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EXHIBIT 10.1
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
BETWEEN
U.S. RESTAURANT PROPERTIES, INC.
LONE STAR U.S. ACQUISITIONS, LLC
AND
LONE STAR FUND III (U.S.), L.P.
DATED AS OF FEBRUARY 27, 2001
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TABLE OF CONTENTS
Page
----
ARTICLE 1 PURCHASE AND SALE OF SHARES....................................................... 2
1.1 Purchase and Sale................................................................ 2
1.2 Purchase Price................................................................... 2
1.3 Payment at First Closing or Subsequent Closing................................... 2
1.4 ▇▇▇▇▇▇▇ Money.................................................................... 2
1.5 Inspection Period................................................................ 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES.................................................... 3
2.1 Representations and Warranties Regarding the REIT................................ 3
(a) Organization, Standing and Power........................................... 3
(b) Capital Structure.......................................................... 4
(c) Authority; No Violations; Consents and Approvals........................... 6
(d) SEC Documents.............................................................. 8
(e) Information Supplied....................................................... 8
(f) Absence of Certain Changes or Events....................................... 9
(g) No Undisclosed Material Liabilities........................................ 9
(h) No Default................................................................. 9
(i) Compliance with Applicable Laws............................................ 10
(j) REIT Litigation............................................................ 10
(k) Taxes...................................................................... 10
(l) Pension and Benefit Plans; ERISA........................................... 12
(m) Labor and Employment Matters............................................... 15
(n) Intangible Property........................................................ 16
(o) Environmental Matters...................................................... 16
(p) Properties................................................................. 18
(q) Insurance.................................................................. 20
(r) Beneficial Ownership of REIT Common Stock.................................. 20
(s) Brokers.................................................................... 20
(t) Investment Company Act of 1940............................................. 20
(u) Contracts.................................................................. 20
(v) Information Systems........................................................ 22
(w) Projections................................................................ 22
2.2 Representations and Warranties of Buyer.......................................... 22
(a) Organization, Standing and Power........................................... 22
(b) Authority; No Violations, Consents and Approvals........................... 23
(c) Information Supplied....................................................... 24
(d) Litigation................................................................. 24
(e) Acquisition of Shares...................................................... 24
(f) No Registration............................................................ 24
(g) Status as Accredited Investor.............................................. 25
(h) Brokers.................................................................... 25
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ARTICLE 3 COVENANTS OF THE REIT............................................................. 25
3.1 Covenants Relating to the Business of the REIT................................... 25
3.2 No Solicitation by the REIT...................................................... 28
3.3 Access and Information........................................................... 30
3.4 Assistance....................................................................... 31
3.5 Notification of Certain Matters.................................................. 31
3.6 Third Party Consents............................................................. 31
3.7 Appointment of Directors........................................................ 32
3.8 Noncompetition and Release Agreements............................................ 32
3.9 Affiliate Agreement.............................................................. 32
3.10 Additional Arrangements.......................................................... 32
3.11 Insurance........................................................................ 32
3.12 Execution and Delivery of Registration Rights Agreement.......................... 32
3.13 Execution and Delivery of Excepted Holder Agreement.............................. 32
ARTICLE 4 MUTUAL COVENANTS.................................................................. 33
4.1 Additional Agreements............................................................ 33
4.2 Preparation of Proxy Statement................................................... 33
4.3 Stockholders Meeting............................................................. 33
4.4 Advise of Changes; SEC Filings................................................... 34
ARTICLE 5 CONDITIONS PRECEDENT.............................................................. 34
5.1 Conditions to Each Party's Obligation............................................ 34
(a) Consents and Approvals..................................................... 34
(b) No Injunctions or Restraints............................................... 34
(c) No Action.................................................................. 34
5.2 Conditions to Obligations of Buyer at the First Closing.......................... 34
(a) Representations and Warranties............................................. 34
(b) Performance of Obligations................................................. 34
(c) Consents Under Agreements.................................................. 35
(d) Legal Opinion.............................................................. 35
(e) Excepted Holder Limit and Excepted Holder Agreement........................ 35
(f) Registration Rights Agreement.............................................. 35
(g) Resignations From Positions and Appointment of Directors................... 35
(h) Closing Deliveries......................................................... 35
(i) Affiliate Agreements....................................................... 35
(j) Severance.................................................................. 35
(k) Releases................................................................... 36
(l) Concurrent Transactions.................................................... 36
(m) Other Agreements........................................................... 36
(n) No Litigation.............................................................. 36
(o) Stock Exchange Listing..................................................... 36
(p) Material Adverse Effect.................................................... 36
(q) REIT Stockholder Approval.................................................. 36
(r) Noncompetition and Release Agreement....................................... 36
5.3 Conditions to Obligations of the REIT at the First Closing....................... 37
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(a) Representations and Warranties............................................. 37
(b) Performance of Obligations of Buyer........................................ 37
(c) Closing Deliveries......................................................... 37
(d) Concurrent Transactions.................................................... 37
5.4 Conditions to Obligations of Buyer at each Subsequent Closing.................... 37
(a) Representations and Warranties............................................. 37
(b) Performance of Obligations................................................. 37
(c) Closing Deliveries......................................................... 37
(d) First Closing.............................................................. 38
(e) No Litigation.............................................................. 38
5.5 Conditions to Obligations of the REIT at Each Subsequent Closing................. 38
(a) Representations and Warranties............................................. 38
(b) Performance of Obligations of Buyer........................................ 38
(c) Closing Deliveries......................................................... 38
ARTICLE 6 CLOSING........................................................................... 38
6.1 Closing.......................................................................... 38
6.2 Actions to Occur at the First Closing............................................ 39
6.3 Actions to Occur at Each Subsequent Closing...................................... 39
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER................................................. 40
7.1 Termination Prior to First Closing............................................... 40
7.2 Termination Subsequent to First Closing.......................................... 42
7.3 Effect of Termination Prior to First Closing..................................... 42
ARTICLE 8 INDEMNIFICATION................................................................... 44
8.1 Indemnification of Buyer......................................................... 44
8.2 Indemnification of the REIT...................................................... 44
8.3 Defense of Third-Party Claims.................................................... 45
8.4 Direct Claims.................................................................... 46
8.5 Limitations...................................................................... 46
(a) Minimum Loss............................................................... 46
(b) Determination of Breach.................................................... 46
(c) Limitation as to Time...................................................... 47
(d) Other Indemnified Costs.................................................... 47
(e) Limitation as to Amount.................................................... 47
8.6 Tax Related Adjustments.......................................................... 47
ARTICLE 9 GENERAL PROVISIONS................................................................ 47
9.1 Survival of Representations, Warranties, and Covenants........................... 47
9.2 No Waiver Relating to Claims for Fraud........................................... 48
9.3 Amendment and Modification....................................................... 48
9.4 Waiver of Compliance............................................................. 48
9.5 Specific Performance............................................................. 48
9.6 Severability..................................................................... 48
9.7 Expenses and Obligations......................................................... 49
9.8 Parties in Interest.............................................................. 49
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9.9 Notices.......................................................................... 49
9.10 Counterparts..................................................................... 50
9.11 Entire Agreement................................................................. 51
9.12 Governing Law; Choice of Forum................................................... 51
9.13 Public Announcements............................................................. 51
9.14 Assignment....................................................................... 51
9.15 Guarantee of Buyer's Obligation to Purchase Shares at any Subsequent Closing..... 51
EXHIBITS:
Exhibit A -- Form of Deposit Escrow Agreement
Exhibit B-1 -- Form of Noncompetition and Release Agreement
Exhibit B-2 -- Form of Noncompetition and Release Agreement
(▇▇▇▇▇▇ ▇▇▇▇▇)
Exhibit B-3 -- Form of Noncompetition and Release Agreement
(▇▇▇▇▇ ▇▇▇▇▇)
Exhibit C -- Form of Excepted Holder Agreement
Exhibit D -- Form of Legal Opinion of REIT's Counsel
Exhibit E -- Form of Registration Rights Agreement
Exhibit F -- Liquidated Damages Release
Exhibit G -- Commitment Letter
DISCLOSURE SCHEDULES:
Schedule 2.1(a) -- REIT Subsidiaries
Schedule 2.1(a)(iii) -- Non-Subsidiary Investments
Schedule 2.1(b) -- Capital Structure
Schedule 2.1(c)(ii) -- Conflicts, Violations or Defaults
Schedule 2.1(c)(iii) -- Consents of Governmental Entities
Schedule 2.1(f) -- Certain Changes or Events
Schedule 2.1(g) -- Undisclosed Material Liability
Schedule 2.1(h) -- Defaults and Violations
Schedule 2.1(i) -- Officers with Knowledge
Schedule 2.1(j) -- REIT Litigation
Schedule 2.1(k) -- Taxes
Schedule 2.1(l) -- ERISA Matters
Schedule 2.1(m) -- Labor and Employment Matters
Schedule 2.1(o) -- Environmental Matters
Schedule 2.1(p) -- Properties
Schedule 2.1(q) -- Insurance
Schedule 2.1(s) -- Brokers
Schedule 2.1(u) -- Certain Contracts
Schedule 2.1(v) -- Information Systems
Schedule 3.1 -- Conduct of Business
Schedule 3.10 -- Affiliate Agreements
Schedule 3.11 -- Internal Litigation
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INDEX OF DEFINED TERMS
Definitions Defined on Page #
----------- -----------------
Affiliate................................................................................... 8
Affiliate Agreements........................................................................ 32
Agreement................................................................................... 1
Business Day................................................................................ 39
Buyer....................................................................................... 1
Buyer Indemnified Costs..................................................................... 44
Buyer Indemnified Parties................................................................... 44
Buyer Indemnified Representation Costs...................................................... 44
Buyer Litigation............................................................................ 24
Buyer Order................................................................................. 24
CERCLA...................................................................................... 18
Closing Date................................................................................ 38
Closing Dates............................................................................... 38
Closings.................................................................................... 38
Company..................................................................................... 1
Company Common Stock........................................................................ 1
Confidentiality Agreement................................................................... 28
Contingent Securities....................................................................... 1
Cure Period................................................................................. 40
Delivery Date............................................................................... 3
Deposit Escrow Agreement.................................................................... 2
▇▇▇▇▇▇▇ Money............................................................................... 3
Encumbrances................................................................................ 5
Environmental Laws.......................................................................... 16
EPA......................................................................................... 18
ERISA....................................................................................... 12
Escrow Agent................................................................................ 2
Excepted Holder Agreement................................................................... 32
Excepted Holder Limit....................................................................... 35
Exchange Act................................................................................ 7
Final Closing Date.......................................................................... 40
First Closing............................................................................... 2
First Closing Shares........................................................................ 2
GAAP........................................................................................ 8
Governmental Entity......................................................................... 7
Guaranteed Funding Facility................................................................. 41
Guarantor................................................................................... 1
Hazardous Materials......................................................................... 17
HSR Act..................................................................................... 8
Indemnified Costs........................................................................... 46
Indemnified Party........................................................................... 45
Indemnifying Party.......................................................................... 45
Information Systems......................................................................... 22
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Definitions Defined on Page #
----------- -----------------
Initial Execution Date...................................................................... 1
Inspection Period........................................................................... 3
Inspection Termination Time................................................................. 3
Investment Company Act...................................................................... 20
Knowledge................................................................................... 10
Liquidated Damages Release.................................................................. 43
Material Adverse Effect..................................................................... 4
Material Contracts.......................................................................... 21
Merger...................................................................................... 1
Merger Agreement............................................................................ 1
Minimum Loss................................................................................ 46
Net Cash Flow............................................................................... 4
Net Operating Income........................................................................ 4
Noncompetition and Release Agreements....................................................... 28
OP Units.................................................................................... 1
Operating Partnership....................................................................... 1
Original Agreement.......................................................................... 1
Person...................................................................................... 8
Projections................................................................................. 22
Property Restrictions....................................................................... 19
Proxy Statement............................................................................. 7
Purchase Price.............................................................................. 2
Registration Rights Agreement............................................................... 35
Reit........................................................................................ 11
REIT........................................................................................ 1
REIT Acquisition Agreement.................................................................. 29
REIT Board.................................................................................. 28
REIT Charter................................................................................ 7
REIT Common Stock........................................................................... 1
REIT Disclosure Schedule.................................................................... 4
REIT Employee Benefit Plans................................................................. 13
REIT ERISA Affiliate........................................................................ 12
REIT Incentive Plan......................................................................... 5
REIT Indemnified Costs...................................................................... 44
REIT Indemnified Parties.................................................................... 45
REIT Indemnified Representation Costs....................................................... 45
REIT Intangible Property.................................................................... 16
REIT Litigation............................................................................. 10
REIT Notice................................................................................. 29
REIT Order.................................................................................. 10
REIT Pension Plans.......................................................................... 12
REIT Permits................................................................................ 10
REIT Preferred Stock........................................................................ 4
REIT Properties............................................................................. 18
REIT Response Period........................................................................ 30
REIT SEC Documents.......................................................................... 8
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Definitions Defined on Page #
----------- -----------------
REIT Superior Proposal...................................................................... 30
REIT Takeover Proposal...................................................................... 29
Release..................................................................................... 17
Released Claims............................................................................. 43
Released Parties............................................................................ 43
Remedial Action............................................................................. 17
SEC......................................................................................... 7
Securities Act.............................................................................. 7
Selling Stockholders........................................................................ 32
Series A Preferred Stock.................................................................... 4
Shares...................................................................................... 2
Stockholders................................................................................ 1
Stockholders Meeting........................................................................ 33
Stockholders Stock Purchase Agreement....................................................... 1
Subsequent Closing.......................................................................... 2
Subsequent Closing Date..................................................................... 38
Subsequent Closing Shares................................................................... 2
Subsidiary.................................................................................. 4
Tax Protection Agreement.................................................................... 12
Taxes....................................................................................... 11
Termination Fee............................................................................. 49
third-party action.......................................................................... 45
Transaction Documents....................................................................... 6
Voting Debt................................................................................. 5
Year 2000 Data.............................................................................. 22
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AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of February 27, 2001, by and among U.S. Restaurant
Properties, Inc., a Maryland corporation (the "REIT"), Lone Star U.S.
Acquisitions, LLC, a Delaware limited liability company (including its permitted
successors and assigns, "Buyer"), and Lone Star Fund III (U.S.), L.P., a
Delaware limited partnership, as guarantor solely for the purpose of Section
9.15 of this Agreement ("Guarantor").
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of January 17,
2001 (the "Initial Execution Date") by and between the REIT and Buyer (the
"Original Agreement"), Buyer agreed to purchase from the REIT, and REIT agreed
to issue and sell to Buyer, 1,887,935 shares of common stock, par value $0.001
per share (the "REIT Common Stock"), of the REIT in consideration of the
Purchase Price (as defined in the Original Agreement), upon the terms and
subject to the conditions set forth in the Original Agreement;
WHEREAS, pursuant to the terms of the Withdrawal Agreement dated October
15, 1997 by and among QSV Restaurant Properties, Inc., a Delaware corporation
(the "Company"), the REIT, U.S. Restaurant Properties Master L.P., a Delaware
limited partnership, and U.S. Restaurant Properties Operating L.P., a Delaware
limited partnership (the "Operating Partnership"), and the Agreement and Plan of
Merger (the "Merger Agreement") dated as of December 29, 2000 by and among the
REIT, the Company and each of the stockholders of the Company (collectively, the
"Stockholders") pursuant to which the Company has merged (the "Merger") with the
REIT;
WHEREAS, pursuant to the Merger and the Merger Agreement the shares of
common stock, par value $0.001 per share, of the Company ("Company Common
Stock") held by the Stockholders were converted into REIT Common Stock (or cash,
as determined in the sole discretion of the REIT), and the (a) units of limited
partnership interest in Operating Partnership, which are exchangeable into
shares of REIT Common Stock (the "OP Units"), (b) unvested units of partnership
interest in Operating Partnership, which units are exchangeable into shares of
REIT Common Stock after vesting (the "Contingent Securities"), and (c) other
securities convertible into or exchangeable for shares of REIT Common Stock or
other rights to acquire REIT Common Stock or such convertible or exchangeable
securities (collectively with the OP Units and the Contingent Securities, "REIT
Common Stock Equivalent") held by the Company, were terminated and cancelled in
exchange for the issuance of REIT Common Stock or cash on the terms and
conditions set forth in the Merger Agreement, an executed copy of which has been
delivered to Buyer;
WHEREAS, concurrently with the execution of the Original Agreement,
certain of the Stockholders and Buyer entered into a stock purchase agreement on
January 17, 2001 (the "Stockholders Stock Purchase Agreement") pursuant to which
Buyer agreed to purchase from such Stockholders, and such Stockholders agreed to
sell to Buyer, concurrently with the closing of the transactions contemplated by
the Original Agreement, all shares of REIT Common Stock received in the Merger
by such Stockholders, upon the terms and subject to the conditions set forth
therein; and
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WHEREAS, the REIT and Buyer now desire to amend and restate the Original
Agreement to add Guarantor as a party, and to make such other amendments as are
set forth herein.
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements and conditions are hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, the REIT shall issue and sell to Buyer, and Buyer shall
purchase from the REIT, at the times indicated below, a number of shares of REIT
Common Stock equal to the sum of the following:
(a) at the first closing (the "First Closing") 469,484 shares of
REIT Common Stock (the "First Closing Shares"); and
(b) at subsequent closings, each of which shall occur within 15
business days after the date on which the REIT provides written notice to Buyer
in accordance with Section 9.9 hereof (each, a "Subsequent Closing") requiring
such Subsequent Closing to occur, up to 1,408,451 shares of REIT Common Stock
(all such shares, the "Subsequent Closing Shares" and, together with the First
Closing Shares, the "Shares"); provided, however, that, subject to the
satisfaction of the conditions set forth in Sections 5.4 and 5.5 hereof, Buyer
shall be required to purchase all of the Subsequent Closing Shares on or before
the 180th day following the date on which the First Closing occurs and provided,
further, that the aggregate number of Subsequent Closing Shares shall not exceed
1,408,451.
1.2 Purchase Price. The purchase price payable by Buyer to the REIT in
consideration for the sale of the Shares shall be an amount equal to $10.65 per
Share, or a total of $20,000,007.75 (the "Purchase Price").
1.3 Payment at First Closing or Subsequent Closing. Payment of the
Purchase Price for the Shares to be purchased hereunder shall be made by or on
behalf of Buyer by wire transfer of immediately available funds to an account
designated by the REIT (the number for which account shall have been furnished
to Buyer at least two Business Days prior to the First Closing Date (as
hereinafter defined) or any Subsequent Closing Date (as hereinafter defined), as
applicable).
1.4 ▇▇▇▇▇▇▇ Money.
(a) Concurrently with the execution of the Original Agreement,
Buyer, the REIT and an escrow agent (the "Escrow Agent") have executed and
delivered a Deposit Escrow Agreement (the "Deposit Escrow Agreement") in the
form attached hereto as Exhibit A.
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(b) Notwithstanding anything to the contrary in the Transaction
Documents (as hereinafter defined), on February 28, 2001, Buyer shall deposit
$1,000,000 in cash (the "▇▇▇▇▇▇▇ Money") with the Escrow Agent to be held in
accordance with the terms hereof and the Deposit Escrow Agreement.
(c) Subject to the satisfaction of the conditions set forth in
Article 5 hereof, at the First Closing Buyer and the REIT shall instruct the
Escrow Agent to release and return the ▇▇▇▇▇▇▇ Money (together with any earnings
thereon) by wire transfer of immediately available funds to an account
designated by Buyer.
(d) If this Agreement is terminated after the Inspection
Termination Time, Buyer and the REIT shall instruct the Escrow Agent to release
the ▇▇▇▇▇▇▇ Money (together with any earnings thereon) to Buyer or to the REIT,
all as provided in Section 7.3.
1.5 Inspection Period. On or before 5:00 p.m., Central time, on the
fifth Business Day (as hereinafter defined) following the date of the Original
Agreement, the REIT delivered the REIT Disclosure Schedule (as defined below) to
Buyer (the later of (a) such date of delivery and (b) the delivery by the
Stockholders of the Stockholders Disclosure Schedule (as defined in the
Stockholders Stock Purchase Agreement), the "Delivery Date"). If for any reason
Buyer, in its sole discretion, determines that it does not desire to purchase
the Shares, then Buyer may terminate this Agreement in accordance with Section
7.1(c)(i) by delivering to the REIT a notice of termination at any time during
the period (the "Inspection Period") beginning on the Delivery Date and
terminating at 5:00 p.m. Dallas, Texas time, on February 27, 2001 (the
"Inspection Termination Time"). If Buyer does not so terminate this Agreement
before the Inspection Termination Time, Buyer shall have waived its right to
terminate this Agreement under this Section 1.5 and Section 7.1(c)(i).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties Regarding the REIT. The REIT
represents and warrants to Buyer as follows (such representations and warranties
being deemed to be made on a continuous basis until the First Closing):
(a) Organization, Standing and Power.
(i) The REIT is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland,
and each of its Subsidiaries (as defined below) is a corporation,
limited liability company or partnership duly organized, validly
existing and, where applicable, in good standing under the laws of its
state of incorporation or organization, and each of the REIT and each of
its Subsidiaries has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the
failure so to qualify would not have a Material Adverse Effect (as
defined below) on the REIT. On or before the Delivery Date, the REIT
shall
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deliver to Buyer complete and correct copies of the REIT's charter and
bylaws and the charter, bylaws or other organizational documents of each
of the REIT's Subsidiaries. All Subsidiaries of the REIT and their
respective jurisdictions of incorporation or organization are identified
on Schedule 2.1(a) of the disclosure schedule delivered by the REIT to
Buyer on the Delivery Date, and made a part hereof by reference (the
"REIT Disclosure Schedule"). Each owner and the respective amount of
such owner's equity interest in each such Subsidiary is set forth on
Schedule 2.1(a) of the REIT Disclosure Schedule. Schedule 2.1(a) of the
REIT Disclosure Schedule sets forth a list of each jurisdiction in which
the REIT or a Subsidiary of the REIT is qualified or licensed to do
business and each assumed name under which any of them conducts business
in any jurisdiction.
(ii) As used in this Agreement, "Material Adverse Effect"
means, when used in connection with the REIT, any change, event or
effect, whether or not foreseeable or known as of the Initial Execution
Date, that, individually or in the aggregate with any such other
changes, events or effects, is, or could reasonably be expected to be
(whether or not such change, event or effect has, at the time in
question, manifested itself in the REIT's historical financial
statements), materially adverse to the historical or near-term or
long-term projected (A) business, (B) assets, (C) liabilities, (D)
financial condition or (E) results of operations (including, but not
limited to, Net Operating Income (as defined below) and Net Cash Flow
(as defined below)), in each case, of the REIT and its Subsidiaries
taken as a whole. As used in this Agreement, "Net Operating Income"
means rental and other property income minus property management and
operating expenses and general and administrative expenses, and "Net
Cash Flow" means Net Operating Income minus debt service payments of
principal and interest, capital expenditures and other non-operating
expenses.
(iii) As used in this Agreement, the word "Subsidiary"
means, with respect to any party, any corporation or other organization,
whether incorporated or unincorporated, of which: (A) such party or any
other Subsidiary of such party is a general partner; (B) 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 is, directly or indirectly, owned or controlled by
such party or by any one or more of its Subsidiaries, or by such party
and any one or more of its Subsidiaries; (C) such party and/or any other
Subsidiary of such party beneficially owns, directly or indirectly, at
least 25% of the equity interests; or (D) such party and/or any other
Subsidiary of such party has a direct or indirect investment of $10
million or more in equity or indebtedness in such corporation or other
organization except as set forth on Schedule 2.1(a)(iii) of the REIT
Disclosure Schedule.
(b) Capital Structure.
(i) As of the Initial Execution Date, the authorized
capital stock of the REIT consisted of (A) 100,000,000 shares of REIT
Common Stock, (B) 50,000,000 shares of preferred stock, par value $0.001
per share ("REIT Preferred Stock"), of which 3,680,000 shares have been
designated as Series A Cumulative Convertible Preferred Stock, par value
$0.001 per share ("Series A Preferred Stock"), and (C) 15,000,000
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shares of excess stock, par value $0.001 per share. As of the Initial
Execution Date, (1) 17,416,672 shares of REIT Common Stock were issued
and outstanding; (2) 3,679,938 shares of REIT Preferred Stock were
issued and outstanding; (3) 756,720 (4.3% of the outstanding shares of
REIT Common Stock) shares of REIT Common Stock were reserved for
issuance pursuant to the REIT's Flexible Incentive Plan (the "REIT
Incentive Plan"), of which no shares of REIT Common Stock were issued
under restricted stock grants; (4) 634,577 shares of REIT Common Stock
were subject to issuance upon the exercise of options or awards granted
to officers, directors or employees of the REIT and its Subsidiaries
under the REIT Incentive Plan; (5) 134,344 shares of REIT Common Stock
were subject to issuance, and were also reserved for issuance, upon the
exchange of OP Units (as defined above); and (6) no Voting Debt (as
defined below) was issued and outstanding in the REIT or any Subsidiary
of the REIT. A wholly owned subsidiary of the REIT is the sole general
partner of the Operating Partnership and holds a 1.0% general
partnership interest in the Operating Partnership. As of the Initial
Execution Date, (x) 134,344 OP Units, constituting an interest of
0.7654% in the Operating Partnership, were validly issued and
outstanding, fully paid and nonassessable and not subject to preemptive
rights, and (y) no other REIT Common Stock Equivalents to acquire shares
of REIT Common Stock were issued and outstanding, and (z) 4,312 OP Units
or shares were required to be issued to the ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Trust pursuant to a guaranty agreement and an undeterminable amount were
due the ▇▇▇▇ family and affiliates on July 29, 2002 pursuant to a
guaranty agreement. Subject to the limitations contained in the
partnership agreement for the Operating Partnership and the REIT
charter, each OP Unit is immediately exchangeable for one share of REIT
Common Stock upon the election of the holder of OP Units. Schedule
2.1(b) of the REIT Disclosure Schedule sets forth the name and number
and class of OP Units and the percentage interest of each partner in the
Operating Partnership. The term "Voting Debt" means bonds, debentures,
notes or other indebtedness having the right to vote (or convertible
into securities having the right to vote) on any matters on which
holders of equity interests in the REIT or any Subsidiary of the REIT or
Buyer, as applicable, may vote.
(ii) All outstanding shares of REIT Common Stock and REIT
Preferred Stock are validly issued, fully paid and nonassessable and are
not subject to preemptive rights. Except as set forth on Schedule 2.1(a)
of the REIT Disclosure Schedule, all outstanding equity interests of the
Subsidiaries of the REIT owned by the REIT, or a direct or indirect
wholly owned Subsidiary of the REIT, are free and clear of all liens,
pledges, charges, claims, mortgages, deeds of trust, security interests,
restrictions, rights of first refusal, defects in title, or other
burdens, options or encumbrances of any kind ("Encumbrances"). Set forth
on Schedule 2.1(b) of the REIT Disclosure Schedule is a true and
complete list of the following: (A) each outstanding qualified or
non-qualified option to purchase REIT Common Stock granted under the
REIT Incentive Plan or otherwise, the name of each holder of each such
option and the exercise price and the number of shares subject to each
such option; (B) each grant of REIT Common Stock to employees which is
subject to any risk of forfeiture, the name of each holder of such
restricted stock and the number of shares of such restricted stock held
by each holder; (C) any obligations of the REIT to issue REIT Common
Stock except pursuant to this Agreement, and any obligations of the
Operating Partnership to issue OP
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Units, in each case as a result of the transactions contemplated hereby
and the total thereof; and (D) each loan made by the REIT with respect
to the purchase of REIT Common Stock and the recipient, amount and
principal terms thereof. Except as set forth in this Section 2.1(a) or
on Schedule 2.1(a) of the REIT Disclosure Schedule, there are issued and
outstanding or reserved for issuance: (x) no shares of stock, Voting
Debt or other voting securities of the REIT; (y) no securities of the
REIT or any Subsidiary of the REIT or securities or assets of any other
entity convertible into or exchangeable for shares of stock, Voting Debt
or other voting securities of the REIT or any Subsidiary of the REIT;
and (z) no options, warrants, calls, rights (including preemptive
rights), commitments or agreements to which the REIT or any Subsidiary
of the REIT is a party or by which it is bound in any case obligating
the REIT or any Subsidiary of the REIT to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of stock or any
Voting Debt or other voting securities of the REIT or of any Subsidiary
of the REIT, or obligating the REIT or any Subsidiary of the REIT to
grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. There were not as of the Initial Execution
Date, and there will not be on the Closing Date, any stockholder
agreements, voting trusts or other agreements or understandings to which
the REIT or any Subsidiary of the REIT is a party or by which it is
bound relating to the voting of any shares of the stock of the REIT or
partnership interests in the Operating Partnership that will limit in
any way, if required, the solicitation of proxies or consents from, or
the casting of votes by, the stockholders of the REIT or the partners of
the Operating Partnership with respect to the transactions contemplated
by this Agreement and all other documents to be executed by the REIT (or
any applicable Subsidiary) and Buyer in connection with the consummation
of the transactions contemplated in this Agreement (collectively, the
"Transaction Documents"). Except as set forth on Schedule 2.1(b) of the
REIT Disclosure Schedule, there are no restrictions on the REIT's
ability to vote the equity interests of any of its Subsidiaries. Except
as set forth on Schedule 2.1(b) of the REIT Disclosure Schedule, all
dividends or distributions on securities of the REIT that have been
declared or authorized prior to the Initial Execution Date have been
paid in full. Except as set forth on Schedule 2.1(b) of the REIT
Disclosure Schedule, there is no restriction on the ability of the
REIT's Subsidiaries to distribute cash to their respective parent
companies.
(c) Authority; No Violations; Consents and Approvals.
(i) Each of the REIT and its Subsidiaries has all
requisite power and authority to enter into the Transaction Documents to
which it is a party, if any, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of the
Transaction Documents to which the REIT or any of its Subsidiaries is a
party, if any, and the consummation of the transactions contemplated
hereby or thereby have been duly authorized by all necessary action on
the part of the REIT and/or such Subsidiary. The Transaction Documents
to which the REIT or any applicable Subsidiary is a party have been duly
executed and delivered by the REIT or such Subsidiary and, assuming the
Transaction Documents to which Buyer is a party constitute the valid and
binding obligations of Buyer, constitute valid and binding obligations
of the REIT or such Subsidiary, enforceable in accordance with their
terms, subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity
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(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(ii) Except as set forth on Schedule 2.1(c)(ii) of the
REIT Disclosure Schedule, the execution and delivery of the Transaction
Documents by the REIT and any of its Subsidiaries, if applicable, do
not, and the consummation of the transactions contemplated hereby or
thereby, and compliance with the provisions hereof or thereof, will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any material obligation
or to the loss of a material benefit under, or give rise to a right of
purchase under, result in the creation of any Encumbrance upon any of
the properties or assets of the REIT or any of its Subsidiaries under or
require the consent or approval of any third party under, any provision
of (A) the charter of the REIT, as that term is defined in the Maryland
General Corporation Law, as amended from time to time (the "REIT
Charter"), or REIT bylaws or any provision of the comparable charter or
organizational documents of any of the REIT's Subsidiaries, (B) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to the REIT or any of its Subsidiaries or their respective
properties or assets or any guarantee by the REIT or any of its
Subsidiaries of any of the foregoing, (C) any joint venture or other
ownership arrangement or (D) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
Section 2.1(c)(iii) are duly and timely obtained or made, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
the REIT or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (B), (C) and
(D), any such conflicts, violations, defaults, rights, Encumbrances or
detriments that, individually or in the aggregate, (1) have not had, and
could not reasonably be expected to have, a Material Adverse Effect on
the REIT, or (2) would not, or could not reasonably be expected to,
materially impair the ability of the REIT or any of its Subsidiaries to
perform its obligations hereunder or thereunder or prevent the
consummation of any of the transactions contemplated hereby or thereby.
(iii) Except as set forth on Schedule 2.1(c)(iii) of the
REIT Disclosure Schedule, no consent, approval, order or authorization
of, or registration, declaration or filing with, or permit from any
court, governmental, regulatory or administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign
(a "Governmental Entity"), is required by or with respect to the REIT or
any of its Subsidiaries in connection with the execution and delivery of
the Transaction Documents to which the REIT or any of its Subsidiaries
is a party, if any, by the REIT or such Subsidiary, or the consummation
by the REIT and its Subsidiaries of the transactions contemplated hereby
or thereby, except for: (A) the filing with the Securities and Exchange
Commission (the "SEC") of such reports under Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
such other compliance with the Exchange Act or Securities Act of 1933,
as amended (the "Securities Act"), and the rules and regulations
thereunder, as may be required in connection with the Transaction
Documents and the transactions contemplated hereby or thereby, including
(if required) the filing with SEC of a proxy statement (the "Proxy
Statement") in preliminary and definitive form relating to the meeting
(if required) of the stockholders of the REIT to be held in connection
with the issuance and sale of the Shares; (B) any
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filings required under state securities laws; (C) such filings and
approvals as may be required by any applicable state takeover laws, or
environmental laws; (D) such filings and approvals as may be required by
any foreign premerger notification, securities, corporate or other law,
rule or regulation; (E) the filing, if applicable, of a pre-merger
notification and report by the REIT under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder;
and (F) approval of the listing application for the Shares to be issued
hereunder by the New York Stock Exchange.
(d) SEC Documents. The REIT has made available to Buyer a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by the REIT with the SEC since January 1, 1997
and prior to or on the date hereof (the "REIT SEC Documents"), which are all the
documents (other than preliminary material) that the REIT was required to file
with the SEC between January 1, 1997 and the date hereof. As of their respective
dates, the REIT SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such REIT SEC
Documents, and none of the REIT SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The REIT has no
outstanding and unresolved comments from the SEC with respect to any of the REIT
SEC Documents. The financial statements of the REIT included in the REIT SEC
Documents complied as to form in all material respects with the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Rule 10-01
of Regulation S-X of the SEC) and fairly presented in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to
normal, recurring adjustments, none of which are material) the consolidated
financial position of the REIT and its consolidated Subsidiaries as of their
respective dates and the consolidated statements of income and the consolidated
cash flows of the REIT and its consolidated Subsidiaries for the periods
presented therein. Except as disclosed in the REIT SEC Documents, there are no
agreements, arrangements or understandings between the REIT and any party who is
at the date hereof or was at any time prior to the date hereof but after January
1, 1997 an Affiliate (as hereinafter defined) of the REIT that are required to
be disclosed in the REIT SEC Documents. The books of account and other financial
records of the REIT are true, complete and correct in all material respects and
are accurately reflected in all material respects in the financial statements
included in the REIT SEC Documents. As used in this Agreement, "Affiliate"
means, with respect to any Person, any other Person controlling, controlled by
or under common control with such Person. For purposes of this definition and
this Agreement, the term "control" (and correlative terms) means the power,
whether by contract, equity ownership or otherwise, to direct the policies or
management of a Person. As used in this Agreement, "Person" means an individual,
corporation, partnership, limited liability company, association, trust,
unincorporated organization, or other entity.
(e) Information Supplied. If a meeting of the stockholders of the
REIT and the filing with the SEC of a Proxy Statement shall be required in
connection with the purchase of the Shares contemplated hereby, none of the
information supplied or to be supplied by the REIT for inclusion or
incorporation by reference in the Proxy Statement will, at the date mailed to
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17
stockholders of the REIT, at the time of the meeting of such stockholders to be
held in connection with any required approval of the purchase of the Shares
contemplated hereby or at the Closing, 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 are made, not misleading. If at any time prior to
the First Closing any event with respect to the Company, the REIT or any of
their respective Subsidiaries or the Stockholders, or with respect to other
information supplied by the REIT for inclusion in the Proxy Statement, shall
occur which is required to be described in an amendment of, or a supplement to,
the Proxy Statement, such event shall be so described, and the REIT shall cause
such amendment or supplement to be promptly filed (if required to be filed) with
the SEC and disseminated to the stockholders of the REIT. The Proxy Statement,
insofar as it relates to the REIT, the REIT's Subsidiaries or other information
supplied by the REIT for inclusion or incorporation by reference therein, will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder and other applicable law.
(f) Absence of Certain Changes or Events. Except as set forth on
Schedule 2.1(f) of the REIT Disclosure Schedule or as disclosed in or reflected
in the REIT SEC Documents, and except as contemplated by this Agreement, since
the date of the most recent audited financial statements included in the REIT
SEC Documents, (i) nothing has occurred that would have been prohibited by
Section 3.1 if the terms of such subsections had been in effect as of and after
such date of such financial statements; and (ii) there has not been: (A) except
for regularly scheduled monthly and quarterly dividend and distribution payments
in amounts consistent with past practices, any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the REIT's stock or the OP Units; (B) any
amendment of any term of any outstanding equity security of the REIT or any
Subsidiary of the REIT; (C) any repurchase, redemption or other acquisition by
the REIT or any Subsidiary of the REIT of any outstanding shares of capital
stock or other equity securities of, or other ownership interests in, the REIT
or any Subsidiary of the REIT; (D) any material change in any method of
accounting or accounting practice or any tax method, practice or election by the
REIT or any Subsidiary of the REIT; (E) any amendment of any employment,
consulting, severance, retention or any other agreement between the REIT or any
of its Subsidiaries and any officer or director of the REIT or any of its
Subsidiaries; or (F) any change, event or effect that has had, or could
reasonably be expected to have, a Material Adverse Effect on the REIT.
(g) No Undisclosed Material Liabilities. Except as set forth on
Schedule 2.1(g) of the REIT Disclosure Schedule or as disclosed in the REIT SEC
Documents, there are no liabilities of the REIT or any of its Subsidiaries of
any kind whatsoever, whether accrued, contingent, absolute or determined, other
than: (i) liabilities adequately provided for on the balance sheet of the REIT
dated as of September 30, 2000 (including the notes thereto) contained in the
REIT's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000;
(ii) liabilities incurred in the ordinary course of business subsequent to
September 30, 2000 which have not had, individually or in the aggregate, and
could not reasonably be expected to have a Material Adverse Effect on the REIT;
and (iii) liabilities under this Agreement.
(h) No Default. Except as set forth on Schedule 2.1(h) of the
REIT Disclosure Schedule, neither the REIT nor any of its Subsidiaries is in
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation)
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of any term, condition or provision of (i) the REIT Charter or bylaws of the
REIT or the comparable charter or organizational documents of any of the REIT's
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license to which the REIT or any of its Subsidiaries is now a party or by
which the REIT or any of its Subsidiaries or any of their respective properties
or assets is bound or (iii) any order, writ, injunction, decree, statute, rule
or regulation applicable to the REIT or any of its Subsidiaries, except in the
case of (ii) and (iii) for defaults or violations which in the aggregate have
not had and could not reasonably be expected to have a Material Adverse Effect
on the REIT.
(i) Compliance with Applicable Laws. The REIT and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "REIT Permits"), except where the
failure so to hold has not had, and could not reasonably be expected to have, a
Material Adverse Effect on the REIT. The REIT and its Subsidiaries are in
compliance with the terms of the REIT Permits, except where the failure so to
comply has not had, and could not reasonably be expected to have, a Material
Adverse Effect on the REIT. Except as disclosed in the REIT SEC Documents, the
businesses of the REIT and its Subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity, except for
possible violations which have not had, and could not reasonably be expected to
have, a Material Adverse Effect on the REIT. No investigation or review by any
Governmental Entity with respect to the REIT or any of its Subsidiaries is
pending or, to the Knowledge (as hereinafter defined) of the REIT, is
threatened, other than those the outcome of which has not had, and could not
reasonably be expected to have, a Material Adverse Effect on the REIT. As used
in this Agreement, "Knowledge" means, with respect to a specified party hereto,
the actual knowledge of such party (including, but not limited to, (i) the
actual knowledge of any Subsidiaries of such party and (ii) with respect to the
REIT and its Subsidiaries, the actual knowledge of the officers, directors and
employees set forth on Schedule 2.1(i) of the REIT Disclosure Schedule and (iii)
with respect to Buyer, the individuals listed on Schedule 2.2(d) of the Buyer
Disclosure Schedule.
(j) REIT Litigation. As of the Initial Execution Date, except as
disclosed in the REIT SEC Documents or on Schedule 2.1(j) of the REIT Disclosure
Schedule, there was no suit, action or proceeding pending, or, to the Knowledge
of the REIT, threatened against the REIT or any Subsidiary of the REIT ("REIT
Litigation"), and the REIT had no Knowledge of any facts that are likely to give
rise to any REIT Litigation, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against the REIT
or any Subsidiary of the REIT ("REIT Order"). Schedule 2.1(j) of the REIT
Disclosure Schedule contains an accurate and complete list of all REIT
Litigation pending or, to the Knowledge of the REIT, threatened against the REIT
or any of its Subsidiaries.
(k) Taxes. Except as set forth on Schedule 2.1(k) of the REIT
Disclosure Schedule:
(i) Each of the REIT and its Subsidiaries (A) has filed
all Tax returns and reports required to be filed by it (after giving
effect to any filing extension properly granted by a Governmental Entity
having authority to do so), and all such returns and reports are
accurate and complete in all material respects, and (B) has paid (or the
REIT
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has paid on its behalf) all Taxes (as defined below) shown on such
returns and reports as required to be paid by it. The most recent
financial statements contained in the REIT SEC Documents reflect an
adequate reserve for all material Taxes payable by the REIT and its
Subsidiaries for all taxable periods and portions thereof through the
date of such financial statements. The REIT and each Subsidiary of the
REIT has established (and until the First Closing Date shall continue to
establish and maintain) on its books and records reserves that are
adequate for the payment of all Taxes not yet due and payable, all as
required by GAAP. Since September 30, 2000, the REIT has incurred no
liability for Taxes under Sections 857(b), 860(c) or 4981 of the Code,
including without limitation any Tax arising from a prohibited
transaction described in Section 857(b)(6) of the Code, and neither the
REIT nor any of its Subsidiaries has incurred any material liability for
Taxes other than in the ordinary course of business. No material
deficiencies for any Taxes have been proposed, asserted or assessed
against the REIT or any of its Subsidiaries, including claims by any
taxing authority in a jurisdiction where the REIT or any Subsidiary of
the REIT do not file Tax returns but in which any of them is or may be
subject to taxation, and no requests for waivers of the time to assess
any such Taxes are pending. As used in this Agreement, "Taxes" includes
all federal, state, local and foreign income, property, sales, use,
franchise, employment, payroll, excise, environmental and other taxes,
tariffs or governmental charges of any nature whatsoever, together with
penalties, interest or additions to Tax with respect thereto.
(ii) The REIT (A) for all taxable years commencing with
the year ended December 31, 1997 through December 31, 1999, has been
subject to taxation as a real estate investment trust within the meaning
of Section 856 of the Code (a "Reit") and has satisfied all requirements
to qualify as a domestically controlled (as defined in Section
897(h)(4)(B) of the Code) Reit for such years, (B) was as of the Initial
Execution Date and will be as of the First Closing Date (taking into
account the Shares to be issued hereunder and the shares issued pursuant
to the Merger Agreement) domestically organized and operated in
conformity with the requirements for qualification and taxation as a
domestically controlled Reit and (C) no challenge to the REIT's status
as a domestically controlled Reit is pending or, to the REIT's
Knowledge, threatened. Each Subsidiary of the REIT which is a
partnership, joint venture or limited liability company has been since
its formation and continues to be treated for federal income tax
purposes as a partnership and not as a corporation.
(iii) All Taxes which the REIT or the REIT's Subsidiaries
are required by law to withhold or collect, including Taxes required to
have been withheld in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party and sales, gross receipts and use taxes, have been duly withheld
or collected and, to the extent required, have been paid over to the
proper Governmental Entities or are held in separate bank accounts for
such purpose. There are no liens for Taxes upon the assets of the REIT
or the REIT's Subsidiaries except for statutory liens for Taxes not yet
due.
(iv) The Tax returns of the REIT and the REIT's
Subsidiaries are not being and have not been examined or audited by any
taxing authority for any past year or periods.
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(v) Neither the REIT nor the REIT's Subsidiaries (A) have
filed a consent under Section 341(f) of the Code concerning collapsible
corporations, or (B) are a party to any Tax allocation or sharing
agreement.
(vi) The REIT does not have any liability for the Taxes of
any Person other than the REIT and the REIT's Subsidiaries and the
REIT's Subsidiaries do not have any liability for the Taxes of any
Person other than the REIT and the REIT's Subsidiaries (A) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law), (B) as a transferee or successor, (C) by
contract, or (D) otherwise.
(vii) Neither the REIT nor the REIT's Subsidiaries have
made any payments, are obligated to make any payments, or are parties to
an agreement that could obligate them to make any payments that will not
be deductible under Section 280G of the Code.
(viii) Neither the REIT nor any of its Subsidiaries has
entered into or is subject, directly or indirectly, to any "Tax
Protection Agreements," except as disclosed in Schedule 2.1(k) of the
REIT Disclosure Schedule, true and correct copies of which have been
made available to Buyer. As used herein, a "Tax Protection Agreement" is
an agreement, oral or written, (A) that has as one of its purposes to
permit a Person or entity to take the position that such Person or
entity could defer federal taxable income that otherwise might have been
recognized upon a transfer of property to any Subsidiary of the REIT
that is treated as a partnership for federal income tax purposes, and
(B) that (i) prohibits or restricts in any manner the disposition of any
assets of the REIT or any of its Subsidiaries (including, without
limitation, requiring the REIT or any of its Subsidiaries to indemnify
any Person for any tax liabilities resulting from any such disposition),
(ii) requires that the REIT or any of its Subsidiaries maintain, or put
in place, or replace, indebtedness, whether or not secured by one or
more of the REIT Properties (as hereinafter defined), or (iii) requires
that the REIT or any of its Subsidiaries offer to any Person or entity
at any time the opportunity to guarantee or otherwise assume, directly
or indirectly, the risk of loss for federal income tax purposes for
indebtedness or other liabilities of the REIT or any of its
Subsidiaries.
(l) Pension and Benefit Plans; ERISA. Except as set forth on
Schedule 2.1(l) of the REIT Disclosure Schedule or in the REIT SEC Documents:
(i) All "employee pension benefit plans," as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), maintained by the REIT or any of its Subsidiaries or
any trade or business (whether or not incorporated) which is under
common control, or which is treated as a single employer, with the REIT
under Section 414(b), (c), (m) or (o) of the Code ("REIT ERISA
Affiliate") or to which the REIT or any of its Subsidiaries or any REIT
ERISA Affiliate contributed or is obligated to contribute thereunder
within six years prior to the Effective Time (the "REIT Pension Plans")
intended to qualify under Section 401 of the Code so qualify and have
been determined by the IRS to be qualified under Section 401 of the Code
and, to the Knowledge of the REIT nothing has occurred with respect to
the operation of the REIT Pension Plans that could reasonably be
expected to cause the loss
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of such qualification or the imposition of any material liability,
penalty or tax under ERISA or the Code.
(ii) No REIT Pension Plan is subject to Title IV of ERISA.
(iii) There is no material violation of ERISA with respect
to (A) the filing of applicable reports, documents, and notices with the
Secretary of Labor and the Secretary of the Treasury regarding all
"employee benefit plans," as defined in Section 3(3) of ERISA, the REIT
Pension Plans and all other material employee compensation and benefit
arrangements or payroll practices, including, without limitation,
severance pay, sick leave, vacation pay, salary continuation for
disability, consulting or other compensation agreements, retirement,
deferred compensation, bonus (including, without limitation, any
retention bonus plan), long-term incentive, stock option, stock
purchase, hospitalization, medical insurance, life insurance and
scholarship programs maintained by the REIT or any of its Subsidiaries
or with respect to which the REIT or any of its Subsidiaries has any
liability (all such plans, other than the REIT Pension Plans, being
hereinafter referred to as the "REIT Employee Benefit Plans") or (B) the
furnishing of such documents to the participants or beneficiaries of the
REIT Employee Benefit Plans or REIT Pension Plans.
(iv) Each REIT Employee Benefit Plan and REIT Pension
Plan, related trust (or other funding or financing arrangement) and all
amendments thereto are listed on Schedule 2.1(l) of the REIT Disclosure
Schedule, true and complete copies of which have been made available to
Buyer, as have the most recent summary plan descriptions, administrative
service agreements, Form 5500s and, with respect to any REIT Pension
Plan intended to be qualified pursuant to Section 401 of the Code, a
current determination letter.
(v) The REIT Employee Benefit Plans and REIT Pension Plans
have been maintained, in all material respects, in accordance with their
terms and with all provisions of ERISA (including rules and regulations
thereunder) and other applicable Federal and state law, there is no
material liability for breaches of fiduciary duty in connection with the
REIT Employee Benefit Plans and REIT Pension Plans, and neither the REIT
nor any of its Subsidiaries or any "party in interest" or "disqualified
person" with respect to the REIT Employee Benefit Plans and the REIT
Pension Plans has engaged in a material "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA.
(vi) There are no material actions, suits or claims
pending (other than routine claims for benefits) or, to the Knowledge of
the REIT, threatened against, or with respect to, the REIT Employee
Benefit Plans or the REIT Pension Plans or their assets.
(vii) Except as described on Schedule 2.1(l) of the REIT
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (A) result in any payment (including any retention bonuses or
noncompetition payments) becoming due to any employee or group of
employees of the REIT or any of its Subsidiaries; (B) increase any
benefits otherwise payable under any REIT Employee Benefit Plan or REIT
Pension Plan; or (C) result in
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the acceleration of the time of payment or vesting of any such benefits.
Except as described on Schedule 2.1(l) of the REIT Disclosure Schedule,
there are no severance agreements, noncompetition agreements or
employment agreements between the REIT or any of its Subsidiaries and
any employee of the REIT or such Subsidiary. True and complete copies of
all severance agreements and employment agreements described on Schedule
2.1(l) of the REIT Disclosure Schedule have been provided to Buyer.
(viii) Neither the REIT nor any of its Subsidiaries has
any consulting agreement or arrangement with any Person involving
compensation in excess of $200,000 except as are terminable upon one
month's notice or less.
(ix) Neither the REIT nor any of its Subsidiaries nor any
REIT ERISA Affiliate contributes to, or has an obligation to contribute
to, and has not within six years prior to the Effective Time contributed
to, or had an obligation to contribute to, a multiemployer plan within
the meaning of Section 3(37) of ERISA.
(x) No stock or other security issued by the REIT or any
of its Subsidiaries forms or has formed a material part of the assets of
any REIT Employee Benefit Plan or REIT Pension Plan.
(xi) The REIT and its ERISA Affiliates have materially
complied with the requirements of Section 4980B of the Code and Parts 6
and 7 of Subtitle B of Title I of ERISA regarding health care coverage
under the REIT Employee Benefit Plans.
(xii) No amount has been paid by the REIT or any of its
ERISA Affiliates, and no amount is expected to be paid by the REIT or
any of its ERISA Affiliates, which would be subject to the provisions of
162(m) of the Code such that all or a part of such payments would not be
deductible by the payor.
(xiii) As to any REIT Pension Plan intended to be
qualified pursuant to Section 401(a) of the Code there has been no
termination or partial termination of the plan within the meaning of
Section 411(d)(3) of the Code.
(xiv) No act, omission or transaction has occurred which
would result in the imposition on the REIT or any Subsidiary of the REIT
of breach of fiduciary duty liability damages pursuant to Section 409 of
ERISA, a civil penalty pursuant to Section 502 of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code.
(xv) To the Knowledge of the REIT, there is no matter
pending with respect to any REIT Pension Plan or REIT Employee Benefit
Plan before the Internal Revenue Service, the Department of Labor or the
Pension Benefit Guaranty Corporation.
(xvi) Each REIT Employee Benefit Plan may be unilaterally
amended or terminated in its entirety by the REIT without liability
except as to benefits accrued thereunder prior to amendment or
termination.
(xvii) No Employee Benefit Plan provides retiree medical
or retiree life insurance benefits to any Person and the REIT is not
contractually or otherwise obligated (whether or not in writing) to
provide any Person with life insurance or medical benefits
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upon retirement or termination of employment, other than as referenced
by the provisions of Section 601 through 608 of ERISA and Section 4980B
of the Code.
(xviii) In connection with the consummation of the
transaction contemplated by this Agreement, no payments have or will be
made which, in the aggregate, would result in the imposition of the
sanctions imposed under Sections 280G and 4999 of the Code.
(m) Labor and Employment Matters. Except as set forth on Schedule
2.1(m) of the REIT Disclosure Schedule or in the REIT SEC Documents:
(i) Neither the REIT nor any of its Subsidiaries is a
party to any collective bargaining agreement or other current labor
agreement with any labor union or organization, and there is no current
union representation question involving employees of the REIT or any of
its Subsidiaries, nor does the REIT have any Knowledge of any activity
or proceeding of any labor organization (or representative thereof) or
employee group (or representative thereof) to organize any such
employees.
(ii) There is no unfair labor practice charge or grievance
arising out of a collective bargaining agreement or other grievance
procedure pending, or, to the Knowledge of the REIT, threatened against
the REIT or any of its Subsidiaries.
(iii) There is no complaint, lawsuit or proceeding in any
forum by or on behalf of any present or former employee, any applicant
for employment or any classes of the foregoing alleging breach of any
express or implied contract of employment, any law or regulation
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment
relationship pending, or, to the Knowledge of the REIT, threatened
against the REIT or any of its Subsidiaries.
(iv) There is no strike, slowdown, work stoppage or
lockout pending, or, to the Knowledge of the REIT, threatened, against
or involving the REIT or any of its Subsidiaries.
(v) Employees of the REIT and its Subsidiaries are
lawfully authorized to work in the United States according to federal
immigration laws, except for such lack of authorization that does not
have, and could not reasonably be expected to have, a Material Adverse
Effect on the REIT.
(vi) The REIT and each of its Subsidiaries are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, except for non-compliance that does not
have, and could not reasonably be expected to have, a Material Adverse
Effect on the REIT.
(vii) There is no proceeding, claim, suit, action or
governmental investigation pending or, to the Knowledge of the REIT,
threatened, with respect to which any current or former director,
officer, employee or agent of the REIT or any of its Subsidiaries is or
may be entitled to claim indemnification from the REIT or any of its
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Subsidiaries pursuant to the REIT Charter or REIT bylaws, any provision
of the comparable charter or organizational documents of any of the
REIT's Subsidiaries, any indemnification agreement to which the REIT or
any Subsidiary of the REIT is a party or applicable law.
(n) Intangible Property. The REIT and its Subsidiaries own, possess or
have adequate rights to use all material trademarks, trade names, patents,
service marks, brand marks, brand names, computer programs, databases,
industrial designs and copyrights necessary for the operation of the businesses
of each of the REIT and its Subsidiaries (collectively, the "REIT Intangible
Property"), except where the failure to possess or have adequate rights to use
such properties has not had, and could not reasonably be expected to have, a
Material Adverse Effect on the REIT. All of the REIT Intangible Property is
owned or licensed by the REIT or its Subsidiaries free and clear of any and all
Encumbrances, except those that have not had, and could not reasonably be
expected to have, a Material Adverse Effect on the REIT, and neither the REIT
nor any such Subsidiary has forfeited or otherwise relinquished any REIT
Intangible Property which forfeiture has resulted, or could reasonably be
expected to result, in a Material Adverse Effect on the REIT. To the Knowledge
of the REIT, the use of the REIT Intangible Property by the REIT or its
Subsidiaries does not, in any material respect, conflict with, infringe upon,
violate or interfere with or constitute an appropriation of any right, title,
interest or goodwill, including, without limitation, any intellectual property
right, trademark, trade name, patent, service ▇▇▇▇, brand ▇▇▇▇, brand name,
computer program, database, industrial design, copyright or any pending
application therefor, of any other Person, and there have been no claims made,
and neither the REIT nor any of its Subsidiaries has received any notice of any
claim, and the REIT has no Knowledge, that any of the REIT Intangible Property
is invalid or conflicts with the asserted rights of any other Person or has not
been used or enforced or has failed to have been used or enforced in a manner
that would result in the abandonment, cancellation or unenforceability of any of
the REIT Intangible Property, except for any such conflict, infringement,
violation, interference, claim, invalidity, abandonment, cancellation or
unenforceability that has not had and could not reasonably be expected to have a
Material Adverse Effect on the REIT.
(o) Environmental Matters. For purposes of this Agreement:
"Environmental Laws" means all federal, state and local
laws (including common laws), rules, regulations, ordinances, orders and
decrees of any Governmental Entity or other legal requirements, whether
now in existence or hereafter enacted and in effect at the time of the
First Closing which apply to the applicable party hereto, relating to
pollution or the protection of human health or the environment or
natural resources of any jurisdiction in which the applicable party
hereto owns or operates assets or conducts business or owned or operated
assets or conducted business (whether or not through a predecessor
entity) (including, without limitation, ambient air, surface water,
groundwater, land surface, subsurface strata, natural resources or
wildlife), including, without limitation, laws and regulations relating
to Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of solid waste or Hazardous
Materials, and any similar laws, rules, regulations, ordinances, orders
and decrees of any foreign jurisdiction in which the applicable party
hereto owns or operates assets or conducts business;
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"Hazardous Materials" means (i) any petroleum or petroleum
products, radioactive materials (including naturally occurring
radioactive materials), asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, polychlorinated biphenyls or
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls, (ii) any chemicals, materials or substances
which are now defined as or included in the definition of "solid
wastes," "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances" or "toxic pollutants," or words of similar
import, under any Environmental Law and (iii) any other chemical,
material, substance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a jurisdiction in
which the REIT or any of its Subsidiaries operates);
"Release" means any spill, effluent, emission, leaking,
pumping, pouring, emptying, escaping, dumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the indoor or
outdoor environment, or into or out of any property owned, operated or
leased by the applicable party or its Subsidiaries; and
"Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a Governmental Entity
or required under any Environmental Law, or voluntarily undertaken to
(i) clean up, remove, treat, or in any other way ameliorate or address
any Hazardous Materials or other substance in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not endanger or
threaten to endanger the public or employee health or welfare of the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations or post-remedial monitoring and care pertaining or
relating to a Release; or (iv) bring the applicable party into
compliance with any Environmental Law.
Except as disclosed on Schedule 2.1(o) of the REIT Disclosure Schedule:
(i) The operations of the REIT and its Subsidiaries have
been conducted, are and, as of the First Closing Date, will be, in
compliance with all Environmental Laws, in all material respects;
(ii) The REIT and its Subsidiaries have obtained and,
until the First Closing Date, will maintain all material permits,
licenses and registrations, or applications relating thereto, and have
made and, until the First Closing Date, will make all material filings,
reports and notices required under applicable Environmental Laws for the
continued operations of their respective businesses;
(iii) The REIT and its Subsidiaries are not subject to any
outstanding material written orders issued by any Governmental Entity
respecting (A) Environmental Laws, (B) Remedial Action, (C) any Release
or threatened Release of a Hazardous Material or (D) an assumption of
responsibility for environmental liabilities of another Person;
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(iv) The REIT and its Subsidiaries are not subject to any
outstanding material contracts with any other Person respecting (A)
Environmental Laws, (B) Remedial Action, (C) any Release or threatened
Release of a Hazardous Material or (D) an assumption of responsibility
for environmental liabilities of another Person, with respect to which
the obligations of the REIT or any of its Subsidiaries has, or could
reasonably be expected to have, a Material Adverse Effect on the REIT;
(v) The REIT and its Subsidiaries have not received any
written communication alleging, with respect to any such party, the
violation of or liability under any Environmental Law;
(vi) Neither the REIT nor any of its Subsidiaries has any
material contingent liability in connection with the Release of any
Hazardous Material into the indoor or outdoor environment (whether
on-site or off-site) or employee or third party exposure to Hazardous
Materials;
(vii) The operations of the REIT and its Subsidiaries
involving the generation, transportation, treatment, storage or disposal
of hazardous or solid waste, as defined and regulated under 40 C.F.R.
Parts 260-270 (in effect as of the Prior Execution Date) or any
applicable state equivalent, are in material compliance with applicable
Environmental Laws;
(viii) Other than properties on which convenience stores
and/or gasoline stations are operated (which properties are designated
with an asterisk on Schedule 2.1(p) of the REIT Disclosure Schedule),
there is not on or in any property of the REIT or its Subsidiaries or
any property for which the REIT or its Subsidiaries are potentially
liable any of the following: (A) to the Knowledge of the REIT, after due
inquiry including completion of phase I environmental surveys, any
underground storage tanks or surface impoundments or (B) any on-site
disposal of Hazardous Material; and
(ix) No REIT Property (as hereinafter defined) is included
or, to the Knowledge of the REIT, proposed for inclusion on the National
Priorities List issued pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
by the United States Environmental Protection Agency (the "EPA") or on
the Comprehensive Environmental Response, Compensation, and Liability
Information System database maintained by the EPA, and the REIT has no
Knowledge that any REIT Property has otherwise been identified in a
published writing by the EPA as a potential CERCLA removal, remedial or
response site or, to the Knowledge of the REIT, proposed for inclusion
on any similar list of potentially contaminated sites pursuant to any
other Environmental Law.
(p) Properties.
(i) The REIT or one of the REIT's Subsidiaries owns fee
simple title (or where indicated, leasehold estate) to each of the real
properties identified in Schedule 2.1(p) to the REIT Disclosure Schedule
(the "REIT Properties"), which are all of the real estate properties
owned or leased by them, in each case (except as provided below) free
and clear of Encumbrances. The REIT Properties are not subject to any
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rights of way, written agreements, laws, ordinances and regulations
affecting building or land use, occupancy, or development (collectively,
"Property Restrictions"), except for (A) Property Restrictions imposed
or promulgated by law or any governmental body or authority with respect
to real property, including zoning regulations, provided that they do
not materially adversely affect the currently intended use of any REIT
Property, (B) Encumbrances and Property Restrictions disclosed on
existing title reports or existing surveys (in either case copies of
which title reports or surveys have been made available to Buyer), and
(C) mechanics', carriers', workmen's, repairmen's and materialmen's
liens and other Encumbrances, Property Restrictions and other
limitations of any kind, if any, which, individually or in the
aggregate, do not materially detract from the value of or materially
interfere with the present use of any of the REIT Properties subject
thereto or affected thereby, and do not, or could not reasonably be
expected to, otherwise have a Material Adverse Effect on the REIT.
Except as set forth on Schedule 2.1(p) and for approximately 125
properties contributed to Burger King Master L.P. (a predecessor to the
REIT) at the time of its formation (which properties are designated by a
double asterisk on Schedule 2.1(p) to the REIT Disclosure Schedule),
valid policies of title insurance or commitments to issue title
insurance policies have been obtained, insuring the REIT's or its
applicable Subsidiary's fee simple title or leasehold estate to the REIT
Properties in amounts at least equal to the value of such REIT
Properties at the time of the issuance of such policy, subject only to
the matters disclosed above and on the REIT Disclosure Schedule, and
such policies are in full force and effect and no material claim has
been made against any such policy. Except as set forth on Schedule
2.1(p) to the REIT Disclosure Schedule, to the REIT's Knowledge, an
on-the-ground survey of each of the REIT Properties made prior to the
First Closing Date and prepared in accordance with ALTA/ACSM (or Texas
equivalent) standards would not disclose any Encumbrance, Property
Restriction or other matter affecting title which is not currently shown
on an existing survey of such REIT Property and which could materially
adversely affect the value or operation of such REIT Property or the
ability to obtain mortgage financing on such REIT Property.
(ii) Each REIT Property (A) complies with the Property
Restrictions, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect, (B) each improvement on
each REIT Property lies outside of any flood plain or, if any such
improvement lies within a flood plain, adequate insurance therefor is in
full force and effect, and (C) each REIT Property has access to and from
a dedicated public right-of-way either directly or through an insured
easement, copies of which have been made available to Buyer.
(iii) All properties currently under development or
construction by the REIT or the REIT's Subsidiaries and all properties
currently proposed for acquisition, development or commencement of
construction prior to the First Closing Date by the REIT and the REIT's
Subsidiaries are listed as such on Schedule 2.1(p) to the REIT
Disclosure Schedule. All material executory agreements (which shall
include, without limitation, all executory agreements involving
aggregate payments for goods or services in excess of $100,000) entered
into by the REIT or any of its Subsidiaries relating to the development
or construction of restaurant, gasoline, convenience store or other real
estate properties (other than agreements for architectural, engineering,
planning, accounting, legal or other professional services or agreements
for material or labor) are listed on
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Schedule 2.1(p) to the REIT Disclosure Schedule. Copies of such
agreements, all of which have previously been delivered or made
available to Buyer, are listed on the REIT Disclosure Schedule and are
true and correct.
(q) Insurance. Schedule 2.1(q) of the REIT Disclosure Schedule
sets forth an insurance schedule of the REIT's and each of its Subsidiaries'
directors' and officers' liability insurance. The REIT and each of its
Subsidiaries maintains insurance with financially responsible insurers in such
amounts and covering such risks as are in accordance with normal industry
practice for companies engaged in businesses similar to those of the REIT and
each of its Subsidiaries (taking into account the cost and availability of such
insurance). Except as set forth on Schedule 2.1(q) of the REIT Disclosure
Schedule, neither the REIT nor any of its Subsidiaries has received any notice
of cancellation or termination with respect to any existing material insurance
policy of the REIT or any of its Subsidiaries.
(r) Beneficial Ownership of REIT Common Stock. Neither the REIT
nor its Subsidiaries "beneficially own" (as defined in Rule 13d-3 under the
Exchange Act) any of the outstanding REIT Common Stock or any of the REIT's
outstanding debt securities.
(s) Brokers. Except as set forth on Schedule 2.1(s) of the REIT
Disclosure Schedule, no agent, broker, investment banker or other person is or
will be entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by the Transaction Documents based
upon arrangements made by or on behalf of the REIT.
(t) Investment Company Act of 1940. Neither the REIT nor any of
its Subsidiaries is, or at the Effective Time will be, required to be registered
as an investment company under the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(u) Contracts.
(i) Except as disclosed in the REIT SEC Documents or on
Schedule 2.1(u) to the REIT Disclosure Schedule, there is no contract or
agreement that purports to limit in any material respect the names or
the geographic location in which the REIT or any REIT Subsidiary may
conduct its business.
(ii) Schedule 2.1(u) of the REIT Disclosure Schedule sets
forth each interest rate cap, interest rate collar, interest rate swap,
currency hedging transaction, and any other agreement relating to a
similar transaction to which the REIT or any REIT Subsidiary is a party
or an obligor with respect thereto.
(iii) Except as set forth on Schedule 2.1(u) of the REIT
Disclosure Schedule, neither the REIT nor any of the REIT's Subsidiaries
is party to any agreement which would restrict any of them from
prepaying any of their indebtedness without penalty or premium at any
time or which requires any of them to maintain any amount of
indebtedness with respect to any of the REIT Properties.
(iv) Neither the REIT nor any of the REIT's Subsidiaries
is a party to any agreement relating to the management of any of the
REIT Properties which is not
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terminable by the REIT or such Subsidiary without penalty on less than
30 days notice except the agreements described on Schedule 2.1(u) of the
REIT Disclosure Schedule.
(v) Schedule 2.1(u) of the REIT Disclosure Schedule lists
all agreements entered into by the REIT or any of the REIT's
Subsidiaries providing for the sale of, or option to sell, any REIT
Properties or the purchase of, or option to purchase, any real estate
which are currently in effect, other than agreements containing rights
of first refusal exercisable by the Burger King Corporation to match
third party offers to purchase any of the REIT Properties.
(vi) Except as set forth on Schedule 2.1(u) of the REIT
Disclosure Schedule, neither the REIT nor any of its Subsidiaries has
any continuing contractual liability (A) for indemnification or
otherwise under any agreement relating to the sale of real estate
previously owned (other than non-material indemnification obligations
relating to brokerage commissions, ordinary and customary title
warranties, post-closing adjustments and customary contractual
indemnification for pre-closing events upon sales of properties by the
REIT or any of its Subsidiaries), (B) to pay any additional purchase
price for any of the REIT Properties, or (C) to make any prorations or
adjustments to prorations involving an amount in excess of $50,000
(other than real estate taxes) that may previously have been made with
respect to any property currently or formerly owned by the REIT.
(vii) Except as set forth on Schedule 2.1(u) of the REIT
Disclosure Schedule, there are no material outstanding contractual
obligations of the REIT or any of its REIT Subsidiaries to provide any
funds to, or make any investment (in the form of an advance, loan,
extension of credit, capital contribution or otherwise) in, or which
provide for the direct or indirect guarantee by the REIT or any of its
Subsidiaries (including by means of a take-or-pay or keepwell agreement)
of the indebtedness, liabilities, obligations or financial condition of,
any of the REIT's Subsidiaries or any other Person.
(viii) Except as set forth on Schedule 2.1(u) of the REIT
Disclosure Schedule, there are no indemnification agreements entered
into by and between the REIT and any director or officer of the REIT or
any of its Subsidiaries.
(ix) Except as set forth on Schedule 2.1(u) of the REIT
Disclosure Schedule, there are no contracts, agreements, commitments or
arrangements that (A) create a material partnership, joint venture or
similar arrangement, (B) require payments to be made in excess of
$100,000 per year for goods and services or with respect to any licenses
granted to or by the REIT or any of its Subsidiaries, (C) grant any
Encumbrance upon any material asset of the REIT or any of its
Subsidiaries or (D) were not made in the ordinary course of business and
are material to the REIT and its Subsidiaries, taken as a whole, in each
of the cases set forth in clauses (A), (B), (C) and (D) which are not
subject to termination within 30 days after the date of the execution
and delivery thereof without penalty or payment by the REIT (all such
contracts, arrangements or agreements listed on Schedule 2.1(u) of the
REIT Disclosure Schedule pursuant to clauses (i) through (ix), the
"Material Contracts").
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(v) Information Systems. Schedule 2.1(v) of the REIT Disclosure
Schedule identifies information systems of the REIT and its Subsidiaries that
are material to the operations of the REIT and its Subsidiaries (the
"Information Systems") and identifies for each such Information System (i)
whether such Information System has been able to accurately process date and
time data from, into and beyond the year 2000 ("Year 2000 Data"), and (ii) if
such Information System has not been able to accurately process Year 2000 Data,
the plan and target date for replacing, updating or upgrading such Information
System in order to be able to accurately process such data. No client, customer,
supplier or vendor, and no electric, telecommunications or other utility with
whom the REIT's or any Subsidiary's Information Systems interact, has notified
the REIT or such Subsidiary that the Information Systems, when used in
combination with any information system of such Person, has been or is unable to
accurately process such Year 2000 Data.
(w) Projections. All financial projections concerning the REIT,
its Subsidiaries, the Company and the transactions contemplated by this
Agreement and the other Transaction Documents (the "Projections") that have been
prepared by or on behalf of the REIT or any of its authorized representatives
and that have been or will be made available to Buyer or any of its authorized
representatives in connection with the transactions contemplated hereby and
thereby have been, and at the time made available will be, reasonably prepared
on a basis reflecting (i) the REIT's best estimates, (ii) assumptions and (iii)
judgments as to the future financial performance of the REIT and its
Subsidiaries.
2.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the REIT as follows (such representations and warranties being
deemed to be made on a continuous basis until the final Subsequent Closing):
(a) Organization, Standing and Power. Buyer is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware. Buyer has no Subsidiaries. As of the Initial
Execution Date, Buyer has heretofore delivered to the REIT complete and correct
copies of its certificate of formation.
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(b) Authority; No Violations, Consents and Approvals.
(i) Buyer has all requisite power and authority to enter
into the Transaction Documents to which it is a party and to consummate
the transactions contemplated hereby or thereby. The execution and
delivery of the Transaction Documents to which Buyer is a party and the
consummation of the transactions contemplated hereby or thereby have
been duly authorized by all necessary action on the part of Buyer. The
Transaction Documents to which Buyer is a party have been duly executed
and delivered by Buyer, and assuming the Transaction Documents, if any,
to which the REIT or any of its Subsidiaries or any Stockholder is a
party constitute the valid and binding obligation of the REIT or its
Subsidiary or such Stockholder, as the case may be, constitute a valid
and binding obligation of Buyer enforceable in accordance with its
terms, subject as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of the Transaction
Documents to which Buyer is a party do not, and the consummation of the
transactions contemplated hereby or thereby, and compliance with the
provisions hereof or thereof, will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to the loss of a material
benefit under, or give rise to a right of purchase under, result in the
creation of any Encumbrance upon any of the properties or assets of
Buyer under, require the consent or approval of any third party or
otherwise result in a material detriment to Buyer under, any provision
of (A) Buyer's limited liability company agreement, (B) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to Buyer or its respective properties or assets or any
guarantee by Buyer of the foregoing, (C) any joint venture or other
ownership arrangement or (D) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
Section 2.2(b)(iii) are duly and timely obtained or made, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Buyer or any of its respective properties or assets, other than, in the
case of clauses (B), (C) and (D), any such conflicts, violations,
defaults, rights, Encumbrances or detriments that, individually or in
the aggregate, would not, or could not reasonably be expected to,
materially impair the ability of Buyer to perform its obligations
hereunder or thereunder or prevent the consummation of any of the
transactions contemplated hereby or thereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any
Governmental Entity is required by or with respect to Buyer in
connection with the execution and delivery by Buyer of the Transaction
Documents to which it is a party or the consummation by Buyer of the
transactions contemplated hereby or thereby, except for: (A) the filing
with the SEC of such reports under Section 13(a) of the Exchange Act and
such other compliance with the Securities Act and the Exchange Act and
the rules and regulations thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby; (B) any
filings required under state securities laws; (C) such filings and
approvals as may
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be required by any applicable state takeover laws or environmental laws;
and (D) filings under the HSR Act, if applicable.
(c) Information Supplied. If a meeting of the stockholders of the
REIT and the filing with the SEC of a Proxy Statement shall be required in
connection with the purchase of the Shares contemplated hereby, none of the
information, if any, supplied or to be supplied by Buyer for inclusion or
incorporation by reference in the Proxy Statement will, at the date mailed to
stockholders of the REIT, at the time of the meeting of such stockholders to be
held in connection with any required approval of the purchase of the Shares
contemplated hereby 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 are
made, not misleading. If at any time prior to the final Subsequent Closing any
event with respect to Buyer or with respect to other information supplied by
Buyer for inclusion in the Proxy Statement, shall occur which is required to be
described in an amendment of, or a supplement to, the Proxy Statement, such
event shall be so described, and such amendment or supplement shall be promptly
filed (if required to be filed) with the SEC. The Proxy Statement, insofar as it
relates to Buyer or other information supplied by Buyer for inclusion or
incorporation by reference therein, will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
(d) Litigation. As of the Initial Execution Date, there was no
suit, action or proceeding pending, or, to the Knowledge of Buyer, threatened
against Buyer that could reasonably be expected to affect the ability of Buyer
to consummate the transactions contemplated hereby ("Buyer Litigation"), and
Buyer had no Knowledge of any facts that are likely to give rise to any Buyer
Litigation, nor was there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Buyer that could
reasonably be expected to affect the ability of Buyer to consummate the
transactions contemplated hereby ("Buyer Order"). Schedule 2.2(d) sets forth the
individuals whose Knowledge shall be deemed to be the Knowledge of the Buyer.
(e) Acquisition of Shares. Buyer is acquiring the Shares for its
own account or for one or more separate accounts maintained by it or for the
account of one or more institutional investors on whose behalf Buyer has
authority to make this representation for investment and without the view to the
distribution thereof within the meaning of the Securities Act or with any
present intention of distributing or selling any of the Shares except in
compliance with the Securities Act and except to one or more such institutional
investors, provided that the disposition by Buyer or such institutional
investors of their property shall at all time be within their control.
(f) No Registration. Buyer understands that the Shares (A) have
not been registered under the Securities Act or any state securities laws or the
securities laws of any other domestic or foreign jurisdiction, (B) will be
issued in reliance upon an exemption from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2) thereof
and/or Regulation D promulgated thereunder and (C) will be issued in reliance
upon exemptions from the registration and prospectus delivery requirements of
state securities laws which relate to private offerings.
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(g) Status as Accredited Investor. Buyer is an "Accredited
Investor" within the meaning of Rule 501 of Regulation D, as promulgated by the
United States Securities and Exchange Commission pursuant to the Securities Act.
(h) Brokers. Except for the fee to be paid to ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ &
Company, Inc. as provided in the Stockholders Stock Purchase Agreement, no
agent, broker, investment banker or other Person is or will be entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by the Transaction Documents based upon arrangements
made by or on behalf of Buyer.
ARTICLE 3
COVENANTS OF THE REIT
3.1 Covenants Relating to the Business of the REIT. Except as
contemplated by or otherwise permitted under this Agreement or to the extent
that Buyer shall otherwise consent in writing, from the Initial Execution Date
until the First Closing, the REIT covenants and agrees with Buyer that, as to
itself and its Subsidiaries, neither it nor its Subsidiaries shall:
(a) fail to conduct its business in any manner except in the
ordinary course consistent with past practice;
(b) except as set forth on Schedule 3.1(b) of the REIT Disclosure
Schedule, amend, terminate, or fail to use all commercially reasonable efforts
to renew any agreement or contract (provided that the REIT shall not be required
to renew any agreement or contract on terms that are less favorable to the
REIT), or default in any material respect (or take or omit to take any action
that, with or without the giving of notice or passage of time, would constitute
a material default) under any agreement or contract or enter into any agreement
or contract under which any party thereto becomes obligated to provide goods or
services having a value of, or to make payments aggregating, $50,000 or more per
year, other than contracts and agreements relating to the amendment,
modification or other restructuring or termination of leases, the resolution of
issues arising under existing leases (including, without limitation, the payment
or collection of rent and the providing of services) and entering into new
leases relating to properties owned by the REIT as of the Initial Execution Date
and the Noncompetition and Release Agreements (as defined below) which,
individually or in the aggregate, are not material to the operation or financial
results of the REIT and its subsidiaries taken as a whole; provided however,
that any action or omission described in this Section 3.1(b) shall not
constitute a breach of this Agreement if such action or omission is described on
Schedule 3.1 attached hereto which supplements and amends the REIT Disclosure
Schedule.
(c) other than mergers of wholly-owned Subsidiaries of the REIT
with or into the REIT or other Subsidiaries, merge or consolidate with or into
any other legal entity, dissolve, or liquidate;
(d) (i) hire or promote any individual to serve as an officer of
the REIT or hire any employee or consultant if the aggregate annual compensation
of such employee or consultant exceeds $75,000; (ii) grant any increases in the
compensation of, or pay any bonuses (other than regularly scheduled bonuses as
set forth on Schedule 3.1(d) of the REIT Disclosure Schedule,
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attached hereto) or noncompetition payments to, any of its directors, trustees,
officers or employees; (iii) pay or agree to pay to any director, officer or
employee, whether past or present, any pension, retirement or other employee
benefit not required or contemplated by any of the existing REIT Employee
Benefit Plans or REIT Pension Plans, as applicable; (iv) enter into any new, or
amend any existing, employment or severance or termination agreement with any
director, officer or employee either individually or as part of a class of
similarly situated Persons, other than the Noncompetition and Release
Agreements; or (v) establish, adopt or enter into any new, or amend any
existing, (A) "employee benefit plan," as such term is defined in section 3(3)
of ERISA (including, but not limited to, employee benefit plans, such as foreign
plans, which are not subject to the provisions of ERISA), (B) personnel policy,
stock option plan, stock purchase plan, stock appreciation rights, phantom stock
plan, collective bargaining agreement, bonus plan or arrangement, incentive
award plan or arrangement, vacation policy, severance pay plan, policy or
agreement, deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, consulting agreement,
employment agreement or other employee benefit plan, agreement, arrangement,
program, practice or understanding or (C) collective bargaining agreement;
(e) acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) any assets
other than the acquisitions set forth on Schedule 3.1(e) of the REIT Disclosure
Schedule;
(f) sell (whether by merger, consolidation or the sale of an
equity interest or assets, except for transactions permitted under Section
3.1(c)) or otherwise dispose of any real property assets of the REIT or its
Subsidiaries except as set forth on Schedule 3.1(f) of the REIT Disclosure
Schedule;
(g) except as set forth on Schedule 2.1(u) of the REIT Disclosure
Schedule, mortgage, pledge, or subject to any material Encumbrance, any assets
having a fair market value, individually or in the aggregate, in excess of
$1,000,000;
(h) fail to pay or otherwise satisfy (except if being contested
in good faith) any material accounts payable, liabilities, or obligations when
due and payable other than on a basis, and within the time, consistent with past
practice;
(i) (i) authorize, declare, pay or set aside for payment any
dividends on or make other distributions in respect of any of its equity
interests, capital stock or partnership interests, except for (A) the
authorization, declaration and payment of regular monthly cash dividends on REIT
Common Stock not to exceed $0.11 per share, with usual record and payment dates,
(B) the payment of regular cash dividends on the REIT Preferred Stock in
accordance with its terms, with usual record and payment dates, (C) the payment
of any distributions to the partners of any limited partnerships that are
Subsidiaries of the REIT made in accordance with the requirements of the
existing organizational documents of such Subsidiary limited partnerships and
(D) the payment of regular quarterly cash dividends to stockholders of any
corporations that are preferred stock Subsidiaries of the REIT, with usual
record and payment dates (ii) split, combine, divide, distribute, or reclassify
any shares of its equity interests, capital stock or partnership interests, or
(iii) directly or indirectly, redeem, purchase, or otherwise acquire any equity
interests, shares of its capital stock or other securities;
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(j) issue, sell, pledge, dispose of, encumber, or deliver
(whether through the issuance or granting of any options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any equity interests or stock of
any class or any securities convertible into or exercisable or exchangeable for
shares of stock of any class (other than the issuance of certificates in
replacement of lost certificates) or any Voting Debt or other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, Voting Debt, other voting securities or convertible
securities, other than the issuance of (i) REIT Common Stock upon the exercise
of stock options that were outstanding on the Initial Execution Date and (ii)
REIT Common stock upon the conversion of OP Units that were outstanding on the
Initial Execution Date;
(k) change or amend its charter documents or bylaws;
(l) except as set forth on Schedule 3.1(l) of the REIT Disclosure
Schedule, (i) incur any indebtedness for borrowed money (except (A) to finance
any transactions or other expenditures permitted by this Agreement (including
those referred to in Section 3.1(e)) and regular borrowings under credit
facilities made in the ordinary course of the REIT's cash management practices,
(B) refinancings of existing debt and (C) immaterial borrowings that, in each
such case, permit prepayment of such debt without penalty) or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the REIT or any of its Subsidiaries or guarantee
any debt securities of others, (ii) except in the ordinary course of business,
create any material mortgages, liens, security interests or similar other
encumbrances on the property of the REIT or any of its Subsidiaries in
connection with any indebtedness thereof; (iii) assume, guarantee, endorse, or
otherwise become liable or responsible (whether directly, contingently, or
otherwise) for the obligations of any other Person (other than endorsements of
checks in the ordinary course); or (iv) make any loans, advances, or capital
contributions to, or investments in, any Person;
(m) (i) make or rescind any material express or deemed election
relating to Taxes (except as required by law or necessary to preserve the REIT's
status as a REIT or the status of any of the REIT's Subsidiaries as a
partnership for federal income tax purposes or as a qualified REIT subsidiary
under Section 856(i) of the Code or as a taxable REIT subsidiary under Section
856(l) of the Code) unless it is reasonably expected that such action will not
materially and adversely affect the REIT, including elections for any and all
joint ventures, partnerships, limited liability companies or other investments
where the REIT has the capacity to make such binding election, (ii) settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except where
such settlement or compromise will not materially and adversely affect the REIT
and except any settlement or compromise relating to contests or protests
relating to property tax valuations undertaken by the REIT in the ordinary
course of business, or (iii) change in any material respect any of its methods
of reporting income or deductions for federal income tax purposes from those
employed in the preparation of its federal income Tax Returns that have been
filed for prior taxable years, except as may be required by applicable law or
except for changes that are reasonably expected not to materially and adversely
affect the REIT;
(n) except as set forth on Schedule 3.1(g) or 3.1(l) of the REIT
Disclosure Schedule, engage in any transactions with any of its Affiliates other
than (i) transactions approved by Buyer in writing or expressly contemplated
hereby and (ii) those certain
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Noncompetition and Release Agreements between the REIT and each of ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ in the forms attached hereto as
Exhibit B (the "Noncompetition and Release Agreements");
(o) terminate the services of its current officers and employees
or terminate or damage its relationships with customers, suppliers and others
having business dealings with it such that its goodwill and ongoing business
shall be impaired in any material respect at the Effective Time;
(p) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of the REIT or
any of its Subsidiaries, provided that dispositions in accordance with Section
3.1(f) hereof shall not be deemed a partial liquidation;
(q) make any changes in its accounting methods which would be
required to be disclosed under the rules and regulations of the SEC, except as
required by law, rule, regulation or GAAP;
(r) materially amend or terminate, or waive compliance with the
terms of or breaches under, any Material Contract nor enter into a new contract,
agreement or arrangement that, if entered into prior to the Initial Execution
Date, would have been required to be listed on Schedule 2.1(u) of the REIT
Disclosure Schedule but was not listed on such schedule;
(s) take any action to increase the size of its board of
directors, remove any director or, except as expressly contemplated hereby, fill
any vacancies created by the death, resignation or removal of any director; or
(t) agree to or make any commitment, orally or in writing, to
take any actions prohibited by this Agreement.
3.2 No Solicitation by the REIT.
(a) The REIT shall not, nor shall it authorize or permit any of
its Subsidiaries to, nor shall it authorize or permit any of its or its
Subsidiaries' directors, officers, employees, agents or representatives
(including, without limitation, any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries) to, directly or indirectly, (i) solicit, initiate, encourage or
knowingly facilitate any inquiries, any expression of interest or the making of
any proposal which constitutes any REIT Takeover Proposal (as defined below) or
(ii) participate in any discussions or negotiations regarding any REIT Takeover
Proposal; provided, however, that if the Board of Directors of the REIT (the
"REIT Board") (A) determines in good faith (after receiving advice from a
financial advisor) that such REIT Takeover Proposal is or is reasonably likely
to result in a REIT Superior Proposal (as defined in Section 3.2(b)) and (B)
determines in good faith, after receiving advice of outside counsel, that such
action is necessary for the REIT Board to comply with its statutory duties to
stockholders under the Maryland General Corporation Law, and, prior to
furnishing any non-public information to such Person, the REIT receives from
such Person an executed confidentiality agreement with provisions no less
favorable to the REIT than the letter agreement dated August 21, 2000 between
the REIT and Buyer (the "Confidentiality Agreement"), the
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REIT may, in response to a REIT Takeover Proposal not solicited in violation of
this Section 3.2(a) and subject to providing prior written notice of its
decision to take such action to Buyer (the "REIT Notice") in compliance with
Section 3.2(c), following delivery of the REIT Notice (x) furnish information
with respect to the REIT and its Subsidiaries to any Person making such a REIT
Takeover Proposal and (y) participate in discussions or negotiations regarding
such a REIT Takeover Proposal; provided, further, that discussions between the
REIT and the REIT's lenders and potential lenders regarding the REIT's credit
facilities shall not be prohibited by the provisions of this Section 3.2(a). For
purposes of this Agreement, "REIT Takeover Proposal" means any inquiry, proposal
or offer from any Person relating to any (i) acquisition or purchase or
financing of substantial assets of the REIT or any of its Subsidiaries, taken as
a whole, (ii) direct or indirect acquisition or purchase or financing of 10% or
more of any class of equity securities of the REIT or any of its Subsidiaries
whose business constitutes 10% or more of the net revenues, net earnings or
assets of the REIT and its Subsidiaries, taken as a whole, (iii) tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 10% or more of any class of equity securities of the REIT, (iv) merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the REIT or any of its
Subsidiaries whose business constitutes 10% or more of the net revenues, net
earnings or assets of the REIT and its Subsidiaries, taken as a whole, or (v)
adoption by the REIT of a plan of liquidation or the effectuation by the REIT of
a recapitalization or other similar type of transaction other than the
transactions contemplated by this Agreement. Immediately after the execution and
delivery of this Agreement, the REIT and its Subsidiaries will, and will
instruct their directors, officers, employees, agents or representatives
(including, without limitation, any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries) to, cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any possible
REIT Takeover Proposal. The REIT agrees that it will take the necessary steps to
promptly inform its directors, officers, employees, agents or representatives
(including, without limitation, any investment banker, financial advisor,
attorney, accountant or other representative retained by it) involved in the
transactions contemplated hereby of the obligations undertaken in this Section
3.2. The REIT shall not release any third party from, or waive any provision of,
any confidentiality or standstill agreement to which the REIT is a party.
(b) Except as expressly permitted by this Section 3.2, neither
the REIT Board nor any committee thereof shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Buyer, the
approval or recommendation by the REIT Board or such committee of this Agreement
or the issuance and sale of the Shares hereunder, (ii) approve or recommend, or
propose publicly to approve or recommend, any REIT Takeover Proposal or (iii)
cause the REIT to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, a "REIT Acquisition
Agreement") related to any REIT Takeover Proposal. Notwithstanding the
foregoing, in the event that the REIT Board determines in good faith, after
receiving advice from the REIT's outside counsel that (i) the withdrawal,
modification or change of its recommendation is necessary for the REIT Board to
comply with its statutory duties to the stockholders under the Maryland General
Corporation Law, and (ii) the REIT Takeover Proposal is a REIT Superior Proposal
(as defined below), the REIT Board may (subject to this and the following
sentences) (x) withdraw or adversely modify its approval or recommendation of
this Agreement or the issuance and sale of the Shares
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hereunder or the matters to be considered at the REIT Stockholders Meeting, if
any, (y) approve or recommend such REIT Superior Proposal and/or (z)
simultaneously with the payment of the Termination Fee (as hereinafter defined)
required pursuant to Section 9.7(b), terminate this Agreement and enter into a
REIT Acquisition Agreement with respect to such REIT Superior Proposal, but only
after the fifth business day following Buyer's receipt of written notice
advising Buyer that the REIT Board is prepared to terminate this Agreement and
only if, during such five-day period (the "Response Period"), the REIT and its
advisors shall have negotiated in good faith with Buyer to make such adjustments
in the terms and conditions of this Agreement as would enable Buyer to proceed
with the transactions contemplated hereby on such adjusted terms. For purposes
of this Agreement, a "REIT Superior Proposal" means any bona fide written
proposal, which was not solicited, initiated, facilitated or encouraged in
breach of Section 3.2(a), made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, more than 80% of the combined voting power of the shares
of REIT Common Stock then outstanding or all or substantially all the assets of
the REIT and its Subsidiaries and which the REIT Board determines in its good
faith judgment (after receiving advice from a financial advisor of nationally
recognized reputation) to be more financially favorable to the REIT's
stockholders than transactions contemplated by this Agreement and the other
Transaction Documents and for which financing, to the extent required, is then
committed or reasonably likely (in the REIT Board's good faith judgment) to be
available. Any material amendment or modification to the terms of a REIT
Superior Proposal shall be deemed a new REIT Superior Proposal and commence a
new Response Period.
(c) In addition to the obligations of the REIT set forth in
paragraphs (a) and (b) of this Section 3.2, the REIT shall promptly and in any
event within one business day advise Buyer orally and in writing of (i) the
receipt of any REIT Takeover Proposal or request for information relating to the
REIT or any of its Subsidiaries, or for access to the properties, books or
records of the REIT or any of its Subsidiaries, by any Person that has advised
the REIT that it is considering making, or has made, a REIT Takeover Proposal,
(ii) the material terms and conditions of such REIT Takeover Proposal or
request, (iii) the identity of the Person making any such REIT Takeover Proposal
or request and (iv) any determination by the REIT Board that a REIT Takeover
Proposal is a REIT Superior Proposal. During the Response Period, the REIT shall
keep Buyer reasonably informed of the status and details thereof and, if in
writing, promptly deliver or cause to be delivered to Buyer a copy of such
proposal or request.
(d) Nothing contained in this Section 3.2 shall prohibit the REIT
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
REIT's stockholders which, in the good faith judgment of the REIT Board, after
receiving advice of outside counsel, is necessary under applicable law, provided
that the REIT does not withdraw or modify, or propose to withdraw or modify, its
position with respect to the issuance and sale of Shares or this Agreement and
the transactions contemplated hereby or approve or recommend, or propose to
approve or recommend, a REIT Takeover Proposal unless the REIT and the REIT
Board have complied with all the provisions of this Section 3.2.
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3.3 Access and Information.
(a) Until the First Closing, the REIT shall afford to Buyer and
its representatives (including accountants and counsel) full access during
normal business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of the business of the REIT, to all
properties, books, records, Phase I and Phase II environmental reports and Tax
Returns of the REIT and all other information with respect to its business,
together with the opportunity to make copies of such books, records, Phase I and
Phase II environmental reports and other documents and to discuss the business
of the REIT with such officers, directors, accountants and counsel for the REIT
as Buyer deems reasonably necessary or appropriate for the purposes of
familiarizing itself with the REIT, the Operating Partnership and the other
Subsidiaries of the REIT. In furtherance of the foregoing, the REIT shall
authorize and instruct its accountants to meet with Buyer and its
representatives, including Buyer's independent public accountants, to discuss
the business and accounts of the REIT, the Operating Partnership and the other
Subsidiaries of the REIT and to make available (with the opportunity to make
copies) to Buyer and its representatives, including its independent public
accountants, all the work papers of its accountants related to their audit of
the financial statements and Tax Returns of the REIT and its Subsidiaries.
(b) Within 30 days after the end of each calendar month, the REIT
shall deliver to Buyer for the REIT, the Operating Partnership and the other
Subsidiaries of the REIT monthly operating statements (in a form consistent with
the monthly operating statements previously supplied to the REIT) prepared in
the ordinary course of business for internal purposes.
(c) From and after the Initial Execution Date, the REIT shall
advise Buyer of the status of its discussions and negotiations with respect to
the renegotiation, extension or replacement of its existing senior credit
facility and shall afford Buyer and its representatives the opportunity to
participate in and advise it with respect to such discussions and negotiations.
3.4 Assistance. If Buyer requests, the REIT shall cooperate in all
reasonable respects in connection with any financing efforts of Buyer or its
Affiliates and any other filings that may be made by Buyer or its Affiliates
with the SEC, all at the sole expense of Buyer.
3.5 Notification of Certain Matters. The REIT shall give prompt written
notice to Buyer of (a) the occurrence, or failure to occur, of any event of
which it has Knowledge that has caused or that would be likely to cause any
representation or warranty of the REIT contained in this Agreement or the other
Transaction Documents to be untrue or inaccurate in any material respect at any
time from the Initial Execution Date to the First Closing Date or (b) the
failure of the REIT or any officer, director, employee or agent of the REIT, the
Operating Partnership and the other Subsidiaries of the REIT to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it hereunder No such notification shall affect the
representations or warranties of the parties or the conditions to their
respective obligations hereunder.
3.6 Third Party Consents. After the Initial Execution Date and prior to
the First Closing, the REIT shall use all commercially reasonable efforts,
including making any required payments, to obtain the written consent, waiver or
approval (i) with respect to any of the items
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required by the items set forth on Schedule 2.1(c)(ii) of the REIT Disclosure
Schedule and (ii) any other party to any contract or agreement that is required
to permit the consummation of the transactions contemplated hereby.
3.7 Appointment of Directors. Immediately prior to the First Closing,
the REIT shall have (i) appointed four individuals designated by Buyer to fill
the vacancies created by the resignations contemplated by the Stockholders Stock
Purchase Agreement and (ii) appointed at least one such individual designated by
Buyer to each committee of the Board of Directors of the REIT. Buyer shall have
received a copy of the resolutions of the REIT's Board of Directors reflecting
these actions.
3.8 Noncompetition and Release Agreements. Subject to the terms and
conditions hereof, the REIT shall enter into a Noncompetition and Release
Agreement with each of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Selling Stockholders"). The Noncompetition and Release Agreements shall be
executed in substantially the following forms: with respect to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
as provided in Exhibit B-1; with respect to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as provided in
Exhibit B-2; and with respect to ▇▇▇▇▇ ▇. ▇▇▇▇▇, as provided in Exhibit B-3.
3.9 Affiliate Agreement. The REIT shall take all actions necessary to
terminate at or prior to the First Closing all agreements, arrangements or
rights of the REIT, the Operating Partnership or any other Subsidiaries of the
REIT, or any of their respective Affiliates, with the Company, any Selling
Stockholder or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Affiliate Agreements") other than any
rights of such Persons to indemnity in their capacities as officers or directors
of the REIT, any of the REIT's Subsidiaries or any predecessors of the REIT or
its Subsidiaries, which Affiliate Agreements are set forth on Schedule 3.9 to
the REIT Disclosure Schedule.
3.10 Additional Arrangements. Subject to the terms and conditions herein
provided, the REIT shall take, or cause to be taken, all actions and shall do,
or cause to be done, all things necessary, appropriate or desirable under any
applicable laws and regulations or under applicable governing agreements to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers, consents
and approvals and effecting all necessary registrations and filings. The REIT
shall take, or cause to be taken, all action or shall do, or cause to be done,
all things necessary, appropriate or desirable to cause the covenants and
conditions applicable to the transactions contemplated hereby to be performed or
satisfied as soon as practicable. In addition, if any Governmental Entity shall
have issued any order, decree, ruling or injunction, or taken any other action
that would have the effect of restraining, enjoining or otherwise prohibiting or
preventing the consummation of the transactions contemplated hereby, the REIT
shall use its reasonable best efforts to have such order, decree, ruling or
injunction or other action declared ineffective as soon as practicable.
3.11 Insurance. The REIT shall, and shall cause its Subsidiaries to, use
all commercially reasonable efforts to maintain with financially responsible
insurance companies insurance in such amounts and against such risks and losses
as are customary for companies engaged in their respective business.
3.12 Execution and Delivery of Registration Rights Agreement. The REIT
shall execute and deliver to Buyer the Registration Rights Agreement (as defined
below).
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3.13 Execution and Delivery of Excepted Holder Agreement. The REIT shall
execute and deliver to Buyer an excepted holder agreement (the "Excepted Holder
Agreement"), in the form attached hereto as Exhibit C (as modified, if
necessary, to reflect assignment by Buyer to more than one Affiliate pursuant to
Section 9.14; provided that such modification shall not increase the aggregate
ownership limit of Buyer thereunder).
ARTICLE 4
MUTUAL COVENANTS
4.1 Additional Agreements. Subject to the terms and conditions of this
Agreement, both the REIT and Buyer will use their commercially reasonable
efforts to do, or cause to be taken, all action and to do, or cause to be done,
all things necessary, proper, or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement. If at any time after each Closing Date, any further action is
necessary to comply with this Agreement, the parties to this Agreement or their
duly authorized representatives shall take all such action. Without limiting the
generality of the foregoing, if, after each Closing Date, Buyer seeks
indemnification or recovery from one or more other parties to a contract or
agreement or otherwise seeks to enforce such contract or agreement and, in order
to obtain such indemnification, recovery or enforcement, it is necessary for the
REIT or any of its Subsidiaries or Affiliates to participate in any enforcement
proceeding or otherwise provide assistance to Buyer, then, at the request, upon
reasonable prior notice, during normal business hours and without unreasonable
interruption of such Person's business activities, and at the sole expense of
Buyer, the REIT shall take, or shall cause such Subsidiary or Affiliate to take,
such action as Buyer may reasonably request in connection with Buyer's efforts
to obtain such indemnification, recovery or enforcement.
4.2 Preparation of Proxy Statement. If the approval of the REIT's
stockholders is required in connection with the issuance and sale of the Shares
hereunder, then the REIT shall promptly prepare and file with the SEC the Proxy
Statement in form and substance reasonably satisfactory to the REIT and Buyer.
Each of the REIT and Buyer shall use its commercially reasonable efforts to have
the Proxy Statement approved for mailing to the stockholders of the REIT as
promptly as practicable after such filing. The REIT shall agree to date the
Proxy Statement as of the approximate date of mailing to its stockholders and
shall use its commercially reasonable efforts to cause the Proxy Statement to be
mailed to its stockholders at the earliest practicable date.
4.3 Stockholders Meeting. If required by the Maryland General
Corporation Law or rules of the NYSE, the REIT shall call a meeting of its
stockholders (the "Stockholders Meeting") to be held as promptly as practicable
after the date hereof, but no sooner than 20 business days following the date
that the Proxy Statement is mailed to stockholders of the REIT, for the purpose
of voting upon this Agreement and the issuance and sale of the Shares hereunder.
Subject to the provisions of Section 3.2(b), the REIT Board shall recommend to
the REIT's stockholders entitled to vote thereon the approval of this Agreement,
the issuance and sale of the Shares hereunder and not rescind such
recommendation, and the REIT shall use all commercially reasonable efforts to
obtain approval of this Agreement and the issuance and sale of the Shares
hereunder by its stockholders entitled to vote thereon. The REIT shall use all
commercially
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reasonable efforts to hold such meeting as soon as practicable, but no sooner
than 20 business days following the date that the Proxy Statement is mailed to
stockholders of the REIT.
4.4 Advise of Changes; SEC Filings. The REIT shall confer with Buyer on
a regular basis, report on REIT operational matters and promptly advise Buyer
orally and in writing of any change or event which has, or could reasonably be
expected to have, a Material Adverse Effect on the REIT. The REIT or Buyer, as
the case may be, shall promptly provide each other (or their respective counsel)
copies of all filings made by such party or its Subsidiaries with the SEC or any
other state or federal Governmental Entity in connection with the Transaction
Documents and the transactions contemplated hereby or thereby.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligation. The respective obligations of
Buyer and the REIT to effect the transactions contemplated hereby are subject to
the satisfaction of the following conditions on or prior to each Closing Date:
(a) Consents and Approvals. All authorizations, consents, orders,
or approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any Governmental Entity necessary for the consummation of
the transactions contemplated by this Agreement shall have been filed, occurred,
or been obtained.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any statute,
rule, or regulation shall have been enacted by any Governmental Entity that
makes the consummation of the transactions contemplated hereby illegal.
5.2 Conditions to Obligations of Buyer at the First Closing. The
obligation of Buyer to effect the transactions contemplated hereby at the First
Closing is subject to the satisfaction of the following conditions unless
waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations and
warranties of the REIT set forth in this Agreement shall be true and correct in
all material respects (provided that any representation or warranty of the REIT
contained herein that is qualified by a materiality standard or a Material
Adverse Effect qualification shall not be further qualified hereby) as of the
Initial Execution Date and as of the First Closing Date, as though made on or as
of the First Closing Date, and Buyer shall have received a certificate to the
foregoing effect signed by the chief executive officer and the chief financial
officer of the REIT.
(b) Performance of Obligations. The REIT shall have performed in
all material respects (provided that any covenant or agreement that is qualified
by a materiality standard or Material Adverse Effect qualification shall not be
further qualified hereby) all
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obligations required to be performed by it under this Agreement prior to the
First Closing Date, and Buyer shall have received a certificate to such effect
signed by the chief executive officer and the chief financial officer of the
REIT.
(c) Consents Under Agreements. Buyer shall have been furnished
with any such written consent, approval or waiver contemplated by Section 3.6
hereof.
(d) Legal Opinion. Buyer shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, counsel to the REIT, an opinion dated the First Closing Date, in
substantially the form attached as Exhibit D hereto, which opinion, if requested
by Buyer, shall expressly provide that they may be relied upon by Buyer's
lenders, underwriters, or other sources of financing with respect to the
transactions contemplated hereby and which opinion shall be based on such
representations by the REIT as shall be requested by ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP.
(e) Excepted Holder Limit and Excepted Holder Agreement. The
Board of Directors of the REIT shall have granted Buyer a limit on the
percentage ownership of the REIT by Buyer (the "Excepted Holder Limit") of no
less than 40% and otherwise on terms reasonably acceptable to Buyer and shall
have waived any applicable State law restrictions on such ownership by Buyer,
including exemption from the "control share" provisions (Title 3, Subtitle 7 of
the Corporations and Associations Article of the Annotated Code of Maryland (or
any successor statute)) and "business combination" provisions (Section 3) of the
Maryland General Corporation Law, as amended from time to time, and Buyer shall
have received a copy of the resolutions of the REIT's Board of Directors
reflecting these actions. Further, the REIT shall have entered into the Excepted
Holder Agreement.
(f) Registration Rights Agreement. The REIT shall have entered
into a registration rights agreement with Buyer, in substantially the form
attached as Exhibit E hereto (the "Registration Rights Agreement"), granting
Buyer customary registration rights with respect to any and all shares of REIT
Common Stock acquired by Buyer, including (but not limited to) the right to at
least three demand registrations and unlimited piggyback registration rights, on
terms reasonably acceptable to Buyer.
(g) Resignations From Positions and Appointment of Directors.
Each of the Selling Stockholders and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have resigned from
all positions each holds as an officer or director of the REIT, the Operating
Partnership and any of their respective Affiliates, the Board of Directors of
the REIT shall have appointed four individuals designated by Buyer to fill the
vacancies created by the resignations of the Selling Stockholders and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, the Board of Directors shall have appointed at least one such individual
designated by Buyer to each committee of the Board of Directors, and Buyer shall
have received a copy of the resolutions of the REIT's Board of Directors
reflecting these actions.
(h) Closing Deliveries. All documents, instruments, certificates
or other items required to be delivered by the REIT pursuant to Section 6.2(b)
shall have been delivered.
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(i) Affiliate Agreements. All Affiliate Agreements shall have
been terminated, and Buyer shall have received evidence satisfactory to it of
such terminations.
(j) Severance. To the extent that any of the officers or
directors of the REIT receives, in connection with his resignation from his
positions with the REIT or any of its Subsidiaries or other Affiliates, a
severance payment in excess of the amount to which such Person is entitled under
any written employment or severance agreement between the REIT or any of its
Subsidiaries or other Affiliates and such Person, such severance payment shall
be acceptable to Buyer in its sole discretion.
(k) Releases. To the extent that any of the officers or directors
of the REIT receives, in connection with his resignation from his positions with
the REIT or any of its Subsidiaries or other Affiliates, any severance payment,
such Person shall have executed and delivered a general release of claims
against the REIT and its Subsidiaries and Affiliates in a form reasonably
satisfactory to Buyer.
(l) Concurrent Transactions. The transactions contemplated by the
Stockholders Stock Purchase Agreement shall be consummated concurrently with the
First Closing pursuant to its terms.
(m) Other Agreements. All other agreements or arrangements
between any of the directors who are resigning as directors of the REIT or any
of its Subsidiaries or other Affiliates and the Company, the REIT and/or the
Operating Partnership or any of their respective Subsidiaries or other
Affiliates shall have been terminated, cancelled or modified on terms reasonably
acceptable to Buyer, and Buyer shall have received evidence satisfactory to it
of such terminations, cancellations or modifications.
(n) No Litigation. No litigation or administrative proceeding or
investigation (whether formal or informal) shall be pending or, to Buyer's
Knowledge, threatened which challenges the transactions contemplated hereby.
(o) Stock Exchange Listing. The Shares shall have been authorized
for listing on the New York Stock Exchange, subject to official notice of
listing.
(p) Material Adverse Effect. There shall not have occurred (i)
any event, circumstance, condition, fact, effect, or other matter which has had
or could reasonably be expected to have a REIT Material Adverse Effect or
material adverse effect on the ability of any of the REIT and its Subsidiaries,
the Company, or the Stockholders to perform on a timely basis any material
obligation under this Agreement or any of the other Transaction Documents to
which such Person is a party or to consummate the transactions contemplated
hereby or thereby; or (ii) any material disruption of, or material adverse
change in, financial, banking, or capital market conditions.
(q) REIT Stockholder Approval. The issuance and sale of the
Shares hereunder and all other actions contemplated hereby that require the
approval of holders of the REIT Common Stock shall have been approved and
adopted by the affirmative vote of the holders of a majority of the outstanding
shares of REIT Common Stock present and entitled to vote thereon.
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(r) Noncompetition and Release Agreement. The REIT and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ shall have entered into a Noncompetition and Release Agreement in the
form attached hereto as Exhibit B1.
5.3 Conditions to Obligations of the REIT at the First Closing. The
obligation of the REIT to effect the transactions contemplated hereby at the
First Closing is subject to the satisfaction of the following conditions unless
waived, in whole or in part, by the REIT.
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the Initial Execution Date and as of the First
Closing Date, as though made on or as of the First Closing Date, and the REIT
shall have received a certificate to the foregoing effect signed on behalf of
Buyer by the chief executive officer and another officer of Buyer.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects (provided that any covenant or agreement that
is qualified by a materiality standard shall not be further qualified hereby)
the obligations required to be performed by it under this Agreement prior to the
First Closing Date, and the REIT shall have received a certificate to such
effect signed on behalf of Buyer by the chief executive officer and another
officer of Buyer.
(c) Closing Deliveries. All documents, instruments, certificates
or other items required to be delivered by Buyer pursuant to Section 6.2(a)
shall have been delivered.
(d) Concurrent Transactions. The transactions contemplated by the
Stockholders Stock Purchase Agreement shall be consummated concurrently with the
First Closing pursuant to its terms.
5.4 Conditions to Obligations of Buyer at each Subsequent Closing. The
obligation of Buyer to effect the transactions contemplated hereby at each
Subsequent Closing is subject to the satisfaction of the following conditions
unless waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations and
warranties of the REIT set forth in this Agreement (other than the
representation and warranty set forth in Section 2.1(b)(i)(1) hereof) shall have
been true and correct in all material respects (provided that any representation
or warranty of the REIT contained herein that is qualified by a materiality
standard or a Material Adverse Effect qualification shall not be further
qualified hereby) as of the Initial Execution Date and as of the First Closing
Date, as though made on or as of the First Closing Date, and Buyer shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial officer of the REIT.
(b) Performance of Obligations. The REIT shall have performed in
all material respects (provided that any covenant or agreement that is qualified
by a materiality standard or Material Adverse Effect qualification shall not be
further qualified hereby) all obligations required to be performed by it under
this Agreement prior to the First Closing Date,
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and Buyer shall have received a certificate to such effect signed by the chief
executive officer and the chief financial officer of the REIT.
(c) Closing Deliveries. All documents, instruments, certificates
or other items required to be delivered by the REIT pursuant to Section 6.3(b)
shall have been delivered.
(d) First Closing. The First Closing shall have occurred.
(e) No Litigation. No litigation or administrative proceeding or
investigation (whether formal or informal) shall be pending or, to Buyer's
Knowledge, threatened which challenges the transactions contemplated hereby.
5.5 Conditions to Obligations of the REIT at Each Subsequent Closing.
The obligation of the REIT to effect the transactions contemplated hereby at
each Subsequent Closing is subject to the satisfaction of the following
conditions unless waived, in whole or in part, by the REIT.
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the Initial Execution Date and as of each
Subsequent Closing Date, as though made on or as of such Subsequent Closing
Date, and the REIT shall have received a certificate to the foregoing effect
signed on behalf of Buyer by the chief executive officer and another officer of
Buyer.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects (provided that any covenant or agreement that
is qualified by a materiality standard shall not be further qualified hereby)
the obligations required to be performed by it under this Agreement prior to
such Subsequent Closing Date, and the REIT shall have received a certificate to
such effect signed on behalf of Buyer by the chief executive officer and another
officer of Buyer.
(c) Closing Deliveries. All documents, instruments, certificates
or other items required to be delivered by Buyer pursuant to Section 6.3(a)
shall have been delivered.
ARTICLE 6
CLOSING
6.1 Closing. (a) The purchase and sale of the Shares shall take place at
two or more closings (the "Closings"). The First Closing shall take place,
subject to the earlier satisfaction or waiver of each of the conditions set
forth in Article 5 (other than the conditions set forth in Sections 5.2(h),
5.2(m) and 5.3(c)) concurrently with the closing of the transactions
contemplated by the Stockholders Stock Purchase Agreement, at 9:30 a.m., Central
time, on March 9, 2001 (the "First Closing Date"), at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P., 3700 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
unless another date or place is agreed to in writing by the parties. Each
Subsequent Closing shall occur within 15 business days of the date (each, a
"Subsequent Closing Date" and, together with the First Closing Date, the
"Closing Dates" and each, a "Closing Date") on which the REIT provides written
notice to Buyer
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in accordance with Section 9.9 hereof requiring a Subsequent Closing to occur at
the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., 3700 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in
writing by the parties. Notwithstanding anything to the contrary in this
Agreement, the obligation of Buyer hereunder to consummate any Subsequent
Closing within 15 business days of the date on which the REIT provides written
notice to Buyer shall not be amended, terminated or waived without the consent
of a majority of the members of the REIT's Board of Directors other than those
members appointed to the REIT's Board of Directors pursuant to Section 3.7(i)
hereof.
(b) As used in this Agreement, "Business Day" means any day other
than (i) a Saturday or Sunday or (ii) a day on which commercial banks in New
York, New York or Dallas, Texas are authorized or required to be closed.
6.2 Actions to Occur at the First Closing.
(a) At the First Closing, Buyer shall deliver to the
REIT the following:
(i) Purchase Price. An amount equal to the Purchase Price
for the First Closing Shares, by wire transfer of immediately available
funds to an account designated by the REIT; and
(ii) Certificates. The certificates referred to in
Sections 5.3(a) and 5.3(b).
(b) At the First Closing, the REIT shall deliver to Buyer the
following:
(i) Share Certificates. Certificates representing the
First Closing Shares;
(ii) Certificates. The certificates described in Sections
5.2(a) and 5.2(b);
(iii) Legal Opinion. The opinion of counsel referred to in
Section 5.2(d);
(iv) Consents; Acknowledgments. The original of each
Consent, if any, pursuant to Section 5.2(c);
(v) Noncompetition and Release Agreements. Fully executed
copies of the Noncompetition and Release Agreements; and
(vi) Registration Rights Agreement. A counterpart of the
Registration Rights Agreement executed by the REIT;
6.3 Actions to Occur at Each Subsequent Closing.
(a) At each Subsequent Closing, Buyer shall deliver to the REIT
the following:
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(i) Purchase Price. An amount equal to the Purchase Price
for the Subsequent Closing Shares to be purchased at such Subsequent
Closing, by wire transfer of immediately available funds to an account
designated by the REIT; and
(ii) Certificates. The certificates referred to in
Sections 5.5(a) and 5.5(b).
(b) At each Subsequent Closing, the REIT shall deliver to Buyer
the following:
(i) Share Certificates. Certificates representing the
Subsequent Closing Shares to be purchased at such Subsequent Closing;
and
(ii) Certificates. The certificates described in Sections
5.4(a) and 5.4(b).
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination Prior to First Closing. This Agreement may be terminated
at any time prior to the First Closing:
(a) by mutual consent of Buyer and the REIT;
(b) by either Buyer or the REIT:
(i) in the event of a breach by the other party of any
representation, warranty, covenant or agreement contained in this
Agreement, which cannot be or has not been cured within 10 days (the
"Cure Period") following receipt by the breaching party of written
notice of such breach; provided, however, that there shall be no right
to cure any breach of Section 3.2, Section 3.12 or Section 6.2 and
provided, further, that the REIT shall not terminate this Agreement
pursuant to this Section 7.1(b)(i) at or prior to the Inspection
Termination Time;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or
taken any other action (which order, decree, or ruling Buyer and the
REIT shall use their best efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions
contemplated by this Agreement or the other Transaction Documents, and
such order, decree, ruling, or other action shall have become final and
nonappealable; or
(iii) if the First Closing shall not have occurred by 5:00
p.m., Central time on the 150th day following the Delivery Date (the
"Final Closing Date"); provided, however, that the right to terminate
this Agreement under this clause (iii) shall not be available to any
party whose breach of this Agreement has been the cause of, or resulted
in, the failure of the First Closing to occur on or before such date;
(c) by Buyer:
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(i) pursuant to the provisions of Section 1.5 upon
delivery of the notice of termination to the REIT;
(ii) if the REIT shall have entered into or agreed to
enter into any material amendment of or replacement for the REIT's Bank
of America, N.A. credit facility or entered into or agreed to enter into
any other material financing transaction other than with the written
consent of Buyer, other than any credit facility entered into in
accordance with the terms of the commitment letter regarding the
proposed $175 million Guaranteed Funding Facility attached hereto as
Exhibit G ("Guaranteed Funding Facility");
(iii) upon the occurrence of an event described in Section
5.2(p);
(iv) if the Stockholders Stock Purchase Agreement or any
other definitive document relating thereto is terminated in accordance
with its terms (other than as a result of a breach of this Agreement by
Buyer);
(v) if (A) the REIT proposes to enter into a written
agreement for a REIT Superior Proposal, (B) the REIT Board (or any
committee thereof) withdraws or modifies its approval or recommendation
of this Agreement, the issuance and sale of the Shares, or the
transactions contemplated hereby in a manner adverse to Buyer, (C) the
REIT Board (or any committee thereof) approves or recommends to
stockholders of the REIT any REIT Takeover Proposal, (D) the REIT Board
(or any committee thereof) fails to recommend that the stockholders of
the REIT vote against any REIT Takeover Proposal within ten business
days after public announcement thereof, or (E) the REIT Board (or any
committee thereof) shall have resolved to do any of the foregoing; or
(vi) if stockholder approval is required with respect to
this Agreement and the issuance and sale of the Shares to Buyer
hereunder, and, when presented to the holders of REIT Common Stock for
their consideration, such actions shall fail to receive the requisite
vote for approval and adoption by the REIT's stockholders.
(d) by the REIT, if:
(i) the REIT Board shall have exercised its termination
rights set forth in Section 3.2(b); provided that, in order for the
termination of this Agreement pursuant to this paragraph (d)(i) to be
deemed effective, the REIT shall have complied with all provisions of
Section 3.2, including (A) the notice provisions therein and (B) the
obligation to simultaneously pay Buyer the Termination Fee required
pursuant to Section 3.2(b) and enter into a REIT Acquisition Agreement
relating to a REIT Superior Proposal; or
(ii) if Buyer fails to deposit $1,000,000 with the Escrow
Agent prior to 5:00 p.m., Central Time, on February 28, 2001; provided
that this Agreement has not otherwise been terminated prior to such
time.
The right of any party hereto to terminate this Agreement pursuant to
this Section 7.1 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
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officers, directors, employees, accountants, consultants, legal counsel, agents,
or other representatives whether prior to or after the execution of this
Agreement. Notwithstanding anything in the foregoing to the contrary, a party
that is in material breach of this Agreement shall not be entitled to terminate
this Agreement except, in the case of a default by the REIT, with the consent of
Buyer, or in the case of a default by Buyer, with the consent of the REIT.
7.2 Termination Subsequent to First Closing. This Agreement may be
terminated subsequent to the First Closing:
(a) by mutual consent of Buyer and the REIT; provided, however,
that the REIT may not so consent without the approval of a majority of the
members of the REIT's Board of Directors other than those members appointed to
the REIT's Board of Directors pursuant to Section 3.7(i) hereof;
(b) by the REIT, in the event of a breach by Buyer of any
representation, warranty, covenant or agreement contained in this Agreement,
which cannot be or has not been cured within the Cure Period following receipt
by the Buyer of written notice of such breach; provided, however, that there
shall be no right to cure any breach of Section 6.3, and provided, further, that
the REIT may not so terminate without the approval of a majority of the members
of the REIT's Board of Directors other than those members appointed to the
REIT's Board of Directors pursuant to Section 3.7(i) hereof;
(c) by Buyer, in the event that any representation or warranty
contained in this Agreement was not true and correct as of the First Closing
Date, which cannot be or has not been cured within the Cure Period following
receipt by the REIT of written notice of such breach; and
(d) by Buyer, in the event of a breach by the REIT of any
covenant or agreement contained in this Agreement, which cannot be or has not
been cured with the Cure Period following receipt by the REIT of written notice
of such breach; provided, however, that there shall be no right to cure any
breach of Section 3.2, Section 3.12 or Section 6.3 hereof.
7.3 Effect of Termination Prior to First Closing.
(a) In the event of a termination of this Agreement pursuant to
Section 7.1 hereof by either the REIT or Buyer, this Agreement shall terminate
and have no further effect, without any liability or obligation on the part of
either the REIT or Buyer, other than the provisions of Article 9 and this
Article 7, which shall survive termination of this Agreement; provided, however,
that nothing herein shall relieve any party from any liability for any breach by
such party of any of its representations, warranties, covenants or agreements
set forth in this Agreement. If, after the Inspection Termination Time and prior
to the First Closing, Buyer should breach this Agreement in a manner which gives
rise to a termination right pursuant to Section 7.1(b)(i) or 7.1(d)(ii) on the
part of the REIT (which breach shall include a purported or wrongful termination
of this Agreement by Buyer made in breach of this Agreement), then the REIT's
sole and exclusive right and remedy shall be to terminate this Agreement
pursuant to Section 7.1(b)(i) or 7.1(d)(ii) and to receive payment of the
liquidated damages described below as provided in this Section 7.3. If this
Agreement is terminated by the REIT pursuant to Section 7.1(b)(i) or 7.1(d)(ii),
the parties agree and acknowledge that the REIT will suffer damages that are not
practicable to ascertain. Accordingly, in such event and if, within ten Business
Days after
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termination of this Agreement by the REIT pursuant to Section 7.1(b)(i) or
7.1(d)(ii), the REIT delivers to Buyer a written demand for liquidated damages,
subject to Buyer's receipt of a counterpart of a release of claims executed and
delivered by the REIT, in the form attached hereto as Exhibit F (the "Liquidated
Damages Release"), the REIT shall be entitled to an aggregate amount in cash
equal to $1,000,000 (together with any earnings thereon), as liquidated damages
payable by Buyer in accordance with the provisions of the Deposit Escrow
Agreement within ten Business Days after receipt of the written demand by the
REIT. As security for payment thereof, Buyer has concurrently with the execution
of the Original Agreement entered into the Deposit Escrow Agreement with the
REIT and the Escrow Agent as provided in Section 1.4 and Buyer will, prior to
5:00 p.m., Central Time, on February 28 2001, deposit $1,000,000 with the Escrow
Agent. The parties agree that the foregoing liquidated damages are reasonable
considering all the circumstances existing as of the Initial Execution Date and
constitute the parties' good faith estimate of the actual damages reasonably
expected to result from the termination of this Agreement by the REIT. The REIT
agrees that, to the fullest extent permitted by law, the REIT's right to
terminate this Agreement and to receive payment of the liquidated damages
described above as provided in this Section 7.3 shall be the REIT's sole and
exclusive right and remedy if the First Closing does not occur with respect to
any damages whatsoever that the REIT may suffer or allege to suffer as a result
of any claim or cause of action asserted by the REIT relating to or arising from
breaches of the representations, warranties or covenants of Buyer contained in
this Agreement and to be made or performed at or prior to the First Closing. If
this Agreement is terminated either by Buyer or the REIT pursuant to any
provision of Section 7.1 other than a termination (A) by the REIT pursuant to
Section 7.1(b)(i) or 7.1(d)(ii), or (B) by Buyer pursuant to Section 7.1(c)(i),
then Buyer and the REIT shall instruct the Escrow Agent in writing to release
the ▇▇▇▇▇▇▇ Money (including any accrued interest thereon), if any, to Buyer. If
the REIT delivers to the Escrow Agent a fully executed counterpart of the
Liquidated Damages Release in accordance with the Deposit Escrow Agreement,
Buyer shall be deemed to have received a counterpart of the Liquidated Damages
Release for purposes of this Section 7.3(a).
(b) As a condition of payment, and upon receipt of an aggregate
amount in cash equal to $1,000,000 (together with any earnings thereon) in
respect of a termination pursuant to Section7.1(b)(i) or 7.1(d)(ii), as
liquidated damages under this Section 7.3, the REIT hereby irrevocably and
unconditionally releases, acquits, and forever discharges Buyer and its
successors, assigns, officers, directors, employees, agents, stockholders,
subsidiaries, parent companies and other Affiliates (corporate or otherwise)
(the "Released Parties") of and from any and all Released Claims. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses or
expenses (including attorneys' and other professional fees and expenses) held by
the REIT, whether known or unknown, matured or unmatured, suspected or
unsuspected, liquidated or unliquidated, absolute or contingent, direct or
derivative, arising out of the negotiation, execution, performance, or breach of
this Agreement. The Liquidated Damages Release to be delivered pursuant to
Section 7.3(a) shall be in addition to the provisions of this Section 7.3(b).
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ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of Buyer.
(a) From and after the First Closing and subject to the
provisions of this Article 8 and Section 9.2 below, the REIT agrees to indemnify
and hold harmless the Buyer Indemnified Parties (as hereinafter defined) from
and against any and all Buyer Indemnified Costs; provided, however, that the
liability of the REIT for any Buyer Indemnified Representation Costs shall not
exceed an amount equal to the Purchase Price.
(b) As used in this Agreement,
(i) "Buyer Indemnified Costs" means (i) all Buyer
Indemnified Representation Costs and (ii) all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable legal fees and expenses incurred
in investigating and preparing for any litigation or proceeding) that
any of the Buyer Indemnified Parties incurs and that arise out of any
breach by the REIT of any of the covenants or agreements (other than
breaches of covenants to be performed by the REIT after the First
Closing) of the REIT under this Agreement or any other Transaction
Document executed in connection herewith.
(ii) "Buyer Indemnified Parties" means Buyer and each
officer, director, partner, member, manager, agent, employee,
stockholder and other Affiliate of Buyer.
(iii) "Buyer Indemnified Representation Costs" means any
and all damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs, and expenses (including court costs and reasonable
legal fees and expenses incurred in investigating and preparing for any
litigation or proceeding) that any of the Buyer Indemnified Parties
incurs in connection with, relating to or arising out of the
transactions contemplated hereby and that arise out of any breach or
default by the REIT of any of the representations or warranties of the
REIT under this Agreement or any agreement or document executed in
connection herewith.
8.2 Indemnification of the REIT. From and after the First Closing and
subject to the provisions of this Article 8 and Section 9.2 below, Buyer agrees
to indemnify and hold harmless the REIT Indemnified Parties from and against any
and all REIT Indemnified Costs.
(a) As used in this Agreement,
(i) "REIT Indemnified Costs" means (i) all REIT
Indemnified Representation Costs, (ii) any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable legal fees and expenses
incurred in investigating and preparing for any litigation or
proceeding) that the REIT incurs and that arise out of any breach by
Buyer of any of the covenants or agreements under this Agreement or any
other Transaction Documents and (iii) any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties,
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costs, and expenses (including court costs and reasonable legal fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) that the REIT incurs and that arise out of any breach by
Buyer of a covenant or agreement to be performed by Buyer after the
First Closing.
(ii) "REIT Indemnified Parties" means the REIT and each
officer and director of the REIT.
(iii) "REIT Indemnified Representation Costs" means any
and all damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs, and expenses (including court costs and reasonable
legal fees and expenses incurred in investigating and preparing for any
litigation or proceeding) that the REIT incurs and that arise out of any
breach or default by Buyer of any of its representations or warranties
under this Agreement or any agreement or document executed in connection
herewith.
8.3 Defense of Third-Party Claims. The Buyer Indemnified Parties or the
REIT Indemnified Parties, as the case may be (each, an "Indemnified Party"),
shall give prompt written notice to any Person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article 8
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as it deems appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at its own expense,
to participate in the defense of such third-party action (provided, however,
that the Indemnifying Parties shall pay the legal fees of the Indemnified Party
if (i) the employment of separate counsel shall have been authorized in writing
by all Indemnifying Parties in connection with the defense of such third-party
action, (ii) the Indemnifying Parties shall not have employed counsel reasonably
satisfactory to the Indemnified Party to have charge of such third-party action,
(iii) the Indemnified Party shall have been advised in writing by counsel that
there may be defenses available to such Indemnified Party that are different
from or additional to those available to the Indemnifying Party, or (iv) the
Indemnified Party's counsel shall have advised the Indemnified Party in writing,
with a copy delivered to the Indemnifying Party, that there is a material
conflict of interest that could violate applicable standards of professional
conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any settlement,
compromise, admission, or acknowledgment of the validity of such third-party
action or any liability in respect thereof if, pursuant to or as a result of
such settlement, compromise, admission, or acknowledgment, injunctive or other
equitable relief would be imposed against the Indemnified Party or if, in the
opinion of the Indemnified Party, such settlement, compromise, admission, or
acknowledgment could have a material adverse effect on its business;
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(c) No Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to each Indemnified Party
of a release from all liability in respect of such third-party action; and
(d) The Indemnifying Party shall not be entitled to control (but
shall be entitled to participate at its own expense in the defense of), and the
Indemnified Party shall be entitled to have sole control over, the defense or
settlement, compromise, admission, or acknowledgment of any third-party action
(i) as to which the Indemnifying Party fails to assume the defense within a
reasonable length of time; or (ii) to the extent the third-party action seeks an
order, injunction, or other equitable relief against the Indemnified Party
which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article 8 and, in connection
therewith, shall furnish such records, information, and testimony and attend
such conferences, discovery proceedings, hearings, trials, and appeals as may be
reasonably requested.
8.4 Direct Claims. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 8.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Buyer Indemnified Costs or REIT Indemnified
Costs, as the case may be ("Indemnified Costs"), which Indemnified Party claims
are subject to indemnification under the terms hereof. Subject to the
limitations set forth in Sections 8.5(c) and 9.2, the failure of the Indemnified
Party to exercise promptness in such notification shall not amount to a waiver
of such claim unless the resulting delay materially prejudices the position of
the Indemnifying Party with respect to such claim.
8.5 Limitations. Subject to Section 9.2 hereof, the following provisions
of this Section 8.5 shall be applicable after the time of the First Closing:
(a) Minimum Loss. No Indemnifying Party shall be required to
indemnify an Indemnified Party for Buyer Indemnified Representation Costs or
REIT Indemnified Representation Costs, as the case may be ("Indemnified
Representation Costs"), unless and until the aggregate amount of such
Indemnified Representation Costs for which the Indemnified Party is otherwise
entitled to indemnification pursuant to this Article 8 exceeds $400,000 (the
"Minimum Loss"). After the Minimum Loss is exceeded, the Indemnified Party shall
be entitled to be paid the entire amount of its Indemnified Representation
Costs, including the full amount of the Minimum Loss, subject to the limitations
on recovery and recourse set forth in this Section 8.5.
(b) Determination of Breach. For purposes of determining (i)
whether an Indemnifying Party shall be required to indemnify an Indemnified
Party under this Article 8 or (ii) the aggregate amount of Minimum Loss suffered
by an Indemnified Party, each representation and warranty contained in this
Agreement for which indemnification can be or is sought hereunder shall be read
(including for purposes of determining whether a breach of such
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representation or warranty has occurred) without regard to materiality
(including Material Adverse Effect) qualifications that may be contained
therein.
(c) Limitation as to Time. No Indemnifying Party shall be liable
for any Indemnified Representation Costs pursuant to this Article 8 unless a
written claim for indemnification in accordance with Section 8.3 or 8.4 is given
by the Indemnified Party to the Indemnifying Party with respect thereto on or
before the first anniversary of the First Closing Date, except that this time
limitation shall not apply to any (i) claims for fraud pursuant to Section 9.2;
(ii) claims for breaches of the representations and warranties contained in
Section 2.1(b) (relating to capital structure of the REIT and its Subsidiaries),
Section 2.1(c) (relating to authority of the REIT and its Subsidiaries), Section
2.1(k) (relating to taxes) and Section 2.1(o) (relating to environmental
matters), which representations and warranties shall survive until the
expiration of the applicable statute of limitations.
(d) Other Indemnified Costs. The provisions of this Section 8.5
shall only be applied to Indemnified Representation Costs and shall not be
applicable to any other Indemnified Costs.
(e) Limitation as to Amount. The Indemnifying Party's aggregate
indemnity obligations to the Indemnified Parties under this Agreement shall be
limited to an amount equal to the Purchase Price.
8.6 Tax Related Adjustments. The REIT and Buyer agree that any payment
of Indemnified Costs made hereunder will be treated by the parties on their Tax
Returns as an adjustment to the Purchase Price. If, notwithstanding such
treatment by the parties, any payment of Indemnified Costs is determined to be
taxable income rather than adjustment to Purchase Price by any taxing authority,
then the Indemnifying Party shall indemnify the Indemnified Party for any Taxes
payable by the Indemnified Party or any subsidiary by reason of the receipt of
such payment (including any payments under this Section 8.6), determined at an
assumed marginal tax rate equal to the highest marginal tax rate then in effect
for corporate taxpayers in the relevant jurisdiction.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties, and Covenants. Regardless
of any investigation at any time made by or on behalf of any party hereto or of
any information any party may have in respect thereof, each of the
representations and warranties made in this Agreement or any other Transaction
Document shall survive the First Closing as provided below. The representations
and warranties set forth in this Agreement (other than representations and
warranties contained in Section 2.1(b) (relating to capital structure of the
REIT and its Subsidiaries), Section 2.1(c) (relating to authority of the REIT
and its Subsidiaries), Section 2.1(k) (relating to taxes) and Section 2.1(o)
(relating to environmental matters), which representations and warranties shall
survive until the expiration of the applicable statute of limitations) or any
other Transaction Document shall terminate on the first anniversary of the First
Closing Date. Following the date of termination of a representation or warranty,
no claim can be brought with respect to a breach of such representation or
warranty, but no such
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termination shall affect any claim for a breach of a representation or warranty
that was asserted in writing pursuant to Section 8.3 or Section 8.4 hereof
before the date of termination. To the extent that such are performable after
the First Closing or any Subsequent Closing, as applicable, each of the
covenants and agreements contained in each of the Transaction Documents shall
survive such Closing indefinitely; provided, however, effective as of the First
Closing or any Subsequent Closing, the REIT shall be deemed to have waived any
and all rights and remedies as to any breach by Buyer of any covenant and
agreement of Buyer contained in each Transaction Document occurring prior to
such Closing other than the obligation to acquire all Subsequent Closing Shares.
9.2 No Waiver Relating to Claims for Fraud. The liability of any party
under Article 8 shall be in addition to, and not exclusive of, any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Section 8.5,
shall be deemed a waiver by any party to this Agreement of any right or remedy
which such party may have at law or equity based on any other party's fraudulent
acts or omissions, nor shall any such provisions limit, or be deemed to limit,
(a) the amounts of recovery sought or awarded in any such claim for fraud, (b)
the time period during which a claim for fraud may be brought, or (c) the
recourse which any such party may seek against another party with respect to a
claim for fraud; provided, that with respect to such rights and remedies at law
or equity, the parties further acknowledge and agree that none of the provisions
of this Section 9.2, nor any reference to this Section 9.2 throughout this
Agreement, shall be deemed a waiver of any defenses which may be available in
respect of actions or claims for fraud, including but not limited to, defenses
of statutes of limitations or limitations of damages.
9.3 Amendment and Modification. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto or by Buyer and the
REIT.
9.4 Waiver of Compliance. Any failure of Buyer on the one hand, or the
REIT, on the other hand, to comply with any obligation, covenant, agreement, or
condition contained herein may be waived only if set forth in an instrument in
writing signed by the party or parties to be bound by such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement, or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
9.5 Specific Performance. The parties recognize that in the event the
REIT should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement specifically, the REIT hereby waives the
defense that there is an adequate remedy at law. In no event shall the REIT be
entitled to seek specific performance with respect to any of Buyer's obligations
arising under this Agreement.
9.6 Severability. If any term or other provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal, or
incapable of being enforced under any rule of applicable law, or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of
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the transactions contemplated herein are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated herein are consummated as originally
contemplated to the fullest extent possible.
9.7 Expenses and Obligations.
(a) Except as otherwise expressly provided in this Agreement or
as provided by law, if the First Closing does not occur, all costs and expenses
incurred by the parties hereto in connection with the consummation of the
transactions contemplated hereby shall be borne solely and entirely by the party
which has incurred such expenses. If the First Closing does occur, then, except
as so provided, all costs and expenses incurred by the REIT, on the one hand,
and Buyer, on the other, in connection with such consummation shall be borne
solely and entirely by the REIT and Buyer, respectively. Notwithstanding the
foregoing, upon the First Closing, Buyer shall pay $131,250, the Selling
Stockholders shall pay $71,250 in the aggregate and the REIT shall pay $60,000
($262,500 in total) to ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Company, Inc. as a result of the
consummation of the transactions contemplated hereby.
(b) In the event that (i) this Agreement is terminated by the
REIT prior to the First Closing pursuant to Section 7.1(d)(i) or (ii) this
Agreement is terminated by Buyer pursuant to Section 7.1(c)(ii), Section
7.1(c)(v), or Section 7.1(c)(vi), then promptly after such termination (and in
any event within one Business Day, except that any payment of the Termination
Fee pursuant to subparagraph (i) above shall be paid simultaneously with, and be
a necessary condition to, such termination), the REIT shall pay Buyer a fee of
$10,000,000 million (the "Termination Fee") by wire transfer of same day funds;
provided, however, that the amount of the Termination Fee payable to Buyer upon
a termination by Buyer pursuant to Section 7.1(c)(ii) or 7.1(c)(vi) shall be
$3,500,000 rather than $10,000,000. The fee and other amounts payable pursuant
to this Section 9.7 shall be paid by the REIT without reservation of rights or
protests and the REIT, upon making such payment, shall be deemed to have
released and waived any and all rights that it may have to recover such amounts.
9.8 Parties in Interest. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors, assigns and transferees, and nothing in this Agreement, except
as set forth below, express or implied, is intended to confer upon any other
Person (other than the Indemnified Parties as provided in Article 8 and any
Released Parties under Section 7.3) any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
9.9 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied, or mailed
by registered or certified mail (return receipt requested), or sent by Federal
Express or other recognized overnight courier, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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(a) If to Buyer, to:
Lone Star Fund III (U.S.), L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ 164
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. Dell
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the REIT, to:
U.S. Restaurant Properties, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier.
9.10 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by
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each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
9.11 Entire Agreement. This Agreement (which term shall be deemed to
include the exhibits and schedules hereto and the other certificates, documents
and instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement. The
provision contained in Section 1.4(b) hereof shall supercede any provision to
the contrary in the Transaction Documents.
9.12 Governing Law; Choice of Forum. This Agreement shall be construed
in accordance with and governed by the internal law of the State of Maryland
(without reference to its rules as to conflicts of law).
9.13 Public Announcements. The REIT, on the one hand, and Buyer, on the
other, shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby, except for statements required by law or by
any listing agreements with any national securities exchange or the National
Association of Securities Dealers, Inc., or made in disclosures filed pursuant
to the Securities Act or the Exchange Act.
9.14 Assignment. 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; provided, however, that upon
notice to the REIT and without releasing Buyer from any of its obligations or
liabilities hereunder, (a) Buyer may assign or delegate any or all of its rights
or obligations under this Agreement to any one or more Affiliates of Buyer or
any Person with or into which Buyer or any parent company of Buyer merges or
consolidates, and (b) nothing in this Agreement shall limit Buyer's ability to
make a collateral assignment of its rights under this Agreement to any
institutional lender that provides funds to Buyer without the consent of the
REIT. The REIT shall execute an acknowledgment of such collateral assignments in
such forms as Buyer's lenders may from time to time reasonably request;
provided, however, that unless written notice is given to the REIT that any such
collateral assignment has been foreclosed upon, the REIT shall be entitled to
deal exclusively with Buyer as to any matters arising under this Agreement or
any of the other agreements delivered pursuant hereto. In the event of such an
assignment, the provisions of this Agreement shall inure to the benefit of and
be binding on Buyer's assigns. Any attempted assignment in violation of this
Section 9.14 shall be null and void.
9.15 Guarantee of Buyer's Obligation to Purchase Shares at any
Subsequent Closing. Guarantor guarantees the full and prompt performance by
Buyer of Buyer's obligation to deliver the Purchase Price for the Subsequent
Closing Shares pursuant to Section 6.3(a)(i) hereunder. This guarantee shall be
a continuing guarantee of Buyer's obligation to deliver the Purchase Price for
the Subsequent Closing Shares pursuant to Section 6.3(a)(i) and the liability of
the Buyer hereunder shall in no way be effected, modified or diminished.
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9.16 No Affiliate Liability. Each of the following is herein referred to
as a "Buyer Affiliate": (a) any direct or indirect holder of any equity
interests or securities in Buyer (whether limited or general partners, members,
stockholders or otherwise), (b) any Affiliate of Buyer, or (c) any director,
officer, employee, representative or agent of (i) Buyer, (ii) any Affiliate of
Buyer or (iii) any such holder of equity interests or securities referred to in
clause (a) above. No Buyer Affiliate shall have any liability or obligation of
any nature whatsoever in connection with or under this Agreement or the other
Transaction Documents or the transactions contemplated hereby or thereby (other
than as an assignee of this Agreement) and the REIT hereby waives and releases
all claims of any such liability and obligation, it being understood that no
such Person or entity (other than Buyer or an assignee of this Agreement) shall
be liable for or in respect of this Agreement or the other Transaction Documents
and the transactions contemplated hereby or thereby.
9.17 Headings. The headings of this Agreement are for convenience of
reference only and are not part of the substance of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed, all as of the date first written above.
U.S. RESTAURANT PROPERTIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: CEO
-------------------------------
LONE STAR U.S. ACQUISITIONS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Title: President
-------------------------------
LONE STAR FUND III (U.S.), L.P.
By: /s/ ▇.▇. DELL
-----------------------------------
Name: ▇.▇. Dell
---------------------------------
Title: Vice President
-------------------------------
S-1
62
Exhibit A
Form of Deposit Escrow Agreement
63
Exhibit B-1
Form of Noncompetition and Release Agreement
(▇▇▇▇▇▇▇▇)
64
Exhibit B-2
Form of Noncompetition and Release Agreement
(▇▇▇▇▇▇ ▇▇▇▇▇)
65
Exhibit B-3
Form of Noncompetition and Release Agreement
(▇▇▇▇▇ ▇▇▇▇▇)
66
Exhibit C
Form of Excepted Holder Agreement
67
Exhibit D
Form of Legal Opinion of REIT's Counsel
68
Exhibit E
Form of Registration Rights Agreement
69
Exhibit F
Liquidated Damages Release
70
Exhibit G
Commitment Letter