRLP Merger"). NRLP shall be the surviving entity in the
NRLP Merger (hereinafter sometimes referred to as the "Surviving Entity").
Section 1.2 Effective Time of the NRLP Merger. The NRLP Merger shall
---------------------------------
become effective as of the date and at such time (the "Effective Time") as a
certificate of merger pursuant to Section 263 of the DGCL and any other
documents necessary to effect the NRLP Merger in
accordance with the DRLPA and the DGCL shall be filed with the Secretary of
State of the State of Delaware and become effective. Such filings shall be made,
and shall provide that the instruments filed therewith shall become effective,
in accordance with the Plan of Reorganization.
Section 1.3 Effects of Merger. The Merger shall have the effects set forth
-----------------
in Section 251 of the DGCL.
ARTICLE II
THE SURVIVING ENTITY
Section 2.1 Governing Documents. At the Effective Time, the agreement of
-------------------
limited partnership of NRLP, as in effect immediately prior to the Effective
Time, shall be the agreement of limited partnership of the Surviving Entity.
ARTICLE III
CONVERSION OF UNITS
Section 3.1 Conversion of Units. At the Effective Time, by virtue of the
-------------------
NRLP Merger and without any action on the part of any holder of units of
partnership interest of NRLP (the "NRLP Units") or the holder of any capital
stock of Sub II:
(a) each Unit (other than units that are owned by ART or any of ART's
direct or indirect wholly owned Subsidiaries (as hereinafter defined)) issued
and outstanding immediately prior to the Effective Time shall, subject to
Section 3.3 hereof, be converted into, and become exchangeable for, one (1)
share of common stock, par value $.01 per share, of Newco (the "Newco Common
Stock");
(b) each share of common stock, par value $.01 per share, of Sub II shall
be cancelled and cease to exist at and after the Effective Time and no
consideration shall be delivered with respect thereto; and
(c) each share of Newco Common Stock issued and outstanding immediately
prior to the Effective Time and owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be cancelled
and cease to exist at and after the Effective Time and no consideration shall be
delivered with respect thereto.
Section 3.2 Exchange of NRLP Certificates.
-----------------------------
(d) From and after the Effective Time, each holder of a
certificate that immediately prior to the Effective Time represented an
NRLP Unit (other than those NRLP Units owned by ART or any direct or
indirect wholly owned Subsidiary of ART) shall be entitled to receive in
exchange therefor (or upon the provision of an appropriate affidavit of
lost certificate and an indemnity bond), upon surrender thereof to an
exchange agent selected by NRLP and ART (the "Exchange Agent"), a
certificate or certificates representing the number of whole shares of
Newco Common Stock into which such holder's NRLP Units were converted
pursuant to Section 3.1 hereof. From and after the Effective Time, Newco
shall be entitled to treat each certificate formerly representing NRLP
Units (each an "NRLP
Certificate"), which has not yet been surrendered for exchange, as
evidencing the ownership of the number of full shares of Newco Common Stock
into which the NRLP Units represented by such NRLP Certificate shall have
been converted pursuant to Section 3.1 hereof, notwithstanding the failure
to surrender such NRLP Certificate. However, notwithstanding any other
provision of this Agreement, until holders or transferees of NRLP
Certificates formerly representing NRLP Units have surrendered them for
exchange as provided herein (i) no dividends or other distributions, if
any, without interest, shall be paid with respect to any shares of Newco
Common Stock represented by such NRLP Certificates and no payment for
fractional shares shall be made, and (ii) without regard to when such NRLP
Certificates are surrendered for exchange as provided herein, no interest
shall be paid or payable on any dividends, if any, or any amount payable in
respect of fractional shares of Newco Common Stock. Upon surrender of an
NRLP Certificate, which immediately prior to the Effective Time represented
NRLP Units, there shall be paid to the holder of such NRLP Certificate the
amount of any dividends, if any, which theretofore became payable, but
which were not paid by reason of the foregoing, with respect to the number
of whole shares of Newco Common Stock represented by such NRLP Certificate
(or certificates) issued upon such surrender. If any certificate for shares
of Newco Common Stock is to be issued in a name other than that in which
the NRLP Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for such shares of Newco Common Stock in a name
other than that of the registered holder of the NRLP Certificate
surrendered, or shall establish to the satisfaction of Newco that such tax
has been paid or is not applicable.
(e) As soon as practicable after the Effective Time, Newco shall
make available to the Exchange Agent the certificates representing shares
of Newco Common Stock required to effect the exchange referred to in
Section 3.2(a) hereof. The shares of Newco Common Stock into which NRLP
Units shall be converted in the NRLP Merger shall be deemed to have been
issued at the Effective Time.
(f) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each person who was a holder of record of NRLP Units
immediately prior to the Effective Time whose shares were converted into
the right to receive shares of Newco Common Stock pursuant to Section 3.1
hereof (i) a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to any NRLP Certificate shall
pass, only upon actual delivery of the NRLP Certificates to the Exchange
Agent and shall be in such form and have such other provisions as NRLP and
ART may reasonably specify) and (ii) instructions for use in effecting the
surrender of NRLP Certificates in exchange for certificates representing
shares of Newco Common Stock. Upon surrender of an NRLP Certificate for
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal and such other documents as the Exchange Agent shall require,
the holder of such NRLP Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Newco Common Stock into which the NRLP Units theretofore represented by the
NRLP Certificates so surrendered shall have been converted
pursuant to the provisions of Section 3.1 hereof, and the NRLP Certificates
so surrendered shall forthwith be cancelled. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to a holder
of NRLP Units for any shares of Newco Common Stock or dividends or
distributions thereon, if any, delivered to a public official pursuant to
applicable abandoned property, escheat or similar law.
Section 3.3 No Fractional Shares. Notwithstanding any other provision of
--------------------
this Agreement or the Plan of Reorganization, no certificates or scrip for
fractional shares of Newco Common Stock shall be issued upon the surrender for
exchange of an NRLP Certificate pursuant to this Article III and no dividend or
other distribution, stock split or interest with respect to shares of Newco
Common Stock, if any, shall relate to any fractional share, and such fractional
interests shall not entitle the owner thereof to vote or to any other rights of
a stockholder. In lieu of any such fractional shares, each holder of NRLP Units
who would otherwise have been entitled to a fraction of a share of Newco Common
Stock upon surrender of an NRLP Certificate for exchange pursuant to this
Article III shall be entitled to receive from the Exchange Agent a cash payment
(without interest) in lieu of such fractional share equal to such fraction
multiplied by the average closing price per share of Newco Common Stock on the
New York Stock Exchange, Inc. or on such exchange as the Newco Common Stock
shall be listed, during the five trading days immediately following the
Effective Time.
Section 3.4 Closing of Transfer Books. From and after the Effective Time,
-------------------------
the unit transfer books of NRLP (but not of the Surviving Entity) shall be
closed and no transfer of NRLP Units shall thereafter be made. If, after the
Effective Time, NRLP Certificates are presented to Newco, they shall be
cancelled and exchanged for certificates representing shares of Newco Common
Stock as set forth in Section 3.1 hereof.
Section 3.5 Tax Effects. The parties intend that the transactions
-----------
described in this Agreement, the ART Merger Agreement and the Plan of
Reorganization constitute a single plan that is treated for federal income tax
purposes as an integrated transaction described in and satisfying each of the
requirements of Section 351 of the Code and the regulations thereunder (and any
similar provisions of state laws) pursuant to which (i) each shareholder of ART
is treated as transferring all of its ART stock to Newco in exchange for Newco
stock, (ii) each limited partner of NRLP, other than ART (and its wholly owned
subsidiaries), is treated as transferring all of its NRLP Units to Newco in
exchange for Newco stock and (iii) immediately after the transactions described
in (i) and (ii), the former shareholders of ART and the former limited partners
of NRLP, other than ART (and its wholly owned subsidiaries), as a group, are in
"control" of Newco (as such term is defined in Section 368(c) of the Code). The
parties intend that no transactions other than the transactions described in
this Agreement, the ART Merger Agreement and the Plan of Reorganization be
considered part of the integrated transaction for purposes of determining the
group in "control" of Newco immediately after these transactions.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Termination. Prior to the Effective Time, this Agreement
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shall terminate in the event of and upon the termination of the Plan of
Reorganization.
Section 4.2 Amendment. This Agreement may be amended by the parties
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hereto, at any time before or after approval hereof by the stockholders of Newco
or the unitholders of NRLP, provided that after any such approval, no amendment
shall be made which (a) changes the ratio at which NRLP Units are to be
converted into shares of Newco Common Stock pursuant to Section 3.1 hereof, (b)
in any way materially adversely affects the rights of holders of NRLP Units or
(c) changes any of the principal terms of this Agreement or the Plan of
Reorganization, in each case, without the further approval of such unitholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 4.3 Notices. Any notices or other communications required or
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permitted hereunder shall be in writing and shall be deemed duly given upon (a)
transmitter's confirmation of a receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or by hand delivery or (c)
the expiration of five business days after the day when mailed by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address as the parties hereto shall specify by like notice):
(a) If to Newco or Sub II to:
American Realty Investors, Inc.
c/o Basic Capital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
(b) If to NRLP, to:
National Realty, L.P.
c/o NRLP Management Corp.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
President
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Section 4.4 Interpretation. As used in this Agreement, the word
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"Subsidiary" means, with respect to any party, any corporation or other entity
of which outstanding securities having ordinary voting power to elect a majority
of the board of directors of such corporation or a majority of the voting power
of the voting equity interest of such other entity is owned, directly or
indirectly, by such party. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 4.5 Miscellaneous. This Agreement (including the documents and
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instruments referred to herein) (a) together with the Plan of Reorganization,
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof; (b) is not intended to confer upon any
other person any rights or remedies hereunder; (c) shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties hereto, except that Sub II may assign, in its sole discretion, all or
any of its rights, interests and obligations hereunder to any direct or indirect
wholly owned Subsidiary of Newco; and (d) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware (without giving effect to the provisions thereof relating to conflicts
of law).
Section 4.6 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 4.7 Parties in Interest. Subject to the provisions of Section
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4.5(c) hereof, this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 4.8 Severability. Any term or provision of this Agreement which
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is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
Section 4.9 Reporting. Newco, NRLP and Sub II shall for federal income
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tax purposes report the transactions contemplated by this Agreement, the ART
Merger Agreement and the Plan of Reorganization pursuant to which Newco stock is
issued to ART shareholders and limited partners of NRLP (other than ART and its
wholly owned subsidiaries) as a transaction governed by Section 351 of the Code.
Newco shall comply with the reporting and record keeping requirements of
Treasury Regulation Section 1.351-3 with respect to such transactions. Newco
shall inform each recipient of Newco stock pursuant to such transactions of such
recipient's reporting and record keeping requirements as specified in Treasury
Regulation Section 1.351-3 with respect to such transactions.
IN WITNESS WHEREOF, Newco, NRLP and Sub II have caused this Agreement of
Merger to be signed by their respective officers thereunto duly authorized as of
the date first written above.
AMERICAN REALTY INVESTORS, INC.
By:_______________________________________
Name:________________________________
Title:_______________________________
NATIONAL REALTY, L.P.
By: NRLP Management Corp.,
its general partner
By:__________________________________
Name:__________________________
Title:_________________________
NRLP ACQUISITION CORP.
By:_______________________________________
Name:________________________________
Title:_______________________________
EXHIBIT C
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NEWCO BOARD OF DIRECTORS
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ART Designees
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NRLP Designees
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