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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER
between
CORPORATE REALTY INCOME TRUST I
and
LEXINGTON CORPORATE PROPERTIES, INC.
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Dated as of May 29, 1997
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TABLE OF CONTENTS
ARTICLE 1 THE MERGER...........................................................1
Section 1.1 THE MERGER...................................................1
Section 1.2 THE CLOSING..................................................2
Section 1.3 EFFECTIVE TIME...............................................2
ARTICLE 2 ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION..........................................................2
ARTICLE 3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION..................2
ARTICLE 4 EXCHANGE OF STOCK, ASSUMPTION OF MORTGAGE AND OTHER
CONSIDERATION........................................................2
Section 4.1 CONVERSION AND REDEMPTION OF STOCK...........................2
Section 4.2 EXCHANGE OF CERTIFICATES REPRESENTING TRUST SHARES...........4
Section 4.3 RETURN OF EXCHANGE FUND......................................6
Section 4.4 CASH PAYMENT; CONTINUANCE OF MORTGAGES.......................6
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE TRUST..........................6
Section 5.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.....7
Section 5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS.............7
Section 5.3 CAPITALIZATION...............................................8
Section 5.4 SUBSIDIARIES AND OTHER INTERESTS.............................8
Section 5.5 NO VIOLATION.................................................8
Section 5.6 SEC DOCUMENTS................................................9
Section 5.7 LITIGATION...................................................9
Section 5.8 ABSENCE OF CERTAIN CHANGES...................................9
Section 5.9 ABSENCE OF UNDISCLOSED LIABILITIES..........................10
Section 5.10 REGISTRATION STATEMENT AND PROXY INFORMATION................10
Section 5.11 TAXES.......................................................10
Section 5.12 BOOKS AND RECORDS...........................................12
Section 5.13 PROPERTIES..................................................12
Section 5.14 ENVIRONMENTAL MATTERS.......................................13
Section 5.15 NO FEES.....................................................14
Section 5.16 OPINION OF FINANCIAL ADVISOR................................14
Section 5.17 CONTRACTS AND COMMITMENTS...................................14
Section 5.18 LEASES......................................................15
Section 5.19 AFFILIATED TRANSACTIONS.....................................15
Section 5.20 EMPLOYEES...................................................15
Section 5.21 DEFINITION OF THE TRUST'S KNOWLEDGE.........................16
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF LEXINGTON.........................16
Section 6.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW....16
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Section 6.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS............17
Section 6.3 CAPITALIZATION..............................................17
Section 6.4 REGISTRATION STATEMENT AND PROXY INFORMATION................17
Section 6.5 OTHER INTEREST..............................................17
Section 6.6 NO VIOLATION................................................18
Section 6.7 SEC DOCUMENTS...............................................18
Section 6.8 LITIGATION..................................................19
Section 6.9 ABSENCE OF CERTAIN CHANGES..................................19
Section 6.10 TAXES.......................................................19
Section 6.11 ENVIRONMENTAL MATTERS.......................................21
Section 6.12 NO FEES.....................................................21
Section 6.13 BENEFICIAL SHARE OWNERSHIP..................................22
Section 6.14 CONTRACTS AND COMMITMENTS...................................22
Section 6.15 LEXINGTON COMMON STOCK......................................22
Section 6.16 CONVERTIBLE SECURITIES......................................22
Section 6.17 DEFINITION OF LEXINGTON'S KNOWLEDGE.........................22
ARTICLE 7 COVENANTS...........................................................23
Section 7.1 ACQUISITION PROPOSALS.......................................23
Section 7.2 CONDUCT OF BUSINESSES.......................................23
Section 7.3 MEETING OF STOCKHOLDERS.....................................26
Section 7.4 FILINGS; OTHER ACTION.......................................27
Section 7.5 INSPECTION OF RECORDS.......................................27
Section 7.6 PUBLICITY...................................................28
Section 7.7 REGISTRATION STATEMENT......................................28
Section 7.8 LISTING APPLICATION.........................................29
Section 7.9 FURTHER ACTION..............................................29
Section 7.10 AFFILIATES OF THE TRUST.....................................29
Section 7.11 EXPENSES....................................................29
Section 7.12 INDEMNIFICATION AND INSURANCE...............................30
Section 7.13 REORGANIZATION..............................................31
Section 7.14 PAYMENT OF ADVISORY FEES AND TRANSACTION EXPENSES...........32
Section 7.15 REIT STATUS.................................................32
ARTICLE 8 CONDITIONS PRECEDENT................................................32
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..32
Section 8.2 CONDITIONS TO OBLIGATIONS OF THE TRUST TO EFFECT THE MERGER.33
Section 8.3 CONDITIONS TO OBLIGATION OF LEXINGTON TO EFFECT THE MERGER..34
ARTICLE 9 TERMINATION.........................................................35
Section 9.1 TERMINATION.................................................35
Section 9.2 EFFECT OF TERMINATION.......................................37
Section 9.3 FEES AND EXPENSES...........................................38
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Section 9.4 EXTENSION; WAIVER...........................................38
ARTICLE 10 GENERAL PROVISIONS.................................................39
Section 10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS...39
Section 10.2 NOTICES.....................................................39
Section 10.3 ASSIGNMENT; BINDING EFFECT; BENEFIT.........................39
Section 10.4 ENTIRE AGREEMENT............................................40
Section 10.5 CONFIDENTIALITY.............................................40
Section 10.6 AMENDMENT...................................................40
Section 10.7 GOVERNING LAW...............................................40
Section 10.8 COUNTERPARTS................................................41
Section 10.9 HEADINGS....................................................41
Section 10.10 WAIVERS.....................................................41
Section 10.11 INCORPORATION...............................................41
Section 10.12 SEVERABILITY................................................41
Section 10.13 INTERPRETATION AND CERTAIN DEFINITIONS......................41
Section 10.14 SCHEDULES...................................................42
Section 10.15 LIMITATION OF LIABILITY.....................................42
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SCHEDULES
Schedule 4.4 - Trust Obligations
Schedule 5.1(c) - Trust Organizational Documents
Schedule 5.5 - Trust Conflicts or Breaches
Schedule 5.9 - Trust Liabilities
Schedule 5.11 - Trust Taxes
Schedule 5.13 - Trust Properties
Schedule 5.14 - Trust Environmental Matters
Schedule 5.17 - Trust Contracts and Commitments
Schedule 5.18 - Trust Consents
Schedule 5.19 - Trust Affiliated Transactions
Schedule 6.1(b) - Lexington Subsidiaries
Schedule 6.1(d) - Lexington Charter Documents
Schedule 6.3 - Lexington Reserved Shares
Schedule 6.6 - Lexington Conflicts or Violations
Schedule 6.8 - Lexington Litigation
Schedule 6.10 - Lexington Taxes
Schedule 6.11 - Lexington Environmental Matters
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of May 29, 1997 between CORPORATE REALTY INCOME TRUST I, a Massachusetts
business trust having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "Trust"), and LEXINGTON CORPORATE PROPERTIES, INC., a Maryland
corporation having its offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("Lexington").
RECITALS
A. The Board of Trustees of the Trust and the Board of Directors of
Lexington each have determined that a business combination between the Trust and
Lexington is in the best interests of their respective companies and
stockholders, and accordingly have agreed to effect the merger provided for
herein upon the terms and subject to the conditions set forth herein.
B. It is intended that the merger provided for herein, for federal
income tax purposes, shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
C. The Trust has received a fairness opinion from its financial advisor
relating to the transactions contemplated hereby as more fully described herein.
D. The Trust and Lexington desire to make certain representations,
warranties and agreements in connection with the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
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THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3 hereof), the Trust shall be
merged with and into Lexington in accordance with this Agreement and the
separate corporate existence of the Trust shall thereupon cease (the "Merger").
Lexington shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation"). The Merger shall be
completed pursuant to Chapter 182 of the Massachusetts General Laws (the "MGL")
and Section 3-114 of the Maryland General Corporation Law (the "MGCL").
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1.2 THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place at the offices of
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP in New York, New York, at 1:00 p.m., local
time, on the later of (a) September 4, 1997 or (b) the second business day after
the last condition set forth in Article 8 shall have been satisfied or waived by
the party entitled to effect such waiver (but in any event no later than October
1, 1997), or at such other time, date or place as the parties hereto may agree.
The date on which the Closing occurs is hereinafter referred to as the "Closing
Date".
1.3 EFFECTIVE TIME. If all the conditions to the Merger set forth in
Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, the parties
hereto shall cause Articles of Merger satisfying the requirements of the MGCL
Law to be properly executed, verified and delivered for filing in accordance
with the MGCL Law on the Closing Date. The Merger shall become effective upon
the acceptance for record of the Articles of Merger by the State Department of
Assessments and Taxation of Maryland in accordance with the MGCL Law or at such
later time which the parties hereto shall have agreed upon and designated in
such filing in accordance with applicable law as the effective time of the
Merger (the "Effective Time").
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ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION
The articles of incorporation, as amended (the "Articles of
Incorporation") and by-laws of Lexington in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and by-laws of the
Surviving Corporation:
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DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
The directors and officers of Lexington immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
as of the Effective Time.
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EXCHANGE OF STOCK, ASSUMPTION OF MORTGAGE AND OTHER
CONSIDERATION
4.1 CONVERSION AND REDEMPTION OF STOCK.
(a) At the Effective Time, each outstanding share of common
stock, par value .0001 per share, of Lexington ("Lexington Common
Stock") and each outstanding share of Class A Senior Cumulative
Convertible Preferred Stock, par value $.0001 per share, of Lexington
("Lexington Preferred Stock") immediately prior to the Effective Time
shall remain outstanding and shall continue to represent one share of
Lexington Common Stock
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or Lexington Preferred Stock, as the case may be, of the Surviving
Corporation. At the Effective Time, Lexington shall issue shares of
Lexington Common Stock as contemplated by Section 4.1(b) and shall
deliver $1,000,000 cash (the "Cash Payment") to Corporate Realty
Advisors, Inc., the Trust's advisor, as contemplated by Section 4.4.
(b) At the Effective Time, each share of beneficial interest,
par value $.10 per share, of the Trust (the "Trust Shares") issued and
outstanding immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of the Trust, Lexington
or the holders of any of the securities of either of these entities, be
converted into a number of shares of Lexington Common Stock equal to a
fraction, the numerator of which is the Share Value and the denominator
of which is the Lexington Common Stock Price (collectively, the "Stock
Consideration"); provided, however, that in the event the Lexington
Common Stock Price is (i) greater than $14.125, then, for purposes of
determining the Stock Consideration, the Lexington Common Stock Price
shall be deemed to be $14.125, and (ii) in the event the Lexington
Common Stock Price is less than $12.125, then, for purposes of
determining the Stock Consideration, the Lexington Common Stock Price
shall be deemed to be $12.125. The "Lexington Common Stock Price" means
an amount equal to the average of the closing sales prices of Lexington
Common Stock on the New York Stock Exchange, Inc. during the twenty
consecutive trading days ending on the fifth business day immediately
preceding the Trust's meeting of shareholders referred to in Section
7.3. The "Share Value" shall equal the quotient obtained by dividing
(A) an amount equal to (y) $18.15 million minus (z) the amount of cash
which the Trust shall elect to receive from Lexington and apply toward
the payment of Trust obligations as provided in Section 4.4, by (B) the
total number of Trust Shares issued and outstanding immediately prior
to the Effective Time (subject to the adjustments as described in
Section 7.15). The Stock Consideration shall be appropriately adjusted
to reflect the effect of any stock split, reverse stock split, stock
dividend, reorganization, recapitalization or other like change with
respect to the Lexington Common Stock occurring after the date hereof
and prior to the Effective Time, or to reflect the effect of any
merger, consolidation or other transaction involving Lexington which
shall affect the Lexington Common Stock or its listing on the New York
Stock Exchange, Inc. Subject to the right of the Trust to terminate as
set forth in Section 9.1(g), the Trust and Lexington shall agree in
good faith on the specific adjustments required to be made pursuant to
the preceding sentence.
(c) As a result of the Merger and without any action on the
part of the holders thereof, all Trust Shares shall cease to be
outstanding, shall be canceled and retired and shall cease to exist and
each holder of a certificate (a "Certificate") representing any Trust
Shares shall thereafter cease to have any rights with respect to such
Trust Shares, except the right to receive, without interest, shares of
Lexington Common Stock, dividends payable in accordance with Section
4.2(c), any unspent portion of the Cash Payment and cash in lieu of
fractional shares of Lexington Common Stock in accordance with Section
4.2(e) upon the surrender of such Certificate.
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(d) Each Trust Share issued and held in the Trust's treasury
and each Trust Share held by Lexington or any of the Lexington
Subsidiaries immediately prior to the Effective Time, if any, by virtue
of the Merger, shall cease to be outstanding, shall be canceled and
retired and shall cease to exist and no payment of any consideration
shall be made with respect thereto.
4.2 EXCHANGE OF CERTIFICATES REPRESENTING TRUST SHARES.
(a) At the Effective Time, Lexington shall deposit, or shall
cause to be deposited, with ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Services LLC (the
"Exchange Agent"), for the benefit of the holders of Trust Shares, for
exchange in accordance with this Article 4, certificates representing
the shares of Lexington Common Stock and the cash in lieu of fractional
shares (such cash and certificates for shares of Lexington Common Stock
being hereinafter referred to as the "Exchange Fund") to be issued
pursuant to Section 4.1 and paid pursuant to this Section 4.2,
respectively, in exchange for outstanding Trust Shares. After payment
by the Trust of its accrued expenses, any remaining portion of the Cash
Payment will be delivered to the Exchange Agent by the Trust's advisor,
Corporate Realty Advisors, Inc. (the "Trust Advisor") at such time as
shall be determined by the Trust Advisor, for distribution to the
former shareholders of the Trust; provided that in the event any such
distribution shall occur on any date other than the date on which
certificates representing shares of Lexington Common Stock are
distributed to the former stockholders of the Trust, then, in such
event, the Trust Advisor shall pay any and all fees and expenses to be
charged by the Exchange Agent for effecting such distribution prior to
the date of such distribution by the Exchange Agent.
(b) Promptly after the Effective Time, Lexington shall cause
the Exchange Agent to mail to each holder of record of a Certificate or
Certificates (i) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions
as Lexington may reasonably specify and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing shares of Lexington Common Stock, cash in
lieu of fractional shares and the portion, if any, of the Cash Payment
distributable to the Trust's shareholders. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed and completed in accordance with
the instructions thereto, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing
the number of whole shares of Lexington Common Stock to which such
holder shall be entitled and (y) a check representing the amount of
cash in lieu of fractional shares, if any, plus the amount of any
dividends or distributions, if any, pursuant to paragraph (c) below,
after giving effect to any required withholding tax, and the
Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on the cash in lieu of fractional shares or on
the dividend or distribution, if any,
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payable to holders of Certificates, pursuant to this Section 4.2 or on
the portion of the Cash Payment distributable to the Trust's
shareholders. In the event of a transfer of ownership of Trust Shares
which is not registered in the transfer records of the Trust, a
Certificate representing the proper number of shares of Lexington
Common Stock, together with a check, for the Cash Payment, and the cash
to be paid in lieu of fractional shares plus, to the extent applicable,
the amount of any dividend or distribution, if any, payable pursuant to
paragraph (c) below, may be issued to such a transferee if the
Certificate representing shares of such Trust Shares is presented to
the Exchange Agent, accompanied by all documents required to evidence
and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Lexington Common Stock shall be
paid with respect to any Trust Shares represented by a Certificate
until such Certificate is surrendered for exchange as provided herein;
provided, however, that subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid by the
Surviving Corporation to the holder of the certificates representing
whole shares of Lexington Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective
Time theretofore payable with respect to such whole shares of Lexington
Common Stock and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of
Lexington Common Stock, less the amount of any withholding taxes which
may be required thereon.
(d) At and after the Effective Time, there shall be no
transfers on the stock transfer books of the Trust of the Trust Shares
which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for certificates for
shares of Lexington Common Stock, dividends, if any, the Cash Payment,
and cash in lieu of fractional shares, if any, in accordance with this
Section 4.2. Certificates surrendered for exchange by any person
constituting an "affiliate" of the Trust for purposes of Rule 145, as
such rule may be amended from time to time ("Rule 145"), of the rules
and regulations promulgated under the Securities Act of 1933, as
amended (the "Securities Act") shall not be exchanged until Lexington
has received an Affiliate Letter in a form satisfactory to the Trust
and Lexington from such person as provided in Section 7.10.
(e) No fractional shares of Lexington Common Stock shall be
issued pursuant hereto. In lieu of the issuance of any fractional share
of Lexington Common Stock pursuant to this Agreement, each holder of
the Trust Shares upon surrender of a Certificate for exchange shall be
paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) the Lexington Common Stock Price, by (ii)
the fraction of a
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share of Lexington Common Stock which such holder would otherwise be
entitled to receive under this Article 4.
4.3 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any shares of Lexington
Common Stock) that remains unclaimed by the former shareholders of the Trust one
year after the Effective Time shall be delivered to the Surviving Corporation.
Any remaining amount of the Cash Payment that remains unclaimed by the former
shareholders of the Trust one year after the Effective Time shall be delivered
to the Trust Advisor. Any former shareholders of the Trust who have not
theretofore complied with this Article 4 shall thereafter look only to (i) the
Surviving Corporation for payment of their shares of Lexington Common Stock, and
cash in lieu of fractional shares (plus dividends and distributions to the
extent set forth in Section 4.2(c), if any), as determined pursuant to this
Agreement, and (ii) the Trust Advisor for payment of their allocable share of
any remaining portion of the Cash Payment, in each case without any interest
thereon. None of Lexington, the Trust, the Exchange Agent or any other person
shall be liable to any former holder of Trust Shares for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. In the event 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
Exchange Agent or the Surviving Corporation or the Trust Advisor, as the case
may be, will issue in exchange for such lost, stolen or destroyed Certificate
the shares of Lexington Common Stock, the Cash Payment, and cash in lieu of
fractional shares (and to the extent applicable, dividends and distributions
payable pursuant to Section 4.2(c)).
4.4 CASH PAYMENT; CONTINUANCE OF MORTGAGES.
At the Effective Time, at the option of the Trust and if so requested
by the Trust, Lexington shall pay to the Trust Advisor, in immediately available
funds up to $1,000,000, which shall be used by the Trust and such advisor to pay
and discharge in full all of the Trust's obligations other than the mortgages
and other obligations described on Schedule 4.4. In the event any such amount is
requested by the Trust and applied toward the payment of Trust obligations as
aforesaid, any unexpended balance shall be paid to the Trust's former
stockholders in accordance with Section 4.2(a), at such time as the Trust
Advisor shall, in its sole discretion, determine, and Lexington shall have no
responsibility or liability for any such monies or the application thereof.
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REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants as follows:
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5.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.
(a) The Trust is a Massachusetts business trust duly formed,
validly existing and in good standing under the laws of Massachusetts.
The Trust is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state
of the United States in which the character of the properties owned or
leased by it therein or in which the transaction of its business makes
such qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse effect on the
business, results of operations or financial condition of the Trust
taken as a whole (a "Trust Material Adverse Effect"). The Trust has all
requisite corporate power and authority to own, operate, lease and
encumber its properties and carry on its business as now conducted.
(b) The Trust is not in violation of any order of any court,
governmental authority or arbitration board or tribunal, or to the
knowledge of the Trust, any law, ordinance, governmental rule or
regulation to which the Trust or any of its respective properties or
assets is subject.
(c) Copies of the Declaration of Trust (the "Declaration") and
other organizational documents (and all amendments thereto) of the
Trust are listed in Schedule 5.1(c), and the copies of such documents,
which have previously been delivered or made available to Lexington,
are true and correct.
5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Upon shareholder
approval of an amendment to the Trust's Declaration of Trust, the Trust will
have the requisite power and authority to enter into the transactions
contemplated hereby. The Board of Trustees of the Trust has unanimously approved
this Agreement, the Merger, and the transactions contemplated by this Agreement
and declared such transactions advisable and in the best interest of the
shareholders and the Trust, and shall recommend that the holders of Trust Shares
adopt and approve this Agreement, the Merger, and the transactions contemplated
by this Agreement at the Trust shareholders' meeting which will be held in
accordance with the provisions of Section 7.3 hereof. Subject only to (i) the
approval by the holders of a majority of the outstanding Trust Shares of an
amendment to the Trust's Declaration of Trust authorizing the Trust to merge,
and (ii) the approval of this Agreement, the Merger and the transactions
contemplated hereby by the holders of a majority of the outstanding Trust
Shares, the execution by the Trust of this Agreement and the consummation of the
Merger and the transactions contemplated by this Agreement, have been duly and
validly authorized by all requisite action on the part of the Trust and no other
authorization by the Trust is required. This Agreement has been duly and validly
executed and delivered by the Trust and constitutes the valid and legally
binding obligations of the Trust, enforceable against the Trust in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
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5.3 CAPITALIZATION. The authorized capital of the Trust consists of
20,000,000 Trust Shares. As of the date hereof, there are 1,010,776 Trust Shares
issued and outstanding and no Trust Shares are held in treasury or otherwise
reserved for issuance for any reason. All such Trust Shares are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. The
Trust has no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders of
the Trust on any matter. There are not at the date of this Agreement any
existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate the Trust to issue,
transfer or sell any Trust Shares. There are no agreements or understandings to
which the Trust is a party with respect to the voting of any Trust Shares or
which restrict the transfer of any such shares, nor does the Trust have
knowledge of any such agreements or understandings with respect to the voting of
any such shares or which restrict the transfer of any such shares other than
those set forth in the Trust's Declaration of Trust with respect to the
maintenance of the Trust as a real estate investment trust ("REIT"). There are
no outstanding contractual obligations of the Trust to repurchase, redeem or
otherwise acquire any Trust Shares or any other securities of the Trust. The
Trust is not under any obligation, contingent or otherwise, by reason of any
agreement to register any of its securities under the Securities Act.
5.4 SUBSIDIARIES AND OTHER INTERESTS. The Trust does not own directly
or indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business trust or other entity (other
than investments in short-term investment securities).
5.5 NO VIOLATION. Neither the execution and delivery by the Trust of
this Agreement nor the consummation by the Trust of the transactions
contemplated by this Agreement in accordance with its terms, will: (i) conflict
with or result in a breach of any provisions of the Trust's Declaration or other
organizational documents, if they are amended as contemplated in Section 7.3;
(ii) except as set forth in Schedule 5.5, violate, or conflict with, or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties of the Trust
under, or result in being declared void, voidable or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease, contract,
agreement or other instrument, commitment or obligation to which the Trust is a
party, or by which the Trust or any of its properties is bound or affected; or
(iii) other than the filings provided for in Article 1 of this Agreement, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Securities
Act or applicable state securities and "Blue Sky" laws (collectively, the
"Regulatory Filings"), filings as may be required in the registries of deeds or
similar governmental offices in those states where the Trust Properties (as
hereinafter defined) are located or filings necessary to qualify Lexington to do
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business as a foreign corporation in such states, require any consent, approval
or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority.
5.6 SEC DOCUMENTS. The Trust has filed all required forms, reports and
documents with the Securities and Exchange Commission ("SEC") since December 31,
1994 (collectively, the "Trust SEC Reports"), all of which were prepared in
accordance with the applicable requirements of the Exchange Act and the
Securities Act. The Trust SEC Reports were filed with the SEC in a timely manner
and constitute all forms, reports and documents required to be filed by the
Trust since December 31, 1994 under the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder (the "Securities Laws"). As of
their respective dates, the Trust SEC Reports (i) complied as to form in all
material respects with the applicable requirements of the Securities Laws and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. Each of the balance sheets of the Trust included in or incorporated
by reference into the Trust SEC Reports (including the related notes and
schedules) fairly presents the financial position of the Trust as of its date
and each of the statement of income, retained earnings and cash flows of the
Trust included in or incorporated by reference into the Trust SEC Reports
(including any related notes and schedules) fairly presents the results of
operations, retained earnings or cash flows, as the case may be, of the Trust
for the periods set forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments which would not be material in amount or
effect), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein and except, in the case of the unaudited statements, as permitted
by Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act.
5.7 LITIGATION. There are (i) no continuing orders, injunctions or
decrees of any court, arbitrator or governmental authority to which the Trust is
a party or by which any of its properties or assets are bound, or, to which any
person who is now, or, to the knowledge of the Trust, has been at any time prior
to the date hereof, a trustee, officer, employee or agent of the Trust acting in
such capacity is a party, and (ii) no actions, suits or proceedings pending
against the Trust or, to the knowledge of the Trust, threatened against the
Trust or against any person who is now, or has been at any time prior to the
date hereof, a trustee, officer, employee or agent of the Trust acting in such
capacity, at law or in equity, or before or by any federal or state commission,
board, bureau, agency or instrumentality.
5.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Trust SEC
Reports filed with the SEC prior to the date hereof, since December 31, 1996,
the Trust has conducted its business only in the ordinary course of such
business and there has not been (i) any Trust Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or other distribution with
respect to Trust Shares except as disclosed in writing to Lexington; (iii) any
material commitment, contractual obligation, borrowing, capital expenditure or
transaction (each, a "Commitment") entered into by the Trust, inside or outside
the ordinary course of business
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except for Commitments for expenses of environmental engineers, attorneys,
accountants and investment bankers incurred in connection with the Merger; or
(iv) any change in the Trust's accounting principles, practices or methods,
except as disclosed in writing to Lexington.
5.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on Schedule
5.9 or in the Trust SEC Reports and for liabilities incurred in the ordinary
course of business since December 31, 1996, and in connection with the
transactions contemplated hereby, to the knowledge of the Trust, the Trust does
not have any material liabilities, claims, losses, damages, deficiencies or
obligations (whether absolute, contingent, accrued or otherwise) of any nature
whatsoever.
5.10 REGISTRATION STATEMENT AND PROXY INFORMATION. None of the
information supplied or to be supplied by the Trust for inclusion in the Form
S-4 (as defined in Section 7.7), including any supplements or amendments
thereto, will, at the time it is mailed to the shareholders of the Trust, at the
time of the meeting of the Trust's shareholders or at the time that the Form S-4
is declared effective, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, the Trust makes no
representation or warranty with respect to any information supplied or to be
supplied by Lexington which is contained in the Form S-4.
5.11 TAXES. Except as set forth in Schedule 5.11:
(a) The Trust has timely and fully paid or caused to be paid,
or has adequately accrued or reserved for, all federal, state, local,
foreign, and other taxes (including without limitation, income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes,
use taxes, value-added taxes, gross receipts taxes, franchise taxes,
capital stock taxes, employment and payroll-related taxes, withholding
taxes, stamp taxes, transfer taxes, windfall profit taxes, property
taxes and environmental taxes, whether or not measured in whole or in
part by net income), fees, duties, assessments, withholdings or
governmental charges of any kind whatsoever, and all deficiencies, or
other additions to tax, additional amounts, interest, fines and
penalties with respect to any of the foregoing (collectively, "Taxes"),
required to be paid, accrued or reserved by it through the date hereof;
(b) The Trust has timely filed, in accordance with all
applicable laws, all federal, state, local and foreign tax returns,
reports, declarations, estimates, informational returns and statements
regarding Taxes (collectively "Returns") required to be filed in
respect of the Trust through the date hereof, and all such Returns
completely and accurately set forth the facts regarding the income,
properties, operations and status of any entity required to be shown
thereon and the amount of any Taxes relating to the applicable period;
(c) The Trust has timely and fully withheld and paid to the
appropriate governmental authority all taxes required to have been
withheld and paid in connection
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with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other party;
(d) For its taxable year ended December 31, 1996, for all of
its prior taxable years beginning with the taxable year ended December
31, 1990 and at all times thereafter up to and including the date
hereof, the Trust has qualified to be treated as a REIT within the
meaning of Sections 856-860 of the Code, including, without limitation,
the requirements of Sections 856 and 857 of the Code. For the periods
described in the preceding sentence, the Trust has satisfied all
requirements necessary to be treated as a REIT for purposes of the
income tax provisions of those states in which the Trust is subject to
income tax and which provide for the taxation of a REIT in a manner
similar to the treatment of REITS under Sections 856-860 of the Code;
(e) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority has asserted by written notice to the Trust or,
to the knowledge of the Trust, threatened to assert against the Trust
any deficiency or claim for additional Taxes. There is no dispute or
claim concerning any Tax liability of the Trust either claimed or
raised in writing by the IRS or any other governmental authority, or,
to the knowledge of the Trust, which, at some future date, may be
claimed or raised by the IRS or any other governmental authority. No
written claim has ever been made by a taxing authority in a
jurisdiction where the Trust does not file Returns that the Trust is or
may be subject to taxation by that jurisdiction. There are no security
interests, liens or other encumbrances of any nature on any of the
assets of the Trust that arose in connection with any failure (or
alleged failure) to pay any Taxes when due. The Trust has never been a
party to any Tax sharing or similar agreement or entered into a closing
agreement pursuant to Section 7121 of the Code (or any comparable
provision of state, local or foreign law); and
(f) The Trust has not received notice of any audit of any Tax
Return filed by the Trust, and the Trust has not been notified by any
Tax authority that any such audit is contemplated or pending. The Trust
has not executed or filed with the IRS or any other taxing authority,
and no person has been requested to so execute or file any agreement
extending the period for assessment or collection of any income or
other Taxes, or the time to file any Return other than routine
extensions. True, correct and complete copies of all federal, state and
local income or franchise tax returns required to be filed by the Trust
and all written communications relating thereto (including, without
limitation, in respect of any audits and examinations) have been
delivered to Lexington or made available to representatives of
Lexington. The Trust has not agreed, and is not required, to make any
adjustments under Section 481(a) of the Code (or any comparable
provision of state, local or foreign law) by reason of a change in
accounting method or otherwise. Since the most recent Tax period for
which the Trust has provided Lexington with a copy of each of its
federal, state and local income and franchise tax returns, neither the
Trust nor any person or entity on its behalf has made or changed any
election concerning Taxes or Returns, changed an annual accounting
period, adopted or changed any accounting method, filed
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any amended Return, settled any Tax claim or filed any amended Return,
settled any Tax claim or assessment or surrendered any right to claim a
refund of Taxes or obtained or entered into any Tax ruling, agreement,
contract, understanding, arrangement or plan.
5.12 BOOKS AND RECORDS.
(a) The books of account and other financial records of the
Trust are true, complete and correct in all material respects, have
been maintained in accordance with good business practices, and are
accurately reflected in all material respects in the financial
statements included in the Trust SEC Reports.
(b) Records of the Trust have been, or will be prior to the
Closing, made available to Lexington, and such records contain in all
material respects accurate minutes of all meetings and accurately
reflect in all material respects all other action of the shareholders
and trustees and any committees of the Board of Trustees of the Trust.
5.13 PROPERTIES. All of the real estate owned by the Trust (the "Trust
Properties") is set forth in Schedule 5.13. The Trust has made available to
Lexington for inspection title insurance policies obtained by the Trust in
connection with the acquisition of the Properties (the "Title Policies") and
surveys ("Surveys") relating to the Trust Properties. The Trust has no knowledge
of any encumbrance to title to any Trust Property or any survey matter affecting
any Trust Property other than (i) matters listed in the title reports obtained
by the Trust and delivered to Lexington with respect to such Trust Property (the
"Title Reports"), (ii) matters shown on the Survey with respect to such Trust
Property, (iii) customary ordinances and regulations, including zoning
ordinances and building codes, affecting building use or occupancy, none of
which are, to the knowledge of the Trust, violated by the present use of the
related Trust Property, (iv) matters listed in Schedule B of the Title Policies,
and (v) matters disclosed in Schedule 5.13. Schedule 5.13 sets forth all of the
Title Policies of the Trust relating to the Trust Properties and such policies
are, at the date hereof, in full force and effect and no claims have been made
against any such policies. To the knowledge of the Trust, except as set forth in
Schedule 5.13, the Trust has obtained all certificates, permits and licenses
from any governmental authority having jurisdiction over any of the Trust
Properties which are not the responsibility of tenants and no tenant, to the
knowledge of the Trust, has failed to obtain any such certificate, permit or
license. All agreements, easements and other rights which are necessary to
permit the lawful use and operation of all driveways, roads and other means of
egress and ingress to and from any of the Trust Properties, have been obtained
and are in full force and effect and the Trust has not received notice with
respect to the termination or breach of any such easements, agreements or other
rights. Each Trust Property is in full compliance with all governmental permits,
licenses and certificates except where the failure to be in compliance would not
be reasonably likely to have a Trust Material Adverse Effect. Except as set
forth in Schedule 5.13, no notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirements affecting any
portion of any of the Trust Properties has been issued by any governmental
authority which has not been remedied or cured. There are no material structural
defects relating
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to any of the Trust Properties, except as set forth in the reports referred to
in Schedule 5.13. The building systems of each Trust Property are in working
order in all material respects, except as set forth in the reports referred to
Schedule 5.13. Except as set forth in Schedule 5.13, there is no physical damage
to any Trust Property in excess of $25,000 for which there is no insurance in
effect covering the full cost of the restoration. Except as set forth in
Schedule 5.13, there is no current renovation or restoration or tenant
improvements ongoing to any Trust Property or any portion thereof, nor is there
any renovation, restoration, or tenant improvement which the Trust has committed
to undertake, the cost of which exceeds, or would be likely to exceed, $25,000
individually. Except as disclosed in Schedule 5.13, the use and occupancy of
each Trust Property complies in all material respects with all applicable codes
and zoning laws and regulations and there is no pending or, to the knowledge of
the Trust, any threatened proceeding or action that will in any manner affect
the size of, use of, improvements on, construction on, or access to any of the
Trust Properties. The Trust has not received any notice to the effect that (A)
any betterment assessments have been levied against, or any condemnation or
rezoning proceedings are pending or threatened with respect to any of the Trust
Properties, or (B) any zoning, building or similar law, code, ordinance, order
or regulation is or will be violated by the continued maintenance, operation or
use of any buildings or other improvements on any of the Trust Properties or by
the continued maintenance, operation or use of the parking areas except as set
forth in Schedule 5.1(c). Except as disclosed on Schedule 5.13, there are no
contingent liabilities or amounts owed by the Trust to third parties (excluding
any obligations with respect to mortgage loans encumbering the Properties) with
respect to any Property including, without limitation, those for leasing
commissions, asset management fees or brokerage fees.
5.14 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.14 and
any environmental assessment or report listed therein: (i) to the knowledge of
the Trust, no Hazardous Substances or Hazardous Wastes have been or are being
released into the environment, discharged into the environment or disposed of
from, at, or under the Trust Properties; (ii) to the knowledge of the Trust, no
Hazardous Substances or Hazardous Wastes have been or are being generated or
treated at the Trust Properties or discharged from the Trust Properties, except
in compliance with applicable Laws (defined below); (iii) to the knowledge of
the Trust, no Hazardous Wastes have been or are being stored for more than 90
days or handled at or on the Trust Properties, except in compliance with
applicable laws; (iv) none of the Trust Properties are listed on, and the Trust
has not received written or oral notice that any of the Trust Properties are
being considered for inclusion on, the National Priorities List ("NPL"), the
Comprehensive Environmental Response, Compensation and Liability Information
System ("CERCLIS"), or any State or local listing of sites which are known or
suspected to be contaminated by Hazardous Substances or Hazardous Wastes; (v) to
the knowledge of the Trust, there are no on-going, and there have been no,
violations of any federal, state, or local law, statute, ordinance, rule or
regulation ("Law") at any Trust Properties which could result in contamination
of the land, surface water or groundwater from, at, on or under any such
properties; and (vi) to the knowledge of the Trust, no federal, state or local
governmental board,
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body, department or agency (collectively "Government Agency") is investigating
any alleged or potential release, discharge, disposal or storage of Hazardous
Substances or Hazardous Wastes at, on, under or from any Trust Properties.
As used in this Agreement, the term "Hazardous Substance" shall mean
any hazardous or toxic chemical, waste, byproduct, pollutant, contaminant,
compound, product or substance, including without limitation asbestos,
polychlorinated biphenyl, petroleum (including crude oil or any fraction
thereof), radioactive substances and any material the manufacture, possession,
presence, use, generation, storage, transportation, treatment, release,
disposal, discharge, abatement, cleanup, removal, remediation or handling of
which is prohibited, controlled or regulated by any Government Agency pursuant
to any Law relating to protection of the environment or human health. The term
"Hazardous Waste" shall have the meaning set forth in the Resource Conservation
and Recovery Act, as amended, the regulations thereunder, and any similar or
implementing State or local law, statute, ordinance, rule or regulation.
The Trust has not received any notice from any Government Agency with
respect to alleged or potential liability relating in any way to Hazardous
Substances or Hazardous Wastes at, on, under or from any Trust Property.
5.15 NO FEES. The Trust has not entered into any contract, arrangement
or understanding with any person or firm other than the Trust Advisor which may
result in the obligation of such entity or Lexington to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby. Amounts due to the Trust Advisor will be paid in full at
Closing by the Trust and will not become the obligation of Lexington.
5.16 OPINION OF FINANCIAL ADVISOR. The Trust has received the opinion
of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., to the effect that, as of the date hereof, the Stock
Consideration and other consideration as described in Section 4.4 is fair to the
holders of the Trust Shares from a financial point of view, and has delivered a
true and correct copy of such opinion to Lexington, a copy of which may be
included, and referred to, in the Form S-4.
5.17 CONTRACTS AND COMMITMENTS. Schedule 5.17 sets forth (i) all notes,
debentures, bonds and other evidence of indebtedness which are secured or
collateralized by mortgages, deeds of trust or other security interests in the
Trust Properties or personal property of the Trust and (ii) each Commitment
entered into by the Trust which may result in total payments by or liability of
the Trust in excess of $10,000 in any calender year or $25,000 during the term
of any such Commitment and which may not be terminated within 90 days by the
Trust without payment of any penalty by the Trust. Copies of the foregoing are
listed in Schedule 5.17 and the copies of such documents, which have previously
been provided or made available to Lexington, are true and correct. Except as
set forth in Schedule 5.17, the Trust has not received any notice of a default
or breach under any of the documents described in the preceding sentence, and
any such default has been described in all material respects on Schedule 5.17
and has been cured to
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the satisfaction of the other party to such document. The Trust is not in
default respecting any payment obligations under any of the documents described
in the first sentence of this Section beyond any applicable grace periods.
Except as set forth on Schedule 5.17, the Merger will not require the payment of
any fees or other amounts by the Trust or Lexington under any of the documents
described in the first sentence of this Section and the Merger will not cause
the acceleration of, or a default under any of, such documents. To the knowledge
of the Trust, none of the other parties to any of the documents described in the
first sentence of this Section is in default under, or in breach of, any of such
documents and there has occurred no event, which the lapse of time or the giving
of notice, would be reasonably likely to result in a default or breach thereof.
There has been no payment default by any such other party to any of the
documents described in the first sentence of this Section.
5.18 LEASES. Each of the leases described in Item 2 of the Trust's Form
10-K for the year ended December 31, 1996, is valid and subsisting, in full
force and effect and binding upon the Trust and, to the knowledge of the Trust,
the other parties thereto. Each lessee thereunder has paid in full all amounts
due, and has satisfied in full all of its liabilities and obligations, under its
respective lease and there has not occurred any default under any such lease,
nor (to the knowledge of the Trust) does any condition exist that with notice or
lapse of time or both would constitute a default thereunder. No lessee has paid
rent under any of the leases more than one month in advance. All security
deposits specified under any such leases are held by the Trust and shall be
conveyed to Lexington upon consummation of the Merger. Except as disclosed in
Schedule 5.18, the Merger will not require the consent of any lessee, or require
any payment or undertaking by the Trust or Lexington under any of such leases.
5.19 AFFILIATED TRANSACTIONS. Except as described in Schedule 5.19 or
Item 13 of the Trust's Form 10-K for the year ended December 31, 1996, the Trust
has not engaged in any transactions with any affiliate and is not indebted to
any affiliate for any amounts. At Closing, the Advisory Services Agreement, and
any other agreement then in effect with any affiliate, will be terminated and
Lexington will not assume any responsibility for, or liability under, any such
agreements.
5.20 EMPLOYEES. The Trust has no employees and there are not, and have
not at any time been, any employment or similar agreements with any person to
which the Trust is a party, except the Advisory Services Agreement. The Trust
does not maintain or contribute to, and has never maintained or contributed to,
and is not, and has not, been a party to, any employee benefit plans, programs,
arrangements or practices, including any employee benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and all regulations thereunder.
5.21 DEFINITION OF THE TRUST'S KNOWLEDGE. As used in this Agreement,
the phrase "to the knowledge of the Trust" or any similar phrase means the
actual, not the constructive or imputed, knowledge of trustees of the Trust,
including any information contained in any written notice and correspondence
addressed to the Trust or any of its trustees.
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6
REPRESENTATIONS AND WARRANTIES OF LEXINGTON
Lexington represents and warrants to the Trust as follows:
6.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.
(a) Lexington is a corporation duly formed, validly existing
and in good standing under the laws of the State of Maryland. Lexington
is duly licensed or qualified to do business as a foreign corporation
and is in good standing under the laws of any other state of the United
States in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business,
results of operations or financial condition of Lexington and the
Lexington Subsidiaries (as defined below) taken as a whole (a
"Lexington Material Adverse Effect"). Lexington has all requisite
corporate power and authority to own, operate, lease and encumber its
properties and carry on its business as now conducted.
(b) Schedule 6.1(b) lists each subsidiary required to be
listed by Lexington in Exhibit 21 to the Lexington SEC Reports (the
"Lexington Subsidiaries"). Each of the Lexington Subsidiaries set forth
on Schedule 6.1(b) is a corporation, partnership or trust, as the case
may be, duly formed, validly existing and in good standing under the
laws of its jurisdiction of organization, has the organizational power
and authority to own its properties and to carry on its business as it
is now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its
property or the conduct of its business requires such qualification,
except for jurisdictions in which such failure to be so qualified or to
be in good standing would not have a Lexington Material Adverse Effect.
(c) To the knowledge of Lexington, neither Lexington nor any
Lexington Subsidiary is in violation of any law, ordinance,
governmental rule or regulation to which Lexington or any Lexington
Subsidiary or any of their respective properties or assets is subject.
(d) Copies of the Articles of Incorporation or other charter
documents (and all amendments thereto) of Lexington are listed in
Schedule 6.1(d), and the copies of such documents, which have
previously been delivered or made available to the Trust or its
counsel, are true and correct copies.
6.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Lexington has the
requisite corporate power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement. The Board of
Directors of Lexington has, by resolutions adopted by
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unanimous vote, approved this Agreement, the Merger and the other transactions
contemplated by this Agreement. The execution by Lexington of this Agreement,
and the consummation by Lexington of the transactions contemplated by this
Agreement have been duly authorized by all requisite corporate action on the
part of Lexington. This Agreement constitutes the valid and legally binding
obligations of Lexington, enforceable against Lexington in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity.
6.3 CAPITALIZATION. The authorized capital stock of Lexington consists
of: (i) 40,000,000 shares of Lexington Common Stock; (ii) 10,000,000 shares of
preferred stock, par value $.0001 per share (the "Preferred Stock"); and (iii)
40,000,000 shares of excess stock, par value $.0001 per share (the "Excess
Stock"). As of the date hereof, (i) 9,454,037, 1,325,000 and 0 shares of the
Lexington Common Stock, the Preferred Stock and the Excess Stock, respectively,
were validly issued and outstanding, fully paid and nonassessable; and (ii)
10,545,963, 0, and 0 shares of the Lexington Common Stock, the Preferred Stock
and the Excess Stock, respectively, were reserved for issuance as set forth on
Schedule 6.3 hereto. Except as set forth in the preceding sentence of this
Section 6.3, or as set forth on Schedule 6.3 hereto or contemplated by this
Agreement, as of the date hereof there are no other shares of capital stock of
Lexington outstanding and no other outstanding options, warrants, convertible or
exchangeable securities, subscriptions, rights (including preemptive rights),
stock appreciation rights, calls or commitments of any character whatsoever to
which Lexington is a party or may be bound requiring the issuance or sale of
shares of any capital stock of Lexington, and there are no contracts or other
agreements by which Lexington is or may become bound to issue additional shares
of its capital stock or any options, warrants, convertible or exchangeable
securities, subscriptions, rights (including preemptive rights), stock
appreciation rights, calls or commitments of any character whatsoever relating
to such shares.
6.4 REGISTRATION STATEMENT AND PROXY INFORMATION. None of the
information supplied or to be supplied by Lexington for inclusion in the Form
S-4 (as defined in Section 7.7), including any supplements or amendments
thereto, will, at the time it is mailed to the shareholders of the Trust, at the
time of the meeting of the Trust's shareholders or at the time that the Form S-4
is declared effective, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
wee made, not misleading. Notwithstanding the foregoing, Lexington makes no
representation or warranty with respect to any information supplied or to be
supplied by the Trust which is contained in the Form S-4.
6.5 OTHER INTEREST. Since December 31, 1996, Lexington has not acquired
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business trust or other entity which is, or will be,
required to be reported by Lexington in a report to the SEC and which has not
been so reported.
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6.6 NO VIOLATION. Except as set forth in Schedule 6.6, neither the
execution and delivery by Lexington of this Agreement nor the consummation by
Lexington of the transactions contemplated by this Agreement in accordance with
its terms will: (i) conflict with or result in a breach of any provisions of the
Articles of Incorporation, Charter and other organizational documents,
partnership agreements or joint venture agreements of Lexington or any Lexington
Subsidiary; (ii) result in a breach or violation of, a default under, or the
triggering of any payment or other material obligations pursuant to, or
accelerate vesting under, any of Lexington's stock option plans, or any grant or
award under any of the foregoing; (iii) violate, or conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination or in a right of termination or cancellation of, or accelerate
the performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties of Lexington or any
of the Lexington Subsidiaries under, or result in being declared void, voidable,
or without further binding effect, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or any license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Lexington or any of the Lexington Subsidiaries is a party, or by which
Lexington or any of the Lexington Subsidiaries or any of their properties is
bound or affected except for any of the foregoing matters which, individually or
in the aggregate, would not have a Lexington Material Adverse Effect; or (iv)
other than the Regulatory Rulings, require any consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority except where the failure to obtain any such consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority would not have a Lexington Material Adverse
Effect.
6.7 SEC DOCUMENTS. Lexington has filed all required forms, reports and
documents with the SEC since December 31, 1994 (collectively, the "Lexington SEC
Reports") all of which were prepared in accordance with the applicable
requirements of the Securities Laws. The Lexington SEC Reports were filed with
the SEC in a timely manner and constitute all forms, reports and documents
required to be filed by Lexington since December 31, 1994 under the Securities
Laws. As of their respective dates, the Lexington SEC Reports (i) complied as to
form in all material respects with the applicable requirements of the Securities
Laws and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets of Lexington
included in or incorporated by reference into the Lexington SEC Reports
(including the related notes and schedules) fairly presents the consolidated
financial position of Lexington and the Lexington Subsidiaries as of its date
and each of the consolidated statements of income, retained earnings and cash
flows of Lexington included in or incorporated by reference into the Lexington
SEC Reports (including any related notes and schedules) fairly presents the
results of operations, retained for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during
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the periods involved, except as may be noted therein and except, in the case of
the unaudited statements, as permitted by Form 10-Q pursuant to Section 13 or
15(d) of the Exchange Act.
6.8 LITIGATION. Except as set forth in Schedule 6.8 or in the Lexington
SEC Reports, there are (i) no continuing orders, injunctions or decrees of any
court, arbitrator or governmental authority to which Lexington or any Lexington
Subsidiary is a party or by which any of its properties or assets are bound, or,
to the knowledge of Lexington, to which any person who is now, or has been at
any time prior to the date hereof, a director, officer, employee or agent of
Lexington or any Lexington Subsidiary acting in such capacity is a party, and
(ii) no actions, suits or proceedings pending against Lexington or any Lexington
Subsidiary or, to the knowledge of Lexington, threatened against Lexington or
any Lexington Subsidiary or against any person who is now, or has been at any
time prior to the date hereof, a director, officer, employee or agent of
Lexington or any Lexington Subsidiary acting in such capacity, at law or in
equity, or before or by any federal or state commission, board, bureau, agency
or instrumentality, that in the case of clause (i) or (ii) are reasonably
likely, individually or in the aggregate, to have a Lexington Material Adverse
Effect. There are no written, nor to Lexington's knowledge threatened, claims
made against Lexington or any Lexington Subsidiary by any existing or former
joint venture partner or other partner of Lexington or any Lexington Subsidiary
that are reasonably likely, individually or in the aggregate, to have a
Lexington Material Adverse Effect.
6.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Lexington
SEC Reports filed with the SEC prior to the date hereof, since December 31,
1996, Lexington and the Lexington Subsidiaries have conducted their business
only in the ordinary course of such business and there has not been (i) any
Lexington Material Adverse Effect; (ii) as of the date hereof, any declaration,
setting aside or payment of any dividend or other distribution with respect to
the Lexington Common Stock, except for dividends declared in the ordinary course
of business; or (iii) any material change in Lexington's accounting principles,
practices or methods.
6.10 TAXES. Except as set forth in Schedule 6.10:
(a) Lexington and each of the Lexington Subsidiaries has
timely and fully paid or caused to be paid, or has adequately accrued
or reserved for, all Taxes required to be paid, accrued or reserved by
it through the date hereof;
(b) Lexington and each of the Lexington Subsidiaries has
timely filed, in accordance with all applicable laws, all federal,
state, local and foreign tax returns, reports, declaration estimates,
information returns and statements regarding Taxes (collectively
"Returns") required to be filed in respect of Lexington through the
date hereof, and all such Returns completely and accurately set forth
the facts regarding the income, properties, operations and status of
any entity required to be shown thereon and the amount of any Taxes
relating to the applicable period;
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(c) Lexington and each Lexington Subsidiary has timely and
fully withheld and paid to the appropriate governmental authority all
taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other party;
(d) Neither the IRS nor any other governmental authority has
now asserted by written notice to Lexington or any Lexington Subsidiary
or, to the knowledge of Lexington, threatened to assert against
Lexington or any Lexington Subsidiary any deficiency or claim for
additional Taxes. There is no dispute or claim concerning any Tax
liability of Lexington or any Lexington Subsidiary either claimed or
raised in writing by the IRS or any other governmental authority, or,
to the knowledge of Lexington, which may be claimed or raised by the
IRS or any other governmental authority. No written claim has ever been
made by a taxing authority in a jurisdiction where Lexington does not
file Returns that Lexington is or may be subject to taxation by that
jurisdiction. There are no security interests, liens or other
encumbrances of any nature on any of the assets of Lexington or any
Lexington Subsidiary that arose in connection with any failure (or
alleged failure) to pay any Taxes when due. Lexington has never been a
party to any Tax sharing or similar agreement or entered into a closing
agreement pursuant to Section 7121 of the Code (or any comparable
provision of state, local or foreign law); and
(e) Lexington has not received notice of any audit of any Tax
Return filed by Lexington, and Lexington has not been notified by any
Tax authority that any such audit is contemplated or pending. Neither
Lexington nor any of the Lexington Subsidiaries has executed or filed
with the IRS or any other taxing authority, and no person has been
requested to so execute or file any agreement extending the period for
assessment or collection of any income or other Taxes, or the time to
file any Return. True, correct and complete copies of all federal,
state and local income or franchise tax returns required to be filed by
Lexington and each of the Lexington Subsidiaries and all written
communications relating thereto (including, without limitation, in
respect of any audits and examinations) have been delivered to the
Trust or made available to representatives of the Trust. Lexington has
not agreed, and is not required, to make any adjustment under Section
481(a) of the Code (or any comparable provision of state, local or
foreign law) by reason of a change in accounting method or otherwise.
Since the most recent Tax period for which Lexington has provided the
Trust with a copy of each of its federal, state and local income and
franchise tax returns, neither Lexington nor any person or entity on
its behalf has made or changed any election concerning Taxes or
Returns, changed an annual accounting period, adopted or changed any
accounting method, filed any amended Return, settled any Tax claim or
assessment or surrendered any right to claim a refund of Taxes or
obtained or entered into any Tax ruling, agreement, contract,
understanding, arrangement or plan.
6.11 ENVIRONMENTAL MATTERS. Except as set forth in the Lexington SEC
Reports or in Schedule 6.11 and any environmental assessment or report listed
therein: (i) to the knowledge of Lexington, no Hazardous Substances or Hazardous
Wastes have been or are being released into
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the environment, discharged into the environment or disposed of from, at, on or
under the Lexington Properties; (ii) to the knowledge of Lexington, no Hazardous
Substances or Hazardous Wastes have been or are being generated or treated at
the Lexington Properties or discharged from the Lexington Properties, except in
compliance with applicable Laws; (iii) to the knowledge of Lexington, no
Hazardous Wastes have been or are being stored for more than 90 days or handled
at or on the Lexington Properties, except in compliance with applicable Laws;
(iv) none of the Lexington Properties are listed on, and Lexington has not
received written or oral notice that any of the Lexington Properties are being
considered for inclusion on, NPL, CERCLIS, or any State or local listing of
sites which are known or suspected to be contaminated by Hazardous Substances or
Hazardous Wastes; (v) to the knowledge of Lexington, there are no on-going, and
there have been no violations of any Law at any Lexington Properties which could
result in contamination of the land, surface water or groundwater from, at, on
or under any such properties; and (vi) no Governmental Agency is investigating
or has provided written notice that it is considering investigating any alleged
or potential release, discharge, disposal or storage of Hazardous Substances or
Hazardous Wastes at, on, under or from any Lexington Properties.
With respect to properties previously owned, leased or in the
possession of Lexington or Lexington Subsidiaries ("Lexington Previous
Properties"), Lexington has no actual knowledge that any of the activities or
conditions described in clauses (i), (ii) or (iii) as not having taken place or
existed at the Lexington Properties took place or existed at the Lexington
Previous Properties during the period when Lexington or the Lexington
Subsidiaries owned, leased or possessed the properties. In addition, Lexington
has no actual knowledge that any of the Lexington Previous Properties are listed
or are being considered for listing on any of the lists described in clause (iv)
or are being investigated or considered for investigation as described in clause
(vi).
Except as disclosed in Schedule 6.11, neither Lexington nor any
Lexington Subsidiary has received any notice from any Government Agency with
respect to alleged or potential liability relating in any way to Hazardous
Substances or Hazardous Wastes at, on, under or from any Lexington Property or
Lexington Previous Properties.
6.12 NO FEES. Except for an arrangement with ▇▇▇▇▇▇ ▇. ▇▇▇▇, whose fees
pursuant to such arrangement shall be the responsibility of Lexington, neither
Lexington nor any of the Lexington Subsidiaries has entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of such entity or the Trust to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby. Other than the Trust's arrangements set forth in Section 5.15, and as
set forth in the preceding sentence, to the knowledge of Lexington, there is not
any claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
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6.13 BENEFICIAL SHARE OWNERSHIP. Neither Lexington nor any of the
Lexington Subsidiaries owns any shares of beneficial interest of the Trust or
other securities convertible into shares of beneficial interest of the Trust.
6.14 CONTRACTS AND COMMITMENTS. None of Lexington or any of the
Lexington Subsidiaries has received any written notice of a default that has not
been cured under any of the documents filed by Lexington as an exhibit to the
Lexington SEC Reports or is in default respecting any payment obligations
thereunder beyond any applicable grace periods, except where such default would
not have a Lexington Material Adverse Effect. To the knowledge of Lexington,
neither Lexington nor any of the Lexington Subsidiaries is in default with
respect to any obligations, which individually or in the aggregate are material,
under any joint venture agreements to which Lexington or any of the Lexington
Subsidiaries is a party.
6.15 LEXINGTON COMMON STOCK. The issuance and delivery by Lexington of
shares of Lexington Common Stock in connection with the Merger and this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of Lexington. The shares of Lexington Common Stock to be
issued in connection with the Merger and this Agreement, when issued in
accordance with the terms of this Agreement, will be validly issued, fully paid,
nonassessable, free of preemptive rights and, assuming the effectiveness of the
Form S-4, registered under the Securities Act, subject to no restrictions on
transfer under applicable laws or imposed by Lexington, except as contemplated
by Section 7.10.
6.16 CONVERTIBLE SECURITIES. Except as described in the Lexington SEC
Reports, Lexington has no outstanding options, warrants or other securities
exercisable for, or convertible into, shares of Lexington Common Stock, the
terms of which would require any anti-dilution adjustments by reason of the
consummation of the transactions contemplated hereby.
6.17 DEFINITION OF LEXINGTON'S KNOWLEDGE. As used in this Agreement,
the phrase "to the knowledge of Lexington" or any similar phrase shall mean the
actual, not constructive or imputed, knowledge of officers of Lexington,
including any information contained in any written notice or correspondence
addressed to Lexington or any of its directors or officers.
7
COVENANTS
7.1 ACQUISITION PROPOSALS.
(a) Unless and until this Agreement shall have been terminated
in accordance with its terms, the Trust shall not, directly or
indirectly, through any officer, trustee, employee, representative or
agent of the Trust, (i) solicit or initiate any inquiries or proposals
regarding any merger, sale of substantial assets, sale of shares of
beneficial interest (including without limitation by way of a tender
offer for 15% or more of the outstanding Trust Shares) or similar
transactions involving the Trust other than the Merger
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(any of the foregoing inquiries or proposals being referred to herein
as an "Acquisition Proposal"), (ii) except as permitted under
subsection (e) below or as otherwise required by the Trust's
Declaration or applicable law, engage in negotiations concerning, or
provide any nonpublic information to any person relating to, any
Acquisition Proposal, or (iii) except as permitted under subsection (e)
below, agree to, approve, or recommend any Acquisition Proposal.
(b) The Trust shall immediately notify Lexington after receipt
of any Acquisition Proposal, or any modification of or amendment to any
Acquisition Proposal.
(c) The Trust shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons
(other than Lexington) conducted heretofore with respect to any of the
foregoing.
(d) The Trust shall ensure that the officers, trustees and
employees of the Trust and any investment banker or other advisor or
representative retained by the Trust are aware of the restrictions
described in this Section 7.1.
(e) Nothing contained in this Section 7.1 shall prevent the
Board of Trustees of the Trust from considering, negotiating,
discussing, approving and recommending to the shareholders of the Trust
a bona fide Acquisition Proposal not solicited in violation of this
Agreement, if, and only to the extent that, the Board of Trustees
determines in good faith (upon advice of outside counsel) that it is
required to do so in order to discharge properly its fiduciary duties.
Nothing contained in this Section 7.1 shall prohibit the Board of
Trustees from complying with Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any Acquisition Proposal.
7.2 CONDUCT OF BUSINESSES.
(a) Until the earlier of the Effective Time or the date on
which this Agreement is terminated in accordance with its terms, except
as specifically permitted by this Agreement, unless Lexington has
consented in writing thereto, the Trust:
(i) Shall use its reasonable best efforts to preserve
intact its business organizations and goodwill;
(ii) Shall confer on a regular basis with one or more
representatives of Lexington to report operational matters of
materiality (except for operational matters in the ordinary
course of business) and, subject to Section 7.1, any proposals
to engage in material transactions;
(iii) Shall promptly notify Lexington of any material
emergency or other material change in the condition (financial
or otherwise), business, properties,
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assets, liabilities, prospects or the normal course of its
businesses or in the operation of its properties, any material
governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated),
or the breach in any material respect of any representation,
warranty or covenant contained on its part herein; and
(iv) Shall promptly deliver to Lexington true and
correct copies of any report, statement or schedule filed with
the SEC subsequent to the date of this Agreement.
(b) Until the earlier of the Effective Time or the date on
which this Agreement is terminated in accordance with its terms,
Lexington:
(i) Shall use its reasonable best efforts to preserve
intact its business organizations and goodwill;
(ii) Shall promptly notify the Trust in the event (x)
any of E. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇. ▇▇▇▇▇▇ Eglin or
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively, "Senior Management")
determines to resign, is terminated or for any other reason is
no longer employed by Lexington, (y) Lexington's ratio of debt
to total market capitalization is reasonably likely to exceed
60% and (z) subject to applicable laws, of (1) any material
and adverse change in its business, operations or financial
condition, or any fundamental change in the nature or
operation of its business, (2) the breach, in any material
respect, of any representation, warranty or covenant on its
part contained herein or (3) any Material Structural Change
(as hereinafter defined); and
(iii) Shall promptly deliver to the Trust true and
correct copies of any report, statement or schedule filed with
the SEC, or any press release issued by Lexington, subsequent
to the date of this Agreement.
(c) Until the earlier of the Effective Time or the date on
which this Agreement is terminated in accordance with its terms, unless
Lexington has consented thereto (and Lexington hereby agrees to give
good faith consideration to any such request for consent by the Trust
and to respond to any such request within five (5) business days and in
the event no response is received by the Trust by the expiration of
such five business day period, such consent shall be deemed given) the
Trust:
(i) Shall conduct its operations in the ordinary
course in substantially the same manner as heretofore
conducted, subject to clauses (ii)-(ix) below;
(ii) Shall not acquire, enter into an option to
acquire or exercise an option or contract to acquire
additional real property, incur additional indebtedness,
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encumber assets or commence construction of, or enter into any
agreement or commitment to develop or construct, any other
type of real estate projects;
(iii) Shall not amend the Trust's Declaration or its
other organizational documents except as contemplated by this
Agreement;
(iv) Shall not (A) issue any shares of its capital
stock, effect any stock split, reverse stock split, stock
dividend, recapitalization or other similar transaction; (B)
grant, confer or award any option, warrant, conversion right
or other right not existing on the date hereof to acquire any
shares of its capital stock, (C) increase any compensation or
enter into or amend any employment agreement with any of its
present or future officers or trustees or retain any person as
an employee, or (D) adopt any employee benefit plan (including
any stock option, stock benefit or stock purchase plan);
(v) Shall not, except in accordance with and as
permitted under Section 7.2(d), sell, lease or otherwise
dispose of or enter into an option or other commitment to
dispose of (A) any the Trust Properties or (B) except in the
ordinary course of business, any of its other assets;
(vi) Shall not make any loans, advances or capital
contributions to, or investments in, any other person or make
or declare any dividend or distribution except as permitted by
Section 7.2(e);
(vii) Shall not pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent financial statements (or the
notes thereto) of the Trust included in the Trust SEC Reports
or incurred in the ordinary course of business consistent with
past practice;
(viii) Shall not enter into any Commitment which may
result in total payments or liability by or to it in excess of
$25,000 other than Commitments for expenses of attorneys,
accountants and investment bankers incurred in connection with
the Merger, but subject to Section 7.11; and
(ix) Shall not enter into any Commitment with any
officer, trustee, consultant or affiliate of the Trust.
(d) The Trust shall not, without the written consent of
Lexington, which consent may not be unreasonably withheld, (i) effect
any material change in any lease or occupancy agreement currently in
effect (together with such additional leases approved or permitted
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pursuant to this Agreement, the "Leases"), (ii) renew or extend the
term of any Lease, unless the same is an extension or expansion
permitted pursuant to the express terms of an existing Lease, or (iii)
enter into any new Lease or cancel or terminate any Lease. When seeking
consent to a new or modified Lease, the Trust shall provide notice of
the identity of the Tenant, a term sheet, letter of intent or proposed
lease containing material business terms (including, without
limitation, rent, expense base, concessions, tenant improvement
allowances, brokerage commissions, and expansion and extension options)
and whatever credit and background information, if any, the Trust then
possesses with respect to such tenant. Lexington shall be deemed to
have consented to any proposed Lease or Lease modification if it has
not responded to the Trust within five (5) business days after receipt
of such information. Upon Lexington's approval or deemed approval, the
Trust shall be entitled to enter into a Lease.
(e) The Trust may declare regular quarterly dividends
(provided that any such dividends do not exceed, on a per share basis,
the per share dividend for the Trust's most recent fiscal quarter ended
prior to the date of this Agreement) and any dividends as contemplated
under Section 7.15. In addition, the Trust may declare and pay a
special dividend within 30 days prior to the Effective Time in an
aggregate amount up to the amount of cash on hand at the time of such
declaration; provided, however, that the Trust may only make such
payment after reserving a sufficient amount of cash necessary to pay
those expenses for which it is responsible under this Agreement.
7.3 MEETING OF STOCKHOLDERS. The Trust will take all action necessary
in accordance with applicable law and its Declaration of Trust and other
organizational documents to convene a meeting of its shareholders as promptly as
practicable to consider and vote upon the approval of this Agreement and the
transactions contemplated hereby. The Board of Trustees of the Trust, subject to
Section 7.1, shall unanimously recommend that its shareholders approve this
Agreement and the transactions contemplated hereby and the adoption of an
amendment to its Declaration of Trust authorizing merger, and the Trust shall
use its reasonable best efforts to obtain such approval, including, without
limitation, by timely mailing the proxy statement/prospectus contained in the
Form S-4 (as defined in Section 7.7 hereof) to its shareholders and including
such recommendation within such Form S-4; provided, however, that nothing
contained in this Section 7.3 shall prohibit the Board of Trustees of the Trust
from failing to make or withdrawing such recommendation or using their
reasonable best efforts to obtain such approval if the Board of Trustees of the
Trust has determined in good faith, after consultation with and based upon the
advice of counsel, that such action is necessary for such Board of Trustees to
comply with its fiduciary duties to its stockholders under applicable law. It
shall be a condition to the mailing of the Form S-4 that (i) Lexington shall
have received a "comfort" letter from Ernst & Young, independent public
accountants for the Trust, dated as of a date within two business days before
the date on which the Form S-4 shall become effective, with respect to the
financial statements of the Trust included or incorporated in the Form S-4, in
form and substance reasonably satisfactory to Lexington, and customary in scope
and substance for "comfort" letters delivered by independent public accountants
in connection with registration
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statements and proxy statements similar to the Form S-4, and (ii) the Trust
shall have received a "comfort" letter from KPMG Peat Marwick, independent
public accountants for Lexington, dated as of a date within two business days
before the date on which the Form S-4 shall become effective, with respect to
the financial statements of Lexington included or incorporated in the Form S-4,
in form and substance reasonably satisfactory to the Trust, and customary in
scope and substance for "comfort" letters delivered by independent public
accountants in connection with registration statements and proxy statements
similar to the Form S-4.
7.4 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Trust and Lexington shall: (a) to the extent required, promptly
make their respective filings with respect to the Merger; (b) use all reasonable
best efforts to cooperate with one another in (i) determining which filings are
required to be made prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
Effective Time from, governmental or regulatory authorities of the United
States, the several states and foreign jurisdictions and any third parties in
connection with the execution and delivery of this Agreement, the consummation
of the transactions contemplated by this Agreement and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorization; (c) use all reasonably best efforts to obtain in writing any
consents required from third parties to effectuate the Merger, such consents to
be in reasonably satisfactory form to the Trust and Lexington; and (d) use all
reasonable efforts to take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
trustees or directors of Lexington and the Trust shall take all such necessary
action.
7.5 INSPECTION OF RECORDS. From the date hereof to the Effective Time,
each of the Trust and Lexington shall allow all designated officers, attorneys,
accountants and other representatives of the other access, at all reasonable
times, to the records and files, correspondence, audits and properties, as well
as to all information relating to commitments, contracts, title and financial
position, or otherwise pertaining to the business and affairs, of the Trust and
Lexington and its subsidiaries for purposes related to an evaluation of the
transactions contemplated hereby.
7.6 PUBLICITY. Lexington and the Trust shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or any transaction contemplated herein and shall not
issue any such press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by law or the rules of the applicable stock exchange if it has used its
reasonable best efforts to consult with the other party and to obtain such
party's consent but has been unable to do so in a timely manner.
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7.7 REGISTRATION STATEMENT. Lexington and the Trust shall cooperate and
promptly prepare, and Lexington shall file with the SEC on or before June 20,
1997, a Registration Statement on Form S-4 under the Securities Act, with
respect to the shares of Lexington Common Stock issuable in the Merger, a
portion of which Form S-4 shall also serve as the proxy statement with respect
to the meetings of the stockholders of the Trust in connection with Merger (in
its entirety, the "Form S-4"). The parties will cause the Form S-4 to comply as
to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder. Each
of Lexington and the Trust shall furnish all information about itself and its
business and operation and all necessary financial information to the other as
the other may reasonably request in connection with the preparation of the Form
S-4. Lexington shall use its best efforts, and the Trust will cooperate with
Lexington, to have the Form S-4 declared effective by the SEC as promptly as
practicable. Lexington shall use its best efforts to obtain, prior to the
effective date of the Form S-4, all necessary state securities law or "blue sky"
permits or approvals required to carry out the transactions contemplated by this
Agreement and will pay all expenses incident thereto. Lexington agrees that the
Form S-4 and each amendment or supplement thereto at the time of mailing thereof
and at the time of the meeting of stockholders of the Trust, will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by Lexington in
reliance upon and in conformity with information concerning the Trust furnished
to Lexington by the Trust for use in the Form S-4. The Trust agrees that the
information provided by it for inclusion in the Form S-4 and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
meeting of shareholders of the Trust, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Lexington will advise and deliver copies
to the Trust, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Lexington
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Form S-4 or
comments thereon (which Lexington agrees to promptly respond to) and responses
thereto or requests by the SEC for additional information (which Lexington
agrees to promptly provide).
7.8 LISTING APPLICATION. Prior to the Effective Time, Lexington shall
prepare and submit to the New York Stock Exchange a listing application covering
the shares of Lexington Common Stock issuable in the Merger, and shall obtain
prior to the Effective Time approval for the listing of such Lexington Common
Stock, subject to official notice of issuance.
7.9 FURTHER ACTION. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof,
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perform such further acts and execute such documents as may reasonably be
required to effect the Merger. In connection with the Closing, the Trust shall
use its best efforts to deliver to Lexington such deeds, bills of sale,
assignments, certificates, affidavits and indemnities as are required to
effectuate the consummation of the transactions described herein.
7.10 AFFILIATES OF THE TRUST.
(a) At least 30 days prior to the effective date of the Form
S-4, the Trust shall deliver to Lexington a list of names and addresses
of those persons who were, in the Trust's reasonable judgment, at the
record date for its stockholders' meeting to approve the Merger,
"affiliates" (each such person, an "Affiliate") of the Trust within the
meaning of Rule 145. The Trust shall provide Lexington such information
and documents as Lexington shall reasonably request for purposes of
reviewing such list. The Trust shall use its reasonable best efforts to
deliver or cause to be delivered to Lexington, at least 30 days prior
to the Closing Date, from each of the Affiliates of the Trust
identified in the foregoing list, an Affiliate Letter in a form
satisfactory to the Trust and Lexington. Lexington shall be entitled to
place legends as specified in such Affiliate Letters on the
certificates evidencing any shares of Lexington Common Stock to be
received by such Affiliates pursuant to the terms of this Agreement,
and to issue appropriate stop transfer instructions to the transfer
agent for the shares of Lexington Common Stock, consistent with the
terms of such Affiliate Letters.
(b) Lexington shall file the reports required to be filed by
it under the Exchange Act and the rules and regulations adopted by the
SEC thereunder, to the extent required from time to time to enable such
Affiliate to sell shares of Lexington Common Stock received by such
Affiliate in the Merger with registration under the Securities act
pursuant to (i) Rule 145(d)(1) or (ii) any successor rule or regulation
hereafter adopted by the SEC.
7.11 EXPENSES. Subject to the provisions of Article 9, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that, in addition to its own costs and expenses, the Trust will be responsible
for and shall discharge prior to the Closing or from the proceeds of the Cash
Payment all costs associated with environmental audits of the Trust Properties,
which audits have been received and approved by Lexington, and all other closing
costs including, but not limited to, survey charges, third party and
governmental fees (except fees payable to the SEC and state "blue sky" fees,
which shall be paid by Lexington), charges and taxes, and the expenses of the
Trust's attorneys, accountants and investment bankers, except as provided below;
and, in addition to its own costs and expenses, Lexington shall be responsible
for the fees and expenses of its legal counsel, and engineering studies of the
Trust Properties with respect to the structural soundness of the Trust
Properties. The Trust and Lexington shall share equally (i) the printing costs
associated with the Form S-4, provided that the Trust's portion of such costs
shall not
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exceed $15,000; and (ii) restructuring or assumption or amendment fees payable
to the Trust's lenders, provided that Lexington's portion of such fees shall not
exceed $30,000.
7.12 INDEMNIFICATION AND INSURANCE.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action,
suit, proceeding or investigation in which any person who is now, or
has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, a trustee, officer, employee, fiduciary or agent of
the Trust (the "Indemnified Parties") is, or is threatened to be, made
a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he, she or it is or was a
trustee, officer, employee or agent of the Trust, or is or was serving
at the request of the Trust as a trustee, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or
after the Effective Time, the parties hereto agree to cooperate and use
their reasonable best efforts to defend against and respond thereto. It
is understood and agreed that the Trust shall indemnify and hold
harmless, and after the Effective Time Lexington shall indemnify and
hold harmless, as and to the full extent permitted by applicable law or
the Declaration of Trust of the Trust, each Indemnified Party against
any losses, claims, damages, liabilities, costs, expenses (including
attorneys' fees and expenses, judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time); (i)
the Trust, and the Lexington after the Effective Time, shall promptly
pay expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the full
extent permitted by law, (ii) the Indemnified Parties may retain
counsel satisfactory to them, provided such counsel is reasonably
satisfactory to Lexington, and the Trust, and Lexington after the
Effective Time, shall promptly pay all fees and expenses of such
counsel for the Indemnified Parties after reasonably detailed
statements therefor are received, and (iii) the Trust and Lexington
will use their respective reasonable best efforts to assist in the
vigorous defense of any such matter; provided, that neither the Trust
nor Lexington shall be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably
withheld); and provided further that the Lexington shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such
determination shall have become final and non-appealable, that
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. The Indemnified Parties as a
group may retain only one law firm to represent them with respect to
any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties. Any Indemnified Party
wishing to claim indemnification under this Section 7.12, upon learning
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of any such claim, action, suit, proceeding or investigation, shall
notify the Trust and, after the Effective Time, Lexington, thereof,
provided that the failure to so notify shall not affect the obligations
of the Trust or Lexington except to the extent such failure to notify
materially prejudices such party.
(b) Lexington agrees that all rights to indemnification
existing in favor, and all limitations on the personal liability, of
the Indemnified Parties provided for in the Trust's Declaration or
similar organizational documents as in effect as of the date hereof
with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect for a
period of not less than six (6) years from the Effective Time;
provided, however, that all rights to indemnification in respect of any
claim (a "Claim") asserted or made within such period shall continue
until the disposition of such Claim.
(c) This Section 7.12 is intended for the irrevocable benefit
of, and to grant third party rights to, the Indemnified Parties and
shall be binding on all successors and assigns of Lexington and the
Trust. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 7.12 and Lexington acknowledges and
agrees that each Indemnified Party would suffer irreparable harm and
that no adequate remedy at law exists for a breach of such covenants.
(d) In the event Lexington or any of its successors or assigns
(i) consolidates with or merges into any other person or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person or entity,
then, and in each such case, proper provision shall be made so that the
successors and assigns of Lexington assume the obligations set forth in
this Section 7.12.
7.13 REORGANIZATION. From and after the date hereof and until the
earlier of the Effective Time or the date on which this Agreement is terminated
in accordance with its terms, none of Lexington, the Trust or its affiliates
shall (i) knowingly take any action, or knowingly fail to take any action, that
would jeopardize qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code or (ii) enter into any contract,
agreement, commitment or arrangement with respect to the foregoing. Following
the Effective Time, Lexington shall use its reasonable best efforts to conduct
its business in a manner that would not jeopardize the characterization of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
7.14 PAYMENT OF ADVISORY FEES AND TRANSACTION EXPENSES. Notwithstanding
anything to the contrary set forth in this Agreement, Lexington and the Trust
hereby agree that, immediately prior to, or upon, the Effective Time, the Trust
shall pay at Closing to the Trust Advisor the termination fee described in the
Advisory Services Agreement dated September 22, 1989 between the Trust and the
Advisor, to the extent not waived. The Trust will pay all its
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accrued and unpaid obligations and its costs relating to the Merger, so that
Lexington will assume no liabilities of the Trust other than the mortgages and
other obligations described on Schedule 4.4 and those expenses described in
Section 7.11.
7.15 REIT STATUS. Notwithstanding anything to the contrary set forth in
this Agreement, nothing in this Agreement shall prohibit the Trust from taking,
and the Trust hereby agrees to take, any action at any time or from time to time
that in the reasonable judgment of the Trust is legally necessary for the Trust
to maintain its qualification as a REIT within the meaning of Sections 856-860
of the Code for any period or portion thereof ending on or prior to the Merger
including without limitations, making dividend or distribution payments to
stockholders. To the extent that any dividends or distributions are paid to the
Trust shareholders other than the payments permitted to be made pursuant to
Section 7.2, the Share Value shall be reduced by the per share amount of such
dividend or distribution payments. Prior to the payment of any such dividend or
distribution contemplated by the preceding sentence, the Trust shall provide
written notice of its intention to make such dividend or distribution and the
reasons therefor to Lexington. Following the Merger, Lexington shall use its
best efforts to take any such actions as may be necessary to maintain the
Trust's status as a REIT for any period or portion thereof ending on or prior to
the Merger (including, without limitation, the mailing of stockholder demand
letters as required by Treasury Regulations sec. 1.857-8).
8
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part by the parties hereto, to the extent permitted by
applicable law:
(a) This Agreement and the transactions contemplated hereby
shall have been approved by the requisite vote of shareholders of the
Trust, and the Trust's shareholders shall have approved an amendment to
the Trust's Declaration of Trust authorizing the Merger.
(b) Neither of the parties hereto shall be subject to any
order, ruling or injunction of a court of competent jurisdiction which
prohibits the consummation of the transactions contemplated by this
Agreement. In the event any such order, ruling or injunction shall have
been issued, each party agrees to use its best efforts to have any such
order, ruling or inunction lifted, stayed or reversed.
(c) The Form S-4 shall have been declared effective by the SEC
under the Securities Act, and no stop order suspending the
effectiveness of the Form S-4 shall have
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been issued by the SEC, and no proceedings for that purpose shall have
been initiated or, to the knowledge of Lexington or the Trust,
threatened by the SEC.
(d) Lexington shall have obtained the approval for the listing
of the shares of Lexington Common Stock issuable in the Merger on the
New York Stock Exchange, subject to official notice of issuance.
(e) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board,
other regulatory body or third parties required to be made or obtained
by Lexington, the Trust and any affiliated entities in connection with
the execution, delivery and performance of this Agreement shall have
been obtained or made, including obtaining any consents or approvals
which are required from any holders of mortgages affecting any Trust
Properties (the "Lender Consents"); provided, however, approvals or
consents are not required where the failure to have obtained or made
any such consent, authorization, order, approval, filing or
registration, would not have a Trust Material Adverse Effect or a
Lexington Material Adverse Effect, as the case may be.
8.2 CONDITIONS TO OBLIGATIONS OF THE TRUST TO EFFECT THE MERGER. The
obligation of the Trust to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the following conditions, unless waived by
the Trust:
(a) Each of the representations and warranties of Lexington
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time
as though made on and as of the Effective Time and the Trust shall have
received a certificate, dated the Closing Date, signed on behalf of
Lexington by the Chairman, Vice Chairman or President of Lexington to
the foregoing effect.
(b) Lexington shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective
Time, and the Trust shall have received a certificate, dated the
Closing Date, signed on behalf of Lexington by the Chairman, Vice
Chairman or President of Lexington to the foregoing effect.
(c) The Trust shall have received the opinion of counsel,
reasonably acceptable to the Trust, and subject to customary conditions
and qualifications (including reliance, in part, on representations of
Lexington and the Trust), to the effect that the Merger will be treated
for federal income tax purposes as a tax-free reorganization qualifying
under the provisions of Sections 368(a) of the Code, which opinion
shall not have been withdrawn or modified in any material respect.
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Section 8.3 CONDITIONS TO OBLIGATION OF LEXINGTON TO EFFECT THE MERGER.
The obligations of Lexington to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, unless
waived by Lexington:
(a) Each of the representations and warranties of the Trust
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time
as though made on and as of the Effective Time, and Lexington shall
have received a certificate, dated the Closing Date, signed on behalf
of the Trust by a trustee of the Trust to the foregoing effect.
(b) The Trust shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective
Time, and Lexington shall have received a certificate, dated the
Closing Date, signed on behalf of the Trust by the a trustee of the
Trust to the foregoing effect.
(c) Lexington shall have received the opinion of counsel,
reasonably acceptable to Lexington, and subject to customary conditions
and qualifications (including reliance, in part, on representations of
Lexington and the Trust), to the effect that the Merger will be treated
for federal income tax purposes as a tax-free reorganization qualifying
under the provisions of Sections 368(a) of the Code, which opinion
shall not have been withdrawn or modified in any material respect.
(d) Estoppel certificates in form reasonably acceptable to
Lexington and otherwise indicating that all Leases are in full force
and effect and there are no defaults thereunder shall have been
obtained and delivered to Lexington.
(e) Lexington shall have received the letters from Affiliates
of the Trust referred to in Section 7.10, and such letters shall be in
full force and effect.
(f) None of the Properties shall have been encumbered by any
lien, easement, covenant, restriction or other title matter not
reflected on the Title Policies for the related property other than
those title matters set forth on Title Reports delivered to Lexington.
Lexington shall have received title reports (or, at its option, title
insurance policies) updated through the Effective Time confirming the
foregoing status of title to the Properties as of the Effective Time.
(g) The Trust shall have paid any real estate transfer or
similar taxes incurred in connection with the Merger which are payable
in connection with filing a certificate of merger or quitclaim deed,
but not otherwise.
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(h) Lexington shall have received evidence reasonably
satisfactory to it that the Trust's mortgage lenders have approved the
assumption by Lexington of the mortgages on each of the Trust's
Properties.
(i) Each guarantor of any lease relating to any of the Trust's
properties shall have agreed to the continuing effectiveness of such
guarantee upon confirmation of the Merger.
(j) Lexington shall have received with respect to the Trust
Property located in Virginia (A) a survey reasonably acceptable to
Lexington and its counsel showing Parcels 1, 2, and 3 as described in
the Ground Lease and Agreement dated as of February 28, 1990 between
CRA Acquisition Corp. and Circuit City Stores, Inc., and (B) back-up
documentation regarding the dedication for public use of such Parcels 2
and 3, as referenced in Lawyers Title Insurance Corporation title
commitment dated October 8, 1996, case number 1960836.
9
TERMINATION
9.1 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after approval and adoption
of this Agreement by the stockholders of the Trust:
(a) by mutual written consent of Lexington and the Trust; or
(b) by either Lexington or the Trust if any United States
federal or state court of competent jurisdiction or other governmental
entity shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become
final and non-appealable, provided that the party seeking to terminate
shall have used its best efforts to appeal such order, decree, ruling
or other action; or
(c) by Lexington upon a material breach of any representation,
warranty, covenant or agreement on the part of the Trust set forth in
this Agreement, or if any representation or warranty of the Trust shall
have become untrue, in either case such that the conditions set forth
in Section 8.3(a) or Section 8.3(b), as the case may be, would be
incapable of being satisfied by October 1, 1997; provided, however,
that, in any case, a willful breach shall be deemed to cause such
conditions to be incapable of being satisfied for purposes of this
Section 9.1(c); or
(d) by the Trust upon a material breach of any representation,
warranty, covenant or agreement on the part of Lexington set forth in
this Agreement, or if any representation or warranty of Lexington shall
have become untrue, in either case such that
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the conditions set forth in Section 8.2(a) or Section 8.2(b), as the
case may be, would be in capable of being satisfied by October 1, 1997;
provided, however, that, in any case, a willful breach shall be deemed
to cause such conditions to be incapable of being satisfied for
purposes of this Section 9.1(d); or
(e) by Lexington if (i) the Board of Trustees of the Trust
shall have withdrawn, amended, modified or changed its approval or
recommendation of this Agreement or any of the transactions
contemplated hereby in a manner adverse to Lexington or shall have
resolved to do so; (ii) the Trust shall have failed as soon as
practicable to mail the Form S-4 to its stockholders after the Form
S-4 has been declared effective by the SEC or to include the
recommendation of its Board of Trustees of this Agreement as
contemplated by this Agreement and the transactions contemplated hereby
in the Form S-4, or the requisite vote of shareholders shall not have
been obtained at a duly held meeting on or prior to October 1, 1997; or
(iii) the Board of Trustees of the Trust shall have recommended that
shareholders of the Trust accept or approve an Acquisition Proposal by
a person other than Lexington (or the Trust or its Board of Trustees
shall have resolved to do such) or a tender offer or exchange offer for
15% or more of the outstanding Trust Shares is commenced (other than by
Lexington) and the Board of Trustees recommends that the shareholders
of the Trust tender their shares in such tender or exchange offer; or
(f) by the Trust, (i) if the Board of Trustees recommends to
the Trust's shareholders approval or acceptance of an Acquisition
Proposal by a person other than Lexington, but only in the event that
the Board of Trustees of the Trust, after consultation with and based
upon the advice of Day, ▇▇▇▇▇ & ▇▇▇▇▇▇ or another nationally-recognized
law firm selected by the Board of Trustees of the Trust, has determined
in good faith that such action is necessary for the Board of Trustees
of the Trust to comply with its fiduciary duties to its shareholders
under applicable law or (ii) if the average closing sales price of
Lexington Common Stock on the New York Stock Exchange on twenty (20)
trading days ending on the fifth business day immediately preceding (A)
the date on which the Form S-4 is declared effective by the SEC, is
equal to or less than $10.50 or (B) the date on which the meeting of
the Trust shareholders is to be convened pursuant to Section 7.3
hereof, is equal to or less than $11.125, without any liability on the
part of the Trust; or
(g) by the Trust if (i) this Agreement and the transactions
contemplated hereby shall have failed to receive the requisite vote for
approval and adoption by the shareholders of the Trust upon the holding
of a duly convened shareholder meeting or (ii) within ten days after
receipt of notice from Lexington of any Material Structural Change; or
(h) by Lexington if (i) any tenant of the Trust shall have
filed a petition commencing a voluntary case concerning such tenant
under any chapter of Title 11 of the United States Code entitled
"Bankruptcy," or an involuntary case shall be commenced against such
tenant under any such chapter and relief is ordered against such tenant
or the petition is controverted but is not dismissed within sixty (60)
days after the commencement
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of the case, or (ii) any of the Trust Properties shall have been
substantially destroyed by fire or other casualty and the tenant under
the affected Trust Property shall not be required to apply the casualty
insurance proceeds to restore such Trust Property; or
(i) by either Lexington or the Trust, if the Merger shall not
have been consummated on or before October 1, 1997 (other than due to
the failure of the party seeking to terminate this Agreement to perform
its obligations under this Agreement required to be performed by it at
or prior to the Effective Time).
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective employees, officers,
trustees, directors, agents, representatives or advisors, whether prior to or
after the execution of this Agreement.
"Material Structural Change" shall mean (i) any event which will result
in an increase in the number of issued and outstanding shares of capital stock
of Lexington on a Fully Diluted Basis, in any single transaction, in excess of
50% of the number of issued and outstanding shares of capital stock of Lexington
on a Fully Diluted Basis immediately prior to the consummation of such event,
(ii) the date on which any two of the four members of Senior Management are no
longer serving as officers of Lexington, (iii) the date on which Lexington's
ratio of debt to total market capitalization exceeds 60%, or (iv) the first
public announcement of any transaction which will result in the acquisition of
Lexington, by way of merger, consolidation, sale of substantially all of
Lexington's assets or otherwise and in which Lexington will not be the surviving
entity.
"Fully Diluted Basis" shall mean the number of issued and outstanding
shares of capital stock of Lexington assuming conversion of all operating
partnership units and shares of convertible preferred stock, the exercise of all
warrants and options and the conversion of all other securities convertible
into, or exchangeable for, shares of Lexington capital stock.
9.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party hereto or its affiliates, trustees, directors, officers or
stockholders and all rights and obligations of any party hereto shall cease
except for the agreements contained in Section 9.3 and Section 10.5; provided,
however, that nothing contained in this Section 9.2 shall relieve any party from
liability for any breach of this Agreement.
9.3 FEES AND EXPENSES.
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(a) Except as set forth in Section 7.11, fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated.
(b) The Trust shall pay Lexington a fee of $700,000 (the
"Fee") upon the termination of this Agreement by the Trust pursuant to
Section 9.1(f)(i) or Lexington pursuant to Section 9.1(e)(iii).
(c) The Trust shall pay Lexington the Fee if this Agreement is
terminated by Lexington pursuant to Section 9.1(e)(i) or Section
9.1(e)(ii) (if, in the case of Section 9.1(e)(ii), the Trust shall have
failed to mail the Form S-4 to its stockholders or shall have failed to
include its recommendation of this Agreement in such Form S-4), and
thereafter on or prior to the 60th day after the date of such
termination the Trust enters into a definitive agreement relating to
any merger, consolidation, share exchange, sale of a substantial
portion of its assets, liquidation or other similar extraordinary
corporate transaction.
(d) The Fee payable pursuant to Section 9.3(b) shall be paid
within five business days after the first to occur of any of the events
described in Section 9.3(b). The Fee payable pursuant to Section 9.3(c)
shall be paid within five business days following the consummation of
any such alternative transaction. The payment of the Fee under this
Section 9.3 shall constitute full satisfaction of any obligation of the
Trust or right of Lexington under this Agreement or otherwise, and upon
payment of the Fee, the Trust will have no further liability to
Lexington whatsoever under this Agreement or otherwise under any other
theory of recovery.
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time, any
party hereby, by action taken by its Board of Trustees or Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
10
GENERAL PROVISIONS
10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall terminate as of the
Effective Time and shall not survive the Merger, provided, however, that the
agreements contained in Article 4, the last sentence of Section 7.4 and Sections
7.10, 7.12 and 7.13 and this Article 10 shall survive the Merger.
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10.2 NOTICES. Any notice required to be given hereunder shall be in
writing and shall be sent by facsimile transmission (confirmed by any of the
methods that follow), courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid) and addressed as follows:
If to Lexington: Lexington Corporate Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇, President
With copies to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
399 Park Avenue, Thirty ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Trust: Corporate Realty Advisors, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With copies to: Day, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
10.3 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties; provided, however, that the Trust
has received a copy of Lexington's proxy statement dated April 25, 1997 which
sets forth a proposal to reorganize Lexington as a Maryland real estate
investment trust pursuant to a merger of Lexington with and into a newly-formed
Maryland real estate investment trust (the "MDREIT"), with such MDREIT to be the
surviving entity. Notwithstanding anything to the contrary, the Trust consents
to the reorganization described in such proxy and agrees that all rights and
obligations of Lexington under this Agreement shall be assumed by, and inure to
the benefit of, the MDREIT upon consummation of such reorganization to the same
extent as if the MDREIT had been a signatory hereto and Lexington shall cause
such MDREIT to assume all such rights and obligations as a condition to such
reorganization. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
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and their respective successors and assigns. Notwithstanding anything contained
in this Agreement to the contrary, but subject to the first and second sentences
of this Section, except for the provisions of Article 4 and Sections 7.10, 7.12
and 7.13, nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.4 ENTIRE AGREEMENT. This Agreement, the Schedules and any documents
delivered by the parties in connection herewith constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties with respect thereto
except that the Confidentiality Agreement (as hereinafter defined) shall remain
in effect and shall be binding upon Lexington and the Trust in accordance with
its terms.
10.5 CONFIDENTIALITY. Each of Lexington and the Trust understands and
agrees that it is still bound by and subject to the terms of the Confidentiality
Agreement dated as of September 16, 1996, by and between Lexington and the Trust
(the "Confidentiality Agreement").
10.6 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Board of Trustees and Board of Directors, at
any time before or after approval of matters presented in connection with the
Merger by the shareholders of the Trust, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its rules
of conflict of laws. Each of the Trust and Lexington hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America located in the
State of New York (the "New York Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the laying of venue of any such litigation in the New York
Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in any inconvenient forum.
10.8 COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
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10.9 HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
10.10 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
10.11 INCORPORATION. The Schedules attached hereto and referred to
herein are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
10.12 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.13 INTERPRETATION AND CERTAIN DEFINITIONS.
(a) In this Agreement, unless the context otherwise requires,
words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders.
(b) As used in this Agreement, the word "Subsidiary" or
"Subsidiaries" when used with respect to any party means any
corporation, partnership, joint venture, business trust or other
entity, of which such party directly or indirectly owns or controls at
least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization.
(c) As used in this Agreement, the word "person" means an
individual, a corporation, a partnership, an association, a joint-stock
company, a trust, a limited liability company, any unincorporated
organization or any other entity.
(d) As used in this Agreement, the word "affiliate" shall have
the meaning set forth in Rule 12b-2 of the Exchange Act.
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10.14 SCHEDULES. Any fact or item disclosed in one section of any
schedule hereto ("Schedule") shall be deemed to be disclosed with respect to any
other section of such Schedule to the extent that the facts regarding the fact
or item disclosed is adequate so as to make reasonably clear or otherwise make
the other party to which such Schedule is delivered reasonably aware that such
fact or item (and description relating thereto) is applicable to such other
section of the Schedule, whether or not an explicit cross-reference appears.
10.15 LIMITATION OF LIABILITY. Reference is hereby made to the
Declaration of Trust establishing Corporate Realty Income Trust I dated June 27,
1989, as amended and restated as of October 3, 1989, and as further amended as
of December 27, 1995, copies of which Declaration of Trust and amendments are on
file in the office of the Secretary of the Commonwealth of Massachusetts. The
name "Corporate Realty Income Trust I" refers to the trustees under said
Declaration as trustees, and no trustee, shareholder, officer, employee or agent
of Corporate Realty Income Trust I shall be held to any personal liability in
connection with the affairs of Corporate Realty Income Trust I or under this
Agreement, but the trust estate only is liable.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
ATTEST: CORPORATE REALTY INCOME TRUST I
By:______________________________ By:______________________________________
Title: Name:
Title:
ATTEST: LEXINGTON CORPORATE PROPERTIES, INC.
By:______________________________ By:______________________________________
Title: Name:
Title:
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