1
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
USRP GP, LLC
US RETAIL PARTNERS LIMITED PARTNERSHIP,
FIRST WASHINGTON REALTY TRUST, INC.,
AND
FIRST WASHINGTON REALTY LIMITED PARTNERSHIP
Dated as of September 27, 2000
================================================================================
2
TABLE OF CONTENTS
Page
----
RECITALS.....................................................................................1
ARTICLE I THE MERGERS..................................................................3
1.1 The Company Merger...................................................3
1.2 The Partnership Merger...............................................4
1.3 Closing..............................................................4
1.4 Effective Time.......................................................4
1.5 Effect of the Company Merger on the Organizational Documents
of the Company.....................................................4
1.6 Effect of the Partnership Merger on Agreement of Limited
Partnership........................................................5
1.7 Effect of Mergers on Management......................................5
1.8 Liquidating Distribution.............................................5
ARTICLE II EFFECT OF THE COMPANY MERGER ON THE STOCKAND MEMBERSHIP INTERESTS OF
THE CONSTITUENT ENTITIES; PAYMENT FOR SHARES.................................5
2.1 Effect on Equity Interests...........................................5
2.2 Payment for Shares...................................................7
2.3 Company Preferred Stock..............................................8
2.4 No Dissenters' Rights................................................8
ARTICLE III EFFECT OF THE PARTNERSHIP MERGER ON THE PARTNERSHIP INTERESTS OF THE
CONSTITUENT PARTNERSHIPS; PAYMENT FOR INTERESTS .............................9
3.1 Effect on Partnership Interests......................................9
3.2 Payment of Exiting Partner Consideration............................10
3.3 Appraisal Rights....................................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MERGERCO AND MERGERLP.....................12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................12
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGERS.....................................12
3
ARTICLE VII ADDITIONAL AGREEMENTS.......................................................13
7.1 Stockholders Meeting................................................13
7.2 Partner Approval....................................................14
7.3 Officers' and Directors' Indemnification............................14
7.4 Status of Employees.................................................16
ARTICLE VIII CONDITIONS TO THE MERGERS...................................................17
8.1 Conditions to the Obligations of Each Party to Effect the
Mergers...........................................................17
8.2 Conditions to Obligations of MergerCo and MergerLP..................17
8.3 Conditions to Obligations of the Company and FWOP...................20
ARTICLE IX TERMINATION.................................................................20
9.1 Termination.........................................................20
ARTICLE X GENERAL PROVISIONS..........................................................21
10.1 Defined Terms.......................................................21
10.2 Non-Survival of Representations, Warranties, Covenants and
Agreements........................................................21
10.3 Miscellaneous Provisions............................................21
-ii-
4
EXHIBITS
Exhibit 1.6 Form of Surviving Partnership Agreement
Exhibit 2.1(c) Balance of Assumed Loans on Merger Agreement Properties
Exhibit 7.4 Form of Release
Exhibit 8.2(f) Employee Expenses
Exhibit 8.2(i) Transaction Expenses
-iii-
5
GLOSSARY OF DEFINED TERMS
Page
----
"Agreement"..................................................................................1
"Appraisal Rights Provisions"...............................................................11
"Articles of Company Merger".................................................................4
"Articles of Partnership Merger".............................................................4
"Asset Sale".................................................................................2
"Certificate of Company Merger"..............................................................4
"Certificate of Partnership Merger"..........................................................4
"Certificates"...............................................................................7
"Claim".....................................................................................15
"Closing"....................................................................................4
"Closing Date"...............................................................................4
"Code".......................................................................................5
"Common Stock Consideration".................................................................6
"Common Unit"................................................................................9
"Company"....................................................................................1
"Company Board"..............................................................................1
"Company Bylaws"............................................................................15
"Company Charter"...........................................................................15
"Company Common Stock".......................................................................1
"Company Letter of Transmittal"..............................................................7
"Company Merger Consideration"...............................................................6
"Company Merger".............................................................................1
"Company Options"...........................................................................18
"Company Preferred Stock"....................................................................1
"Consent Solicitation Materials"............................................................14
"Continuing Partner"........................................................................10
"Continuing Partner Consideration"...........................................................9
"D&O Insurance".............................................................................15
"Dissenting Units"..........................................................................11
"DLLCA"......................................................................................3
"DRULPA".....................................................................................4
"Effective Time".............................................................................4
"Exchange Agent".............................................................................7
"Excluded Liabilities"......................................................................19
"Exiting Partner"...........................................................................10
"Exiting Partner Cash Consideration".........................................................9
"FWM".......................................................................................18
"FWOP".......................................................................................1
"G&C".......................................................................................19
"General Partner"............................................................................1
"Indemnified Parties".......................................................................14
6
"Limited Partnership Interest Purchase Agreement"............................................2
"Master Agreement"...........................................................................2
"MergerCo"...................................................................................1
"MergerLP Common Unit".......................................................................9
"MergerLP Partnership Agreement".............................................................5
"MergerLP Preferred Unit"....................................................................1
"MergerLP"...................................................................................1
"Mergers"....................................................................................1
"MGCL".......................................................................................1
"MRULPA".....................................................................................1
"Partner Approval"..........................................................................14
"Partnership Liquidating Distribution".......................................................2
"Partnership Merger Consideration"...........................................................9
"Partnership Merger".........................................................................1
"Plan of Liquidation"........................................................................1
"Preferred Stock Consideration"..............................................................6
"Proxy Statement"...........................................................................13
"Real Estate Purchase Agreement".............................................................2
"Recapitalization"...........................................................................2
"Sale of the Limited Partnership Interest"...................................................2
"SDAT".......................................................................................4
"Securities Act"............................................................................10
"Series B Preferred Unit Cash Consideration".................................................9
"Series B Preferred Unit"....................................................................9
"Special Committee"..........................................................................1
"Special Meeting"...........................................................................13
"Stock Exchange Fund"........................................................................7
"Surviving Company"..........................................................................3
"Transaction Documents"......................................................................2
"Transactions"...............................................................................1
"Unit Exchange Fund"........................................................................10
"Units"......................................................................................9
"USRP I".....................................................................................2
"USRP LP"....................................................................................2
"Voting Agreement Stockholders"..............................................................3
"Voting Agreement"...........................................................................3
"Woodmoor Contribution Agreement"...........................................................19
-ii-
7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of September
27, 2000, by and among USRP GP, LLC, a Delaware limited liability company
("MergerCo"), US Retail Partners Limited Partnership, a Delaware limited
partnership ("MergerLP"), First Washington Realty Trust, Inc., a Maryland
corporation (the "Company"), and First Washington Realty Limited Partnership, a
Maryland limited partnership ("FWOP").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Company Board")
and the members of MergerCo have approved the merger of the Company with and
into MergerCo (the "Company Merger") in accordance with Section 3-105 of the
Maryland General Corporation Law (the "MGCL") and, upon the terms and subject to
the conditions set forth in this Agreement, when the Company Merger becomes
effective (i) each share of common stock, par value $.01 per share, of the
Company (the "Company Common Stock") issued and outstanding immediately prior to
the Effective Time (as hereinafter defined) will be converted, subject to the
terms and conditions hereof, into the right to receive the Common Stock
Consideration (as defined herein), and (ii) each share of Series A Cumulative
Participating Convertible Preferred Stock, par value $.01 per share, of the
Company (the "Company Preferred Stock") issued and outstanding immediately prior
to the Effective Time will be converted, subject to the terms and conditions
hereof, into the right to receive the Preferred Stock Consideration (as defined
herein);
WHEREAS, the Company Board, based upon the recommendation of a duly
appointed special committee thereof of independent directors (the "Special
Committee"), has (i) adopted a resolution declaring that the liquidation of the
Company is advisable and adopted a plan of liquidation (the "Plan of
Liquidation"), (ii) adopted a resolution declaring that the Mergers (as defined
herein), the Asset Sale (as defined herein), the Sale of the Limited Partnership
Interest (as defined herein) (the Mergers, the Asset Sale and the Sale of the
Limited Partnership Interest and the other transactions contemplated or required
by the Master Agreement (as defined herein) are collectively referred to herein
as the "Transactions") are advisable on substantially the terms and conditions
set forth herein, and in the other Transaction Documents (as defined herein),
and (iii) directed that the Plan of Liquidation and the Transactions be
submitted for consideration by the Company's stockholders at a special meeting
of the stockholders;
WHEREAS, the Company as the sole general partner of FWOP (the "General
Partner"), has deemed it advisable and in the best interests of its limited
partners that FWOP merge with and into MergerLP (the "Partnership Merger" and
together with the Company Merger, the "Mergers") in accordance with Section
10-208 of the Maryland Revised Uniform Limited Partnership Act (the "MRULPA")
and, upon the terms and subject to the conditions set forth in this Agreement,
when the Partnership Merger becomes effective, the Continuing Partners (as
1
8
defined herein) shall receive preferred units in MergerLP (each a "MergerLP
Preferred Unit") and the Exiting Partners (as defined herein) shall receive cash
for their Units (as defined herein);
WHEREAS, the General Partner has, in light of and subject to the terms
and conditions set forth herein, (i) determined that the Partnership Merger and
the other transactions contemplated or required by this Agreement are advisable
on substantially the terms and conditions set forth herein, and (ii) directed
that the Partnership Merger and such other transactions be submitted for
consideration and approval by the holders of Units entitled to vote thereon;
WHEREAS, simultaneously with the execution of this Agreement (a) the
Company, FWOP, and certain of their respective subsidiaries will enter into a
certain Real Estate Purchase Agreement with USRP I, LLC ("USRP I") (the "Real
Estate Purchase Agreement"), pursuant to which USRP I will purchase, and the
Company and FWOP will sell, certain real estate assets and equity interests
specified therein (the "Asset Sale"), (b) the Company and USRP LP, LLC, an
affiliate of MergerCo ("USRP LP"), will enter into a certain Limited Partnership
Interest Purchase and Sale Agreement (the "Limited Partnership Interest Purchase
Agreement") and (c) MergerCo, MergerLP, USRP I, U.S. Retail Partners, LLC, USRP
LP, the Company, FWOP and certain direct and indirect subsidiaries of the
Company and FWOP will enter into a certain Master Agreement (the "Master
Agreement" and, together with this Agreement, the Limited Partnership Interest
Purchase Agreement and the Real Estate Purchase Agreement, the "Transaction
Documents"), each of which is subject to the terms and conditions set forth
therein;
WHEREAS, as a condition to the Mergers and, subject to the approval of
the limited partners of FWOP, FWOP will recapitalize the Company's general
partnership interest in FWOP into a 1% general partnership interest and a
limited partnership interest classified as the Series A Common Units that
represents the Company's then-remaining interest in FWOP (the
"Recapitalization") immediately after the consummation of the Asset Sale;
WHEREAS, as a further condition to the Mergers, immediately following
the consummation of the Asset Sale but prior to the Effective Time, the Company
and FWOP will cause the conditions set forth in Section 8.2(e) through (k)
hereof to be satisfied or waived;
WHEREAS, as a further condition to the Mergers, FWOP will distribute
to its partners in accordance with the terms of Section 13.2 of the FWOP
Partnership Agreement (as defined herein), the net proceeds of the Asset Sale,
after certain adjustments are made thereto, promptly after the conditions set
forth in Section 8.2(e) through (k) hereof have been satisfied or waived (the
"Partnership Liquidating Distribution") and immediately thereafter (but prior to
the Effective Time), the Company will distribute, or irrevocably resolve to
distribute, a liquidating distribution to its stockholders in accordance with
the Company Charter (the "Company Liquidating Distribution");
2
9
WHEREAS, after the Partnership Liquidating Distribution is made and
after all other conditions precedent to the Mergers have been satisfied, the
Company will sell and assign (the "Sale of the Limited Partnership Interest")
all of its right, title and interest in all of the limited partnership interests
held by it to USRP LP, subject to the terms and conditions of the Limited
Partnership Interest Purchase Agreement;
WHEREAS, the Company and MergerCo intend that, for Federal income tax
purposes, the Mergers, the Asset Sale and the Sale of Limited Partnership
Interest will be treated as a taxable sale of assets by the Company, in exchange
for cash and the assumption of the liabilities and a liquidating distribution of
such cash to the stockholders of the Company and the partners of FWOP;
WHEREAS, FWOP and MergerLP intend that, for Federal income tax
purposes, the Partnership Merger will be treated as (i) a taxable sale by the
Exiting Partners of their interests in FWOP to MergerCo in exchange for cash and
(ii) a tax-free contribution by the Continuing Partners of their interests in
FWOP to MergerLP in exchange for the MergerLP Preferred Units;
WHEREAS, as a condition to the willingness of MergerCo to enter into
this Agreement, certain stockholders of the Company (the "Voting Agreement
Stockholders") have entered into a voting agreement with MergerCo (the "Voting
Agreement"), pursuant to which each Voting Agreement Stockholder has agreed,
among other things, to vote certain of his shares of Company Common Stock in
favor of the approval of the Transactions upon the terms and subject to the
conditions set forth therein; and
WHEREAS, MergerCo, MergerLP, the Company, and FWOP desire to make
certain representations, warranties, covenants and agreements in connection with
the Transactions, and also to prescribe various conditions to the Transactions.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, MergerCo, MergerLP, the Company and FWOP hereby
agree as follows:
ARTICLE 1
THE MERGERS
1.1 The Company Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company and MergerCo shall consummate the
Company Merger pursuant to which (a) the Company shall be merged with and into
MergerCo, (b) MergerCo shall be the successor or surviving company in the
Company Merger (sometimes hereinafter referred to as the "Surviving Company")
and shall continue to be governed by the laws of the State of Delaware,
and (c) the separate corporate existence of the Company shall cease. The Company
Merger shall
3
10
have the effects specified in Section 3-114 of the MGCL and Section
18-209 of the Delaware Limited Liability Company Act (the "DLLCA").
1.2 The Partnership Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, FWOP and MergerLP shall consummate the
Partnership Merger pursuant to which (a) FWOP shall be merged with and into
MergerLP, (b) MergerLP shall be the successor or surviving partnership in the
Partnership Merger and shall continue to be governed by the laws of the State of
Delaware, and (c) the separate existence of FWOP shall cease. The Partnership
Merger shall have the effects specified in Section 10-208 of the MRULPA and
Section 17-211 of the Delaware Revised Uniform Limited Partnership Act (the
"DRULPA").
1.3 Closing. The closing of the Mergers (the "Closing") shall occur as
promptly as practicable (but in no event earlier than January 12, 2001) after
all of the conditions set forth in Article VIII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, and,
subject to the foregoing, shall take place at such time and on a date to be
specified by the parties (the "Closing Date"). The Closing shall take place at
the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to by the parties hereto.
1.4 Effective Time. As promptly as practicable after all of the
conditions set forth in Article VIII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, (i)
MergerCo and the Company shall duly execute and file (x) articles of merger (the
"Articles of Company Merger") with the State Department of Assessments and
Taxation of the State of Maryland (the "SDAT") in accordance with Section 3-109
of the MGCL and (y) a certificate of merger (the "Certificate of Company
Merger") with the Secretary of State of the State of Delaware in accordance with
Section 18-209(c) of the DLLCA and (ii) and FWOP and MergerLP shall duly execute
and file (x) articles of merger (the "Articles of Partnership Merger") with the
SDAT in accordance with Section 10-208 of the MRULPA and (y) a certificate of
merger (the "Certificate of Partnership Merger") with the Secretary of State of
the State of Delaware in accordance with Section 17-211(c) of the DRULPA. The
Mergers shall become effective (the "Effective Time") at such time as (x) the
Articles of Company Merger and the Articles of Partnership Merger are accepted
for record by SDAT and (y) the Certificate of Company Merger and the Certificate
of Partnership Merger are accepted for record by the Secretary of State of the
State of Delaware or such later time as MergerCo and the Company shall specify
therein.
1.5 Effect of the Company Merger on the Organizational Documents of
the Company. The operating agreement of MergerCo, as in effect immediately prior
to the Effective Time, shall be the operating agreement of the Surviving Company
following the Effective Time until further amended in accordance with the DLLCA,
and the Charter and Bylaws of the Company in effect prior to the Effective Time
shall not govern the business or affairs of the Surviving Company.
4
11
1.6 Effect of the Partnership Merger on Agreement of Limited
Partnership. In connection with the Closing, the Agreement of Limited
Partnership of MergerLP as in effect immediately prior to the Effective Time
(the "MergerLP Partnership Agreement") will be amended to make certain changes
in order to reflect the Partnership Merger and the other Transactions. The
MergerLP Partnership Agreement shall be amended and restated to contain
substantially the terms set forth in Exhibit 1.6 hereto and shall govern the
business and affairs of MergerLP following the Partnership Merger.
1.7 Effect of Mergers on Management. The manager of MergerCo
immediately prior to the Effective Time shall be the initial manager of the
Surviving Company and the officers of MergerCo immediately prior to the
Effective Time shall be the initial officers of the Surviving Company, each to
hold office in accordance with the terms of the operating agreement of the
Surviving Company in effect at the Effective Time.
1.8 Liquidating Distribution. The Company hereby confirms that the
Transactions shall constitute its plan of liquidation within the meaning of
Section 562(b)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
1.9 Alternative Structures. Prior to the consummation of the Mergers,
MergerLP shall have the right, at its election, to restructure the Partnership
Merger so that, rather than merging directly into MergerLP, FWOP would merge
into a limited liability company that is wholly owned by MergerLP; provided that
any such restructuring would not have an adverse financial effect on the
stockholders of the Company or the limited partners of FWOP. In the event Merger
LP makes such an election, the parties agree to make appropriate conforming
amendments to the Transaction Documents and any related agreements.
ARTICLE II
EFFECT OF THE COMPANY MERGER ON THE STOCK
AND MEMBERSHIP INTERESTS
OF THE CONSTITUENT ENTITIES; PAYMENT FOR SHARES
2.1 Effect on Equity Interests. As of the Effective Time,
automatically by virtue of the Company Merger and without any action on the part
of any stockholder of the Company or any party hereto:
(a) Each membership interest of MergerCo issued and outstanding
immediately prior to the Effective Time shall remain outstanding following the
Effective Time.
(b) Each share of Company Common Stock or Company Preferred
Stock that is owned by the Company, or by any wholly owned Company Subsidiary of
the Company shall automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or deliverable in
exchange therefor.
5
12
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares owned by the Company
or any of its wholly owned Subsidiaries) shall be converted automatically into
the right to receive an amount obtained by dividing (i) the sum of (A)
$83,166,740 and (B) the difference (it being understood that if the amount
described in the following clause (1) is less than the amount described in the
following clause (2), then such difference shall be subtracted from, rather than
added to, the amount set forth in the preceding clause (A)), if any, between (1)
the aggregate amount of the outstanding balance (including principal and any
accrued and unpaid interest) of the Assumed Loans for the Merger Agreement
Properties (as such terms are defined in the Real Estate Purchase Agreement) set
forth on Exhibit 2.1(c), and (2) the aggregate amount of the outstanding balance
(including principal and any accrued and unpaid interest) of the Assumed Loans
for the Merger Agreement Properties on the Closing Date, excluding for this
purpose the $3,000,000 loan on the Woodmoor property referred to in Section
8.2(n), by (ii) the sum of (A) the number of shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time and (B) the
number of additional shares of Company Common Stock that would be outstanding
immediately prior to the Effective Time if all holders (other than the Company)
of Company Preferred Stock, Common Units or Preferred Units had converted their
Company Preferred Stock (including any accrued but unpaid dividends thereon),
Common Units or Preferred Units (including any accrued but unpaid distributions
thereon), as the case may be, into Company Common Stock immediately prior to the
Effective Time and rounded to the nearest one hundredth cent (the "Common Stock
Consideration"), which Common Stock Consideration shall be payable to the holder
thereof in cash, without any interest thereon.
(d) All shares of Company Common Stock, when converted as
provided in Section 2.1(c), shall no longer be outstanding and shall
automatically cease to exist, and each Certificate (as hereinafter defined)
previously representing such shares shall thereafter represent only the right to
receive the Common Stock Consideration. The holders of Certificates previously
representing shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to the Company Common
Stock except as otherwise provided herein or by law.
(e) Each share of Company Preferred Stock issued and outstanding
immediately prior to the Effective Time, other than those shares referred to in
Section 2.1(b), shall be converted automatically into the right to receive an
amount equal to the sum of (A) the product of 1.282051282051 and the Common
Stock Consideration and (B) any accrued and unpaid dividends on such share of
Company Preferred Stock and rounded to the nearest one hundredth cent (the
"Preferred Stock Consideration" and together with the Common Stock
Consideration, the "Company Merger Consideration"), which Preferred Stock
Consideration shall be payable to the holder thereof in cash, without any
interest thereon.
(f) All shares of Company Preferred Stock, when converted as
provided in Section 2.1(e), shall no longer be outstanding and shall
automatically cease to exist, and each
6
13
Certificate (as hereinafter defined) previously representing such shares shall
thereafter represent only the right to receive the Preferred Stock Consideration
in accordance with Section 2.1(e). The holders of Certificates previously
representing shares of Company Preferred Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to the Company
Preferred Stock except as otherwise provided herein or by law.
2.2 Payment for Shares.
(a) From and after the Effective Time, the Company's transfer
agent, American Stock Transfer & Trust Company, shall act as exchange agent (the
"Exchange Agent"). Prior to the Effective Time, MergerCo shall deposit, or take
all steps necessary to cause to be deposited, with the Exchange Agent the
aggregate Company Merger Consideration (such aggregate Company Merger
Consideration being hereinafter referred to as the "Stock Exchange Fund") that
holders of shares of Company Common Stock and shares of Company Preferred Stock
shall be entitled to receive pursuant to Section 2.1.
(b) Promptly, and in any event within three business days after
the Effective Time, MergerCo shall cause the Exchange Agent to mail to each
holder of record of a certificate(s) that immediately prior to the Effective
Time represented shares of Company Common Stock or Company Preferred Stock
("Certificates") (i) a letter of transmittal (the "Company 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 duly endorsed to the Exchange Agent and in such form and with such
other provisions as MergerCo may reasonably specify and (ii) instructions for
use in effecting the surrender of the Certificates and receiving the aggregate
Common Stock Consideration or Preferred Stock Consideration, as applicable, in
respect thereof. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such Company 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 a check
representing the amount of the aggregate Common Stock Consideration or Preferred
Stock Consideration, as applicable, to which such holder shall be entitled,
after giving effect to any required withholding tax, and the Certificate so
surrendered shall be canceled forthwith. In the event of a transfer of ownership
of Company Common Stock or Company Preferred Stock which is not registered in
the transfer records of the Company, checks for the aggregate Common Stock
Consideration or Preferred Stock Consideration, as applicable, to which such
holder shall be entitled may be issued and paid to such a transferee if the
Certificate representing shares of such Company Common Stock or Company
Preferred Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence reasonably
acceptable to the Exchange Agent that any applicable stock transfer taxes have
been paid. Immediately following the Effective Time, the Exchange Agent shall
make appropriate arrangements for the immediate payment of the applicable Common
Stock Consideration or Preferred Stock Consideration to the beneficial owners of
any shares of Company Common Stock or Company Preferred Stock that are held in
book-entry or other
7
14
electronic form and for which at the Effective Time there is no Certificate
representing the ownership thereof.
(c) At and after the Effective Time, there shall be no transfers
on the stock transfer books of the Company of any shares of Company Common Stock
or Company Preferred Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Company, they shall be canceled and exchanged for the aggregate Common
Stock Consideration or Preferred Stock Consideration, as applicable, in respect
thereof in accordance with this Section 2.2.
(d) Any portion of the Stock Exchange Fund (including the
proceeds of any investments thereof) that remains unclaimed by the former
holders of Company Common Stock or Company Preferred Stock for 180 days after
the Effective Time shall be delivered to the Surviving Company. Any former
holder of Company Common Stock or Company Preferred Stock who has not
theretofore complied with this Section 2.2 shall thereafter look only to the
Surviving Company for payment of any Common Stock Consideration, or Preferred
Stock Consideration, as applicable, as determined pursuant to this Agreement to
be owing to such Exiting Partner, without any interest thereon. None of
MergerCo, the Company, the Exchange Agent or any other Person shall be liable to
any former holder of shares of Company Common Stock or Company Preferred Stock
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 Company, the posting by such Person of a bond
in such reasonable amount as the Surviving Company may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent or the Surviving Company will issue and pay in exchange for
such lost, stolen or destroyed Certificate the Common Stock Consideration or
Preferred Stock Consideration, as applicable.
2.3 Company Preferred Stock. In accordance with the terms of the
Company Charter, each holder of Company Preferred Stock shall receive in
connection with the Company Liquidating Distribution an amount per share of
Company Preferred Stock, in the aggregate, equal to what such holder would have
received had such holder converted all of its shares of Company Preferred Stock
into Company Common Stock immediately prior to the consummation of the
Transactions. In furtherance thereof, each holder of Company Preferred Stock
shall receive from the Company (in addition to the Preferred Stock Consideration
payable to such holder by MergerCo pursuant to Section 2.1(e)), in connection
with the Company Liquidating Distribution, an amount per share of Company
Preferred Stock equal to what each holder would have received had such holder
converted its shares of Company Preferred Stock into Company Common Stock
immediately prior to the Company Liquidating Distribution.
8
15
2.4 No Dissenters' Rights. No dissenters' or appraisal rights shall
be available to the holders of Company Common Stock or Company Preferred Stock
with respect to the Transactions.
ARTICLE III
EFFECT OF THE PARTNERSHIP MERGER ON THE PARTNERSHIP INTERESTS
OF THE CONSTITUENT PARTNERSHIPS; PAYMENT FOR INTERESTS
3.1 Effect on Partnership Interests. As of the Effective Time,
automatically by virtue of the Partnership Merger and without any action on the
part of any holder of Units in FWOP or any party hereto:
(a) The general partnership interest in FWOP shall be converted
into the general partnership interest in MergerLP, entitling the holder thereof
to the same economic interest in MergerLP as it held in FWOP prior to the
Effective Time.
(b) The limited partnership interests in FWOP held by Exiting
Partners (as defined herein) immediately prior to the Effective Time shall be
converted into the right to receive: (i) for each common unit of limited
partnership interest in FWOP (each, a "Common Unit"), an amount equal to the
Common Stock Consideration payable to the holder thereof in cash, without any
interest thereon (the "Common Unit Cash Consideration") and (ii) for each Series
B Preferred Unit in FWOP (each, a "Series B Preferred Unit", and together with
the Common Units, the "Units"), an amount equal to the Preferred Stock
Consideration (the "Series B Preferred Unit Cash Consideration", and together
with the Common Unit Cash Consideration and the Series A Preferred Unit Cash
Consideration, the "Exiting Partner Cash Consideration"), which Exiting Partner
Cash Consideration shall be payable to the holder thereof in cash, without any
interest thereon. All Units so converted shall no longer be outstanding and
shall automatically cease to exist, and each Unit shall thereafter represent
only the right to receive the applicable amount of cash specified above.
(c) The limited partnership interests in FWOP held by Continuing
Partners (as defined herein) immediately prior to the Effective Time shall be
converted automatically into: (i) for each Common Unit, one MergerLP Preferred
Unit with an initial capital account in MergerLP equal to the Common Unit Cash
Consideration, and (ii) for each Series B Preferred Unit, 1.282051282051
MergerLP Preferred Units with an initial capital account in MergerLP equal to
the Series B Preferred Unit Cash Consideration. All Units so converted shall no
longer be outstanding and shall automatically cease to exist, and each Unit
shall thereafter represent only the right to receive that number of MergerLP
Preferred Units specified above (the MergerLP Preferred Units issuable in
respect of any given Unit pursuant to this Section 3.1(c) are referred to herein
as, the "Continuing Partner Consideration" and together with the Exiting Partner
Consideration, the "Partnership Merger Consideration").
9
16
(d) Each Unit, if any, reclassified after the date of this
Agreement as a "Series A Common Unit" in the Recapitalization shall be converted
automatically into one common unit of MergerLP (each, a "MergerLP Common Unit").
(e) As used in this Section 3.1, the term "Exiting Partner"
means any holder of Units that elects, or is deemed to have elected, to receive
cash in exchange for its Units, in connection with the Partnership Merger, by
delivering to FWOP written notice of such election no later than twenty (20)
Business Days from the date that the Consent Solicitation Materials (as defined
herein) are sent to such holder, and the term "Continuing Partner" means any
holder of Units that elects to receive MergerLP Preferred Units in exchange for
its Units, in connection with the Partnership Merger, by delivering to FWOP (y)
written notice of such election and (z) an investor questionnaire that confirms
certain matters with respect to such holder, including its status as an
"accredited investor" under Rule 501 promulgated under the Securities Act of
1933, as amended (the "Securities Act") no later than twenty (20) Business Days
from the date that the Consent Solicitation Materials are sent to such holder.
Each holder that fails to deliver a timely election notice and/or an investor
questionnaire that confirms the matters set forth above within such twenty (20)
Business Day period shall be deemed to be an Exiting Partner.
3.2 Payment of Exiting Partner Consideration.
(a) Prior to the Effective Time, MergerLP shall deposit, or take
all steps necessary to cause to be deposited, with the Exchange Agent the
aggregate Exiting Partner Consideration for all Units held by Exiting Partners
(such Exiting Partner Consideration being hereinafter referred to as, the "Unit
Exchange Fund") that Exiting Partners shall be entitled to receive pursuant to
Section 3.1(b). FWOP shall deliver to the Exchange Agent a record of all Units
held by Exiting Partners, specifying the actual number of Common Units and
Series B Preferred Units held by each such holder and the address shown on
FWOP's books and records for each such holder.
(b) Promptly, and in any event within three business days after
the Effective Time, MergerLP shall cause the Exchange Agent to mail to each
Exiting Partner a letter of transmittal (the "Partnership Letter of
Transmittal") with instructions for receiving the Common Unit Cash Consideration
or the Series B Preferred Unit Cash Consideration, as applicable, in respect of
each Unit held by such Exiting Partner. Upon returning a Partnership Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Units shall be entitled to receive a check
representing the amount of the Common Unit Cash Consideration and/or Series B
Preferred Unit Cash Consideration, as applicable, to which such holder shall be
entitled, after giving effect to any required withholding tax. In the event of a
transfer of ownership of a Unit which is not reflected in the record as
delivered by FWOP to the Exchange Agent, checks for the aggregate Common Unit
Cash Consideration or the Series B Preferred Unit Cash Consideration, as
applicable, to which such holder shall be entitled may be issued and paid to
such transferee if all documentation reasonably required by the Exchange
10
17
Agent to evidence and effect such transfer and payment of any applicable
transfer taxes has been delivered to the Exchange Agent.
(c) Any portion of the Unit Exchange Fund (including the
proceeds of any investments thereof) that remains unclaimed by the Exiting
Partners for 180 days after the Effective Time shall be delivered to MergerLP.
Any Exiting Partner who has not theretofore complied with this Section 3.2 shall
thereafter look only to MergerLP for payment of any Common Unit Cash
Consideration or the Series B Preferred Unit Cash Consideration, as applicable,
as determined pursuant to this Agreement to be owing to such Exiting Partner,
without any interest thereon. None of MergerCo, MergerLP, FWOP, the Exchange
Agent or any other Person shall be liable to any Exiting Partner for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
3.3 Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the contrary,
any Units which are issued and outstanding immediately prior to the Effective
Time and which are held by the limited partners of FWOP who have filed with FWOP
no later than twenty (20) Business Days from the date that the Consent
Solicitation Materials (as defined herein) are sent to such holder, written
objections to the Plan of Liquidation, and who have not voted such Units in
favor of the Plan of Liquidation and the Transactions ("Dissenting Units"), will
not be converted at the Effective Time as described in Section 3.1 hereof, but,
will thereafter constitute only the right to receive payment of the fair value
of such Units in accordance with the applicable provisions of Maryland law (the
"Appraisal Rights Provisions"); provided, however, that all Units held by
limited partners who shall have failed to perfect (in accordance with Section
3-203 of the MGCL) or who effectively shall have withdrawn or lost their rights
to appraisal of such Units under the Appraisal Rights Provisions shall thereupon
be deemed to have been converted, as of the Effective Time, into the right to
receive the Common Unit Cash Consideration or the Series B Preferred Unit Cash
Consideration, as applicable, without interest thereon, in the manner provided
in Section 3.1. Persons who have perfected statutory rights with respect to
Dissenting Units as aforesaid will not receive the Common Unit Cash
Consideration or the Series B Preferred Unit Cash Consideration, as applicable,
as provided in this Agreement and will have only such rights as are provided by
the Appraisal Rights Provisions with respect to such Dissenting Units. FWOP
shall give MergerLP prompt notice of any demands received by FWOP for the
exercise of appraisal rights with respect to any Units and MergerCo shall have
the right to participate in all negotiations and proceedings with respect to
such demands. FWOP shall not, except with the prior written consent of MergerCo
or as required by law, make any payment with respect to, or settle or offer to
settle, any such demands.
(b) Each dissenting limited partner who becomes entitled under
Maryland law to payment for Dissenting Units shall receive payment therefor
after the Effective Time from MergerLP in accordance with Maryland law, and such
Units shall be canceled.
11
18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
MERGERCO AND MERGERLP
MergerCo and MergerLP, jointly and severally, represent and warrant to
the Company and FWOP as to each of the matters described in Section 5 of the
Master Agreement, with the same force and effect as if such representations and
warranties were set forth herein, and such representations and warranties are
hereby incorporated herein by reference with the same force and effect as if set
forth herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND FWOP
Except as set forth in the Exhibits to the Master Agreement delivered
at or prior to the execution hereof to MergerCo, the Company and FWOP, jointly
and severally, represent and warrant to MergerCo and MergerLP as to each of the
matters described in Section 4 of the Master Agreement, with the same force and
effect as if such representations and warranties were set forth herein, and such
representations and warranties are hereby incorporated herein by reference with
the same force and effect as if set forth herein.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
During the period from the date of this Agreement to the Effective
Time, the Company agrees to conduct its business, and to cause the Company
Subsidiaries (as defined in the Master Agreement) to conduct their respective
businesses, and to observe all of the agreements, covenants and obligations, and
to cause each of the Company Subsidiaries to observe all the agreements,
covenants and obligations, in the manner described in Section 7 of the Master
Agreement, and such agreements, covenants and obligations are hereby
incorporated herein by reference with the same force and effect as if set forth
herein.
12
19
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Stockholders Meeting.
(a) The Company, acting through the Company Board, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as practicable
following the execution of this Agreement solely for the purpose of considering
and taking action upon the Plan of Liquidation and the Transactions;
(ii) as promptly as practicable, prepare and, subject to the
approval of MergerCo (which approval shall not be unreasonably withheld or
delayed), file with the SEC a preliminary proxy statement relating to the Plan
of Liquidation and the Transactions;
(iii) use its reasonable best efforts to (A) obtain and
furnish the information required to be included by the SEC in a definitive proxy
statement (the "Proxy Statement") and, subject to the approval of MergerCo
(which approval shall not be unreasonably withheld or delayed), to respond
promptly to any comments made by the SEC with respect to the preliminary proxy
statement and cause the Proxy Statement to be mailed promptly to its
stockholders, and (B) obtain the necessary approval of the Plan of Liquidation
and the Transactions by its stockholders; and
(iv) subject to the duties of the Company Board to the
Company's stockholders as provided in Section 7.10 of the Master Agreement,
include in the Proxy Statement the recommendation of the Company Board that
stockholders of the Company vote in favor of the approval of the Plan of
Liquidation and the Transactions.
(b) Each of the Company and FWOP, on the one hand, and MergerCo
and MergerLP, on the other hand, agree promptly to correct any information
provided by either of them for use in the Proxy Statement or the Consent
Solicitation Materials (as defined herein) if and to the extent that such
information shall have become false or misleading, and the Company and FWOP
further agree to take all necessary steps to cause the Proxy Statement and the
Consent Solicitation Materials as so corrected to be disseminated to the
stockholders of the Company and the limited partners of FWOP, respectively, and,
if required, filed with the SEC, in each case to the extent required by
applicable federal securities laws.
(c) None of the information supplied by the Company or FWOP
specifically for inclusion or incorporation by reference in (i) the Proxy
Statement, (ii) the Consent Solicitation Materials, or (iii) the Other Filings
(as defined in the Master Agreement), will, at the respective
13
20
times filed with the SEC or other Governmental Entity or, in addition, in the
case of the Proxy Statement and the Consent Solicitation Materials, as of the
date it or any amendment or supplement thereto is mailed to stockholders or
limited partners, respectively, or at the time of any meeting of stockholders to
be held in connection with the Plan of Liquidation and the Transactions, 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 the light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that neither the Company nor FWOP makes any
representation, warranty or covenant with respect to information concerning
MergerCo or MergerLP included in the Proxy Statement and the Consent
Solicitation Materials based on information supplied by MergerCo or MergerLP for
inclusion in the Proxy Statement or the Consent Solicitation Materials.
(d) None of the information with respect to MergerCo or MergerLP
supplied by MergerCo or MergerLP in writing specifically for inclusion or
incorporation by reference in (i) the Proxy Statement, (ii) the Consent
Solicitation Materials, or (iii) the Other Filings, will, at the respective
times filed with the SEC or other Governmental Entity or, in addition, in the
case of the Proxy Statement and the Consent Solicitation Materials, as of the
date it or any amendment or supplement thereto is mailed to stockholders or the
limited partners, respectively, or at the time of any meeting of stockholders to
be held in connection with the Plan of Liquidation and the Transactions, 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 the light of the circumstances under which they are made, not
misleading.
7.2 Partner Approval. Promptly upon execution of this Agreement, but
after such materials have been reviewed and approved by MergerCo (which approval
shall not be unreasonably withheld or delayed), the Company shall distribute
customary consent solicitation materials (the "Consent Solicitation Materials")
to the partners of FWOP to seek the approval of a Majority-in-Interest of the
Limited Partners (as defined in the FWOP Partnership Agreement) (the "Partner
Approval") for the Partnership Merger, the Recapitalization and any other
matters reasonably requested by the parties hereto, in the manner required by
the FWOP Partnership Agreement.
7.3 Officers' and Directors' Indemnification.
(a) In the event of any threatened or actual claim, action, suit,
demand, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, demand, 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 director or
officer of the Company or any of the Company Subsidiaries (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 the fact that he or she
is or was a director or
14
21
officer of the Company or any of the Company Subsidiaries, or is or was serving
at the request of the Company or any of the Company Subsidiaries as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise, the parties hereto agree to cooperate and use their reasonable best
efforts to defend against and respond thereto. It is understood and agreed that
after the Effective Time the Surviving Company shall indemnify and hold
harmless, as and to the full extent permitted by the Company's Charter (the
"Company Charter") and the Company Bylaws (the "Company Bylaws") in effect on
the date hereof, each Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, demand, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, demand, proceeding or investigation (whether asserted or arising before or
after the Effective Time), (A) the Surviving Company shall promptly pay expenses
as incurred in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the full extent permitted by law,
subject to the provision by such Indemnified Party of an undertaking to
reimburse the amounts so advanced in the event of a final non-appealable
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled to such amounts, (B) the Indemnified Parties may retain one
counsel satisfactory to them (subject to the consent of the Surviving Company,
which shall not be unreasonably withheld) and the Surviving Company shall pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
within 30 days after statements therefor are received, and (C) the Surviving
Company shall use its reasonable best efforts to assist in the vigorous defense
of any such matter; provided, however, that the Surviving Company shall not be
liable for any settlement effected without its prior written consent; and
provided, further that the Surviving Company 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. Any Indemnified Party
wishing to claim indemnification under this Section 7.3, upon learning of any
such claim, action, suit, demand, proceeding or investigation, shall promptly
notify the Surviving Company of such claim and the relevant facts and
circumstances with respect thereto; provided that the failure to so notify shall
not affect the obligations of the Surviving Company except to the extent such
failure to notify materially prejudices the Surviving Company.
(b) MergerCo agrees that all rights to indemnification existing
in favor of, and all limitations on the personal liability of, the directors and
officers of the Company and the Company Subsidiaries provided for in the Company
Charter and Company Bylaws as in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall continue in full force and
effect for a period of six (6) years from the Effective Time; provided, however,
that all rights to indemnification in respect of any claims (each a "Claim")
asserted or made within such period shall continue until the final disposition
of such Claim. Prior to the Closing Date, the Company shall purchase an extended
reporting period endorsement under the Company's existing directors' and
officers' liability insurance coverage ("D&O Insurance") for the Company's
directors and officers in a form acceptable to the Company which shall provide
such directors and
15
22
officers with coverage for six (6) years following the Effective Time of not
less than the existing coverage under, and having terms not materially less
favorable on the whole to the insured Persons than the D&O Insurance coverage
presently maintained by the Company so long as the cost is no more than 150% of
the cost of such D&O Insurance for the year ended December 31, 2000, provided
that the Company agrees to cooperate in good faith with MergerCo in order to
obtain the lowest premium for the above referenced coverage. In the event that
such amount is insufficient for the above referenced coverage, the Company may
spend up to that amount to purchase such lesser coverage as may be obtained by
that amount.
(c) This Section 7.3 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 the Surviving Company. Each of the Indemnified
Parties shall be entitled to enforce the covenants contained in this Section
7.3.
7.4 Status of Employees.
(a) The Company shall terminate the employment of all of its
employees, and shall cause the employment of all employees of the Company
Subsidiaries to be terminated, prior to the Effective Time. The Company shall be
responsible for (i) payment of all wages and salaries and satisfaction of all
medical, dental, health, or life benefits, workers' compensation and disability
claims incurred by any employee prior to the Effective Time, including the
retention bonuses described below, and (ii) payment of accrued vacation,
holiday, sick or personal time not taken by an employee prior to the Effective
Time and for payment of all bonuses and commissions, if any, to which the
employees are entitled, and in no event shall MergerCo or MergerLP be required
to assume any liability with respect to such claims in connection with the
Mergers. The Company agrees to pay prior to the Effective Time all accrued
benefits to participants or retirees and extinguish all contingent benefits
(including all outstanding Company Options (as defined herein) and all
restricted or contingent stock awards) in accordance with the terms of the
Employee Programs, including all severance payments, if any, owed to terminated
employees or to have such accrued benefits and contingent benefits assumed by
FWM, Inc. pursuant to the Management Agreement (as defined herein) on terms and
conditions reasonably acceptable to MergerCo (including a full and irrevocable
release of MergerCo of all obligations thereunder). Each of the employees
receiving a retention bonus in exchange for such employee's continued service to
the Company from the date hereof until the Effective Time shall execute and
deliver a release, substantially on the terms of Exhibit 7.4(a), or FRW, Inc.
shall indemnify and hold MergerCo harmless from any and all claims that would
otherwise be released under Exhibit 7.4(a). The Company shall ensure that all
individuals whose qualifying event occurs on or prior to the Effective Time (and
such individuals' qualified beneficiaries) are notified of and provided with the
continuation of group health coverage required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and similar state and local laws.
(b) The Company agrees that it shall extinguish or otherwise
assign to FRW, Inc. all liabilities and obligations, if any, (including, without
limitation, the liability and obligation
16
23
for all wages, salary, vacation pay, holiday pay, sick leave pay, personal leave
pay, severance pay and unemployment, medical, dental, health, workers'
compensation and disability benefits) for those former employees of the Company
or any of the Companies Subsidiaries who retired or terminated employment prior
to the Effective Time, including, without limitation, those employees terminated
in connection with the Company's obligation under Section 7.4(a).
(c) The Company acknowledges and agrees that MergerCo has the
right to interview and discuss employment terms and issues with such employees
prior to and after the Effective Time. MergerCo specifically reserves the right,
on or after the Effective Time, to employ or reject any of the employees of the
Company or any of the Company Subsidiaries or other applicants in its sole and
absolute discretion; provided that MergerCo shall provide to the Company a list
of employees to whom MergerCo intends to offer employment at the Effective Time.
Nothing in this Agreement shall be construed as a commitment or obligation of
MergerCo to accept for employment, or otherwise continue the employment of, any
of the Company's employees.
(d) Prior to the Effective Time, the Company shall take all
steps necessary to comply with the Worker Adjustment Retraining and Notification
Act, 29 U.S.C. Sections 2101 et. seq. and any corresponding state and
local laws with respect to its employees and the employees of each of the
Company Subsidiaries.
ARTICLE VIII
CONDITIONS TO THE MERGERS
8.1 Conditions to the Obligations of Each Party to Effect the
Mergers. The respective obligations of each party to effect the Mergers shall be
subject to the fulfillment or waiver, where permissible, at or prior to the
Closing Date, of each of the conditions set forth in Section 6.1 of the Master
Agreement.
8.2 Conditions to Obligations of MergerCo and MergerLP. The
obligations of MergerCo to effect the Company Merger and of MergerLP to effect
the Partnership Merger respectively, shall be further subject to the following
conditions:
(a) Transaction Conditions. Each of the conditions set forth in
Section 6.2 of the Master Agreement shall have been fulfilled or waived.
(b) Performance and Obligations of the Company. The Company and
the Company Subsidiaries shall have performed in all material respects all
obligations required to be performed by it under the Master Agreement and under
this Agreement, including, without limitation, the covenants contained in
Articles VI and VII hereof.
17
24
(c) Recapitalization. The Recapitalization shall have occurred.
(d) Management Company. Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall have
sold all of the shares of capital stock in First Washington Management, Inc.
("FWM") owned by them to MergerLP for one dollar ($1.00).
(e) Benefit Plans. All Employee Programs shall have been
assigned to FRW, Inc. on terms and conditions reasonably acceptable to MergerCo
(including full and irrevocable releases of MergerCo and its affiliates of all
obligations thereunder) or terminated pursuant to their terms without any
further liabilities on the part of the Company and the Company Subsidiaries.
(f) Employees. All employees of the Company and the Company
Subsidiaries shall have been terminated as of the Effective Time. Prior to
making the Partnership Liquidating Distribution, FWOP shall have paid all
amounts and taken any other actions required by Section 7.4 hereof, including
the payment of retention bonuses, or any employment agreement, law or regulation
to be taken in connection therewith. An estimate of such amounts is set forth in
Exhibit 8.2(f), however such estimate is for illustrative purposes only and may
not be indicative of the actual amount required to be paid.
(g) Unvested Stock. Each share of restricted Company Common
Stock issued pursuant to an Employee Program which is outstanding immediately
prior to the Asset Sale, whether or not then vested or unrestricted, shall have
become fully vested and unrestricted. All obligations with respect to contingent
Company Common Stock shall have been settled in cash prior to the Partnership
Liquidating Distribution.
(h) Options. Each option (collectively, the "Company Options")
to purchase Company Common Stock granted under the Company's Stock Option Plan
which is outstanding immediately prior to the consummation of the Asset Sale,
whether or not then vested or exercisable, shall have become fully vested and
exercisable. Prior to making the Partnership Liquidating Distribution, in return
for the cancellation of outstanding Company Options required by Section 7.4(a)
FWOP shall have paid to each holder of an unexercised Option a cash settlement
amount equal to the product of (a) the number of shares of Company Common Stock
provided for in such Option and (b) the excess, if any, of the total amount per
share of Company Common Stock to be received by stockholders of the Company in
connection with the Transactions over the exercise price per share provided for
in such Option, which cash payment shall have been treated as compensation and
shall have been net of any applicable tax.
(i) Transaction Expenses. Prior to making the Partnership
Liquidating Distribution, FWOP shall have paid all expenses related to the
negotiation of and preparation for the Transactions incurred by the Company or
any of the Company Subsidiaries. An estimate of such items and the amount of
each is set forth in Exhibit 8.2(i), however, such estimate is for illustrative
purposes only and may not be indicative of the actual amount required to be
paid.
18
25
(j) Other Accrued Liabilities. Prior to making the Partnership
Liquidating Distribution, FWOP shall have paid all accrued liabilities of the
Company and the Company Subsidiaries, other than accounts payable and accrued
expenses, incurred in each case, in the ordinary course of business and deducted
from Net Working Capital (as defined in the Master Agreement), and other than
any contingent liabilities and any liabilities referred to in Exhibit 4.14 or in
Section 8.8 of the Master Agreement (the "Excluded Liabilities").
(k) Repayment of Credit Facility. Prior to making the
Partnership Liquidating Distribution, FWOP shall have repaid the existing
indebtedness and any other obligations or liabilities (e.g. attorneys' fees and
premiums) under that certain Credit Agreement, dated May 19, 2000, between First
Union National Bank and FWOP, and such indebtedness shall have been canceled and
retired. All liens, security interests, guarantees and other documents, rights
and interests of the holders of such indebtedness with respect to such debt
shall have been terminated and released in form and substance reasonably
satisfactory to MergerCo prior to FWOP making the Partnership Liquidating
Distribution.
(l) Partnership Liquidating Distribution. After payment of all
amounts set forth in Section 8.2 (f), (g), (h), (i), (j) and (k) above from the
proceeds of the Asset Sale, FWOP shall have distributed, or irrevocably resolved
to distribute, the remaining proceeds of the Asset Sale to its partners as
follows: each holder of a Preferred Unit shall receive from FWOP (in addition to
any amounts received from MergerLP pursuant to Section 3.1(b) or any MergerLP
Preferred Units received pursuant to Section 3.1(c), in connection with the
Partnership Liquidating Distribution, an amount per Preferred Unit equal to the
amount per share payable per share of Company Preferred Stock pursuant to
Section 2.3 hereof.
(m) Payment of Dividends. All accrued and unpaid dividends on
the Company Preferred Stock shall have been paid prior to the Company
Liquidating Distribution, and the Company Liquidating Distribution shall have
been made.
(n) Woodmoor Financing. FWOP shall have (i) borrowed and
retained in reserve $3,000,000 of qualified non-recourse financing (within the
meaning of Section 465(b)(6) of the Code that also constitutes a non-recourse
liability with the meaning of Treasury Regulation Section 1.752-1(a)(2)) secured
by the parcels of real property known as Woodmoor Shopping Center located in
Silver Spring, Maryland, on terms and conditions reasonably acceptable to
MergerCo, and (ii) offered G&C Properties Corporation, a Maryland corporation
("G&C") the opportunity to provide a Bottom Guaranty Election in the form
attached as Exhibit N to that certain Contribution Agreement by and between G&C
and FWOP, dated September 3, 1999 (the "Woodmoor Contribution Agreement"), in
each case with respect to $1,500,000 of such financing, in exchange for a
complete and irrevocable release of the Bottom Guaranty applicable to the Bottom
Guaranty Property (as such terms are defined in the Woodmoor Contribution
Agreement) immediately prior thereto.
19
26
(o) Opinion Relating to REIT and Partnership Status. MergerCo
shall have received an opinion dated as of the Closing Date of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
in a form and substance reasonably acceptable to MergerCo, regarding the
qualification of the Company as a REIT under the Code and the treatment of FWOP
and all other Company Subsidiaries (which are organized as partnerships or
limited liability companies or which file Tax Returns (as defined in the Master
Agreement) as partnerships) as partnerships and not as associations taxable as
corporations or publicly traded partnerships for Federal income tax purposes
since the acquisition of such Company Subsidiaries by the Company.
(p) Officer's Certificate. The Company shall have furnished
MergerCo and MergerLP with a certificate dated as of the Closing Date signed on
its behalf by its Chief Executive Officer to the effect that the conditions set
forth in Sections 8.1 and 8.2 have been satisfied.
(q) Title Matters. The Company shall have furnished MergerCo and
MergerLP with such affidavits as may be reasonably and customarily required by
Title Company (as defined in the Master Agreement) to issue so-called "date
down" endorsements to owner's policies of title insurance without exception for
parties-in-possession (other than tenants under the Leases (as defined in the
Master Agreement) or mechanics' or materialmen's liens).
(r) Updated Rent Roll. The Company shall have furnished MergerCo
and MergerLP with an updated Rent Roll (as defined in the Master Agreement) for
each Merger Agreement Property (as defined in the Master Agreement) dated no
earlier than five (5) days prior to Closing certified by an authorized
representative of the Company as accurate and complete in all material respects.
8.3 Conditions to Obligations of the Company and FWOP. The
obligations of the Company to effect the Company Merger and of FWOP to effect
the Partnership Merger, respectively, are further subject to the following
conditions:
(a) Transaction Conditions. Each of the conditions set forth in
Section 6.1 and 6.3 of the Master Agreement shall have been fulfilled or waived.
(b) Member's Certificate. MergerCo, on behalf of itself and
Merger LP, shall have furnished the Company with a certificate dated as of the
Closing Date signed on its behalf by its managing member to the effect that the
conditions set forth in Sections 8.1 and 8.3 have been satisfied.
20
27
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after stockholder or partner approval
thereof, in accordance with the provisions of Section 10.1 of the Master
Agreement, and any such termination shall have the effects specified in Section
10.2 of the Master Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Defined Terms. All terms used herein but not defined shall have
the meanings ascribed to such terms in the Master Agreement.
10.2 Non-Survival of Representations, Warranties, Covenants and
Agreements. Except for Sections 2.2, 3.2, 7.3 and this Section 10.2 none of the
representations, warranties, covenants and agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, and thereafter there shall be no liability on the
part of MergerCo, MergerLP, the Company or FWOP or any of their respective
officers, directors or stockholders in respect thereof. Except as expressly set
forth in this Agreement or the Master Agreement, there are no representations or
warranties of any party hereto, express or implied.
10.3 Miscellaneous Provisions. The provisions of Section 11.1 through
Section 11.22 of the Master Agreement are incorporated herein by reference with
the same force and effect as if set forth herein.
[Remainder of Page Left Blank Intentionally]
21
28
IN WITNESS WHEREOF, MergerCo, MergerLP, the Company and FWOP have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
FIRST WASHINGTON REALTY TRUST, INC.
By:
----------------------------------
Name:
Title:
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: FIRST WASHINGTON REALTY TRUST, INC.,
its general partner
By:
----------------------------------
Name:
Title:
USRP GP, LLC
By: U.S. RETAIL PARTNERS, LLC,
its sole member
By:
----------------------------------
Name:
Title:
US RETAIL PARTNERS LIMITED PARTNERSHIP
By: USRP GP, LLC, its general partner
By: U.S. RETAIL PARTNERS, LLC,
its sole member
By:
---------------------------------
Name:
Title:
S-2