Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 14, 2001
BY AND AMONG
SECURITY CAPITAL GROUP INCORPORATED
GENERAL ELECTRIC CAPITAL CORPORATION
AND
EB ACQUISITION CORP.
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER...................................................1
SECTION 1.1 The Merger.............................................1
SECTION 1.2 Effective Time.........................................1
SECTION 1.3 Closing of the Merger..................................2
SECTION 1.4 Effects of the Merger..................................2
SECTION 1.5 Charter and Bylaws.....................................2
SECTION 1.6 Directors..............................................2
SECTION 1.7 Officers...............................................2
ARTICLE II CONVERSION OF STOCK..........................................2
SECTION 2.1 Conversion of Stock....................................2
SECTION 2.2 Exchange of Certificates...............................3
SECTION 2.3 Withholding Taxes......................................5
SECTION 2.4 Stock Options; Restricted Stock Units..................5
SECTION 2.5 Dissenting Shares......................................6
SECTION 2.6 Inclusion of Adjustment to Merger Consideration........6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................8
SECTION 3.1 Organization and Qualification; Subsidiaries...........8
SECTION 3.2 Capitalization of the Company and Its Subsidiaries;
Certain Information Regarding the Public Investees.....8
SECTION 3.3 Authority Relative to This Agreement; Stockholder
Approval..............................................10
SECTION 3.4 Reports; Financial Statements.........................10
SECTION 3.5 No Undisclosed Liabilities............................11
SECTION 3.6 Absence of Changes....................................11
SECTION 3.7 Proxy Statement.......................................11
SECTION 3.8 Consents and Approvals; No Violations.................12
SECTION 3.9 No Default............................................13
SECTION 3.10 Litigation............................................13
SECTION 3.11 Compliance with Applicable Law........................13
SECTION 3.12 Properties............................................13
SECTION 3.13 Employee Plans........................................14
TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 3.14 Labor Matters.........................................16
SECTION 3.15 Environmental Matters.................................17
SECTION 3.16 Tax Matters...........................................19
SECTION 3.17 Absence of Questionable Payments......................20
SECTION 3.18 Material Contracts....................................21
SECTION 3.19 Insurance.............................................22
SECTION 3.20 Intellectual Property.................................22
SECTION 3.21 Opinion of Financial Advisor..........................23
SECTION 3.22 Brokers...............................................23
SECTION 3.23 Takeover Statute......................................23
SECTION 3.24 Ownership Limit.......................................23
SECTION 3.25 Amendment to Rights Agreement.........................23
ARTICLE IV REPRESENTATION AND WARRANTIES OF PARENT AND MERGER SUB......24
SECTION 4.1 Organization..........................................24
SECTION 4.2 Authority Relative to This Agreement..................24
SECTION 4.3 Proxy Statement.......................................25
SECTION 4.4 Consents and Approvals; No Violations.................25
SECTION 4.5 No Prior Activities...................................25
SECTION 4.6 Brokers...............................................25
SECTION 4.7 Financial Capacity....................................26
ARTICLE V COVENANTS RELATED TO CONDUCT OF BUSINESS....................26
SECTION 5.1 Conduct of Business of the Company....................26
SECTION 5.2 Access to Information.................................29
ARTICLE VI ADDITIONAL AGREEMENTS.......................................30
SECTION 6.1 Company Stockholder Meeting, Proxy Statement..........30
SECTION 6.2 Reasonable Best Efforts...............................30
SECTION 6.3 Acquisition Proposals.................................32
SECTION 6.4 Public Announcements..................................34
SECTION 6.5 Indemnification; Directors' and Officers' Insurance...34
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 6.6 Employee Matters......................................35
SECTION 6.7 SEC Filings...........................................37
SECTION 6.8 Obligations of Merger Sub.............................38
SECTION 6.9 Takeover Statutes; Rights Plan; Ownership Limit.......38
SECTION 6.10 Notification of Certain Matters.......................38
SECTION 6.11 Company Funds.........................................38
SECTION 6.12 Other Advisory Contract Consents......................39
SECTION 6.13 Transfer Taxes........................................39
SECTION 6.14 Registration and Sale of ProLogis Common Stock........39
SECTION 6.15 Storage USA Acquisition...............................40
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER....................41
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Merger................................................41
SECTION 7.2 Conditions to the Parent's Obligations to Effect the
Merger................................................41
SECTION 7.3 Conditions to the Company's Obligations to Effect the
Merger................................................42
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER..............................42
SECTION 8.1 Termination...........................................42
SECTION 8.2 Effect of the Termination.............................43
SECTION 8.3 Fees and Expenses.....................................43
SECTION 8.4 Amendment.............................................44
SECTION 8.5 Extension; Waiver.....................................44
ARTICLE IX MISCELLANEOUS...............................................45
SECTION 9.1 Nonsurvival of Representations and Warranties.........45
SECTION 9.2 Entire Agreement; Assignment..........................45
SECTION 9.3 Notices...............................................45
SECTION 9.4 Governing Law.........................................46
SECTION 9.5 Descriptive Headings..................................46
SECTION 9.6 Parties in Interest...................................46
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 9.7 Severability..........................................46
SECTION 9.8 Specific Performance..................................47
SECTION 9.9 Counterparts..........................................47
SECTION 9.10 Interpretation........................................47
SECTION 9.11 Definitions...........................................47
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DEFINED TERMS PAGE
2001 BONUS AWARD...........................................................37
ACQUIRING PERSON...........................................................23
ACQUISITION PROPOSAL.......................................................47
ADVISERS ACT...............................................................39
AGREEMENT...................................................................1
ANNOUNCEMENT DATE...........................................................6
ANTITRUST LAW..............................................................12
APPLICABLE CASH CONSIDERATION...............................................5
APPLICABLE CONSIDERATION....................................................5
APPLICABLE MERGER CONSIDERATION.............................................5
APPLICABLE REQUIRED BENEFITS...............................................35
ARTICLES OF MERGER..........................................................1
AUDIT DATE.................................................................11
BENEFICIAL OWNERSHIP.......................................................48
BENEFICIALLY OWN...........................................................48
CASH CONSIDERATION.........................................................48
CERTIFICATES................................................................3
CHARTER.....................................................................2
CLASS A CASH CONSIDERATION.................................................48
CLASS A MERGER CONSIDERATION...............................................48
CLASS A OPTION..............................................................5
CLASS A PER SHARE FACTOR...................................................48
CLASS A SHARES.............................................................48
CLASS A STOCK CONSIDERATION................................................48
CLASS B CASH CONSIDERATION.................................................48
CLASS B MERGER CONSIDERATION...............................................48
CLASS B OPTION..............................................................5
CLASS B PER SHARE FACTOR...................................................48
CLASS B SHARES.............................................................48
CLASS B STOCK CONSIDERATION................................................48
CLOSING.....................................................................2
CLOSING DATE................................................................2
CODE........................................................................5
COMPANY.....................................................................1
COMPANY 401 (k) PLAN.......................................................37
COMPANY DISCLOSURE SCHEDULE.................................................8
COMPANY EMPLOYEES..........................................................35
COMPANY FUND...............................................................48
COMPANY OPTION PLANS........................................................6
COMPANY PERMITS............................................................13
COMPANY PROPERTIES.........................................................14
COMPANY REQUISITE VOTE.....................................................10
COMPANY SEC REPORTS........................................................10
COMPANY SECURITIES..........................................................9
COMPANY STOCK OPTION........................................................5
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DEFINED TERMS PAGE
COMPANY STOCKHOLDER MEETING................................................30
CONFIDENTIALITY AGREEMENT..................................................29
CONTINUATION PERIOD........................................................35
CONVERTIBLE NOTES...........................................................9
DEEMED ASSIGNMENT..........................................................39
DFP........................................................................36
DISSENTING SHARES...........................................................6
DISSENTING STOCKHOLDERS.....................................................6
DOJ........................................................................31
DROP-DEAD DATE.............................................................42
ECMR.......................................................................12
EFFECTIVE TIME..............................................................2
EMPLOYEE BENEFIT PLAN......................................................15
EMPLOYEE BENEFIT PLANS.....................................................15
ENVIRONMENTAL CLAIMS.......................................................18
ENVIRONMENTAL COSTS AND LIABILITIES........................................18
ENVIRONMENTAL LAWS.........................................................18
ENVIRONMENTAL PERMITS......................................................17
ERISA......................................................................14
ERISA AFFILIATE............................................................15
EXCHANGE ACT...............................................................48
FINAL EXPIRATION DATE......................................................24
FOREIGN PLANS..............................................................16
FTC........................................................................31
FUND.......................................................................49
GAAP.......................................................................11
GOVERNMENTAL ENTITY........................................................12
HAZARDOUS MATERIAL.........................................................19
HEREIN.....................................................................47
HEREOF.....................................................................47
HEREWITH...................................................................47
HSR ACT....................................................................12
INDEMNIFIED PARTIES........................................................34
INDEMNIFIED PARTY..........................................................34
INTELLECTUAL PROPERTY......................................................22
INVESTMENT COMPANY ADVISORY AGREEMENT......................................49
IRS........................................................................15
KNOW.......................................................................49
KNOWLEDGE..................................................................49
LAW........................................................................13
LIEN........................................................................9
MATERIAL ADVERSE EFFECT....................................................49
MATERIAL CONTRACTS.........................................................21
MERGER......................................................................1
MERGER CONSIDERATION........................................................3
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DEFINED TERMS PAGE
MERGER SUB..................................................................1
MGCL........................................................................1
MULTIEMPLOYER PLAN.........................................................15
NEW PLANS..................................................................36
NICAAS.....................................................................39
NON-INVESTMENT COMPANY ADVISORY AGREEMENT..................................49
NOTICE OF SUPERIOR PROPOSAL................................................33
NSP........................................................................36
OLD PLANS..................................................................36
OWNERSHIP LIMIT............................................................49
PARENT......................................................................1
PARENT BENEFITS............................................................36
PARENT BOARD...............................................................24
PARENT DISCLOSURE SCHEDULE.................................................24
PAYING AGENT................................................................3
PERMITTED LIENS............................................................14
PERSON.....................................................................50
PREFERRED STOCK.............................................................3
PROLOGIS...................................................................49
PROLOGIS COMMON STOCK......................................................49
PROLOGIS REGISTRATION STATEMENT............................................41
PROLOGIS SALE..............................................................39
ProLogis Stock Value.......................................................49
PROPERTY RESTRICTIONS......................................................14
PROXY STATEMENT............................................................11
PUBLIC INVESTEE............................................................50
PUBLIC INVESTEES...........................................................50
REGENCY....................................................................50
REGULATORY AGENCY..........................................................11
RELEASE....................................................................19
REMEDIAL ACTION............................................................19
RESTRICTED STOCK UNIT.......................................................5
RIGHTS.....................................................................23
RIGHTS AGREEMENT...........................................................23
SEC........................................................................50
SECURITIES ACT.............................................................10
SHARES.....................................................................50
SHARES ACQUISITION DATE....................................................23
STOCK CONSIDERATION........................................................50
STOCK ELECTION..............................................................6
STOCKHOLDERS MEETING DATE..................................................50
STORAGE USA................................................................50
STORAGE USA ACQUISITION....................................................50
STORAGE USA TRANSACTION AGREEMENTS.........................................50
SUBSIDIARY.................................................................51
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DEFINED TERMS PAGE
SUPERIOR PROPOSAL..........................................................33
SUPPORT AGREEMENTS..........................................................1
SURVIVING CORPORATION.......................................................1
TAKEOVER STATUTES..........................................................23
TAX OR TAXES...............................................................20
TAX RETURNS................................................................20
TERMINATION FEE............................................................44
WARN.......................................................................17
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
December 14, 2001, is by and among Security Capital Group Incorporated, a
Maryland corporation (the "COMPANY"), General Electric Capital Corporation, a
Delaware corporation ("PARENT"), and EB Acquisition Corp., a Maryland
corporation and an indirect wholly owned subsidiary of Parent ("MERGER SUB").
W I T N E S S E T H:
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WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have approved the merger of Merger Sub with and into the Company, upon the terms
and subject to the conditions set forth herein, and have deemed and declared
that such merger is fair to, advisable and in the best interests of their
respective companies and stockholders;
WHEREAS, Parent has required, as a condition to its willingness to
enter into this Agreement, that each of the persons listed on Exhibit A hereto
enter into a Support Agreement, dated as of the date hereof (collectively, the
"SUPPORT AGREEMENTS"), simultaneously herewith, pursuant to which, among other
things, such persons have agreed to vote all of their Shares in favor of the
Merger (as hereinafter defined), on the terms and subject to the conditions
contained in the Support Agreements, and in order to induce Parent and Merger
Sub to enter into this Agreement, the Company Board (as hereinafter defined) has
approved the execution and delivery of the Support Agreements by such persons;
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger provided for herein and also to prescribe various conditions to the
consummation thereof.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the Company,
Parent and Merger Sub hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the Maryland
General Corporation Law (the "MGCL"), Merger Sub shall be merged with and into
the Company (the "MERGER"). Following the Merger, the Company shall continue as
the surviving corporation (the "SURVIVING CORPORATION") and as an indirect
wholly owned subsidiary of Parent, and the separate corporate existence of
Merger Sub shall cease.
SECTION 1.2 EFFECTIVE TIME. Subject to the provisions of this
Agreement, Parent, Merger Sub and the Company shall cause the Merger to be
consummated by filing such articles of merger or other appropriate documents (in
any such case, the "ARTICLES OF MERGER")
with the State Department of Assessments and Taxation of Maryland, as
applicable, in such form as required by, and executed in accordance with, the
relevant provisions of the MGCL and shall make all other filings, recordings or
publications required by the MGCL in connection with the Merger. The Merger
shall become effective at the time specified in the Articles of Merger (the time
the Merger becomes effective being the "EFFECTIVE TIME").
SECTION 1.3 CLOSING OF THE MERGER. The closing of the Merger (the
"CLOSING") will take place at a time and on a date to be specified by the
parties (the "CLOSING DATE"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), at the
offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or at such other time, date or place as agreed to in writing by the
parties hereto.
SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the MGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5 CHARTER AND BYLAWS. The Charter of the Company in effect
at the Effective Time (the "CHARTER") shall be the charter of the Surviving
Corporation until amended in accordance with applicable Law. The Amended and
Restated Bylaws of the Company in effect at the Effective Time shall be the
bylaws of the Surviving Corporation until amended in accordance with applicable
Law.
SECTION 1.6 DIRECTORS. The directors of Merger Sub at the Effective
Time shall be the initial directors of the Surviving Corporation, to hold office
in accordance with the charter and bylaws of the Surviving Corporation until
their successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal.
SECTION 1.7 OFFICERS. The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation, to hold office
in accordance with the charter and bylaws of the Surviving Corporation until
their successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal.
ARTICLE II
CONVERSION OF STOCK
SECTION 2.1 CONVERSION OF STOCK. (a) As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Merger Sub:
(b) MERGER SUB STOCK. Each issued and outstanding share of common
stock, par value $.01 per share, of Merger Sub shall be converted into and
become one fully paid and nonassessable share of Class A Common Stock, of the
Surviving Corporation.
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(c) CANCELLATION OF MERGER SUB-OWNED STOCK. All Shares that are owned
by any subsidiary of the Company and any Shares owned by Parent, Merger Sub or
any subsidiary of Parent or Merger Sub shall be cancelled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(d) EXCHANGE OF SHARES. Each issued and outstanding Class A Share and
Class B Share (other than Shares to be cancelled in accordance with Section
2.1(b) and, to the extent applicable, Dissenting Shares (as hereinafter
defined)) shall be converted into the right to receive, respectively, the Class
A Merger Consideration and the Class B Merger Consideration (the Class A Merger
Consideration together with the Class B Merger Consideration, the "MERGER
CONSIDERATION"). All such Shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2, without interest.
(e) PREFERRED STOCK. To the extent not converted into Class B Shares
prior to the Effective Time, each issued and outstanding share of Series B
Cumulative Convertible Redeemable Voting Preferred Stock, par value $0.01 per
share (the "PREFERRED STOCK"), of the Company shall remain issued and
outstanding and Parent shall cause the Company to perform all of the obligations
of the Company with respect to the Preferred Stock, including the obligation to
pay, upon conversion by the holder of such Preferred Stock, in respect of each
share of Preferred Stock, the Class B Merger Consideration multiplied by that
number of Class B Shares into which each share of Preferred Stock was
convertible as of the Closing Date.
SECTION 2.2 EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior to the
Effective Time, Parent shall designate a bank, trust company or other person,
reasonably acceptable to the Company, to act as agent for the holders of the
Shares in connection with the Merger (the "PAYING AGENT") to receive the funds
and securities if applicable to which holders of the Shares shall become
entitled pursuant to Section 2.1(d). Parent shall, from time to time, make
available to the Paying Agent funds in amounts and at times necessary for the
payment of the Cash Consideration as provided herein and the Company shall, from
time to time, make available to the Paying Agent shares of ProLogis Common Stock
in amounts and at times necessary for the payment of the Stock Consideration, if
any. All interest earned on such funds shall be paid to Parent.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented outstanding Shares (the "CERTIFICATES") whose Shares were
converted into the right to receive the Merger Consideration pursuant to Section
2.1 (i) a letter of transmittal (which shall specify that delivery shall be
effective, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in such form not
inconsistent with this Agreement as Parent may specify, with the consent of the
Company, which consent shall not be unreasonably withheld) and (ii) instructions
for use in surrendering the Certificates in exchange for payment of the Cash
Consideration and issuance of the Stock Consideration, if any. Upon surrender of
a Certificate for cancellation to the Paying Agent, together with such letter of
transmittal, duly exe-
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cuted, and such other documents as may reasonably be required by the Paying
Agent, Parent shall cause the Paying Agent to promptly pay to the holder of such
Certificate the Cash Consideration and issue the Stock Consideration, if any,
and the Certificate so surrendered shall thereupon be cancelled. In the event of
a surrender of a Certificate representing Shares which are not registered in the
transfer records of the Company under the name of the person surrendering such
Certificate, payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other Taxes (as hereinafter
defined) required by reason of payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Paying Agent
that such Taxes have been paid or are not applicable. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, which the holder thereof has the right to
receive in respect of such Certificate pursuant to the provisions of this
Article II. No interest shall be paid or will accrue on the Merger Consideration
payable to holders of Certificates pursuant to the provisions of this Article
II.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN STOCK. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates representing ownership of the Shares outstanding immediately prior
to the Effective Time shall cease to have rights with respect to such Shares,
except as otherwise provided for herein or by applicable Law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following twelve
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds and securities (including
any interest or dividends received with respect thereto) which had been made
available to the Paying Agent and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat or other similar
Laws) only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation or the
Paying Agent shall be liable to any holder of a Certificate for the Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(e) LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent shall pay in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration pursuant to this Agreement.
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SECTION 2.3 WITHHOLDING TAXES. Parent and the Surviving Corporation
shall be entitled to deduct and withhold, or cause the Paying Agent to deduct
and withhold, from the Cash Consideration payable to a holder of Shares,
pursuant to the Merger any withholding or other Taxes (as hereinafter defined)
as are required to be deducted or withheld under the Internal Revenue Code of
1986, as amended (the "CODE"), or any applicable provision of state, local or
foreign Tax law. To the extent that amounts are so withheld by Parent or the
Surviving Corporation, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by Parent or the Surviving
Corporation.
SECTION 2.4 STOCK OPTIONS; RESTRICTED STOCK UNITS. (a) Upon the
Closing Date, each then outstanding option or warrant to purchase Class A Shares
(a "CLASS A OPTION") and each then outstanding option or warrant to purchase
Class B Shares (a "CLASS B OPTION" which together with a Class A Option, a
"COMPANY STOCK OPTION"), whether or not then exercisable, shall be cancelled by
the Company and in consideration of such cancellation and except to the extent
that Parent or Merger Sub and the holder of any such Company Stock Option
otherwise agree, the Company (or, at Parent's option, Merger Sub) shall pay to
each holder of a Company Stock Option, on the Closing Date, the excess of (i)
the Applicable Consideration (as defined below) over (ii) the product of (A) the
per-share exercise price of such Company Stock Option and (B) the number of
shares subject to such Company Stock Option, less (C) all required tax
withholdings; provided, that if the amount described in clause (ii) exceeds the
cash portion of the Applicable Consideration, the holder shall be obligated to
pay the amount of such excess to the Company or Merger Sub, as applicable, in
cash and the Company or Merger Sub, as applicable, shall deliver only the
non-cash portion of the Applicable Consideration to the holder.
(b) Upon the Closing Date, each then
(c) outstanding restricted stock unit (each a "RESTRICTED STOCK UNIT")
whether or not then vested, shall be cancelled by the Company and the Company
shall pay to the holder thereof the Applicable RSU Consideration (as defined
below), less all required tax withholdings. "THE APPLICABLE CONSIDERATION" means
either the Applicable RSU Cash Consideration or the Applicable RSU Merger
Consideration, as elected by the holder before the Closing.
(d) The "APPLICABLE CONSIDERATION" means either the Applicable Cash
Consideration or the Applicable Merger Consideration, as elected by the holder
of any Company Stock Option or Restricted Stock Unit before the Closing,
PROVIDED, HOWEVER, if the holder of a Company Stock Option or Restricted Stock
Unit does not make such an election, he or she shall be deemed to have elected
to receive the Applicable Cash Consideration. The "APPLICABLE CASH
CONSIDERATION" means (w) in the case of a Class A Option or Restricted Stock
Unit with respect to Class A Stock, $1,300, and in the case of a Class B Option
or Restricted Stock Unit with respect to Class B Stock, $26, in either case
times (x) the number of shares subject to such Company Stock Option or
Restricted Stock Unit. The "APPLICABLE MERGER CONSIDERATION" means (y) in the
case of a Class A Option or Restricted Stock Unit with respect to Class A Stock,
the Class A Merger Consideration, and in the case of a Class B Option or
Restricted Stock Unit with respect to Class B Stock, the Class B Merger
Consideration, in either case times (z) the number of shares subject to such
Company Stock Option or Restricted Stock Unit.
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(e) Except as otherwise required by Section 6.6, the Company shall
take all actions necessary and appropriate so that all stock option or other
equity based plans maintained with respect to the Shares, including the plans
listed in Section 3.2 of the Company Disclosure Schedule (as hereinafter
defined) ("COMPANY OPTION PLANS"), shall, terminate as of the Effective Time and
the provisions in any other benefit plan providing for the issuance, transfer or
grant of any stock of the Company or any interest in respect of any stock of the
Company shall be deleted as of the Effective Time, and the Company shall take
all reasonable actions to ensure that following the Effective Time no holder of
a Company Stock Option or any participant in any Company Option Plan shall have
any right thereunder to acquire any stock of the Company, Parent, Merger Sub or
the Surviving Corporation.
SECTION 2.5 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, to the extent that Section 3-202 of the MGCL applies
to the Merger, Shares (the "DISSENTING SHARES") that are outstanding immediately
prior to the Effective Time and which are held by stockholders who shall have
properly objected to the Merger, who shall have not voted in favor of the Merger
and who shall have demanded properly in writing appraisal for such shares in
accordance with Section 3-203 of the MGCL (the "DISSENTING STOCKHOLDERS") shall
not be converted into or represent the right to receive the Merger
Consideration, as applicable. Such stockholders instead shall be entitled to
receive payment of the appraised value of such Shares held by them in accordance
with the provisions of such Section 3-203, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such Shares under the MGCL
shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration, upon surrender in the manner
provided in Section 2.2 of the Certificate or Certificates that, immediately
prior to the Effective Time, represented such Shares.
SECTION 2.6 INCLUSION OF ADJUSTMENT TO MERGER CONSIDERATION. (a)
Parent shall be entitled, by delivery to the Company of written notice at any
time prior to the date which is 15 days prior to Stockholders Meeting Date (as
hereinafter defined) (the date such notice is delivered, "ANNOUNCEMENT DATE"),
to elect (the "STOCK ELECTION") to make the ProLogis Common Stock owned by the
Company a part of the Merger Consideration and to reduce the amount of cash to
be included in the Merger Consideration, all in accordance with and as set forth
in the following and the definitions of the various terms set forth below. In
the event the Stock Election is made, and not revoked in accordance with
paragraph (c) below, the following adjustments shall be made:
(i) the Class A Cash Consideration shall be decreased by an amount
equal to the ProLogis Stock Value multiplied by the Class A Per Share
Factor, so that the amount of cash to be received by each holder of a
share of Class A Common Stock in the Merger, together with the Class A
Stock Consideration valued using the methodology set forth in clause
(i) of the definition of ProLogis Stock Value, shall be $1300;
(ii) the Class A Stock Consideration shall be a number of shares of
ProLogis Common Stock equal to the total number of shares of ProLogis
Common Stock to be
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a part of the Merger Consideration pursuant to the
Stock Election multiplied by the Class A Per Share Factor;
(iii) the Class B Cash Consideration shall be decreased by an amount equal
to the ProLogis Stock Value multiplied by the Class B Per Share
Factor, so that the amount of cash to be received by each holder of a
share of Class B Common Stock in the Merger, together with the Class B
Stock Consideration valued using the methodology set forth in clause
(i) of the definition of ProLogis Stock Value, shall be $26;
(iv) the Class B Stock Consideration shall be a number of shares of
ProLogis Common Stock equal to the total number of shares of ProLogis
Common Stock to be a part of the Merger Consideration pursuant to the
Stock Election multiplied by the Class B Per Share Factor;
PROVIDED, HOWEVER, that the Company shall be under no obligation to cause the
issuance of fractional shares of ProLogis Common Stock, and may substitute cash
in lieu of such fractional shares. In that connection, as soon as practicable
after the Closing Date, the Company shall, itself or through an agent, determine
the number of whole shares and fractional shares of the ProLogis Common Stock to
be delivered to each holder of Shares, aggregate all such fractional shares and
sell the whole shares obtained thereby, in the open market or otherwise, in each
case at then prevailing trading prices, and to cause to be distributed to each
such holder or for the benefit of each beneficial owner, in lieu of any
fractional share, such holder's or owner's ratable share of the proceeds of such
sale, after making appropriate deductions of the amount required to be withheld
for federal income tax purposes and after deducting an amount equal to all
brokerage charges, commissions and transfer taxes attributed to such sale.
(b) As soon as practicable after the Announcement Date, Parent and the
Company shall issue a joint press release announcing Parent's election, subject
to its right of revocation, to include Stock Consideration in the Merger
Consideration, and as soon as the ProLogis Stock Value is determinable, Parent
and the Company shall issue a joint press release announcing the amounts of the
Class A Cash Consideration, the Class A Stock Consideration, the Class B Cash
Consideration and the Class B Stock Consideration.
(c) Parent may revoke the Stock Election at any time, provided that no
such revocation may be made if such revocation would make it reasonably
necessary, based upon the advice of the Company's independent counsel, to delay
the Company Stockholder Meeting. Following any such revocation, the Class A
Merger Consideration shall again be $1,300 and the Class B Merger Consideration
shall again be $26. As soon as practicable after any such revocation, Parent and
the Company shall issue a joint press release announcing such revocation.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein; PROVIDED, HOWEVER, that an item included on a Company Disclosure
Schedule with respect to any section or subsection of this Agreement shall be
deemed to relate to each other section or subsection of this Agreement but only
to the extent that such relationship is reasonably inferable), the Company
hereby represents and warrants to each of Parent and Merger Sub as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The
Company and each of its subsidiaries is a corporation or legal entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate, partnership
or similar power and authority to own, lease and operate its properties and to
carry on its businesses as now conducted and proposed by the Company to be
conducted, except where the failure to be duly organized, existing and in good
standing or to have such power and authority would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the ability
of the Company to consummate the Merger or perform its obligations hereunder.
(b) Section 3.1 of the Company Disclosure Schedule sets forth a list
of all subsidiaries of the Company. Except as listed in Section 3.1 of the
Company Disclosure Schedule, the Company does not own, directly or indirectly,
beneficially or of record, any shares of stock or other security of any other
entity or any other investment in any other entity, that would be a subsidiary
of the Company.
(c) The Company and each of its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be duly organized, existing and in good standing or to have such power and
authority would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the ability of the Company to consummate
the Merger or perform its obligations hereunder.
(d) The Company has heretofore delivered to Parent accurate and
complete copies of the Charter and bylaws, as currently in effect, of the
Company.
SECTION 3.2 CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES;
CERTAIN INFORMATION REGARDING THE PUBLIC INVESTEES. (a) The authorized stock of
the Company consists of: (i) 15,543,012 Class A Shares, of which 882,171.302
Class A Shares were issued and outstanding as of the close of business on
November 30, 2001, (ii) 234,199,346 Class B Shares, of which 93,827,130 Class B
Shares were issued and outstanding as of the close of business on November 30,
2001, and (iii) 257,642 shares of Preferred Stock, of which 257,642 shares were
issued
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and outstanding as of the close of business on November 30, 2001. All of
the issued and outstanding Shares and shares of Preferred Stock have been
validly issued, and are duly authorized, fully paid, non-assessable and free of
preemptive rights. As of November 30, 2001, 8,769,035 Class B Shares and 133,105
Class A Shares were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding Company Stock Options
and 1,305,350 shares were reserved for issuance under Restricted Stock Units
issued pursuant to the Company Option Plans. Except as set forth in Section
3.2(a) of the Company Disclosure Schedule, since November 30, 2001, no shares of
the Company's stock have been issued other than pursuant to Company Stock
Options already in existence on such date or upon conversion of Convertible
Notes or vesting of Restricted Stock Units, and, since November 30, 2001, no
Company Stock Options or Restricted Stock Units have been granted. Except as set
forth above, and except for the conversion of outstanding shares of Preferred
Stock into a maximum of 6,606,205 Class B Shares, the conversion of the
Company's 6.5% Convertible Subordinated Debentures due 2016 (the "CONVERTIBLE
NOTES") into a maximum of 195,982 Class A Shares and the issuance of securities
upon the exercise, exchange or redemption of the Rights, as of the date hereof,
there are outstanding (i) no shares of stock or other voting securities of the
Company; (ii) no securities of the Company or any of its subsidiaries
convertible into or exchangeable for shares of stock or voting securities of the
Company; (iii) no options or other rights to acquire from the Company or any of
its subsidiaries, and no obligations of the Company or any of its subsidiaries
to issue, any stock, voting securities or securities convertible into or
exchangeable for stock or voting securities of the Company; and (iv) no equity
equivalents, interests in the ownership or earnings of the Company or any of its
subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "COMPANY SECURITIES"). There are no outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. Section 3.2(a) of the Company Disclosure
Schedule sets forth information regarding the current exercise price, date of
grant and number granted of Company Stock Options for each holder thereof.
Following the Effective Time, no holder of Company Stock Options will have any
right to receive shares of stock of the Surviving Corporation upon exercise of
the Company Stock Options.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding stock of the Company's subsidiaries is owned by
the Company, directly or indirectly, free and clear of any Lien (as hereinafter
defined) or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided as a matter of
Law). There are no securities of the Company or its subsidiaries convertible
into or exchangeable for, no options or other rights to acquire from the Company
or its subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly of, any stock or other ownership interests in, or any
other securities of, any subsidiary of the Company. There are no outstanding
obligations of the Company or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of stock or other ownership interests
in any subsidiary of the Company. Except as set forth in Section 3.2(b) of the
Company Disclosure Schedule, there are no stockholder agreements, voting trusts
or other agreements or understandings to which the Company or any of its
subsidiaries is bound relating to the voting of any shares of stock of the
Company or any subsidiary of the Company. For purposes of this Agreement, "LIEN"
means, with respect to any asset (including any security) any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
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(c) Section 3.2(c) of the Company Disclosure Schedule sets forth, for
each Public Investee, the amount and nature of all securities of such Public
Investee owned by the Company and its subsidiaries. To the knowledge of the
Company, each of the outstanding shares of stock of each Public Investee is duly
authorized, validly issued, fully paid and nonassessable (to the extent such
concepts are recognized in the applicable jurisdiction), and is owned by the
Company and its subsidiaries free and clear of all Liens (other than as set
forth in Section 3.2(c) of the Company Disclosure Schedule) and has not been
issued in violation of any preemptive or similar rights. Other than as set forth
in Section 3.2(c) of the Company Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance,
sale, transfer or voting of any securities of any Public Investee to which the
Company or any of its subsidiaries is a party or otherwise bound.
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT; STOCKHOLDER
APPROVAL. (a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the Merger. No other
corporate proceedings on the part of the Company or any of its subsidiaries are
necessary to authorize this Agreement or to consummate the Merger (other than,
with respect to the Merger and this Agreement, to the extent required by Law,
the Company Requisite Vote (as hereinafter defined)). This Agreement has been
duly and validly executed and delivered by the Company and constitutes a valid,
legal and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(b) The Company Board has, by unanimous vote of those present, duly
and validly authorized the execution and delivery of this Agreement and approved
the consummation of the Merger, and taken all corporate actions required to be
taken by the Company Board for the consummation of the Merger. The Company Board
has directed that this Agreement be submitted to the stockholders of the Company
for their approval to the extent required by Law. The affirmative approval of
the holders of Shares representing a majority of the votes that may be cast by
the holders of all outstanding Shares and shares of Preferred Stock (voting
together as a single class) as of the record date for the Company Stockholder
Meeting (the "COMPANY REQUISITE VOTE") is the only vote of the holders of any
class or series of stock of the Company necessary to adopt this Agreement and
approve the Merger.
SECTION 3.4 REPORTS; FINANCIAL STATEMENTS. (a) The Company has filed
all required forms, reports and documents with the SEC since January 1, 1998,
each of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and the Exchange Act, each as in effect on the dates such forms, reports and
documents were filed. The Company has heretofore delivered to Parent, in the
form filed with the SEC (including any amendments thereto), (i) its Annual
Reports on Form 10-K for each of the fiscal years ended December 31, 1998, 1999
and 2000, respectively, (ii) all definitive proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
January 1, 1998, and (iii) all other reports or registration statements filed by
the Company with the SEC since January 1, 1998 (the "COMPANY SEC REPORTS"). None
of such forms, reports or documents, including any financial statements or
schedules included or incorporated by reference therein, contained, when filed,
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
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were made, not misleading. The consolidated financial statements of the Company
included in the Company SEC Reports complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto and fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis ("GAAP") (except as
may be indicated in the notes thereto), the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments). Since January 1, 1998, there has
not been any change, or any application or request for any change, by the
Company or any of its subsidiaries in accounting principles, methods or policies
for financial accounting or Tax purposes (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
(b) The Company and each of its subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1998 with any U.S., state or foreign regulatory authorities or
self-regulatory organization (each, a "REGULATORY AGENCY" "), and have paid all
material fees and assessments due and payable in connection therewith. Except
for normal examinations conducted by a Regulatory Agency in the regular course
of the business of the Company and its subsidiaries, no Regulatory Agency has
initiated any proceeding or investigation or, to the knowledge of the Company,
threatened any investigation into the business or operations of the Company or
any of its subsidiaries since December 31, 1998, except for such proceedings or
investigations which would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the Company and its subsidiaries
taken as a whole.
SECTION 3.5 NO UNDISCLOSED LIABILITIES. Except as and to the extent
publicly disclosed by the Company in the Company SEC Reports, as of December 31,
2000 (the "AUDIT DATE"), none of the Company or its subsidiaries had any
liabilities or material obligations of any nature, whether or not accrued,
contingent or otherwise, and whether due or to become due or asserted or
unasserted, except for any such liabilities or obligations which do not or which
would not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Company and its subsidiaries taken as a whole.
SECTION 3.6 ABSENCE OF CHANGES. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports filed prior to the date of
this Agreement, since the Audit Date the business of the Company and its
subsidiaries has been carried on only in the ordinary and usual course
consistent with past practice, none of the Company or its subsidiaries has
incurred any liabilities of any nature, whether or not accrued, contingent or
otherwise, which do or which would reasonably be expected to have, and there
have been no events, changes or effects with respect to the Company or its
subsidiaries, which do or which would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries taken as a whole.
SECTION 3.7 PROXY STATEMENT. The proxy statement relating to the
Merger (the "PROXY STATEMENT") will not, on the date the Proxy Statement
(including any amendment or supplement thereto) is first mailed to stockholders
of the Company, contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary in
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order to make the statements made therein, in light of the circumstances under
which they are made, not misleading or shall, at the time of the Company
Stockholder Meeting or at the Effective Time, omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies which shall have become false or misleading in any
material respect. The Proxy Statement will, when filed by the Company with the
SEC, comply as to form in all material respects with the applicable provisions
of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
the statements made in any of the foregoing documents based on and in conformity
with information supplied in writing by or on behalf of Parent or Merger Sub
specifically for inclusion therein.
SECTION 3.8 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), the European Community's Council Regulation
(EC) 4064/89 of 21 December 1989 on the control of concentrations between
undertakings, as amended (the "ECMR"), or any other Antitrust Law (as
hereinafter defined), the filing and recordation of the Articles of Merger as
required by the MGCL and as otherwise set forth in Section 3.8 to the Company
Disclosure Schedule, no filing with or notice to, and no material permit,
authorization, consent or approval of, (i) any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"GOVERNMENTAL ENTITY") or (ii) any other third party, is necessary for the
execution and delivery by the Company of this Agreement or the consummation by
the Company of the Merger, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice does not, as of the date hereof, question the validity of this Agreement
or any action to be taken by the Company in connection with the consummation of
the Merger and would not otherwise prevent or delay the consummation of the
Merger, reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Company and its subsidiaries taken as a whole.
Except as set forth on Schedule 3.8 of the Company Disclosure Schedule, neither
the execution, delivery and performance of this Agreement by the Company nor the
consummation by the Company of the Merger will (i) conflict with or result in
any breach of any provision of the respective charters or bylaws (or similar
governing documents) of the Company or any of its subsidiaries, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien or result in the reduction or loss of any
benefit) under, any of the terms, conditions or provisions of any material note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound or any Company Permit (as hereinafter defined), (iii) violate any
Law applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, or (iv) to the knowledge of the Company, result
in the loss by any Public Investee of its status as a REIT (as hereinafter
defined), in each case with respect to (i), (ii) and (iii) above, except as does
not or which would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Company and its subsidiaries taken
as a whole. For purposes of this Agreement, "ANTITRUST LAW" means the ▇▇▇▇▇▇▇
Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, the ECMR, and all other Laws that are designed or
intended to prohibit, restrict or regulate actions having the pur-
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pose or effect of monopolization or restraint of trade or creation or
strengthening of a dominant position or lessening of competition through merger
or acquisition.
SECTION 3.9 NO DEFAULT. Neither the Company nor any of its
subsidiaries is in violation of any term of (i) its charter, bylaws or other
organizational documents, (ii) any agreement or instrument related to
indebtedness for borrowed money or any other agreement to which it is a party or
by which it is bound, or (iii) any foreign or domestic law, order, writ,
injunction, decree, ordinance, award, stipulation, statute, judicial or
administrative doctrine, rule or regulation entered by a Governmental Entity
("LAW") applicable to the Company, its subsidiaries or any of their respective
properties or assets, except for violations which do not or which would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Company and its subsidiaries taken as a whole.
SECTION 3.10 LITIGATION. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports filed prior to the date of
this Agreement or as listed on Section 3.10 of the Company Disclosure Schedule,
there is no material suit, claim, action, proceeding or investigation pending
or, to the Company's knowledge, threatened against the Company or any of its
Subsidiaries or any of their respective properties or assets which (a) involves
amounts in excess of $1,000,000 or (b) questions the validity of this Agreement
or any action to be taken by the Company in connection with the consummation of
the Merger. Except as and to the extent publicly disclosed by the Company in the
Company SEC Reports filed prior to the date of this Agreement, none of the
Company or its Subsidiaries is subject to any outstanding order, writ,
injunction or decree, which has or which would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries taken as a whole.
SECTION 3.11 COMPLIANCE WITH APPLICABLE LAW. The Company and each of
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "COMPANY PERMITS"), except for Company Permits the
absence of which does not or which would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries taken as a whole. The Company and each of its subsidiaries are
in compliance with the terms of the Company Permits, except as does not or which
would reasonably be expected not to have, individually or in the aggregate, a
material adverse effect on the Company and its subsidiaries taken as a whole.
The businesses of the Company and each of its subsidiaries are not being
conducted in violation of any Law applicable to the Company or its subsidiaries,
except as does not or which would reasonably be expected not to have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries taken as a whole. To the Company's knowledge, no investigation
or review by any Governmental Entity with respect to the Company or its
subsidiaries is pending or threatened, nor, to the Company's knowledge, has any
Governmental Entity indicated an intention to conduct the same, except for such
investigations or reviews as do not or which would reasonably be expected not to
have, individually or in the aggregate, a material adverse effect on the Company
and its subsidiaries taken as a whole.
SECTION 3.12 PROPERTIES. (a) Section 3.12(a) of the Company Disclosure
Schedule sets forth a complete and accurate list and the address of all real
property owned or
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leased by the Company or otherwise used by the Company in the conduct of its
businesses or operations (collectively, and together with the land at each
address referenced in Section 3.12(a) of the Company Disclosure Schedule and all
buildings, structures and other improvements and fixtures located on or under
such land and all easements, rights and other appurtenances to such land, the
"COMPANY PROPERTIES"). Each of the Company Properties is owned or leased by the
Company, as indicated in Section 3.12(a) of the Company Disclosure Schedule. To
the Company's knowledge, the Company owns or, if so indicated in Section 3.12(a)
of the Company Disclosure Schedule, leases each of the Company Properties, in
each case free and clear of any Liens, title defects, contractual restrictions
or covenants, laws, ordinances or regulations affecting use or occupancy
(including zoning regulations and building codes) or reservations of interests
in title (collectively, "PROPERTY RESTRICTIONS"), except for (i) Permitted Liens
and (ii) Property Restrictions imposed or promulgated by law or by any
Government Authority which are customary and typical for similar properties or
(iii) Property Restrictions which do not or which would reasonably be expected
not to have, individually or in the aggregate, a material adverse effect on the
Company and its subsidiaries taken as a whole. To the Company's knowledge, none
of the matters described in clauses (i) and (ii) above does or would reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on the Company and its subsidiaries taken as a whole. For purposes of this
Agreement, "PERMITTED LIENS" means (i) Liens for Taxes not yet due or delinquent
or as to which there is a good faith dispute and for which there are adequate
reserves on the financial statements of the Company, (ii) with respect to real
property, any Lien, encumbrance or other title defect which is not in a
liquidated amount (whether material or immaterial) and which does not,
individually or in the aggregate, interfere materially with the current use or
materially detract from the value or marketability of such property (assuming
its continued use in the manner in which it is currently used) and (iii)
inchoate materialmen's, mechanics', carriers', workmen's and repairmen's liens
arising in the ordinary course and not past due and payable or the payment of
which is being contested in good faith by appropriate proceedings. To the
Company's knowledge, the Company Properties are adequate to permit the use
thereof in the manner they are currently utilized by the Company, except as does
not or would reasonably be expected not to have, individually or in the
aggregate, a material adverse effect on the Company and its subsidiaries taken
as a whole.
(b) The Company and each of its subsidiaries have good and sufficient
title to all the personal and non-real properties and assets reflected in their
books and records as being owned by them (including those reflected in the
balance sheets of the Company and its subsidiaries as of September 30, 2001,
except as since sold or otherwise disposed of in the ordinary course of
business), free and clear of all Liens, except for Permitted Liens, except as
does not or which would reasonably be expected not to have, individually or in
the aggregate, a material adverse effect on the Company and its subsidiaries
taken as a whole.
SECTION 3.13 EMPLOYEE PLANS. (a) Section 3.13(a) of the Company
Disclosure Schedule sets forth a list of all material "employee benefit plans,"
as defined in Section 3(3) of the Employment Retirement Income Security Act of
1974, as amended ("ERISA"), and all other employee benefit plans or other
benefit arrangements or payroll practices including bonus plans, executive
compensation, consulting or other compensation agreements, change in control
agreements, incentive, equity or equity-based compensation, or deferred
compensation arrangements, stock purchase, severance pay, sick leave, vacation
pay, salary continuation for disability, hospitalization, medical insurance,
life insurance, scholarship programs, directors' benefit, bonus
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or other incentive compensation and any Foreign Plan (as defined in Section
3.13(i)), which the Company or any of its majority owned subsidiaries sponsors,
maintains, contributes to or has any obligation to contribute to (each an
"EMPLOYEE BENEFIT PLAN" and collectively, the "EMPLOYEE BENEFIT PLANS"). Except
as separately set forth on Section 3.13(a) of the Company Disclosure Schedule,
none of the Employee Benefit Plans is subject to Title IV of ERISA ("TITLE IV
PLANS"), or is or has been subject to Sections 4063 or 4064 of ERISA, nor has
the Company, its subsidiaries or any trade or business (whether or not
incorporated) which is or has ever been under common control, or which is or has
ever been treated as a single employer, with the Company or any subsidiary under
Section 414(b), (c), (m) or (o) of the Code ("ERISA AFFILIATE") ever been
obligated to contribute to a multiemployer plan, as defined in Section 3(37) of
ERISA (a "MULTIEMPLOYER PLAN").
(b) True, correct and complete copies of the following documents, with
respect to each of the Employee Benefit Plans and Title IV Plans (other than a
Multiemployer Plan) have been made available or delivered to Parent by the
Company: (i) any plans and related trust documents, and amendments thereto; (ii)
the three most recent Forms 5500 and schedules thereto, if applicable; (iii) the
most recent Internal Revenue Service ("IRS") determination letter, if
applicable; (iv) the three most recent financial statements and actuarial
valuations, if applicable; and (v) summary plan descriptions, if applicable.
(c) As of the date hereof, except as would not reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the
Company and its subsidiaries taken as a whole, (i) the Company and its
subsidiaries have performed all material obligations required to be performed by
them under any Employee Benefit Plan; (ii) the Employee Benefit Plans, have been
administered in material compliance with their terms and the requirements of
ERISA, the Code and other applicable Laws; (iii) there are no material actions,
suits, arbitrations or claims (other than routine claims for benefit) pending or
threatened with respect to any Employee Benefit Plan; and (iv) the Company and
its subsidiaries have no material liability as a result of any "prohibited
transaction" (as defined in Section 406 of ERISA and Section 4975 of the Code)
for any excise Tax or civil penalty.
(d) Neither the Company nor any of its ERISA Affiliates are subject to
any unsatisfied withdrawal liability with respect to any Multiemployer Plan.
(e) Each of the Employee Benefit Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
determination letter from the IRS to the effect that such plan is "qualified"
and that the trusts maintained pursuant thereto are exempt from federal income
taxation under Section 501 of the Code. The Company knows of no fact which would
adversely affect the qualified status of any such Pension Plan or the exemption
of such trust, in either case, that cannot be corrected without a material
adverse effect on the Company and its subsidiaries taken as a whole.
(f) None of the Employee Benefit Plans provide for continuing
post-employment health or life insurance coverage for any participant or any
beneficiary of a participant except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended.
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(g) Except as set forth in Section 3.13(g) of the Company Disclosure
Schedule, no stock or other security issued by the Company forms or has formed a
material part of the assets of any Employee Benefit Plan.
(h) Neither the execution and delivery of this Agreement nor the
consummation of the Merger will by itself or in combination with any other event
(i) result in any material payment becoming due, or materially increase the
amount of compensation due, to any current or former employee of the Company or
any of its subsidiaries; (ii) materially increase any benefits otherwise payable
under any Employee Benefit Plan; or (iii) result in the acceleration of the time
of payment or vesting of any such material benefits.
(i) With respect to each Employee Benefit Plan that is maintained
primarily for employees in a jurisdiction outside the United States (the
"FOREIGN PLANS") except as does not or which would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the Company
and its subsidiaries taken as a whole:
(i) all employer and employee contributions to each Foreign
Plan required by law or by the terms of such Foreign Plan have been made, or, if
applicable, accrued in accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded
Foreign Plan, the liability of each insurer for any Foreign Plan funded through
insurance or the book reserve established for any Foreign Plan, together with
any accrued contributions, is sufficient to procure or provide for the accrued
benefit obligations, as of the Closing Date, with respect to all current or
former participants in such plan according to the actuarial assumptions and
valuations most recently used to determine employer contributions to such
Foreign Plan and no transaction contemplated by this Agreement shall cause such
assets or insurance obligations to be less than such benefit obligations; and
(iii) each Foreign Plan required to be registered has been
registered and has been maintained in good standing with applicable regulatory
authorities.
(j) Except as does not or which would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the Company
and its subsidiaries taken as a whole, any individual who performs services for
the Company or any of is subsidiaries (other than through a contract with an
organization other than such individual) and who is not treated as an employee
of the Company or any of its subsidiaries for federal income tax purposes by the
Company or one of its subsidiaries is not an employee for such purposes.
SECTION 3.14 LABOR MATTERS. (a) Section 3.14(a) of the Company
Disclosure Schedule sets forth a list of all employment, labor or collective
bargaining agreements to which the Company or any subsidiary is party and,
except as set forth therein, there are no employment, labor or collective
bargaining agreements which pertain to employees of the Company or any of its
subsidiaries. The Company has heretofore made available to Parent true and
complete copies of (i) the employment agreements listed on Section 3.14(a) of
the Company Disclosure Schedule or a form thereof and (ii) the labor or
collective bargaining agreements listed on Section 3.14(a)
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of the Company Disclosure Schedule, together with all material amendments,
modifications, supplements and side letters affecting the duties, rights and
obligations of any party thereunder.
(b) Except as set forth on Section 3.14(b) of the Company Disclosure
Schedule or as would not reasonably be expected to have, individually or in the
aggregate a material adverse effect on the Company and its subsidiaries taken as
a whole, (i) no employees of the Company or any of its subsidiaries are
represented by any labor organization; (ii) no labor organization or group of
employees of the Company or any of its subsidiaries has made a pending demand
for recognition or certification; (iii) to the Company's knowledge, there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority, and (iv) to the Company's knowledge, there are
no organizing activities involving the Company or any of its subsidiaries
pending with any labor organization or group of employees of the Company or any
of its subsidiaries.
(c) Except as would not reasonably be expected to have, individually
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries taken as a whole there are no unfair labor practice charges,
grievances or complaints pending or threatened in writing by or on behalf of any
employee or group of employees of the Company or any of its subsidiaries.
(d) Except as would not reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the Company and its
subsidiaries taken as a whole there are no complaints, charges or claims against
the Company or any of its subsidiaries pending, or threatened in writing to be
brought or filed, with any Governmental Entity or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by the Company or any of its
subsidiaries.
(e) Except as would not reasonably be expected to have, individually
or in the aggregate, (i) a material adverse effect on the Company and its
subsidiaries taken as a whole, the Company and each of its subsidiaries is in
compliance with all Laws relating to the employment of labor, including all such
Laws relating to wages, hours, the Worker Adjustment and Retraining Notification
Act and any similar state or local "mass layoff" or "plant closing" Law
("WARN"), collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security Taxes and any similar Tax, except for immaterial
non-compliance; and (ii) there has been no "mass layoff" or "plant closing" as
defined by WARN with respect to the Company or any of its subsidiaries within
the last six (6) months.
SECTION 3.15 ENVIRONMENTAL MATTERS. (a) Except as disclosed on Section
3.15 of the Company Disclosure Schedule and except for conditions that would not
reasonably be expected to result in a material adverse effect on the Company and
its subsidiaries taken as a whole, to the knowledge of the Company, (i) the
Company and its majority owned subsidiaries and all real property owned by the
Company and its majority owned subsidiaries are in compliance with Environmental
Laws; (ii) the Company and its majority owned subsidiaries have obtained and
currently possess and maintain all Permits required by Environmental Laws
(collectively, "ENVIRONMENTAL PERMITS") for each of their respective operations,
all such Environ-
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mental Permits are in good standing, and the Company and its majority owned
subsidiaries are in compliance with the terms and conditions of such
Environmental Permits; (iii) neither the Company and its majority owned
subsidiaries nor any real property currently owned by the Company or its
majority owned subsidiaries is subject to any pending Environmental Claim as to
which the Company has been provided written notice.
(b) To the Company's knowledge, the Company has made available to
Parent copies of all environmental reports which are in the possession of the
Company and were conducted within 24 months prior to the date hereof by private
parties or regulators relating to the operations of the Company and its
subsidiaries or any real property owned by the Company or its subsidiaries.
As used in this Agreement:
"ENVIRONMENTAL CLAIMS" means any and all written administrative,
regulatory, judicial or third-party claims, demands, notices of violation or
non-compliance, directives, proceedings, investigations, orders, decrees,
judgments or other allegations of noncompliance with or liability or potential
liability relating in any way to any Environmental Law or any Environmental
Permit.
"ENVIRONMENTAL COSTS AND LIABILITIES" means, with respect to any
person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand by any other person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, including any
thereof arising under any Environmental Law, Permit, order or agreement with any
Governmental Entity or other person, which relate to any environmental, health
or safety condition or a Release or threatened Release, and result from the
past, present or future operations of, or ownership of property by, such person
or any of its subsidiaries.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and foreign
laws, rules and regulations, orders, judgments, decrees and other legal
requirements relating to pollution or the regulation and protection of human
health, safety, the environment or natural resources, including, but not limited
to, the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. ss. 9601 ET SEQ.); the Hazardous Material
Transportation Act, as amended (49 ▇.▇.▇.▇▇. 180 ET SEQ.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 ▇.▇.▇.▇▇. 136 ET
SEQ.); the Resource Conservation and Recovery Act, as amended (42 ▇.▇.▇.▇▇. 6901
ET SEQ.); the Toxic Substance Control Act, as amended (42 ▇.▇.▇.▇▇. 7401 ET
SEQ.); the Clean Air Act, as amended (42 ▇.▇.▇.▇▇. 740 ET SEQ.); the Federal
Water Pollution Control Act, as amended (33 ▇.▇.▇.▇▇. 1251 ET SEQ.); the
Occupational Safety and Health Act, as amended (29 ▇.▇.▇.▇▇. 651 ET SEQ.); the
Safe Drinking Water Act, as amended (42 ▇.▇.▇.▇▇. 300f ET SEQ.); and their state
and local counterparts or equivalents and any transfer of ownership notification
or approval statute.
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"HAZARDOUS MATERIAL" means any material, substance or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including any petroleum or petroleum-derived
substance or waste, friable asbestos, indoor mold, urea formaldehyde insulation,
and polychlorinated biphenyls.
"RELEASE" means, with respect to any person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration, in each case, of any Hazardous Material into the
environment or into or out of any property owned by such person, including the
movement of Hazardous Material through or in the air, soil, surface water,
ground water or property.
"REMEDIAL ACTION" means all actions required to (a) clean up,
remove, treat or in any other way address any Hazardous Material in the indoor
or outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release so that a Hazardous Material does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
SECTION 3.16 TAX MATTERS. (a) All federal and all other material Tax
Returns (as hereinafter defined) required to be filed by or on behalf of the
Company or any of its subsidiaries have been filed with the appropriate taxing
authorities in all jurisdictions in which such Tax Returns are required to be
filed (after giving effect to any valid extensions of time in which to make such
filings), and all such Tax Returns were true, complete and correct in all
material respects. Except as and to the extent publicly disclosed by the Company
in the Company SEC Reports, (i) as of the Audit Date, all Taxes payable by or on
behalf of the Company or any of its subsidiaries have been fully and timely paid
or adequately provided for in accordance with GAAP, and (ii) adequate reserves
or accruals for Taxes have been provided in accordance with GAAP with respect to
any period for which Tax Returns have not yet been filed or for which Taxes are
not yet due and owing. Except as set forth on Section 3.16(a) of the Company
Disclosure Schedule, as of the date hereof neither the Company nor any of its
subsidiaries has executed or filed with the IRS or any other taxing authority
any agreement, waiver or other document or arrangement extending or having the
effect of extending the period for assessment or collection of material Taxes
(including, but not limited to, any applicable statute of limitation), and no
power of attorney with respect to any Tax matter is currently in force.
(b) Except as set forth on Section 3.16(b) of the Company Disclosure
Schedule, as of the date hereof all material deficiencies asserted or
assessments made as a result of any examinations by the IRS or any other taxing
authority of the Tax Returns of or covering or including the Company or any of
its subsidiaries have been fully paid, and there are no other audits relating to
any material taxes by any taxing authority in progress, nor have the Company or
any of its subsidiaries received any notice from any taxing authority that it
intends to conduct such an audit.
(c) The Company and its subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and have duly and timely withheld from employee
salaries, wages and other compensation and has
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paid over to the appropriate taxing authorities all material amounts required to
be so withheld and paid over for all periods under all applicable Laws.
(d) Parent has had access to complete copies of (A) all federal and
other material Tax Returns of the Company and its subsidiaries relating to the
taxable periods ending since December 31, 1998 which have been filed and (B) any
audit report issued within the last five years relating to any material Taxes
due from or with respect to the Company or any of its subsidiaries.
(e) Except as set forth on Section 3.16(e) of the Company Disclosure
Schedule, no claim has been made in writing by a taxing authority in a
jurisdiction where the Company or any of its subsidiaries does not file Tax
Returns such that the Company or any such subsidiary is or may be subject to
taxation by that jurisdiction.
(f) Except as set forth on Section 3.16(f) of the Company Disclosure
Schedule, neither the Company nor any other person on behalf of the Company or
any of its subsidiaries has requested any extension of time within which to file
any material income Tax Return, which material income Tax Return has since not
been filed.
(g) Except as set forth on Section 3.16(g) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any tax
sharing or similar agreement or arrangement (with any person other than the
Company and/or any of its subsidiaries) pursuant to which it will have any
obligation to make any payments after the Closing.
(h) Neither the Company nor any of its subsidiaries is subject to any
private letter ruling of the IRS or comparable rulings of other taxing
authorities.
(i) For purposes of this Agreement, "TAX" or "TAXES" shall mean all
taxes, charges, fees, imposts, levies, gaming or other assessments, including
all net income, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated Taxes, customs duties, fees, assessments and
charges of any kind whatsoever, together with any interest and any penalties,
fines, additions to Tax or additional amounts imposed by any taxing authority
(domestic or foreign) and shall include any transferee or successor liability in
respect of Taxes, any liability in respect of Taxes under Treasury Regulation
Section 1.1502-6 or any similar provision of state, local or foreign Law, or
imposed by contract, Tax sharing agreement, Tax indemnity agreement or any
similar agreement. "TAX RETURNS" shall mean any report, return, document,
declaration or any other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to Taxes,
including information returns, any document with respect to or accompanying
payments or estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return document, declaration
or other information. For purposes of this Section 3.16, the definition of
"subsidiary" contained in Section 9.11(x) shall be applied by substituting "50%"
for "10%" in clause (iii) of such definition.
SECTION 3.17 ABSENCE OF QUESTIONABLE PAYMENTS. To the Company's
knowledge, neither the Company nor any of its subsidiaries nor, any director,
officer, agent, employee or other person acting on behalf of the Company or any
of its subsidiaries, has used any
-20-
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Exchange Act. To the
knowledge of the Company, neither the Company nor any of its subsidiaries nor,
any director, officer, agent, employee or other person acting on behalf of the
Company or any of its subsidiaries, has accepted or received any unlawful
contributions, payments, gifts, or expenditures. To the Company's knowledge, the
Company and each of its subsidiaries which is required to file reports pursuant
to Section 12 or 15(d) of the Exchange Act is in compliance with the provisions
of Section 13(b) of the Exchange Act.
SECTION 3.18 MATERIAL CONTRACTS. (a) Section 3.18 of the Company
Disclosure Schedule sets forth a list of all Material Contracts (as hereinafter
defined). The Company has heretofore made available to Parent true, correct and
complete copies of all written contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which the Company
or any of its subsidiaries is a party affecting the obligations of any party
thereunder) with any of the Public Investees relating to the Company's
investments in the Public Investees, and all material written contracts and
agreements (and all amendments, modifications and supplements thereto and all
side letters to which the Company or any of its subsidiaries is a party
affecting the obligations of any party thereunder) to which the Company or any
of its subsidiaries is a party or by which any of its properties or assets are
bound that are material to the business, properties or assets of the Company and
its subsidiaries taken as a whole (taking into account only the Company's
ownership interest in each of its subsidiaries), including to the extent any of
the following are, individually or in the aggregate, material to the business,
properties or assets of the Company and its subsidiaries taken as a whole
(taking into account only the Company's ownership interest in each of its
subsidiaries), all material: (i) employment, severance, change in control,
termination, personal services, consulting, non-competition or indemnification
contracts (including any contract to which the Company or any of its
subsidiaries is a party involving employees of the Company); (ii) contracts
granting a right of first refusal or first negotiation; (iii) partnership or
joint venture agreements; (iv) agreements for the acquisition, sale or lease of
material properties or assets of the Company (by merger, purchase or sale of
assets or stock or otherwise) entered into since January 1, 1998; (v) contracts
or agreements with any Governmental Entity; (vi) loan or credit agreements,
mortgages, indentures or other agreements or instruments evidencing indebtedness
for borrowed money by the Company or any of its subsidiaries or any such
agreement pursuant to which indebtedness for borrowed money may be incurred;
(vii) agreements that purport to limit, curtail or restrict the ability of the
Company or any of its subsidiaries to compete in any geographic area or line of
business, or to hire or solicit the hire for employment of any individual or
group; (viii) contracts or agreements that would be required to be filed as an
exhibit to a Form 10-K filed by the Company with the SEC on the date hereof; and
(ix) commitments and agreements to enter into any of the foregoing (such
contracts and agreements, the "MATERIAL CONTRACTS").
(b) Each of the Material Contracts constitutes the valid and legally
binding obligation of the Company or its subsidiaries, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and is in full force and effect, except as
would not reasonably be expected to result in a material adverse effect on the
Company and its subsidiaries
-21-
taken as a whole. To the Company's knowledge, there is no default under any
Material Contract so listed by the Company as would reasonably be expected to
result in a material adverse effect on the Company and its subsidiaries taken as
a whole. The Company has provided to Parent a complete and correct copy of each
of the Storage USA Transaction Agreements.
SECTION 3.19 INSURANCE. The Company and its subsidiaries maintain
insurance policies and performance bonds on their respective properties and
assets, and with respect to their employees and operations, with reputable
insurance carriers, and such insurance policies provide full and adequate
coverage for all normal risks incident to the business of the Company and its
subsidiaries and their respective properties and assets and are in character and
amount at least equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards. The Company and
its subsidiaries are not in default under any of their insurance policies and
have paid all premiums owed thereunder, and no claims for coverage thereunder
have been denied.
SECTION 3.20 INTELLECTUAL PROPERTY. (a) Section 3.20 of the Company
Disclosure Schedule sets forth a list of all material Intellectual Property (as
hereinafter defined) of the Company and its subsidiaries.
(b) The Company and its subsidiaries own or possess adequate licenses
or other valid rights to use (in each case, free and clear of any Liens), all
material Intellectual Property used or held for use in connection with the
business of the Company and its subsidiaries as currently conducted or as
contemplated to be conducted.
(c) To the knowledge of the Company, the use of any material
Intellectual Property by the Company and its subsidiaries does not infringe on
or otherwise violate the rights of any person and is in accordance with any
applicable license pursuant to which the Company or any of its subsidiaries
acquired the right to use any Intellectual Property.
(d) No person is challenging, infringing on or otherwise violating any
right of the Company or any of its subsidiaries with respect to any material
Intellectual Property owned by and/or licensed to the Company or its
subsidiaries.
(e) Neither the Company nor any of its subsidiaries has received any
notice written or otherwise of any assertion or claim, pending or not, with
respect to any material Intellectual Property used by the Company or its
subsidiaries.
(f) No Intellectual Property owned/or licensed by the Company or its
subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property. For
purposes of this Agreement, "INTELLECTUAL PROPERTY" means (i) all trademarks,
trademark rights, trade names, trade name rights, trade dress and other
indications of origin, corporate names, brand names, logos, certification
rights, service marks, applications for trademarks and for service marks,
know-how and other proprietary rights and information, the goodwill associated
with the foregoing and registration in any jurisdiction of, and applications in
any jurisdictions to register, the foregoing, including any extension,
modification or renewal of any such registration or application; (ii) all
inventions, discoveries and ideas (whether patentable or unpatentable and
whether or not reduced to practice), in any juris-
-22-
diction, all improvements thereto, and all patents, patent rights, applications
for patents (including divisions, continuations, continuations in part and
renewal applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; (iii) nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; (iv) writings and other works, whether copyrightable or
not, in any jurisdiction, and all registrations or applications for registration
of copyrights in any jurisdiction, and any renewals or extensions thereof; (v)
all mask works and all applications, registrations and renewals in connection
therewith, in any jurisdiction; (vi) all computer software (including data and
related documentation); (vii) any similar intellectual property or proprietary
rights; and (viii) all copies and tangible documentation thereof and any claims
or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
SECTION 3.21 OPINION OF FINANCIAL ADVISOR. The Financial Advisor has
delivered to the Company Board its opinion, dated the date of this Agreement, to
the effect that, as of such date, the consideration to be received in the Merger
by the Company's stockholders is fair to the Company's stockholders from a
financial point of view, and such opinion has not been withdrawn or modified.
The Company has been authorized by the Financial Advisor to permit the inclusion
of such opinion in its entirety in the Proxy Statement, so long as such
inclusion is in form and substance reasonably satisfactory to the Financial
Advisor and its counsel.
SECTION 3.22 BROKERS. No broker, finder or investment banker (other
than the Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the Merger
based upon arrangements made by and on behalf of the Company or any of its
affiliates.
SECTION 3.23 TAKEOVER STATUTE. The Company has taken all action
required to be taken by it in order to exempt this Agreement and the Merger
from, and this Agreement and the Merger are exempt from, the requirements of any
"moratorium", "control share", "fair price", "affiliate transaction", "business
combination" or other takeover Laws and regulations of any state (collectively,
"TAKEOVER STATUTES"), including the Maryland Business Combination Act and the
Maryland Control Share Acquisition Act, or any takeover provision in the Charter
and the Company's Amended and Restated Bylaws. The provisions of the Maryland
Business Combination Act and the Maryland Control Share Acquisition Act do not
apply to the Merger.
SECTION 3.24 OWNERSHIP LIMIT. The Company Board has taken all action
required to be taken by it in order to exempt Parent, Merger Sub and each of
their respective affiliates from the Ownership Limit provisions set forth in
Article FIFTH of the Charter.
SECTION 3.25 AMENDMENT TO RIGHTS AGREEMENT. The Company Board has
taken all necessary action (including any amendment thereof) under the Rights
Agreement, dated as of April 21, 1997, between the Company and The First
National Bank of Boston, as Rights Agent (as amended, the "RIGHTS AGREEMENT"),
so that (x) none of the execution or delivery of this Agreement or the
consummation of the Merger will cause (i) the rights (the "RIGHTS") issued
pursuant to the Rights Agreement to become exercisable under the Rights
Agreement, (ii) Parent or Merger Sub to be deemed an "ACQUIRING PERSON" (as
defined in the Rights Agreement), or (iii) the "SHARES ACQUISITION DATE" (as
defined in the Rights Agreement) to occur upon any such
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event and (y) the "FINAL EXPIRATION DATE" (as defined in the Rights Agreement)
of the Rights shall occur immediately prior to the Effective Time.
ARTICLE IV
REPRESENTATION AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered by Parent to
the Company prior to the execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULE") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), Parent
and Merger Sub hereby jointly and severally represent and warrant to the Company
as follows:
SECTION 4.1 ORGANIZATION. (a) Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation and has all requisite corporate,
partnership or similar power and authority to own, lease and operate its
properties and to carry on its businesses as now conducted or proposed by Parent
to be conducted, except where the failure to be duly organized, existing and in
good standing or to have such power would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the ability of
Parent to consummate the Merger or perform its obligations hereunder.
(b) Each of Parent and Merger Sub is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing does not and would not
reasonably be expected to have, individually or in the aggregate, a material
adverse affect on the ability of Parent to consummate the Merger or perform its
obligations hereunder.
(c) Parent has heretofore delivered to the Company accurate and
complete copies of the certificate of incorporation and bylaws of Parent and the
charter and bylaws of Merger Sub as currently in effect.
SECTION 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. (a) Each of Parent
and Merger Sub has all necessary corporate power to execute and deliver this
Agreement and to consummate the Merger contemplated hereby. No other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or to consummate the Merger. This Agreement has been duly and validly
executed and delivered by each of Parent and Merger Sub and constitutes a valid,
legal and binding agreement of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms.
(b) The Boards of Directors of Parent (the "PARENT BOARD") and Merger
Sub and Parent as the sole stockholder of Merger Sub have duly and validly
authorized the execution and delivery of this Agreement and the consummation of
the Merger, and taken all corporate actions required to be taken by such Boards
of Directors and Parent as the sole stockholder of Merger Sub for the
consummation of the Merger.
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SECTION 4.3 PROXY STATEMENT. The information to be provided in writing
by Parent to the Company specifically for use in the Proxy Statement will not
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
made therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, neither Parent nor Merger Sub makes
any representation or warranty with respect to the statements made in any of the
foregoing documents based on and in conformity with information supplied by or
on behalf of the Company specifically for inclusion therein.
SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws, the HSR Act, the ECMR, or any other Antitrust Law,
the filing and recordation of the Articles of Merger as required by the MGCL and
as otherwise set forth in Section 4.4 to the Parent Disclosure Schedule, no
filing with or notice to, and no permit, authorization, consent or approval of,
any Governmental Entity is necessary for the execution and delivery by Parent or
Merger Sub of this Agreement or the consummation by Parent or Merger Sub of the
Merger, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice do not or
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the ability of Parent to consummate the Merger or
perform its obligations hereunder. Neither the execution, delivery and
performance of this Agreement by Parent or Merger Sub nor the consummation by
Parent or Merger Sub of the Merger will (i) conflict with or result in any
breach of any provision of the certificate of incorporation or bylaws (or
similar governing documents) of Parent or the charter or bylaws (or similar
governing documents) of Merger Sub, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien) under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Parent or Merger Sub is a party or by which any of them or
any of their respective properties or assets may be bound or (iii) violate any
Law applicable to Parent or Merger Sub or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or defaults
which do not or would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the ability of Parent to consummate the
Merger or perform its obligations hereunder.
SECTION 4.5 NO PRIOR ACTIVITIES. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the Merger, Merger Sub has neither incurred
any obligation or liability nor engaged in any business or activity of any type
or kind whatsoever or entered into any agreement or arrangement with any person.
SECTION 4.6 BROKERS. No broker, finder or investment banker (other
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by and on
behalf of Parent or Merger Sub or any of their affiliates.
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SECTION 4.7 FINANCIAL CAPACITY. Parent has sufficient financial
capacity, and will cause Merger Sub to have sufficient financial capacity, to
consummate the Merger and the other transactions contemplated hereby.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except (i) as
otherwise expressly provided in this Agreement, (ii) as consented to in writing
by Parent, or (iii) with respect to or in connection with the consummation of
the Storage USA Acquisition, or as contemplated by the Storage USA Transaction
Agreements and the merger contemplated thereby (it being understood and agreed
that the Company shall not increase the price to be paid in connection with the
Storage USA Acquisition or make any material change to the Storage USA
Transaction Agreements or grant any material waiver, consent or election
thereunder, except with Parent's consent, provided further that Parent shall be
deemed to have consented to any such proposed price increase or material change,
waiver, consent or election, as the case may be, if Parent has not responded to
the Company's request for consent pursuant to this Section 5.1(iii) within 24
hours of the delivery of such request), during the period from the date hereof
to the Effective Time, the Company will, and will cause each of its subsidiaries
to, and will use commercially reasonable efforts to cause the Public Investees
to, conduct their respective operations in the ordinary and usual course of
business consistent with past practice and, to the extent consistent therewith,
with no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact their respective current business
organizations, seek to keep available the services of their respective current
officers and employees and seek to preserve their respective relationships with
customers, suppliers and others having business dealings with it to the end that
goodwill and ongoing businesses shall be unimpaired. Without limiting the
generality of the foregoing, but subject to clauses (i) through (iii) above,
prior to the Effective Time, except as set forth on the Company Disclosure
Schedule, the Company will not, and will use commercially reasonable efforts to
cause the Public Investees not to, nor permit any of its subsidiaries to:
(a) amend their respective charters or bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including any stock options or stock
appreciation rights), except for (i) the issuance or sale of Shares pursuant to
the exercise of Company Stock Options and conversion of Preferred Stock and the
Company's 6.5% Convertible Subordinated Debentures due 2016 in accordance with
the terms thereof (for a number of Shares not to exceed the maximum number of
Shares set forth in Section 2.2), or (ii) (A) automatic grants of Company Stock
Options to directors of the Company in accordance with plan terms in effect on
the date hereof, (B) the grant of new Company Stock Options upon the exercise of
outstanding Company Stock Options containing a reload feature requiring a new
option grant upon such exercise, (C) the grant of options, in the ordinary
course consistent with past practice
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by subsidiaries of the Company or (D) the grant of Restricted Stock Units
pursuant to the Company's matching share program;
(c) (i) split, combine or reclassify any shares of their respective
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
their respective stock, except the declaration and payment of regular quarterly
cash dividends not in excess of the dividend amounts provided for in the
instrument defining the rights of the Preferred Stock, with usual record and
payments dates in accordance with past dividend practice; (iii) make any other
actual, constructive or deemed distribution in respect of any shares of their
respective stock or otherwise make any payments to stockholders in their
capacity as such; or (iv) redeem, repurchase or otherwise acquire any of their
respective securities or any securities of any of their respective subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization;
(e) alter, through merger, liquidation, dissolution, reorganization,
restructuring or in any other fashion, their respective corporate structures or
ownership of any subsidiary or joint venture;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in the
ordinary and usual course of business consistent with past practice in aggregate
amounts not to exceed $50 million other than in connection with the Storage USA
Acquisition and in connection with the other transactions listed in Section
5.1(f) of the Company Disclosure Schedule (which, notwithstanding anything to
the contrary herein, shall be expressly permitted hereby); (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary and usual course of business consistent with past practice and in
aggregate amounts not to exceed $50 million; (iii) make any capital
contributions to, or investments in, any other person, other than to the wholly
owned subsidiaries; (iv) pledge or otherwise encumber shares of stock of the
Company or its subsidiaries; or (v) mortgage or pledge any of their respective
material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon;
(g) except as may be required by Law, an existing agreement or as
contemplated by this Agreement, (i) enter into, adopt or amend or terminate any
bonus, profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase agreement, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreement, trust, plan, fund, award or other
arrangement for the benefit or welfare of any director, officer or employee in
any manner except for any such actions taken in the ordinary and usual course of
business consistent with past practice and that, in the aggregate, do not result
in a material increase in the Company's aggregate benefits and compensation
expense, and (ii) increase in any manner the compensation or fringe benefits of
any director or officer of the Company or pay any benefit not required by any
plan and arrangement as in effect as of the date hereof or as modified in
accordance with this subsection (g) (including the granting of stock
appreciation rights or performance units);
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(h) acquire, sell, lease or dispose of any assets outside the ordinary
and usual course of business consistent with past practice or any assets which
individually or in the aggregate have a book or fair market value in excess of
$3,000,000, enter into any commitment or transaction outside the ordinary and
usual course of business consistent with past practice or grant any exclusive
distribution rights other than with respect to the disposition of the Company's
right, title and interest in and to 19,403,417 shares of CarrAmerica Realty
Corporation, a Maryland real estate investment trust, which shall be
specifically permitted hereunder regardless of any other provision hereof;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by them (whether
for financial accounting or Tax purposes);
(j) revalue in any material respect any of their respective assets,
including writing-off notes or accounts receivable or modify in any material
respect any reserve, in each case, other than in the ordinary and usual course
of business consistent with past practice or as required by GAAP;
(k) (a) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (b) enter into any contract or
agreement, other than in the ordinary and usual course of business consistent
with past practice or amend in any material respect any of the Material
Contracts or the policies referred to in Section 3.18; (c) authorize any new
capital expenditure or expenditures which are in excess of those contemplated
the budgets previously provided by the Company to Parent; or (iv) enter into or
amend any contract, agreement, commitment or arrangement providing for the
taking of any action that would be prohibited hereunder;
(l) make or revoke any Tax election (except as required by law), or
settle or compromise any Tax liability, material to the Company and its
subsidiaries taken as a whole (taking into account only the Company's actual
ownership interest in each of its subsidiaries), or change (or make a request to
any taxing authority to change) any material aspect of their respective method
of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice of liabilities
reflected or reserved against in the consolidated financial statements of such
person and its subsidiaries or incurred in the ordinary and usual course of
business consistent with past practice or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which such person or any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or
claim relating to the Merger;
(o) enter into any agreement or arrangement that limits or otherwise
restricts such person or any of its subsidiaries or any successor thereto or
that would, after the Effective
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Time, limit or restrict the Surviving Corporation and its affiliates (including
Parent) or any successor thereto, from engaging or competing in any line of
business or in any geographic area;
(p) in any case where the Company, as such, has a contractual right to
consent to any matter requested or proposed by Storage USA or Regency, the
company shall not so consent without Parent's consent, which shall not be
unreasonably withheld or delayed;
(q) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(n) or any action
which would make any of the representations or warranties of the Company
contained in this Agreement (i) which are qualified as to materiality untrue or
incorrect or (ii) which are not so qualified untrue or incorrect in any material
respect.
For purposes of this Agreement, the Company shall be deemed to have
used its commercially reasonable efforts to cause the Public Investees to take
or not take any actions contemplated herein if the Company (i) exercises all
voting rights, to the extent that the taking or not taking of any action
requires a vote of the stockholders of such Public Investee, (ii) exercises all
rights under any contract or agreement to which the Company or any of its
subsidiaries is a party, and (iii) causes its representatives acting as members
of the board of directors or trustees of such Public Investees subject to their
fiduciary duties to such Public Investees or trustees and their shareholders
under applicable Law, to exercise all rights as directors of such Public
Investee, as applicable.
SECTION 5.2 ACCESS TO INFORMATION. (a) Between the date hereof and the
Effective Time, the Company will give Parent and Merger Sub and their authorized
representatives (including counsel, financial advisors and auditors) reasonable
access during normal business hours to all employees and other facilities and to
all books and records of the Company and its subsidiaries, will permit Parent
and Merger Sub to make such inspections as Parent and Merger Sub may reasonably
require and will cause the Company's officers and those of its subsidiaries to
furnish Parent and Merger Sub with such financial and operating data and other
information with respect to the business, properties and personnel of the
Company and its subsidiaries as Parent or Merger Sub may from time to time
reasonably request, provided that no investigation pursuant to this Section
5.2(a) shall affect or be deemed to modify any of the representations or
warranties made by the Company and all such access shall be coordinated through
the Company or its designated representatives, in accordance with such
reasonable procedures as they may establish.
(b) Each of Parent and Merger Sub will hold and will cause its
authorized representatives to hold in confidence all documents and information
concerning the Company and its subsidiaries furnished to Parent or Merger Sub in
connection with the Merger pursuant to the terms of that certain Confidentiality
Agreement entered into between the Company and Parent dated November 7, 2001
(the "CONFIDENTIALITY AGREEMENT").
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 COMPANY STOCKHOLDER MEETING, PROXY STATEMENT. (a) The
Company, acting through the Company Board, shall, in accordance with applicable
Law, and the Charter and its Amended and Restated Bylaws:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") for the purposes
of considering and taking action upon the approval and adoption of this
Agreement.
(ii) prepare and file with the SEC (in consultation with
Parent, and affording Parent an opportunity to review and comment thereon) a
preliminary proxy relating to the Merger and this Agreement and (x) obtain and
furnish the information required to be included by the SEC in the Proxy
Statement and, after consultation with Parent, respond promptly to any comments
made by the SEC with respect to the preliminary proxy and cause a definitive
proxy, including any amendment or supplement thereto to be mailed to its
stockholders at the earliest practicable date, but in no event prior to the time
that the ProLogis Registration Statement (as hereinafter defined) shall have
been declared effective by the SEC; PROVIDED, HOWEVER, that no amendment or
supplement to the Proxy Statement will be made by the Company without
consultation with Parent and its counsel and (y) use its reasonable best efforts
to obtain the necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) unless this Agreement has been terminated in accordance
with Article VIII, subject to its rights pursuant to Section 6.3(b), include in
the Proxy Statement the recommendation of the Company Board that stockholders
of the Company vote in favor of the approval and adoption of the Merger and this
Agreement.
(a) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, Merger Sub or any of its other subsidiaries in favor of the
approval and adoption of the Merger and this Agreement.
SECTION 6.2 REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions of this Agreement, each party hereto will use its reasonable best
efforts to take, or cause to be taken, in good faith, all actions, and do, or
cause to be done, all things necessary, proper or advisable under this Agreement
and applicable laws and regulations to consummate the Merger and to cause to be
satisfied all conditions precedent to its obligations under this Agreement, in
each case as soon as practicable after the date hereof, including, consistent
with the foregoing, (i) preparing and filing as promptly as practicable with the
objective of being in a position to consummate the Merger as promptly as
practicable following the date of this Agreement all documentation to effect all
necessary applications, notices, petitions, filings, and other documents and to
obtain as promptly as practicable all consents, waivers, licenses, orders,
registrations, approvals, permits, rulings, authorizations and clearances
necessary or advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement (collectively, the "REQUIRED
APPROVALS"), and (ii) using its reasonable best efforts to obtain the Required
Approvals.
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(b) (i) Each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the Merger
as promptly as practicable and in any event within 10 business days of the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act, and (ii)
Parent agrees to make any other requisite antitrust filings as soon as
reasonably practicable and the Company agrees to provide Parent with such
assistance as Parent requests for the purposes of filing such requisite
antitrust filings and, if such filings are made, each party agrees to supply as
promptly as practical any additional information and documentary material that
may be required or requested by the relevant governmental authority.
(c) Each of Parent and the Company shall use its reasonable best
efforts to cooperate in all respects with each other in connection with any
filing or submission to or any investigation or proceeding by a private party,
the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other Governmental Entity.
(d) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 6.2 (a) to obtain all Required Approvals, use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) subject to applicable law, permit the other party to review and
discuss in advance, and consider in good faith the views of the other in
connection with, any proposed written or material oral communication (or other
correspondence or memoranda) between it and any Governmental Entity, (iii)
promptly inform each other of and supply to such other party any communication
(or other correspondence or memoranda) received by such party from, or given by
such party to, the DOJ, the FTC or any other Governmental Entity and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding the Merger contemplated hereby, and (iv)
consult with each other in advance of any meeting or conference with the DOJ,
the FTC or any other Governmental Entity or, in connection with any proceeding
by a private party, with any other person, and to the extent permitted by the
DOJ, the FTC or such other applicable Governmental Entity or other person, give
the other party the opportunity to attend and participate in such meetings and
conferences.
(e) In furtherance and not in limitation of the covenants of the
parties contained in this Section 6.2, if any objections are asserted with
respect to the Merger contemplated hereby under any antitrust or competition
law, Parent agrees to use its reasonable best efforts to resolve any antitrust
concerns, federal, state, foreign or private, obtain all Required Approvals and
obtain termination of the waiting period under the HSR Act or any other
applicable law and the termination of any outstanding judicial or administrative
orders prohibiting the Closing so as to permit consummation of the Merger as
soon as practicable. In furtherance and not in limitation thereof, if any
administrative or judicial action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any law or
regulation, or if any statute, rule, regulation, executive order, decree,
injunction or administrative order is enacted, entered, promulgated or enforced
by a Governmental Entity that would make the Merger illegal or would otherwise
prohibit or materially impair or delay the consummation the Merger, the Company
shall cooperate with Parent in all respects in responding thereto, and each
shall use its respective reasonable best efforts to contest, resist and/or
attempt to resolve any such action or proceeding and to have vacated, lifted,
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reversed or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the Merger contemplated by this Agreement,
and to have such statute, rule, regulation, executive order, decree, injunction
or administrative order repealed, rescinded or made inapplicable so as to permit
consummation of the Merger.
(f) The parties acknowledge and agree that Parent's "reasonable best
efforts" as it is referenced in this Section 6.2 shall not require Parent to
agree to or effect any divestiture, or to agree to or to hold separate or hold
in trust (or similar action involving) any part of Parent's or the Company's
business or operations, other than any of the Company's business or operations
with a net asset value in the aggregate of no greater than $50 million.
(g) The Company shall cooperate with Parent and use its reasonable
best efforts to obtain an opinion of counsel on or prior to the Effective Time
satisfying the requirements of Article 9 of the Articles of Incorporation of
Security Capital European Realty to allow Parent to be treated as an "Excluded
Holder" thereunder.
SECTION 6.3 ACQUISITION PROPOSALS. (a) From the date hereof until the
termination hereof and except as expressly permitted by the following provisions
of this Section 6.3, the Company will not, nor will it permit any of its
subsidiaries to, nor will it authorize or permit any officer, director or
employee of, or any investment banker, attorney, accountant or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate, any Acquisition Proposal or any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal; PROVIDED, HOWEVER, that the
Company Board may furnish information to, or enter into discussions or
negotiations with, any person that previously has made an unsolicited bona fide
written Acquisition Proposal if, and only to the extent that, (A) the Company
Board, after consultation with and having considered the advice of independent
legal counsel, determines in good faith that (x) such Acquisition Proposal
would, if consummated, constitute a Superior Proposal (as hereinafter defined),
and (y) such action is necessary for the Company Board to comply with its duties
to the Company's stockholders under applicable Law and (B) prior to taking such
action, the Company (x) provides reasonable notice to Parent (but in any event
no later than 24 hours prior to taking such action) to the effect that it is
taking such action and (y) receives from such person an executed
confidentiality/standstill agreement in reasonably customary form, the terms of
which, as applicable to such person, in any event are at least as stringent as
those applicable to Parent in the Confidentiality Agreement between Parent and
the Company. Prior to providing any information to or entering into discussions
or negotiations with any person in connection with an Acquisition Proposal by
such person, the Company shall notify Parent of any Acquisition Proposal
(including the material terms and conditions thereof and the identity of the
person making it) as promptly as practicable after its receipt thereof (and in
any event, no later than twenty-hours from receipt), and shall provide Parent
with a copy of any written Acquisition Proposal or amendments or supplements
thereto, and shall thereafter promptly inform Parent of the status of any
discussions or negotiations with such a third party, and any material changes to
the terms and conditions of such Acquisition Proposal, and shall promptly give
Parent a copy of any information delivered to such person that has not
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previously been reviewed by Parent. Immediately after the execution and delivery
of this Agreement, the Company will, and will cause its subsidiaries and
affiliates, and their respective officers, directors, employees, investment
bankers, attorneys, accountants and other agents to, cease and terminate any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any possible Acquisition Proposal. The Company agrees
that it will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 6.3(a).
(b) The Company Board will not withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent, its approval or
recommendation of this Agreement or the Merger unless the Company Board, after
consultation with and having considered the advice of independent legal counsel,
determines in good faith that such action is necessary for the Company Board to
comply with its duties to the Company's stockholders under applicable Law.
Except as set forth in this Section 7.3(b), the Company Board will not approve
or recommend or permit the Company to enter into any agreement with respect to
any Acquisition Proposal (other than a confidentiality agreement as described in
Section 6.3(a)) made by any person other than Parent or Merger Sub.
Notwithstanding the foregoing, if the Company Board, after having considered the
advice of independent legal counsel, determines in good faith that failing to
take such action would constitute a breach of the obligations of the Company
Board under applicable law, the Company Board may approve or recommend an
Acquisition Proposal (or amendment or supplement thereto) or cause the Company
to enter into an agreement with respect thereto, but in each case only if (i)
the Company provides written notice to Parent (a "NOTICE OF SUPERIOR PROPOSAL"),
which notice must be received by Parent at least three business days (exclusive
of the day of receipt by Parent of the Notice of Superior Proposal) prior to the
time it intends to cause the Company to enter into such an agreement, advising
Parent in writing that the Company Board has received an Acquisition Proposal
(or amendment or supplement thereto) which it believes constitutes a Superior
Proposal and which it intends to accept and, with respect to which, enter into a
definitive agreement, subject to the provisions of this Section 6.3(b),
providing a copy of any written offer or proposal describing the Superior
Proposal, specifying the material terms and conditions of such Superior Proposal
and identifying the person making such Superior Proposal, (ii) as of the end of
such three business day period referenced above, Parent shall have failed to
notify the Company in writing that it has determined to revise the terms of the
Merger to provide that the Merger Consideration will be equal to or greater than
the consideration to be paid to the Company stockholders pursuant to the
Superior Proposal, and (iii) the Company terminates this Agreement in accordance
with the requirements of Section 8.1(f) within 48 hours after the lapse of the
three-day period referenced above and immediately thereafter enters into an
agreement with respect to such Superior Proposal. For purposes of this
Agreement, a "SUPERIOR PROPOSAL" means any bona fide Acquisition Proposal not
directly or indirectly initiated, solicited, encouraged or knowingly facilitated
by the Company after the date of this Agreement in contravention of the
provisions hereof which the Company Board determines in good faith judgment
(based on the advice of an investment banker of nationally recognized
reputation), taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, (i) would, if
consummated, result in a transaction that is more favorable to the Company's
stockholders (in their capacity as stockholders), from a financial point of
view, than the Merger and (ii) is reasonably capable of being completed;
PROVIDED, HOWEVER, that for purposes of this definition, the term Acquisition
Proposal shall have the meaning assigned to
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such term in Section 9.11 except that the reference to 20 percent in the
definition of "Acquisition Proposal" shall be deemed to be a reference to 100
percent.
(c) Nothing contained in this Section 6.3 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith reasonable judgment of the
Company Board, based on the advice of independent legal counsel, is required
under applicable Law; PROVIDED, HOWEVER, that except as otherwise permitted in
Section 6.3(b), the Company does not withdraw or modify, or propose to withdraw
or modify, its position with respect to the Merger or approve or recommend, or
propose to approve or recommend, an Acquisition Proposal.
SECTION 6.4 PUBLIC ANNOUNCEMENTS. Each of Parent, Merger Sub and the
Company will consult with one another before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated hereby, including the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable Law or by obligations pursuant to any listing
agreement with the New York Stock Exchange, Inc., as determined by Parent,
Merger Sub or the Company, as the case may be, and except by the Company with
respect to any Acquisition Proposal or similar matter or related matter as
contemplated by Section 6.3.
SECTION 6.5 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a)
From and after the Effective Time, Parent shall, to the fullest extent permitted
by applicable Law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "INDEMNIFIED PARTY" and, collectively, the
"INDEMNIFIED PARTIES") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to the
proviso of the next succeeding sentence, amounts paid in settlement, arising out
of actions or omissions occurring at or prior to the Effective Time and whether
asserted or claimed prior to, at or after the Effective Time that are in whole
or in part (i) based on, or arising out of the fact that such person is or was a
director, officer or employee of such party or a subsidiary of such party or
(ii) based on, arising out of or pertaining to the Merger. In the event of any
such loss, expense, claim, damage or liability (whether or not arising before
the Effective Time), (i) Parent shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to Parent, promptly after statements therefor are received and
otherwise advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred, in either case to the fullest extent
not prohibited by the MGCL and upon receipt of any affirmation and undertaking
required by the MGCL, (ii) Parent will cooperate in the defense of any such
matter and (iii) any determination required to be made with respect to whether
an Indemnified Party's conduct complies with the standards set forth under the
MGCL and Parent's certificate of incorporation or bylaws shall be made by
independent counsel mutually acceptable to Parent and the Indemnified Party;
PROVIDED, HOWEVER, that Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld).
The Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the opinion of counsel to
an Indemnified Party, under applicable
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standards of professional conduct, a conflict on any significant issue between
positions of any two or more Indemnified Parties.
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the policies of directors' and officers'
liability insurance maintained by the Company for the benefit of those persons
who are covered by such policies at the Effective Time (or Parent may substitute
therefor policies of at least the same coverage with respect to matters
occurring prior to the Effective Time), to the extent that such liability
insurance can be maintained annually at a cost to Parent not greater than two
hundred percent of the premium for the current Company directors' and officers'
liability insurance; PROVIDED, HOWEVER, that if such insurance cannot be so
maintained or obtained at such costs, Parent shall maintain or obtain as much of
such insurance as can be so maintained or obtained at a cost equal to two
hundred percent of the current annual premiums of the Company for such
insurance.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Parent shall assume the obligations set for in this
Section 6.5.
(d) To the fullest extent permitted by Law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of the Company and its subsidiaries
with respect to their activities as such prior to the Effective Time, as
provided in the Company's charter or bylaws, in effect on the date thereof or
otherwise in effect on the date hereof, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time.
(e) The provisions of this Section 6.5 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
SECTION 6.6 EMPLOYEE MATTERS. (a) Parent will cause the Surviving
Corporation to honor the obligations of the Company or any of its subsidiaries
under the provisions of all employment, consulting, termination, severance,
change in control and indemnification agreements between and among the Company
or any of its subsidiaries and any current or former officer, director,
consultant or employee of the Company or any such subsidiaries. During the
period commencing on the Closing Date and ending on the close of the next fiscal
year ending at least two years from the Closing Date (the "CONTINUATION
PERIOD"), Parent shall provide, or shall cause to be provided, to the current or
former employees of the Company and any of its subsidiaries (other than
employees covered by any collective bargaining agreement) ("COMPANY EMPLOYEES")
compensation and employee benefits that are no less favorable in the aggregate
than the Applicable Required Benefits, as defined below. "APPLICABLE REQUIRED
BENEFITS" shall mean: (i) for Company Employees who are employed by the Company,
the compensation and benefits that are provided to such Company Employees
immediately prior to the Closing Date; provided, that beginning on such date,
not later than January 1, 2003, as Parent shall determine, the "APPLICABLE
REQUIRED BENEFITS" shall mean the compensation and benefits provided to
similarly situated employees of Parent (determined based on position,
compensation level and location) from time to time, if greater (such
compensation and benefits in the aggregate, the
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"PARENT BENEFITS"); (ii) for all other Company Employees who participate in the
employee benefit plans of the Company immediately prior to the Closing Date,
either the compensation and benefits provided to such Company Employees
immediately prior to the Closing Date or, at Parent's option, the Parent
Benefits provided to similarly situated employees of Parent; (iii) in the case
of those Company Employees who do not participate in the employee benefit plans
of the Company as of the Closing Date but who are scheduled to begin so
participating as of April 2002, (A) until April 2002, the compensation and
benefits they are being provided immediately prior to the Effective Time, and
from and after April 2002, the compensation and benefits they are scheduled to
be provided from and after April 2002, or (B) at Parent's option, the Parent
Benefits provided to similarly situated employees of Parent; and (iv) for all
other Company Employees, compensation and benefits that are no less favorable in
the aggregate than those provided to such Company Employees immediately prior to
the Closing Date.
(b) For all purposes under the employee benefit plans of Parent and
its affiliates providing benefits to any Company Employee after the Closing Date
(the "NEW PLANS"), and subject to applicable law and obligations under
applicable collective bargaining agreements, each Company Employee shall be
credited with his or her years of service with the Company or any of its
subsidiaries, as the case may be, before the Closing Date, to the same extent as
such Company Employee was entitled, before the Closing Date, to credit for such
service under any similar Employee Benefit Plans, as applicable, except to the
extent such credit would result in a duplication of benefits and except for
purposes of benefit accrual under defined benefit pension plans. In addition,
and without limiting the generality of the foregoing, and subject to applicable
law and obligations under applicable collective bargaining agreements: (i) each
Company Employee shall be immediately eligible to participate, without any
waiting time, in any and all New Plans which are welfare benefit plans to the
extent coverage under such New Plan replaces coverage under a comparable
Employee Benefit Plan, as applicable, in which such Company Employee
participated immediately before the Closing Date (such plans, collectively, the
"OLD Plans"); and (ii) for purposes of each New Plan providing medical, dental,
pharmaceutical and/or vision benefits to any Company Employee, Parent shall
cause all pre-existing condition exclusions and actively-at-work requirements of
such New Plan to be waived for such Company Employee and his or her covered
dependents, and Parent shall cause any eligible expenses incurred by such
Company Employee and his or her covered dependents during the portion of the
plan year of the Old Plan ending on the date such Company Employee's
participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes of satisfying all deductible, coinsurance and
maximum out-of-pocket requirements applicable to such Company Employee and his
or her covered dependents for the applicable plan year as if such amounts had
been paid in accordance with such New Plan.
(c) Parent shall ensure that the account balance of each participant
in the SCGroup Incorporated Nonqualified Savings Plan (the "NSP") or the SCGroup
Deferred Fee Plan for Directors (the "DFP") fully vests as of the Closing Date,
and that the portion of such account valued with respect to Class A Shares or
Class B Shares shall, at the election of the participant, be converted into
either (i) a cash balance in the amount of $1300 per Class A Share or $26 per
Class B Share, as applicable, or (ii) a cash balance equal to the Class A Cash
Consideration or the Class B Cash Consideration, as applicable, times the number
of shares credited to such account, plus a hypothetical number of shares of
ProLogis Common Stock equal to the Class A Stock Consideration or the Class B
Stock Consideration, as applicable, times the number
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of shares credited to such account. Any portion of such account that is
converted into a cash balance may be deemed invested by the participant in any
of the available investment choices under the NSP or the DFP, as applicable, and
any portion thereof that is converted into hypothetical shares of ProLogis
Common Stock shall continue to be deemed invested in such shares until such time
as the participant elects, in accordance with the NSP or the DFP, as applicable,
to invest such balance in another available investment choice; provided, that
after such conversions, the NSP or the DFP, as applicable, need not permit
participants to elect to invest any addition balances in such shares. Until at
least December 31, 2002, Parent shall (i) maintain or cause the Company to
maintain the NSP in accordance with its terms, except as provided above in this
Section 6.6(c), (ii) allow Company Employees to participate in the NSP and to
defer compensation into the NSP, (iii) make matching contributions with respect
to employee deferrals (including deferrals with respect to the awards described
in Section 6.6(e)), in each case, consistent with the Company's past practice
and on terms no less favorable than those in effect immediately prior to the
date hereof, and (iv) ensure that each Participant's account under the NSP
(including any stock balance converted to a cash balance pursuant to this
Section) and any increase thereto is maintained in accordance with the terms of
the NSP and with the Company's ordinary past practice. Parent may amend or
terminate, or cause the Company to amend or terminate, the NSP effective on or
after January 1, 2003, but in no event shall any such amendment or termination,
whenever occurring, result in a change in the timing, method or amounts of the
distributions made to any Company Employee who is a participant in the NSP
immediately before the Effective Time.
(d) For so long after the Closing Date as the Company or any of its
subsidiaries maintains a 401(k) plan (all such plans, the "COMPANY 401(K)
PLAN"), and Parent maintains a 401(k) plan with a loan feature for similarly
situated employees, Parent shall cause the Company 401(k) Plan to retain the
loan feature of such plan. Effective as of the Closing, the Company will fully
vest the account balances of each participant in the Company 401(k) Plan who is
a Company Employee.
(e) To the extent not paid prior to the Closing Date, Parent shall pay
a cash bonus award with respect to the 2001 calendar year to each Company
Employee listed on Section 6.6(f) of the Company Disclosure Schedule equal to
the amount listed on such schedule (each such award, a "2001 BONUS AWARD").
Parent shall pay the 2001 Bonus Awards no later than January 31, 2002 and shall
allow each Company Employee participating in the NSP upon the Closing Date to
defer a portion of his or her 2001 Bonus Award under the NSP in accordance with
deferral elections in place prior to the Closing Date.
SECTION 6.7 SEC FILINGS. The Company and Parent shall notify the other
promptly upon the receipt of any comments from the SEC or its staff or any other
government officials in connection with any filing made pursuant hereto and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the Proxy Statement or any other filings or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Proxy Statement, the Merger or any other filing. The
Company shall, and Parent shall and shall cause Purchaser to, cause all
documents that it is responsible for filing with the SEC or other regulatory
authorities under Section 6.1 and Section 6.2 to comply in all material respects
with all applicable re-
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quirements of law and the rules and regulations promulgated thereunder. Whenever
any event occurs which is required to be set forth in an amendment or supplement
to the Proxy Statement or any other filing, the Company will, or Parent will
cause Parent to, as the case may be, promptly inform the other of such
occurrence and cooperate in filing with the SEC or its staff or any other
government officials and/or mailing to stockholders of the Company, such
amendment or supplement.
SECTION 6.8 OBLIGATIONS OF MERGER SUB. Parent will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 6.9 TAKEOVER STATUTES; RIGHTS PLAN; OWNERSHIP LIMIT. (a) If
any Takeover Statute is or may become applicable to the Merger, each of Parent
and the Company shall take such actions as are necessary so that the Merger may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of any Takeover Statute on
the Merger.
(b) The Company Board shall not, without the prior written consent of
Parent, (i) amend the Rights Agreement or (ii) take any action with respect to,
or make any determination under, the Rights Agreement, including a redemption of
the Rights.
(c) The Company Board shall not take any action to exempt any person
(other than Parent, Merger Sub and each of their respective affiliates) from the
Ownership Limit provisions set forth in Article FIFTH of the Charter.
SECTION 6.10 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would reasonably be expected to cause any representation or warranty
contained in this Agreement to be materially untrue or inaccurate, or (ii) any
failure of the Company or Parent, as the case may be, materially to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Section 7.2(b) unless and except to the extent that the failure to
give such notice results in material prejudice to the other party.
SECTION 6.11 COMPANY FUNDS. As soon as reasonably practicable after
the date hereof, the Company shall inform the Company Funds of the Merger. If
and to the extent necessary, the Company shall assist each of the Company Funds
to prepare and file with the SEC, or other applicable Governmental Entity, as
soon as is reasonably practicable a preliminary proxy statement, together with a
form of proxy, to be used in connection with the meeting of the stockholders of
each such Company Fund for the purpose of approving new Investment Company
Advisory Agreements, or other applicable agreements, with the current advisor of
each such Fund, substantially on the terms of the current Investment Company
Advisory Agreements, to take effect at the Effective Time, and, as promptly as
practicable thereafter, subject to compliance with the rules and regulations of
the SEC to the extent applicable, a definitive proxy state-
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ment with respect to such meeting shall be mailed to the stockholders of such
Company Fund. Each such proxy statement shall comply as to form in all material
respects with all applicable Law.
SECTION 6.12 OTHER ADVISORY CONTRACT CONSENTS. (a) As soon as
reasonably practicable after the date hereof, the Company shall inform the Funds
that are not Company Funds of the Merger contemplated by this Agreement and
request that such Funds take such actions as may be necessary in connection with
the deemed assignment, as defined in Section 202(a) of the Investment Advisers
Act of 1940, as amended (the "ADVISERS ACT") (the "DEEMED ASSIGNMENT") of the
advisory agreements to which the Company or any of its subsidiaries is a party
relating to such Fund.
(b) As soon as reasonably practicable after the date hereof, the
Company shall inform its investment advisory clients that are parties to
Non-Investment Company Advisory Agreements ("NICAAS") of the Merger contemplated
by this Agreement. The Company shall request written consent of each such client
to the deemed assignment of its NICAA and use reasonable commercial efforts to
obtain such consent; or in the case of NICAAs which prohibit assignment or state
by their terms that they terminate upon assignment, the Company will use its
reasonable commercial efforts to enter into new agreements in substantially
identical terms to be effective upon Closing and the deemed assignment. Parent
agrees that, except in the case of NICAAs that prohibit assignment or state by
their terms that they terminate upon assignment or do not, by their terms,
require written consent of the client, the Company may obtain consent by
requesting written consent as aforesaid and informing such client: (x) of the
Company's intention to effect a deemed assignment of such NICAAs; (y) of the
Company's intention to continue the advisory services, pursuant to the NICAAs
with such client after the Closing if such client does not terminate such NICAAs
prior to the Closing; and (z) that the consent of such client will be implied if
such client continues to accept such advisory services for at least 30 days
after the Closing without termination (to the extent permitted by the Advisers
Act, and any rules, regulations or interpretations of the SEC thereunder).
SECTION 6.13 TRANSFER TAXES. Subject to Section 2.2(b), Parent shall
pay or cause to be paid any transfer, sales, use, excise and similar Taxes and
fees for which the Company Stockholders may be liable (but not any Taxes
measured by or based on gross or net income of any Company stockholders) arising
from or payable by reason of the Merger.
SECTION 6.14 REGISTRATION AND SALE OF PROLOGIS COMMON STOCK. With the
prior written consent of both the Company and the Parent, the Company may at any
time sell any or all of the shares of the ProLogis Common Stock, including to
ProLogis, pursuant to a public offering or private placement, negotiated
third-party purchase or otherwise (a "PROLOGIS SALE"). In addition, the Company
will, at the written request of Parent, use its reasonable best efforts to
effect a ProLogis Sale in the manner requested by Parent, and subject to
approval by Parent of any final pricing terms, provided that the Company shall
not be required to effect a ProLogis Sale, or enter into any binding agreement
to effect a ProLogis Sale, prior to the date which is 18 days prior to the
then-applicable Stockholders Meeting Date (provided that if a "road show" with
respect to a ProLogis sale to be effected by a public offering shall have been
commenced on or after the date which is 22 days prior to the then-applicable
Stockholders Meeting Date, and there shall thereafter be a delay or postponement
of the Stockholders Meeting Date, the relevant date
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which is 18 days prior to the previously-applicable Stockholders Meeting Date
shall not be changed for purposes of this sentence). The Company will, after
consultation with Parent, determine the manager(s) and book runner(s) in the
event of any ProLogis Sale that is an underwritten offering. In order to
facilitate a possible ProLogis Sale and/or a distribution of ProLogis Common
Stock pursuant to the Stock Election, the Company will, on or before December
17, 2001, exercise its rights under Section 6 of the Third Amended and Restated
Investors Agreement between ProLogis and the Company, dated as of September 9,
1997, as amended, and shall use its reasonable best efforts to assist ProLogis
in filing and having declared effective one or more registration statements, and
any necessary supplements or amendments, with respect to the shares of ProLogis
Common Stock, suitable for use in connection with the Stock Election and/or the
ProLogis Sale, and shall allow Parent to participate in the process of so
registering the ProLogis Common Stock.
SECTION 6.15 STORAGE USA ACQUISITION. In the event any third party
shall seek to acquire Storage USA for consideration in excess of that agreed to
be paid pursuant to the Storage USA Transaction Agreements, the Company shall
determine to either (x) seek Parent's consent to offer to increase the price to
be paid by the Company in connection with the Storage USA Acquisition or (y) not
to do so. If the Company determines not to so increase the price to be paid by
the Company in connection with the Storage USA Acquisition, then, at the written
request of Parent, the Company will nevertheless offer to increase the price to
be paid in connection with the Storage USA Acquisition on such terms as Parent
may designate. Immediately upon any subsequently termination of this Agreement
whether pursuant to Article VIII or otherwise (or, if the Storage USA
Acquisition shall not then have been consummated, upon the consummation of the
Storage USA Acquisition), Parent shall pay to the Company by wire transfer of
immediately available funds, an amount equal to the aggregate amount of any such
increased price designated by Parent that may have been agreed with or accepted
by Storage USA
SECTION 6.16 RESTRUCTURING. Immediately prior to the consummation of
the Merger, and provided all conditions to Closing have been satisfied or
waived, Company will assign the stock interests in subsidiaries, or otherwise
restructure or transfer assets as directed by Parent.
SECTION 6.17 SECURITY CAPITAL WAREHOUSE DISTRIBUTION BUSINESS TRUST.
At Parent's written request made within the first 75 days of calendar year 2002,
the Company shall, if permitted to do so by the applicable federal income tax
laws, elect to revoke the status of Security Capital Warehouse Distribution
Business Trust as a real estate investment trust for federal income tax purposes
and shall take such other steps as the parties reasonably agree are necessary to
terminate the real estate investment trust status of Security Capital Warehouse
Distribution Business Trust for federal income tax purposes.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party to consummate the Merger are
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions, any or all of which may be waived in whole or in part by
the party being benefited thereby, to the extent permitted by applicable Law:
(a) the Company shall have obtained the Company Requisite Vote;
(b) there shall not be in effect any Law of any Governmental Entity of
competent jurisdiction, restraining, enjoining or otherwise preventing
consummation of the Merger;
(c) (i) any applicable waiting period under the HSR Act shall have
expired or been terminated, (ii) any relevant statutory, regulatory or other
governmental waiting periods or approvals, whether domestic, foreign or
supranational, the failure of which to have expired or been terminated or to be
obtained or to be in full force and effect, would, either (A) individually or in
the aggregate, have a Material Adverse Effect on the Company or the Surviving
Corporation or (B) result in any violation of Law, shall have expired or been
terminated or been obtained and be in full force and effect, as the case may be,
or (iii) in the event that the Merger constitutes a concentration with a
Community dimension within the scope of the ECMR, the European Commission shall
not have indicated prior to Closing Date that it intends to initiate proceedings
under the ECMR in respect of the Merger nor refer the transactions or any
matters arising therefrom to the competent authority of a Member State under
Article 9(1) of the ECMR;
(d) any registration statement (including any necessary supplement or
amendment) with respect to the ProLogis Common Stock owned by the Company and
filed pursuant to this agreement (a "PROLOGIS REGISTRATION STATEMENT") shall
have been declared effective by the SEC, no stop order shall have been issued
with respect to such ProLogis Registration Statement and such ProLogis
Registration Statement shall not 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 made therein, in light of the circumstances under
which they are made, not misleading.
SECTION 7.2 CONDITIONS TO THE PARENT'S OBLIGATIONS TO EFFECT THE
MERGER. The obligations of the Parent to consummate the Merger are subject to
the fulfillment at or prior to the Effective Time of each of the following
conditions, any or all of which may be waived in whole or in part by the Parent,
to the extent permitted by applicable Law:
(a) No Material Adverse Effect on the Company shall have occurred;
(b) the representations and warranties of the Company set forth in
this Agreement shall be true and accurate as of the Closing Date as though made
on or as of such date (except for those representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time which need only be true and accurate as of such date or with
respect to such period) and the Company shall not have breached or failed to
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perform or comply with any obligation, agreement or covenant required by this
Agreement to be performed or complied with by it except, in each case where the
failure of such representations and warranties to be true and accurate (without
giving effect to any limitation as to "materiality" or "material adverse effect"
set forth therein), or the failure to perform or comply with such obligations,
agreements or covenants, do not or would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on the Company;
SECTION 7.3 CONDITIONS TO THE COMPANY'S OBLIGATIONS TO EFFECT THE
MERGER. The obligations of the Company to consummate the Merger are subject to
the fulfillment at or prior to the Effective Time of each of the following
conditions, any or all of which may be waived in whole or in part by the
Company, to the extent permitted by applicable Law:
(a) the representations and warranties of the Parent or Merger Sub set
forth in this Agreement, shall be true and accurate as of the Closing Date as
though made on or as of such date (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or with respect to such period) and the Parent or Merger Sub shall not
have breached or failed to perform or comply with any obligation, agreement or
covenant required by this Agreement to be performed or complied with by it
except, in each case where the failure of such representations and warranties to
be true and accurate (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein), or the failure to
perform or comply with such obligations, agreements or covenants, do not or
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on Parent.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated herein may be abandoned at any time prior to the Effective
Time, whether before or after approval of the Merger by the stockholders of the
Company:
(a) by the mutual written consent of Parent and the Company;
(b) by either of Parent or the Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated prohibiting the
Merger substantially on the terms contemplated by this Agreement or (ii) any
Governmental Entity shall have issued an order, decree or ruling or taken any
other action in each case permanently restraining, enjoining or otherwise
prohibiting the Merger on the terms contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable.
(c) by either of Parent or the Company if the Merger has not been
consummated by August 14, 2002 (the "DROP-DEAD DATE"); PROVIDED, HOWEVER, that
the party seeking to terminate this Agreement pursuant to this Section 8.1(c)
shall not have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the failure
to consummate the Merger on or before such date.
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(d) by Parent if the Company Board shall have (A) publicly withdrawn
or modified in a manner materially adverse to Parent the recommendation of the
Company Board of this Agreement or the Merger, (B) failed to confirm its
recommendation to the Company's stockholders that they approve and adopt the
Merger and this Agreement within five business days after a written request by
Parent that it do so if such request is made following the making of an
Acquisition Proposal, or (C) approved or recommended an Acquisition Proposal
made by any person other than Parent or Merger Sub;
(e) by the Company, if (i) the Company Board shall have determined
that an Acquisition Proposal constitutes a Superior Proposal in accordance with
the requirements of Section 6.3(b), (ii) the Company shall have delivered to
Parent a written notice of the determination by the Company Board to terminate
this Agreement pursuant to this Section 8.1(e) and followed the procedures
required by Section 6.3(b), and (iii) immediately prior to such termination the
Company shall have made payment of the full amounts required by Sections 8.3(b)
and 8.3(c) and immediately after such termination the Company shall have entered
into a definitive acquisition, merger or similar agreement to effect such
Acquisition Proposal;
(f) by Parent if the Company shall have breached any of its
representations, warranties or covenants contained in this Agreement, which
breach would give rise to the failure of a condition set forth in paragraph (b)
of Section 7.2 and which breach is either (i) reasonably capable of being cured
within 30 business days after its receipt of written notice thereof from the
Parent but has not been cured within such time or (ii) incapable of being cured
by the Company prior to the Drop-Dead Date;
(g) by the Company if any of Parent's representations and warranties
contained in this Agreement shall not be true and correct, except for such
failures to be true and correct that (without giving effect to any limitation as
to "materiality" set forth therein), individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the ability of
Parent to consummate the Merger or perform its obligations hereunder, and which
failure is either (i) reasonably capable of being cured within 30 business days
after its receipt of written notice thereof from the Company but has not been
cured within such time or (ii) incapable of being cured by the Parent prior to
the Drop-Dead Date; or
(h) by the Company or Parent if the Company Requisite Vote shall not
have been obtained at the Company Stockholder Meeting.
SECTION 8.2 EFFECT OF THE TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Merger Sub or the Company, other than the
provisions of Section 5.2(b), this Section 8.2, Section 8.3 and Article IX and
except to the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 8.3 FEES AND EXPENSES. (a) Except as provided below or in
Section 6.15, all fees and expenses incurred in connection with the Merger, this
Agreement and the
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other transactions contemplated hereby shall be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated.
(b) In the event that (i) this Agreement is (A) terminated by Parent
pursuant to Section 8.1(d) or (B) by the Company or Parent pursuant to Section
8.1(h) following any event described in Section 8.1(d), and either (C) an
Acquisition Proposal shall have been previously publicly proposed or publicly
announced or any person has previously publicly announced an intention (whether
or not conditional and whether or not withdrawn) to make an Acquisition
Proposal, or (D) within twelve months after such termination, the Company or any
of its subsidiaries enters into any definitive agreement with respect to, or
consummates, any Acquisition Proposal, or (ii) this Agreement is terminated by
the Company pursuant to Section 8.1(e), then the Company shall pay Parent a fee
equal to $120,000,000 (One Hundred Twenty Million Dollars) (the "TERMINATION
FEE") by wire transfer of same day funds to an account designated by Parent, in
the case of a payment as a result of any event referred to in Section
8.3(b)(i)(A) or (B) and (D), upon the first to occur of the entering into any
definitive agreement or the consummation of any Acquisition Proposal and in the
case of a payment as a result of any event referred to in Section 8.3(b)(ii) or
Section 8.3(b)(i)(A) or (B) and (C), promptly, but in no event later than the
date of such termination. For purposes of Sections 8.3(b)(i)(C) and (D) an
"Acquisition Proposal" shall have the meaning assigned to such term in Section
10.11, except that the reference to "20 percent" in such definition shall be
deemed to be a reference to "50 percent".
(c) The Company shall reimburse Parent and Merger Sub for all their
expenses incurred in connection with this Agreement and the Merger (i) in the
event this Agreement is terminated in the circumstances described in Section
8.3(b)(i)(A) or (B) and (D), upon the occurrence of the events referred in
Section 8.3(b)(i)(D), or (ii) in the event this Agreement is terminated in the
circumstances described in Section 8.3(b)(i)(A) or (B) and (C) or in Section
8.3(b)(ii), promptly, but in no event later than the date of such termination;
PROVIDED, HOWEVER, that the aggregate amount of such reimbursement together with
the Termination Fee shall not exceed $160,000,000 (One Hundred and Sixty Million
Dollars) in the aggregate. All payments made pursuant to this Section 8.3(c)
shall be made by wire transfer of the same day funds to an account designated by
Parent.
SECTION 8.4 AMENDMENT. This Agreement may be amended by action taken
by the Company, Parent and Merger Sub at any time before or after approval of
the Merger by the Company Requisite Vote but, after any such approval, no
amendment shall be made which requires the approval of such stockholders under
applicable Law without such approval. This Agreement may not be amended except
by an instrument in writing signed on behalf of the parties hereto.
SECTION 8.5 EXTENSION; WAIVER. At any time prior to the Effective
Time, each party hereto (for these purposes, Parent and Merger Sub shall
together be deemed one party and the Company shall be deemed the other party)
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement
on the part of either party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
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behalf of such party. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations, warranties, covenants and agreements in this Agreement or in
any exhibit, schedule or instrument delivered pursuant to this Agreement shall
survive beyond the Effective Time, except for those covenants and agreements
contained herein and therein that by their terms apply or are to be performed in
whole or in part after the Effective Time and this Article IX.
SECTION 9.2 ENTIRE AGREEMENT; ASSIGNMENT. (a) This Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including by merger
or consolidation) or otherwise; PROVIDED, HOWEVER, that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to Parent, Parent's ultimate parent company or any direct
or indirect wholly owned subsidiary of Parent or Parent's ultimate parent
company, but no such assignment shall relieve Parent or Merger Sub of its
obligations hereunder if such assignee does not perform such obligations. Any
assignment in violation of the preceding sentence shall be void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.3 NOTICES. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile; PROVIDED,
HOWEVER, that the fax is promptly confirmed by telephone confirmation thereof,
(iii) when delivered, if delivered personally to the intended recipient, and
(iv) one business day following sending by overnight delivery via a national
courier service, and in each case, addressed to a party at the following address
for such party:
if to Parent or to Merger
Sub, to: General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to: Security Capital Group Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without giving
effect to the choice of Law principles thereof.
SECTION 9.5 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.6 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Section 6.5, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.7 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) if necessary, a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
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SECTION 9.8 SPECIFIC PERFORMANCE. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at Law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or the Merger, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating to this
Agreement or the Merger in any court other than a federal or state court sitting
in the State of Delaware.
SECTION 9.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.10 INTERPRETATION. (a) The words "HEREOF," "HEREIN" and
"HEREWITH" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time, amended, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also to
its permitted successors and assigns.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION 9.11 DEFINITIONS. (a) "ACQUISITION PROPOSAL" means an inquiry,
offer or proposal regarding any of the following (other than the Merger)
involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, in a
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single transaction or series of related transactions; (iii) any tender offer or
exchange offer for 20 percent (20%) or more of the outstanding Shares or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
(b) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the
meaning provided in Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(c) "CASH CONSIDERATION" shall mean the Class A Cash Consideration
together with the Class B Cash Consideration.
(d) "CLASS A CASH CONSIDERATION" shall mean $1,300 in cash without
interest, subject to adjustment as set forth in Section 2.6.
(e) "CLASS A MERGER CONSIDERATION" shall mean the Class A Cash
Consideration, together with, if applicable, the Class A Stock Consideration.
(f) The "CLASS A PER SHARE FACTOR" shall be equal to fifty times the
Class B Per Share Factor.
(g) "CLASS A SHARES" shall mean shares of Class A Common Stock, par
value $0.01 per share of the Company, together with the associated rights.
(h) "CLASS A STOCK CONSIDERATION" shall mean number of shares ProLogis
Common Stock, if any, to which a holder of Class A Shares is entitled as
determined pursuant to Section 2.6.
(i) "CLASS B CASH CONSIDERATION" shall mean $26 in cash without
interest, subject to adjustment as set forth in Section 2.6.
(j) "CLASS B MERGER CONSIDERATION" shall mean the Class B Cash
Consideration, together with, if applicable, the Class B Stock Consideration.
(k) "CLASS B PER SHARE FACTOR" shall be 0.0000000058830 which number
is a fraction, expressed as a number, the numerator of which is one and the
denominator of which shall be the fully diluted number of Shares outstanding as
of the date hereof.
(L) "CLASS B SHARES" shall mean shares of Class B Common Stock, par
value $0.01 per share of the Company, together with the associated rights.
(m) "CLASS B STOCK CONSIDERATION" shall mean the number of shares
ProLogis Common Stock, if any, to which a holder of Class B Shares is entitled
as determined pursuant to Section 2.6.
(n) "COMPANY FUND" means the Funds listed on schedule 6.11.
(o) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
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(p) "FUND" means any U.S. or non-U.S. registered or unregistered
investment company or series thereof for which the Company or any of its
subsidiaries provides advisory or subadvisory services pursuant to an Investment
Company Act Advisory Agreement or otherwise.
(q) "INVESTMENT COMPANY ADVISORY AGREEMENT" means an investment
advisory agreement entered into by the Company or any of its subsidiaries for
the purpose of providing investment advisory or subadvisory services to a
registered investment company or series thereof.
(r) "KNOW" or "KNOWLEDGE" means, with respect to any party, the actual
knowledge of such persons listed on Section 1.11(j) of the Company Disclosure
Schedule.
(s) "MATERIAL ADVERSE EFFECT" means when used in connection with the
Company or any of its subsidiaries or Parent or any of its subsidiaries, as the
case may be, means any change, effect or circumstance that (i) is materially
adverse to the business, assets, financial condition or results of operations of
the Company and its subsidiaries or Parent and its subsidiaries, as the case may
be, in each case taken as a whole, excluding the effects of changes to the
extent related to (A) conditions in the United States, European or global
economy or capital or financial markets generally, including changes in interest
or exchange rates, (B) general changes in conditions (including changes in
legal, regulatory or business conditions or changes in GAAP) in or otherwise
affecting the industries in which the Company or Parent, as the case may be,
conducts business (C) this Agreement, the announcement or performance hereof and
the Merger, including the impact thereof on relationships with customers,
suppliers or employees, or (D) anything provided for or contemplated by the
budget previously provided by the Company to Parent or (ii) materially adversely
affects the ability of the Company or Parent and Purchaser, as the case may be,
to perform its obligations hereunder or consummate the Merger.
(t) "NON-INVESTMENT COMPANY ADVISORY AGREEMENT" means any investment
advisory agreement entered into by Company or any of its subsidiaries for the
purpose of providing investment advisory services to a client other than a
registered investment company or series thereof.
(u) "OWNERSHIP LIMIT" shall have the meaning assigned to such term in
Article FIFTH of the Articles.
(v) "PROLOGIS" shall mean ProLogis Trust, a Maryland real estate
investment trust.
(w) "PROLOGIS COMMON STOCK" shall mean common shares of beneficial
interest of ProLogis, $0.01 par value per share. All references to ProLogis
Common Stock shall be deemed to be references to ProLogis Common Stock as the
same may be adjusted for stock splits, dividends, recapitalizations,
reorganizations, and the like, and in the case of any such event such references
shall be automatically deemed to be references to the ProLogis Common Stock as
adjusted, with appropriate adjustments, as necessary, to the provisions hereof.
(x) The "PROLOGIS STOCK VALUE" shall be equal to the product of (i)
average of the daily closing prices (as of 4:00 p.m. eastern time) per share of
ProLogis Common Stock, as reported on the NYSE (as published in The Wall Street
Journal or, if not published therein or in-
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correctly published therein, in another authoritative source mutually selected
by Parent and the Company) for the ten (10) consecutive full trading days
immediately preceding the two (2) consecutive full trading days immediately
preceding the Stockholders Meeting Date (as hereinafter defined) (provided that
if the ProLogis Common Stock shall go "ex-dividend" during such measurement
period, an appropriate adjustment will be made to the ProLogis Stock Value to
take account of such dividend payment) and (ii) the number of shares of ProLogis
Common Stock owned by the Company and to be a part of the Merger Consideration
pursuant to the Stock Election.
(y) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(z) "PUBLIC INVESTEES" collectively means Storage USA, CarrAmerica
Realty Corporation, ProLogis and Regency and "PUBLIC INVESTEE" means each and
any one of such companies.
(aa) "REGENCY" shall mean Regency Realty Corporation, a Florida
corporation.
(bb) "STORAGE USA" shall mean Storage USA, Inc., a Tennessee
corporation.
(cc) "SEC" shall mean the United States Securities and Exchange
Commission.
(dd) "SHARES" shall mean the Class A Shares and the Class B Shares.
(ee) "STOCK CONSIDERATION" shall mean the Class A Stock Consideration
together with the Class B Stock Consideration.
(ff) "STOCKHOLDERS MEETING DATE" shall mean the date for the Company
Stockholder Meeting as set forth in the Proxy Statement as first mailed by the
Company to holders of Shares, PROVIDED, HOWEVER, that the Company may delay or
postpone (but not change to an earlier date) the date of the Company Stockholder
Meeting, or adjourn the Company Stockholder Meeting, to the extent it determines
doing so is reasonably necessary to comply with any applicable legal or
disclosure obligation, or in the event doing so is reasonably necessary to
obtain the Company Requisite Vote, and any such date to which the Company
Stockholder Meeting is so delayed, postponed or adjourned shall thereafter be
the "STOCKHOLDERS MEETING DATE", provided that the Company shall promptly notify
Parent of the date to which the Company Stockholder Meeting has been so delayed,
postponed or adjourned, and shall not thereafter hold the Company Stockholder
Meeting at a date prior to such date.
(gg) "STORAGE USA ACQUISITION" means the consummation of the Merger
contemplated by the Storage USA Transaction Agreements.
(hh) "STORAGE USA TRANSACTION AGREEMENTS" means that certain Agreement
of Purchase and Sale, dated as of December 3, 2001, by and among Storage USA,
Inc., Storage USA Trust, SUSA Partnership, L.P. and the Company, as the same may
be amended from time to time in accordance with the terms of this Agreement.
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(ii) "SUBSIDIARY" means, when used with reference to any party, any
corporation, limited liability company, partnership, joint venture or other
organization, whether incorporated or unincorporated, of which: (i) such party
or any other subsidiary of such party is a general partner; (ii) voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation, partnership, joint venture or other
organization is held by such party or by any one or more of its subsidiaries, or
by such party and any one or more of its subsidiaries; or (iii) at least 10% of
the equity, other securities or other interests is, directly or indirectly,
owned or controlled by such party or by any one or more of its subsidiaries, or
by such party and any one or more of its subsidiaries. Notwithstanding the
foregoing, no Public Investee, other than Storage USA, Inc. following
consummation of the Merger contemplated by the Storage USA Transaction
Agreements, will be deemed to be a subsidiary of the Company. References herein
to "the Company and its subsidiaries taken as a whole" or other words of similar
import shall be understood to refer to the Company and its subsidiaries on an
aggregate basis, but in the case of subsidiaries that are not wholly owned, only
to the extent of the Company's interest therein.
[signature page follows]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
SECURITY CAPITAL GROUP INCORPORATED
By: /S/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Name: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice Chairman, Chief
Operating Officer
EB ACQUISITION CORP.
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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