Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Between
HEALTH CARE PROPERTY INVESTORS, INC.
and
AMERICAN HEALTH PROPERTIES, INC.
Dated as of August 4, 1999
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS 1
ARTICLE II. THE MERGER 12
Section 2.1 The Merger 12
Section 2.2 Closing and Closing Date 12
Section 2.3 Effective Time 12
Section 2.4 Effects of the Merger 12
Section 2.5 Charter; Bylaws 13
Section 2.6 Directors and Officers 13
Section 2.7 Conversion of Securities 13
Section 2.8 Treatment of Company Options,
Company Dividend Equivalent Rights and Company
Deferred Directors Fees 14
Section 2.9 Fractional Interests 17
Section 2.10 Surrender of Shares of Company Stock;
Stock Transfer Books 17
Section 2.11 Lost, Stolen or Destroyed Certificates 20
Section 2.12 Tax Consequences 20
Section 2.13 Withholding Rights 20
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 21
Section 3.1 Organization and Qualification 21
Section 3.2 Authorization; Validity and Effect of Agreement 21
Section 3.3 Capitalization 21
Section 3.4 Subsidiaries 23
Section 3.5 Other Interests 23
Section 3.6 No Conflict; Required Filings and Consents 24
Section 3.7 Compliance 24
Section 3.8 SEC Reports 25
Section 3.9 Absence of Certain Changes 25
Section 3.10 Litigation 26
Section 3.11 Taxes 26
Section 3.12 Employee Benefit Plans 28
Section 3.13 Properties 29
Section 3.14 Contracts 31
Section 3.15 Labor Relations 32
Section 3.16 Intellectual Property 32
Section 3.17 Environmental Matters 32
Section 3.18 Opinion of Financial Advisor 33
Section 3.19 Brokers 33
Section 3.20 Vote Required 33
Section 3.21 Accounting and Tax Matters 33
Section 3.22 Insurance 34
Section 3.23 Takeover Provisions Inapplicable 34
Section 3.24 No Material Adverse Effect 34
Section 3.25 Rights Plan 34
Section 3.26 ▇▇▇▇▇▇▇ Replacement Properties 34
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF HCPI 34
Section 4.1 Organization and Qualification 35
Section 4.2 Authorization; Validity and Effect of Agreement 35
Section 4.3 Capitalization 35
Section 4.4 Subsidiaries 37
Section 4.5 Other Interests 37
Section 4.6 No Conflict; Required Filings and Consents 37
Section 4.7 Compliance 38
Section 4.8 SEC Reports 38
Section 4.9 Absence of Certain Changes 39
Section 4.10 Litigation 39
Section 4.11 Taxes 39
Section 4.12 Employee Benefit Plans 41
Section 4.13 Properties 43
Section 4.14 Contracts 45
Section 4.15 Labor Relations 45
Section 4.16 Intellectual Property 45
Section 4.17 Environmental Matters 45
Section 4.18 Opinion of Financial Advisor 46
Section 4.19 Brokers 46
Section 4.20 Vote Required 46
Section 4.21 Accounting and Tax Matters 47
Section 4.22 Insurance 47
Section 4.23 Takeover Provisions Inapplicable 47
Section 4.24 No Material Adverse Effect 47
Section 4.25 Rights Plan 47
Section 4.26 Ownership of Company Common Stock 47
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER 47
Section 5.1 Conduct of Business of the Company Pending
the Merger 47
Section 5.2 Permitted Conduct of Business by the Company
Pending the Merger 51
Section 5.3 Conduct of Business of HCPI Pending the Merger 53
Section 5.4 Continued Qualification as a Real Estate
Investment Trust; Final Company Dividend 53
Section 5.5 Dividend Payment Coordination 54
ARTICLE VI. ADDITIONAL AGREEMENTS 54
Section 6.1 Preparation of Form S-4 and the Proxy Statement;
Stockholder Meeting 54
Section 6.2 Cooperation; Notice; Cure 56
Section 6.3 No Solicitation 56
Section 6.4 Access to Information 58
Section 6.5 Governmental Approvals 58
Section 6.6 Publicity 59
Section 6.7 Benefit Plans 59
Section 6.8 Indemnification 60
Section 6.9 Affiliate Agreements 60
Section 6.10 Tax Treatment of Reorganization 61
Section 6.11 Further Assurances and Actions 61
Section 6.12 Stock Exchange Listing 62
Section 6.13 Letter of the Company's Accountants 62
Section 6.14 Letter of HCPI's Accountants 62
Section 6.15 Rights Plan 62
Section 6.16 Company REIT Status 62
Section 6.17 HCPI REIT Status 62
Section 6.18 Obtaining Consents 62
Section 6.19 Exemption from Section 16(b) of the
Exchange Act 63
Section 6.20 Termination of Other Stock Rights 63
ARTICLE VII. CONDITIONS OF MERGER 63
Section 7.1 Conditions to Obligation of each Party
to Effect the Merger 63
Section 7.2 Conditions to Obligations of the Company
to Effect the Merger 64
Section 7.3 Conditions to Obligations of HCPI to
Effect the Merger 65
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER 66
Section 8.1 Termination 66
Section 8.2 Effect of Termination 67
Section 8.3 Expenses 69
Section 8.4 Amendment 70
Section 8.5 Waiver 70
ARTICLE IX. GENERAL PROVISIONS 70
Section 9.1 Non-Survival of Representations, Warranties
and Agreements 70
Section 9.2 Notices 70
Section 9.3 Severability 71
Section 9.4 Entire Agreement; Assignment 71
Section 9.5 Parties in Interest 72
Section 9.6 Governing Law 72
Section 9.7 No Trial by Jury 72
Section 9.8 Action by Subsidiaries and Boards 72
Section 9.9 Headings 72
Section 9.10 Specific Performance 72
Section 9.11 Counterparts 73
Exhibits
Exhibit A Form of Affiliate Letter
Exhibit B Articles Supplementary of Series C Preferred Stock
Exhibit C Form of REIT Opinion to be delivered by ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Exhibit D Form of REIT Opinion to be delivered by ▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Exhibit E Form of REIT Opinion to be delivered by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
August 4, 1999, by and between HEALTH CARE PROPERTY INVESTORS, INC., a
Maryland corporation ("HCPI") and AMERICAN HEALTH PROPERTIES, INC., a
Delaware corporation (the "Company"). HCPI and the Company are sometimes
referred to herein, individually, as a "Party," and, collectively, as the
"Parties."
RECITALS
WHEREAS, the Board of Directors of the Company has declared that
this Agreement is advisable and determined that the merger of the Company
with and into HCPI (the "Merger") is advisable and in the best interests of
the Company, has approved this Agreement and authorized the Company to
enter into this Agreement and accordingly has directed that this Agreement
be submitted for consideration by the stockholders of the Company;
WHEREAS, the Board of Directors of HCPI has adopted resolutions
which declare the Merger to be advisable substantially on the terms and
conditions set forth in this Agreement, has approved this Agreement and
authorized HCPI to enter into this Agreement and accordingly has directed
that the Merger be submitted for consideration by the stockholders of HCPI;
WHEREAS, the Board of Directors of the Company and the Board of
Directors of HCPI have each agreed to effect the Merger upon the terms and
subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder (the "Code"); and
WHEREAS, HCPI and the Company desire to make certain
representations, warranties and agreements in connection with the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, HCPI and the Company hereby agree as follows:
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the term:
"Acquisition Proposal" shall mean, with respect to the Company,
any inquiry, proposal or offer from any Person (other than HCPI or any of
its Subsidiaries) relating to any (i) direct or indirect acquisition or
purchase of a business of the Company or any of its Subsidiaries that
constitutes 15% or more of the consolidated net revenues, net income or
Assets of the Company and its Subsidiaries, (ii) direct or indirect
acquisition or purchase of 15% or more of any class of equity securities of
(A) the Company or (B) any of its Subsidiaries whose business constitutes
15% or more of the consolidated net revenues, net income or Assets of the
Company and its Subsidiaries, (iii) tender offer or exchange offer that if
consummated would result in any Person being the Beneficial Owner of 15% or
more of any class of equity securities of the capital stock of the Company,
or (iv) merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving (A) the Company
or (B) any of its Subsidiaries whose business constitutes 15% or more of
the consolidated net revenues, net income or Assets of the Company and its
Subsidiaries.
"Acquisition Transaction" shall mean each of the transactions
referred to in clauses (i) - (iv) of the definition of Acquisition
Proposal, other than any such transaction to which HCPI or any of its
Subsidiaries is a party.
"Action" shall mean any action, order, writ, injunction, judgment
or decree outstanding or claim, suit, litigation, proceeding, arbitration,
audit or investigation by or before any Governmental Entity or any other
Person.
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Affiliate Agreement" shall mean an agreement to be executed by
each Affiliate of the Company in the form attached hereto as Exhibit A.
"Assets" shall mean, with respect to any Person, all land,
buildings, improvements, leasehold interests, Fixtures and Equipment and
other assets, real or personal, tangible or intangible, owned or leased by
such Person or any of its Subsidiaries.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
"Benefit Arrangement" shall mean, with respect to any Person, any
employment, consulting, severance, change in control or other similar
contract, arrangement or policy and each plan, arrangement (written or
oral), program, agreement or commitment providing for insurance coverage
(including without limitation any self-insured arrangements), workers'
compensation, disability benefits, life, health, disability or accident
benefits (including without limitation any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation (other than a Welfare
Plan, Pension Plan or Multiemployer Plan), in each case with respect to
which such Person or any ERISA Affiliate thereof has or may have any
obligation or liability (accrued, contingent or otherwise).
"Business Day" shall mean each day other than Saturdays,
Sundays, days when commercial banks are authorized to be closed for
business in New York, New York, and days when the SDAT or the office of the
Secretary of State of the State of Delaware are authorized to be closed.
"Certificates" shall mean outstanding certificates which
immediately prior to the Effective Time represented shares of Company
Common Stock or Company Series B Preferred Stock, as the case may be.
"Company Affiliate" shall mean an "affiliate" of the Company
within the meaning of Rule 145 promulgated under the Securities Act.
"Company Common Holder" shall mean a holder of record of Company
Common Stock immediately prior to the Effective Time.
"Company Common Stock" shall mean the Common Stock, par value
$.01 per share, of the Company.
"Company Contract" shall mean any note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, lease, license,
contract, agreement or other instrument or obligation to which the Company
or any of its Subsidiaries is a party or by which any of them or any of
their Assets may be bound, and which either (i) has a term of more than one
year or is not otherwise terminable within one year, (ii) involves the
payment or receipt of money in excess of $2,500,000, (iii) contains
covenants limiting the freedom of the Company or any of its Subsidiaries to
engage in any line of business or compete with any Person or operate at any
location or (iv) any other contract, whether similar or dissimilar to the
foregoing, which is material to the Company and its Subsidiaries taken as a
whole, but, in each case, excluding any Company Leases.
"Company Deferred Directors Fees" shall mean all rights to
receive shares of Company Common Stock (or cash or other distributions in
lieu thereof) in satisfaction of deferred directors fees pursuant to the
Company's Nonqualified Stock Option Plan for Nonemployee Directors,
including, without limitation, Company Dividend Equivalent Rights
appurtenant thereto.
"Company Dividend Equivalent Rights" shall mean all rights to
receive shares of Company Common Stock (or cash or other distributions in
lieu thereof) determined by amounts equivalent to dividends distributed or
to be distributed to holders of Company Common Stock that are appurtenant
to Company Options or Company Deferred Directors Fees.
"Company Employment Contracts" shall mean each of the Amended and
Restated Executive Employment Agreements between the Company and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, each
dated as of July 16, 1999, each as amended.
"Company Lease" shall mean any agreement relating to the use or
occupancy of any Company Real Property or any portion thereof.
"Company Material Adverse Effect" shall mean any change in or
effect (i) that is or would be likely to be materially adverse to the
business, Assets, liabilities, results of operations, condition (financial
or otherwise) or prospects of the Company and its Subsidiaries taken as a
whole, (ii) that will or would be likely to materially impair or materially
delay the ability of the Parties to consummate the Merger or (iii) that
would prevent or materially impair the ability of HCPI to operate its and
its Subsidiaries' business, taken as a whole (including the business of the
Surviving Corporation and its Subsidiaries, taken as a whole), or to own
the Assets material to HCPI and its Subsidiaries, taken as a whole
(including the Assets material to the Surviving Corporation and its
Subsidiaries, taken as whole), or qualify for taxation as a REIT following
the Effective Time.
"Company Options" shall mean all stock options and stock purchase
rights to acquire shares of Company Common Stock granted, awarded, earned
or purchased under any Company Stock Plan.
"Company Preferred Holder" shall mean a record holder of Company
Series B Preferred Stock immediately prior to the Effective Time.
"Company Rights" shall mean the Company Series A Preferred Stock
purchase rights issued under the Company Rights Plan.
"Company Rights Plan" shall mean the Rights Agreement, dated as
of April 10, 1990, between the Company and Manufacturers Hanover Trust
Company of California, as Rights Agent.
"Company Series A Preferred Stock" shall mean the Preferred
Stock, Series A, par value $0.01 per share, of the Company.
"Company Series B Preferred Stock" shall mean the 8.60%
Cumulative Redeemable Preferred Stock, Series B, par value $0.01 per share,
of the Company.
"Company Stock" shall mean the Company Common Stock, the Company
Series A Preferred Stock and the Company Series B Preferred Stock.
"Company Stock Plans" shall mean the Company's Nonqualified Stock
Option Plan for Nonemployee Directors, the Company's 1988 Stock Option
Plan, the Company's 1990 Stock Incentive Plan, the Company's 1994 Stock
Incentive Plan and the Company's 1999 Equity Incentive Plan.
"Company Stock Rights" shall mean all outstanding stock options,
restricted stock awards, performance awards, dividend equivalent rights,
deferred stock, stock payments, stock appreciation rights or other rights
to or with respect to shares of capital stock granted, awarded, earned or
purchased pursuant to any Company Stock Plan.
"Company Stockholder Meeting" shall mean a meeting of the holders
of Company Common Stock duly noticed and held to consider a proposal to
approve the Agreement.
"DGCL" shall mean the Delaware General Corporation Law, as
amended.
"Employee Plans" shall mean, with respect to any Person, all
Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans
of such Person.
"Encumbrances" shall mean (i) any claim, lien, pledge, option,
right of first refusal, charge, easement, security interest, deed of trust,
mortgage, covenant, condition, restriction, right of way, reservation of an
interest in title, encumbrance or other similar rights of third parties and
(ii) all laws, ordinances and regulations affecting the use or occupancy of
real property.
"Environmental Laws" shall mean any federal, state or local law,
statute, ordinance, order, decree, rule or regulation relating (i) to
releases, discharges, emissions or disposals of Hazardous Materials to air,
water, land or groundwater; (ii) to the use, handling or disposal of
polychlorinated biphenyls, asbestos or urea formaldehyde or any other
Hazardous Material; (iii) to the treatment, storage, disposal or management
of Hazardous Materials; (iv) to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances; or (v) to the
transportation, release or any other use of Hazardous Materials, including
the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601, et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, 42 U.S.C. 6901, et seq. ("RCRA"), the Toxic Substances Control Act, 15
U.S.C. 2601, et seq. ("TSCA"), those portions of the Occupational, Safety
and Health Act, 29 U.S.C. 651, et seq. relating to Hazardous Materials
exposure and compliance, the Clean Air Act, 42 U.S.C. 7401, et seq., the
Federal Water Pollution Control Act, 33 U.S.C. 1251, et seq., the Safe
Drinking ▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. 1802 et seq. ("HMTA") and the Emergency
Planning and Community Right to ▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇▇, et seq.
("EPCRA"), and other comparable state and local laws and all rules and
regulations promulgated pursuant thereto or published thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean, with respect to any Person, any
entity which is (or, at any relevant time, was) considered one employer
with such Person under Section 4001 of ERISA or Section 414 of the Code.
"Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Executive Company Dividend Equivalent Rights" shall mean the
Company Dividend Equivalent Rights held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, C. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Fixtures and Equipment" shall mean, with respect to any Person,
all of the furniture, fixtures, furnishings, machinery and equipment owned
or leased by such Person and located in, at or upon the facilities of such
Person.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect from time to time, consistently
applied.
"Governmental Entities" shall mean all domestic courts,
regulatory or administrative agencies, commissions or other governmental
authorities, bodies or instrumentalities.
"Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or
other substance which is defined, determined or identified as hazardous or
toxic under applicable Environmental Laws or the release of which is
regulated under Environmental Laws. Without limiting the generality of the
foregoing, the term includes: "hazardous substances" as defined in CERCLA;
"extremely hazardous substances" as defined in EPCRA; "hazardous waste" as
defined in RCRA; "hazardous materials" as defined in HMTA; a "chemical
substance or mixture" as defined in TSCA; medical, biohazardous or
infectious waste; crude oil, petroleum products or any fraction thereof;
radioactive materials, including source, byproduct or special nuclear
materials; asbestos or asbestos-containing materials; chlorinated
fluorocarbons; and radon.
"HCPI Common Stock" shall mean the Common Stock, par value $1.00
per share, of HCPI.
"HCPI Contract" shall mean any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which HCPI or any of its
Subsidiaries is a party or by which any of them or any of their Assets may
be bound, and which either (i) has a term of more than one year or is not
otherwise terminable within one year, (ii) involves the payment or receipt
of money in excess of $2,500,000, (iii) contains covenants limiting the
freedom of HCPI or any of its Subsidiaries to engage in any line of
business or compete with any Person or operate at any location, or (iv) any
other contract, whether similar or dissimilar to the foregoing which is
material to the Company and its Subsidiaries taken as a whole, but, in each
case, excluding any HCPI Leases.
"HCPI Lease" shall mean any agreement relating to the use or
occupancy of any HCPI Real Property or any portion thereof.
"HCPI Material Adverse Effect" shall mean any change in or effect
(i) that is or would be likely to be materially adverse to the business,
Assets, liabilities, results of operations, condition (financial or
otherwise) or prospects of HCPI and its Subsidiaries taken as a whole, (ii)
that will or would be likely to prevent or materially impair or materially
delay the ability of the Parties to consummate the Merger or (iii) that
would materially impair the ability of HCPI to operate its and its
Subsidiaries' business, taken as a whole (including the business of the
Surviving Corporation and its Subsidiaries, taken as a whole), or to own
the Assets material to HCPI and its Subsidiaries, taken as a whole
(including the Assets material to the Surviving Corporation and its
Subsidiaries, taken as a whole), or qualify for taxation as a REIT
following the Effective Time.
"HCPI Rights" shall mean the HCPI Common Stock purchase rights
issued under the HCPI Rights Plan.
"HCPI Rights Plan" shall mean the Rights Agreement dated as of
July 5, 1990, as amended, between HCPI and Manufacturers Hanover Trust
Company of California, as Rights Agent.
"HCPI Series A Preferred Stock" shall mean the 7 7/8% Series A
Cumulative Redeemable Preferred Stock, par value $1.00 per share, of HCPI.
"HCPI Series B Preferred Stock" shall mean the 8.70% Series B
Cumulative Redeemable Preferred Stock, par value $1.00 per share, of HCPI.
"HCPI Series C Preferred Stock" shall mean the 8.60% Series C
Cumulative Redeemable Preferred Stock, par value $1.00 per share, of HCPI
to be issued in the Merger.
"HCPI Stock" shall mean the HCPI Common Stock, the HCPI Series A
Preferred Stock, the HCPI Series B Preferred Stock and the HCPI Series C
Preferred Stock, collectively.
"HCPI Stockholders Meeting" shall mean a meeting of the holders
of HCPI Common Stock duly noticed and held to consider a proposal to
approve the Merger.
"HCPI Stock Plans" shall mean HCPI's Second Amended and Restated
Directors Stock Incentive Plan, HCPI's Second Amended and Restated Stock
Incentive Plan and HCPI's Second Amended and Restated Directors Deferred
Compensation Plan.
"HCPI Stock Rights" shall mean all outstanding stock options,
restricted stock awards, performance awards, dividend equivalent rights,
deferred stock, stock payments, stock appreciation rights or other rights
to or with respect to shares of capital stock granted, awarded, earned or
purchased pursuant to any HCPI Stock Plan or under which HCPI or any
Affiliate thereof has any obligation or liability (accrued, contingent or
otherwise).
"Intellectual Property" shall mean any patent, trademarks, trade
names, service marks, copyrights, any applications for and registrations
for patents, trademarks, trade names, service marks or copyrights, or any
processes, formulae, methods, schematics, technology, computer software
programs or applications, tangible or intangible proprietary information or
material, waivers or licenses of publicity or privacy rights or any other
third party licenses.
"Joint Proxy Statement/Prospectus" shall mean the joint proxy
statement/ prospectus to be prepared by the Company and HCPI pursuant to
Section 6.1 and sent to stockholders of the Company and HCPI in connection
with the Company Stockholders Meeting and HCPI Stockholders Meeting.
"Knowledge" shall mean with respect to (i) the Company, the
actual knowledge after reasonable inquiry of those individuals listed in
Section 1.1(a) of the Company Disclosure Schedule, and (ii) HCPI, the
actual knowledge after reasonable inquiry of those individuals listed in
Section 1.1(b) of the HCPI Disclosure Schedule.
"Lien" shall mean any lien, pledge, option, security interest,
claim, encumbrance, restriction, preemptive right or any similar other
claims of third parties.
"Merger Consideration" shall mean the Common Merger Consideration
and the Series B Preferred Merger Consideration.
"MGCL" shall mean the Maryland General Corporation Law, as
amended.
"Multiemployer Plan" shall mean, with respect to any Person, any
"multiemployer plan" thereof, within the meaning of Section 3(37) or
4001(a)(3) of ERISA, which such Person or any ERISA Affiliate thereof
contributed to or is or was required to contribute to, or under which such
Person or any ERISA Affiliate thereof has or may have any obligation or
liability (accrued, contingent or otherwise).
"NYSE" shall mean The New York Stock Exchange, Inc.
"Pension Plan" shall mean, with respect to any Person, any
"employee pension benefit plan," as defined in Section 3(2) of ERISA (other
than a Multiemployer Plan), which such Person or any ERISA Affiliate
thereof contributed to or is or was required to contribute to, or under
which such Person or any ERISA Affiliate thereof has or may have any
obligation or liability (accrued, contingent or otherwise).
"Permitted Encumbrances" shall mean (i) those Encumbrances that
result from all statutory or other Liens for Taxes or assessments
(including any such Liens for which a tenant is responsible under a Lease
for real property) (A) which are not yet due or delinquent or (B) the
validity of which is being contested in good faith by appropriate
proceedings and for which adequate reserves are being maintained in
accordance with GAAP; (ii) those Encumbrances that result from any
cashiers', landlords', workers', mechanics', carriers', materialmen's,
suppliers' and repairers' Lien and other similar Encumbrances imposed by
law or incurred in the ordinary course of business; (iii) those
Encumbrances imposed by any law, rule, regulation, ordinance or restriction
promulgated by any Governmental Entity; (iv) those Encumbrances that result
from all leases, subleases or licenses to which any Person or any of its
Subsidiaries is a party; (v) Encumbrances which are identified on title
policies or preliminary title reports or other documents or writings which
are in the possession or control of the Person holding title to the
property that is subject to such Encumbrances; and (vi) all other
Encumbrances which, individually, or in the aggregate, would not otherwise
cause a Company Material Adverse Effect with respect to Encumbrances
affecting the Company or a HCPI Material Adverse Effect with respect to
Encumbrances affecting HCPI.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, other organization (whether
incorporated or unincorporated) governmental agency or instrumentality, or
any other legal entity.
"REIT" shall mean a real estate investment trust within the
meaning of the Code.
"Registration Statement" shall mean the registration statement on
Form S-4 pursuant to which the shares of HCPI Common Stock issued in the
Merger will be registered under the Securities Act.
"Representative" shall mean, with respect to any Person, that
Person's officers, directors, employees, financial advisors, agents or
other representatives.
"SDAT" shall mean the State Department of Assessments and
Taxation of Maryland.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, limited liability company, joint venture, or
other organization, whether incorporated or unincorporated, or other legal
entity of which (i) such Person directly or indirectly owns or controls at
least a majority of the capital stock or other equity interests having by
their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions; (ii) such Person has
control whether contractually or otherwise; (iii) such Person is a general
partner, manager or managing member; or (iv) such Person holds a majority
of the equity economic interest.
"Tax" or "Taxes" shall mean all federal, state, local, foreign
and other taxes, levies, imposts, assessments, impositions or other similar
government charges, including, without limitation, income, estimated
income, business, occupation, franchise, real property, payroll, personal
property, sales, transfer, stamp, use, employment, commercial rent or
withholding, occupancy, premium, gross receipts, profits, windfall profits,
deemed profits, license, lease, severance, capital, production,
corporation, ad valorem, excise, duty or other taxes, including interest,
penalties and additions (to the extent applicable) thereto, whether
disputed or not.
"Tax Return" shall mean any report, return, document, declaration
or other information or filing required to be supplied to any taxing
authority or jurisdiction (foreign or domestic) with respect to Taxes,
including, without limitation, information returns, any documents with
respect to or accompanying payments of estimated Taxes, or with respect to
or accompanying requests for the extension of time in which to file any
such report, return, document, declaration or other information.
"Welfare Plan" shall mean, with respect to any Person, any
"employee welfare benefit plan," as defined in Section 3(1) of ERISA, which
such Person or any ERISA Affiliate thereof contributed to or is or was
required to contribute to, or under which such Person or any ERISA
Affiliate thereof has or may have any obligation or liability (accrued,
contingent or otherwise).
Table of Other Defined Terms
Cross Reference
Terms in Agreement
Agreement Preamble
Articles of Merger Section 2.3
Base Amount Section 8.2(d)
Blue Sky Laws Section 3.6(b)
Bylaws Section 2.5(b)
Charter Section 2.5(a)
Certificate of Merger Section 2.3
Closing Section 2.2
Closing Date Section 2.2
Code Recitals
Common Merger Consideration Section 2.7(a)
Company Preamble
Company Board Section 2.8(a)
Company Disclosure Schedule Article III
Company Financial Advisor Section 3.18
Company Leased Property Section 3.13(a)
Company Owned Property Section 3.13(a)
Company Real Property Section 3.13(a)
Company SEC Reports Section 3.8(a)
Confidentiality Agreement Section 6.4
Effective Time Section 2.3
Excess Shares Section 2.9
Exchange Agent Section 2.10(a)
Exchange Ratio Section 2.7(a)
Executive DER Consideration Section 2.8(e)
Final Company Dividend Section 5.3
Fractional Securities Fund Section 2.9
Governmental Approvals Section 6.5
HCPI Preamble
HCPI Board Section 2.8(c)
HCPI Disclosure Schedule Article IV
HCPI Financial Advisor Section 4.18
HCPI Leased Property Section 4.13(a)
HCPI Owned Property Section 4.13(a)
HCPI Real Property Section 4.13(a)
HCPI SEC Reports Section 4.8(a)
Indemnified Parties Section 6.8(a)
Intermediary Section 5.2(a)
Merger Recitals
Minimum Distribution Dividend Section 5.3
Notifying Party Section 6.5(a)
Option Consideration Section 2.8(b)
Other Stock Rights Section 6.20
Party or Parties Preamble
Qualifying Income Section 8.2(d)
Registration Statement Section 3.18
REIT Requirements Section 8.2(d)
Remaining Options Section 2.8(c)
Series B Preferred Merger Consideration Section 2.7(b)
Superior Proposal Section 6.3(b)
Surviving Corporation Section 2.1
Tax Guidance Section 8.2(d)
Termination Fee Section 8.2(d)
Voting Debt Section 3.3(b)
ARTICLE II.
THE MERGER
Section 2.1 The Merger.
Upon the terms and subject to the conditions of this Agreement
and in accordance with Subtitle 1 of Title 3 of the MGCL and in accordance
with Sections 251 and 252 of the DGCL, at the Effective Time, the Company
shall be merged with and into HCPI. As a result of the Merger, the
separate corporate existence of the Company shall cease, and HCPI shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation").
Section 2.2 Closing and Closing Date.
Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to the
provisions of Section 8.1, the closing (the "Closing") of the Merger shall
take place (a) at 10:00 a.m., Los Angeles time, on the second Business Day
after the last of all of the conditions to the respective obligations of
the Parties set forth in Article VII hereof shall have been satisfied or
waived (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) or (b) at such other time and date as HCPI and the Company
shall agree (such date and time on and at which the Closing occurs being
referred to herein as the "Closing Date"). The Closing shall take place at
the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Costa Mesa, California or such other place
as is agreed to by the Parties. At the Closing the documents,
certificates, opinions and instruments referred to in Article VII shall be
executed and delivered.
Section 2.3 Effective Time.
Subject to the provisions of this Agreement, the Parties shall
(i) cause articles of merger (the "Articles of Merger") to be executed,
acknowledged and filed with and accepted for record by the SDAT in
accordance with Sections 3-109, 3-110 and 1-301 of the MGCL and (ii) cause
a certificate of merger (the "Certificate of Merger") to be executed,
acknowledged and filed with the Secretary of State of the State of Delaware
in accordance with Sections 103 and 251 of the DGCL and (iii) make all
other filings or records required to effectuate the Merger under the MGCL
and the DGCL as soon as practical on or after the Closing Date. The
Certificate of Merger shall provide that the Merger shall become effective
in the State of Delaware as of the later of (i) the time at which the
Articles of Merger have been accepted for record by the SDAT or (ii) such
later time agreed to by the Parties and specified in the Articles of Merger
and the Certificate of Merger, but not exceeding 30 days after the date the
Articles of Merger are accepted for record by the SDAT. The Merger shall
become effective as of the date on which the latest of the following
actions shall have been completed: (i) the time at which the SDAT accepts
the Articles of Merger for record, (ii) the Certificate of Merger has been
duly filed with the Secretary of State of the State of Delaware or (iii)
the time agreed to by the Parties and specified in the Articles of Merger
and the Certificate of Merger, but not exceeding 30 days after the date the
Articles of Merger are accepted for record by the SDAT (the "Effective
Time").
Section 2.4 Effects of the Merger.
The Merger shall have the effects set forth in the applicable
provisions of the MGCL and the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time of the Merger,
(a) the Surviving Corporation shall possess all assets and property of
every description, and every interest therein, wherever located, and the
rights, privileges, immunities, powers, franchises and authority, of a
public as well as of a private nature, of each of HCPI and the Company, (b)
all debts, liabilities and obligations belonging to or due each of HCPI and
the Company shall be vested in, and become the obligations of, the
Surviving Corporation without further act or deed, (c) title to any real
estate or any interest therein vested in either of HCPI or the Company
shall not revert, or in any way be impaired by, reason of the Merger, (d)
all Encumbrances upon any property of either of HCPI or the Company shall
be preserved unimpaired, and (e) the Surviving Corporation shall be liable
for all of the debts and obligations of each of HCPI or the Company, and
any Action pending, by or against either HCPI or the Company may be
prosecuted to judgment against the Surviving Corporation with right of
appeal as if the Merger had not taken place.
Section 2.5 Charter; Bylaws.
(a) At the Effective Time and without any further action on the
part of the Company or HCPI, the charter, as amended, of HCPI as in effect
at the Effective Time shall be the charter (the "Charter") of the Surviving
Corporation until duly amended as provided for therein or under the MGCL.
(b) At the Effective Time and without any further action on the
part of the Company or HCPI, the bylaws, as amended, of HCPI as in effect
at the Effective Time shall be the bylaws (the "Bylaws") of the Surviving
Corporation until duly amended as provided for therein and under the MGCL.
Section 2.6 Directors and Officers.
The directors of HCPI at the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance
with the Charter and Bylaws of the Surviving Corporation, and the officers
of HCPI at the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified or until their
earlier death, resignation or removal in accordance with the Charter and
Bylaws.
Section 2.7 Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any
action on the part of HCPI, the Company or the holder of any of the
following securities:
(a) Subject to Section 2.9, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Company Common Stock to be canceled in accordance with Section
2.7(c) hereof) together with the Company Rights attached thereto or
associated therewith, shall be converted into 0.78 fully paid and
nonassessable shares (rounded to the nearest ten-thousandth of a share) (as
adjusted as set forth in subsection (e) of this Section 2.7, the "Exchange
Ratio") of HCPI Common Stock (the "Common Merger Consideration"). Pursuant
to the HCPI Rights Plan, one HCPI Right will be attached to each share of
HCPI Common Stock issued upon conversion of Company Common Stock in
accordance with this Section 2.7(a), and, prior to the Distribution Date
(as defined in the HCPI Rights Plan) all references in this Agreement to
HCPI Common Stock shall be deemed to include the HCPI Rights. As of the
Effective Time, all such shares of Company Common Stock and all Company
Rights shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a Certificate
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except, subject to Section 2.10, rights as
a holder of HCPI Common Stock and the right to receive (i) certificates
representing the Common Merger Consideration, and (ii) any cash in lieu of
fractional shares of HCPI Common Stock to be paid in consideration therefor
upon surrender of such Certificate in accordance with Section 2.9.
(b) Subject to Section 2.9, each share of Company Series B
Preferred Stock issued and outstanding immediately prior to the Effective
Time (other than shares of Company Series B Preferred Stock to be canceled
in accordance with Section 2.7(c) hereof) shall be converted into one share
of HCPI Series C Preferred Stock, having substantially the same rights and
preferences as the Company Series B Preferred Stock, as set forth on
Exhibit B attached hereto (the "Series B Preferred Merger Consideration").
As of the Effective Time, all such shares of Company Series B Preferred
Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a Certificate
representing any such shares of Company Series B Preferred Stock shall
cease to have any rights with respect thereto, except, subject to Section
2.10, rights as a holder of HCPI Series C Preferred Stock and the right to
receive certificates representing the Series B Preferred Merger
Consideration.
(c) Each share of Company Common Stock and Company Series B
Preferred Stock that is (i) held in the treasury of the Company or owned by
any Subsidiary of the Company (other than shares of Company Common Stock
and Company Series B Preferred Stock held or owned on behalf of third
parties) or (ii) owned by HCPI or any Subsidiary of HCPI, in each case
immediately prior to the Effective Time, shall, by virtue of the Merger and
without any action on the part of the holder thereof, be canceled and
retired without any conversion thereof and no payment or distribution of
any consideration shall be made with respect thereto.
(d) Each share of HCPI Stock or other capital stock of HCPI
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and shall be unchanged after the Merger.
(e) The Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into HCPI Common Stock,
but expressly excluding any dividends or distributions payable on HCPI
Common Stock in cash), reorganization, recapitalization or other like
change with respect to HCPI Common Stock occurring after the date hereof
and prior to the Effective Time.
Section 2.8 Treatment of Company Options, Company Dividend
Equivalent Rights and Company Deferred Directors Fees.
(a) The Board of Directors of the Company (the "Company Board"),
or, if appropriate, any committee thereof, shall adopt appropriate
resolutions and take all other necessary actions (including plan
amendments) to cause prior to the Effective Time each outstanding Company
Option which has not vested immediately prior to the Effective Time to
become vested and fully exercisable.
(b) Prior to the Effective Time, the Company and the Company
Board (or, if appropriate, any committee thereof) shall use its reasonable
efforts to cause each then outstanding Company Option, whether vested or
unvested, to be canceled immediately prior to the Effective Time, with the
holder thereof becoming entitled to receive an amount of cash from the
Company equal to the product of (x) the amount, if any, by which (1) the
product of (a) the closing price per share of HCPI Common Stock on the NYSE
on the most recent trading day immediately preceding the Effective Time,
and (b) the Exchange Ratio, exceeds (2) the exercise price per share of
Company Common Stock subject to such Company Option (whether vested or
unvested), and (y) the number of shares of Company Common Stock issuable
pursuant to the unexercised portion of such Company Option, less any
required withholding of taxes (such amount being hereinafter referred to as
the "Option Consideration"). The Option Consideration shall be paid by the
Company immediately prior to the Effective Time. The cancellation of a
Company Option in exchange for the Option Consideration shall be deemed a
release of any and all rights the holder had or may have had in respect of
such Company Option, and any required consents received from Company Option
holders shall so provide.
(c) In the event that any Company Options are not canceled in
accordance with the provisions of Section 2.8(b), such Company Options (the
"Remaining Options") shall be subject to the following provisions of this
Section 2.8(c). Prior to the Effective Time, the Company Board (or, if
appropriate, any committee thereof) and the Board of Directors of HCPI (the
"HCPI Board") (or, if appropriate, any committee thereof) shall adopt
appropriate resolutions and take all other actions necessary to provide
that effective at the Effective Time, each outstanding Remaining Option
shall be assumed by HCPI and shall continue in effect on the same terms and
conditions as in effect immediately prior to the Effective Time (subject to
the provisions of Section 2.8(a) and the adjustments in this Section
2.8(c)) and each such Remaining Option shall be converted automatically
into an option (a "New Option") to purchase the number of shares of HCPI
Common Stock, determined as provided below, at the exercise price,
determined as provided below:
(i) The number of shares of HCPI Common Stock to be subject
to the New Option shall be equal to the product of (x) the number of
shares of Company Common Stock remaining subject (as of immediately
prior to the Effective Time) to the Remaining Option multiplied by
(y) the Exchange Ratio, provided that the number of shares of HCPI
Common Stock resulting therefrom shall be rounded to the nearest whole
share of HCPI Common Stock.
(ii) The exercise price per share of HCPI Common Stock under
the New Option shall be equal to (x) the exercise price per share of
the Company Common Stock under the Remaining Option, divided by
(y) the Exchange Ratio, provided that such exercise price shall be
rounded to the nearest whole cent.
The adjustment provided herein with respect to any Remaining Option which
is an "incentive stock option" (as defined in Section 422 of the Code)
shall be, and is intended to be, effected in a manner which is consistent
with Section 424(a) of the Code. Except as provided in this Section 2.8,
after the Effective Time, each New Option shall be exercisable upon the
same terms and conditions as were applicable to the related Remaining
Option immediately prior to the Effective Time (except that with regard to
such New Option, any references to the Company shall be deemed, as
appropriate, to mean HCPI). HCPI shall take all action necessary, on or
prior to the Effective Time, to authorize and reserve a number of shares of
HCPI Common Stock sufficient for issuance upon the exercise of New Options
as contemplated by this Section 2.8.
(d) HCPI shall file on or prior to the Effective Time, a
registration statement on Form S-8 (or any successor or other appropriate
form) registering a number of shares of HCPI Common Stock to be issued in
connection with the exercise of the New Options as determined in this
Section 2.8.
(e) Prior to the Effective Time, the Company and the Company
Board (or, if appropriate, any committee thereof) shall cause each then
outstanding Executive Company Dividend Equivalent Right to be canceled
prior to the Effective Time, with the holder thereof receiving in
consideration of such cancellation an amount of cash as determined pursuant
to the terms of his Company Employment Contract, less any required
withholding of taxes (such amount being hereinafter referred to as the
"Executive DER Consideration"). The Executive DER Consideration shall be
paid by the Company prior to the Effective Time. The cancellation of an
Executive Company Dividend Equivalent Right in exchange for the Executive
DER Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Executive Company Dividend
Equivalent Right.
(f) Prior to the Effective Time, the Company and the Company
Board (or, if appropriate, any committee thereof) and the HCPI Board (or,
if appropriate, any committee thereof) shall adopt appropriate resolutions
and take all other actions necessary to provide that effective at the
Effective Time, all outstanding Company Deferred Directors Fees shall be
assumed by HCPI on the same terms and conditions as in effect immediately
prior to the Effective Time (subject to adjustments in this Section 2.8(f))
(except that any references to the Company shall be deemed, as appropriate,
to mean HCPI) and the right to receive Company Common Stock in respect of
each such Company Deferred Directors Fees shall be converted automatically
into a right to acquire or receive HCPI Common Stock; provided that the
number of shares of HCPI Common Stock to be subject to such Company
Deferred Directors Fees (including any Company Dividend Equivalent Rights
appurtenant thereto) accumulated immediately prior to the Effective Time
shall be equal to the product of (x) the number of shares of Company Common
Stock subject (as of immediately prior to the Effective Time) to the
Company Deferred Directors Fees (and accumulated Company Dividend
Equivalent Rights appurtenant thereto) multiplied by (y) the Exchange
Ratio; provided that any fractional shares of HCPI Common Stock resulting
therefrom shall be rounded to the nearest whole share of HCPI Common Stock;
provided, further, that, solely with respect to each holder of Company
Deferred Directors Fees who is not a director of the Surviving Corporation
immediately following the Effective Time, HCPI shall distribute promptly
following the Effective Time shares of HCPI Common Stock subject to said
Company Deferred Directors Fees (and accumulated Company Dividend
Equivalent Rights appurtenant thereto) in accordance with the terms and
conditions thereof as in effect immediately prior to the Effective Time,
and such Company Deferred Directors Fees (and accumulated Company Dividend
Equivalent Rights appurtenant thereto) shall thereupon terminate.
Section 2.9 Fractional Interests.
Notwithstanding any other provision of this Agreement, no
certificates or scrip representing fractional shares of HCPI Common Stock
shall be issued in connection with the Merger, and such fractional
interests will not entitle the owner thereof to any rights of a stockholder
of HCPI. In lieu of any such fractional interests, each Company Common
Holder exchanging Certificates pursuant to Section 2.7(a) who would
otherwise have been entitled to receive a fraction of a share of HCPI
Common Stock (after taking into account all shares of Company Common Stock
then held of record by such Company Common Holder) shall receive cash
(without interest) in an amount equal to such Company Common Holder's
proportionate interest in the net proceeds from the sale or sales in the
open market by the Exchange Agent, on behalf of all such Company Common
Holders, of the aggregate fractional HCPI Common Stock that would have been
otherwise issuable pursuant to Section 2.7. As soon as practicable
following the Effective Time, the Exchange Agent shall determine the excess
of (i) the number of full shares of HCPI Common Stock delivered to the
Exchange Agent by HCPI over (ii) the aggregate number of full shares of
HCPI Common Stock to be distributed to Company Common Holders (such excess
being herein called the "Excess Shares"), and the Exchange Agent, as agent
for the former Company Common Holders, shall sell the Excess Shares at the
prevailing prices on the NYSE. The sale of the Excess Shares by the
Exchange Agent shall be executed on the NYSE through one or more member
firms of the NYSE and shall be executed in round lots to the extent
practicable. HCPI shall pay all commissions, transfer Taxes and other out-
of-pocket transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess Shares.
Until the net proceeds of such sale have been distributed to the former
Company Common Holders, the Exchange Agent will hold such proceeds in trust
for such former stockholders (the "Fractional Securities Fund"). As soon
as practicable after the determination of the amount of cash to be paid to
former Company Common Holders in lieu of any fractional interests, the
Exchange Agent shall make available in accordance with this Agreement such
amounts to such former Company Common Holders. The Exchange Agent shall
invest the Fractional Securities Fund as directed by HCPI, on a daily
basis. Any interest and other income resulting therefrom shall be paid to
HCPI.
Section 2.10 Surrender of Shares of Company Stock; Stock
Transfer Books.
(a) Prior to the Closing Date, HCPI shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for the
Company Common Holders and Company Preferred Holders in connection with the
Merger (the "Exchange Agent"). The Exchange Agent shall (i) receive
certificates representing the Merger Consideration to which Company Common
Holders and Company Preferred Holders shall become entitled pursuant to
Sections 2.7(a) and (b) and (ii) receive and thereafter sell the Excess
Shares pursuant to Section 2.9. Prior to the Effective Time, HCPI will
make available to the Exchange Agent sufficient certificates representing
shares of HCPI Common Stock and HCPI Series C Preferred Stock to make all
exchanges pursuant to Section 2.10(b). The Exchange Agent shall cause the
certificates representing shares of HCPI Common Stock and HCPI Series C
Preferred Stock deposited by HCPI to be (i) held for the benefit of the
Company Common Holders and Company Preferred Holders and (ii) promptly
applied to making the exchanges and payments provided for in Section
2.10(b). Such shares of HCPI Common Stock, HCPI Series C Preferred Stock
and cash resulting from the Fractional Securities Fund shall not be used
for any purpose that is not provided for herein.
(b) Promptly after the Effective Time, HCPI shall mail, or shall
cause the Surviving Corporation to mail, to each Company Common Holder and
each Company Preferred Holder (i) a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration and any cash in lieu of fractional shares pursuant to Section
2.9. Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may
be reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor, (i) with
respect to Certificates formerly representing Company Common Stock, a
certificate representing that number of whole shares of HCPI Common Stock
which such holder has the right to receive pursuant to the provisions of
Section 2.7(a), (ii) with respect to Certificates formerly representing
Company Series B Preferred Stock, a certificate representing that number of
whole shares of HCPI Series C Preferred Stock which such holder has the
right to receive pursuant to Section 2.7(b), (iii) cash in lieu of any
fractional shares of HCPI Common Stock to which such holder is entitled
pursuant to Section 2.9, after giving effect to any required Tax
withholdings, and (iv) any dividends or distributions to which such holder
is entitled pursuant to Section 2.10(e), and the Certificate so surrendered
shall forthwith be canceled. Until so surrendered and exchanged, each
Certificate shall represent the Merger Consideration into which the Company
Stock it theretofore represented shall have been converted pursuant to
Sections 2.7(a) or (b), the right to receive certificates representing such
Merger Consideration and cash in lieu of any fractional shares pursuant to
Section 2.9. If the exchange of certificates representing shares of HCPI
Common Stock or HCPI Series C Preferred Stock is to be made to a Person
other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition of exchange that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form
for transfer and that the Person requesting such exchange shall have paid
any transfer and other Taxes required by reason of the exchange of
Certificates representing shares of HCPI Common Stock or HCPI Series C
Preferred Stock, as the case may be, to a Person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such Tax either has been
paid or is not applicable.
(c) At any time after the one-year anniversary of the Effective
Time, HCPI shall be entitled to require the Exchange Agent to deliver to
HCPI all cash then in the Fractional Securities Fund together with any
other cash and any other instruments (including shares of HCPI Common Stock
and HCPI Preferred Series C Preferred Stock) in its possession relating to
the transactions contemplated by this Agreement which had been made
available to the Exchange Agent and which have not been distributed to
holders of Certificates. Thereafter, each holder of a Certificate, subject
to Section 2.7(c), may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat or other
similar laws) receive in exchange therefor the consideration payable in
respect thereto pursuant to Sections 2.7(a) or (b) and Section 2.9, without
interest, but shall have no greater rights against the Surviving
Corporation than may be accorded to general creditors of the Surviving
Corporation under the MGCL. Notwithstanding the foregoing, none of HCPI,
the Surviving Corporation or the Exchange Agent shall be liable to any
Company Common Holder for shares of HCPI Common Stock (and any cash payable
in lieu of any fractional shares of HCPI Common Stock) or Company Preferred
Holder for shares of HCPI Series C Preferred Stock whose Certificates have
been delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further
registration of transfers of shares of Company Stock on the records of the
Company. From and after the Effective Time, the holders of Certificates
evidencing ownership of shares of Company Common Stock or shares of Company
Series B Preferred Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Company
Stock or Company Series B Preferred Stock, as the case may be, except as
otherwise provided for herein or by applicable law.
(e) No dividends or other distributions declared or made after
the Effective Time with respect to shares of HCPI Common Stock or HCPI
Series C Preferred Stock shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of HCPI Common Stock or HCPI Series
C Preferred Stock the holder is entitled to receive and no cash in lieu of
fractional shares pursuant to Section 2.9, shall be paid to such holder
until the holder of such Certificate shall surrender such Certificate in
accordance with the provisions of this Agreement. Upon such surrender,
HCPI shall cause to be paid to the Person in whose name the Certificates
shall be issued, any dividends or distributions with respect to such shares
of HCPI Common Stock or HCPI Series C Preferred Stock which have a record
date after the Effective Time and shall have become payable between the
Effective Time and the time of such surrender. In no event shall the
Person entitled to receive such dividends or distributions be entitled to
receive interest thereon.
(f) HCPI shall take all commercially reasonable action so that
each holder of Company Common Stock at the Effective Time which is
converted into HCPI Common Stock as set forth in Section 2.7(a) shall be
entitled to vote on all matters subject to the vote of holders of HCPI
Common Stock with a record date on or after the date of the Effective Time,
whether or not such holder shall have surrendered Certificates in
accordance with the provisions of this Agreement. For purposes of the
immediate foregoing sentence, HCPI may rely conclusively on the stockholder
records of the Company in determining the identity of and the number of
shares of Company Common Stock held by each holder of Company Common Stock
at the Effective Time.
(g) If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of
the rights or Assets of the Company as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf the Company or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in such names and on such
behalves or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights or Assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.
Section 2.11 Lost, Stolen or Destroyed Certificates.
In the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed Certificates, upon the making of an affidavit of that fact by
the holder thereof, such shares of HCPI Common Stock or HCPI Series C
Preferred Stock, as applicable (and cash in lieu of any fractional shares
of HCPI Common Stock), and dividends or distributions in respect thereof,
if any, as may be required pursuant to Section 2.7(a), Section 2.7(b),
Section 2.9 and Section 2.10(e); provided, however, that HCPI may, in its
discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed Certificates to deliver a bond
in such sum as it may reasonably direct as indemnity against any claim that
may be made against HCPI or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
Section 2.12 Tax Consequences.
It is intended by the Parties that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code. The
Parties hereby adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Treasury Regulations.
Section 2.13 Withholding Rights.
HCPI or the Exchange Agent shall be entitled to deduct and
withhold from the Merger Consideration, or cash in lieu of fractional
shares, if any, otherwise payable pursuant to this Agreement to any Company
Common Holder or Company Preferred Holder such amounts as HCPI or the
Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code or any provision of state, local, or
foreign Tax law. To the extent that amounts are so withheld by HCPI or the
Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the Company Common Holder or Company
Preferred Holder, as the case may be, in respect of which such deduction
and withholding was made by HCPI or the Exchange Agent. HCPI hereby agrees
to comply with all requirements of law, including any notice to the holders
of Company Common Stock or Company Series B Preferred Stock, as the case
may be, in connection with such withholding.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to HCPI that the statements
contained in this Article III are true and correct except as set forth
herein or in the disclosure schedule delivered by the Company to HCPI on or
before the date of this Agreement (the "Company Disclosure Schedule"). The
Company Disclosure Schedule shall be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Agreement and the
disclosure in any paragraph shall qualify other paragraphs in this
Agreement only to the extent that such disclosure specifically references
the fact that it also qualifies or applies to such other specified
paragraphs.
Section 3.1 Organization and Qualification.
The Company and each of its Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization, with the corporate power and authority to own and operate
its business as presently conducted. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation or other entity to
do business and is in good standing in each jurisdiction where the
ownership or operation of its properties or the nature of its activities
makes such qualification necessary, except for such failures of the Company
and any of its Subsidiaries to be so qualified as would not, when taken
together with all such other failures, cause a Company Material Adverse
Effect. The Company has previously made available to HCPI true and correct
copies of its certificate of incorporation and bylaws as currently in
effect.
Section 3.2 Authorization; Validity and Effect of Agreement.
The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby subject to the adoption and
approval of this Agreement by the requisite vote of the holders of Company
Common Stock. The execution and delivery of this Agreement by the Company
and the performance by the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby have been duly
authorized by the Company Board and all other necessary corporate action on
the part of the Company, other than the adoption and approval of this
Agreement by the requisite vote of the holders of the Company Common Stock,
and no other corporate proceedings on the part of the Company are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
(i) 100,000,000 shares of Company Common Stock, and (ii) 1,000,000 shares
of preferred stock, par value $.01 per share, of which 350,000 shares have
been designated as Company Series A Preferred Stock, 46,000 shares have
been designated as Company Series B Preferred Stock and 220,000 shares have
been designated as Psychiatric Group Preferred Stock. As of July 16, 1999,
there were issued and outstanding (i) 24,984,422 shares of Company Common
Stock (none of which is held in the Company treasury), (ii) no shares of
Company Series A Preferred Stock, (iii) 40,000 shares of Company Series B
Preferred Stock (none of which is held in the Company treasury), and
(iv) no shares of Psychiatric Group Preferred Stock. Section 3.3(a) of the
Company Disclosure Schedule sets forth the number of shares of Company
Stock and each other class of capital stock of the Company reserved for
future issuance as of July 16, 1999 under each of the Company Stock Plans
or otherwise and the Company Stock Plan or other agreement pursuant to
which they have been reserved. Since July 16, 1999, no shares of Company
Stock or any other capital stock of the Company have been issued or
reserved for issuance, except for shares of Company Stock issued in respect
of the exercise, conversion or exchange of Company Options, Company
Dividend Equivalent Rights or Company Deferred Directors Fees outstanding
as of July 16, 1999. Section 3.3(a) of the Company Disclosure Schedule
also sets forth as of the date hereof the date on which each Company Stock
Right currently outstanding was issued, the dates on which each such
outstanding and unvested Company Stock Right vests, the class and number of
shares of Company Stock or other capital stock of the Company for or into
which each such Company Stock Right is exercisable, convertible or
exchangeable and the exercise price thereof. Except as set forth in this
Section 3.3(a) or Section 3.3(a) to the Company Disclosure Schedule, there
are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company
or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of
Company Stock or any other capital stock of the Company or its Subsidiaries
or other voting securities of the Company or its Subsidiaries, or
obligating the Company or its Subsidiaries to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking, and neither the Company nor its
Subsidiaries have granted any stock appreciation rights or any other
contractual rights the value of which is derived from the financial
performance of the Company or the value of shares of Company Stock or any
other capital stock of the Company. There are no obligations, contingent
or otherwise, of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Company Stock or any other
capital stock of the Company or the capital stock or ownership interests of
any Subsidiary of the Company or to provide funds to or make any material
investment (in the form of a loan, capital contribution or otherwise) in
any other entity, other than guarantees of bank obligations or indebtedness
for borrowed money of Subsidiaries entered into in the ordinary course of
business. Neither the Company nor any of its Subsidiaries is holding or
owns any shares of Company Stock on behalf of third parties.
(b) There are no issued and outstanding bonds, debentures, notes
or other indebtedness having voting rights (or convertible into securities
having such rights) ("Voting Debt") of the Company or any of its
Subsidiaries. Except as reserved for future grants of options under the
Company Stock Plans as of the date hereof or for issuance pursuant to the
Company Rights Plan, (i) there are no shares of capital stock of any class
of, or any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding; (ii) there are no
options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which the Company or any of its Subsidiaries
is a party or by which it is bound, in each case, obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other ownership
interests (including Voting Debt) of the Company or any of its Subsidiaries
or obligating the Company or any of its Subsidiaries to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement; and (iii) there are no
voting trusts, proxies or other voting agreements or understandings
currently in effect with respect to the shares of capital stock of the
Company to which the Company or any of its Subsidiaries is currently a
party or of which the Company has Knowledge. All shares of Company Common
Stock subject to issuance as specified in this Section 3.3(b) or in Section
3.3(b) of the Company Disclosure Schedule are duly authorized and, upon
issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall be validly issued, fully paid and
nonassessable.
Section 3.4 Subsidiaries.
Other than Subsidiaries of Company formed or acquired after the
date hereof in accordance with the terms of Section 5.2 (of which the
Company has provided notice to HCPI prior to any such formation or
acquisition), Section 3.4 of the Company Disclosure Schedule sets forth all
Subsidiaries of the Company. All of the outstanding shares of capital
stock (including shares which may be issued upon exercise of outstanding
options) or other ownership interests of each of the Company's Subsidiaries
are duly authorized, validly issued, fully paid and nonassessable and all
such shares and ownership interests are owned by the Company or a
Subsidiary of the Company free and clear of all Liens. The Company owns,
directly or indirectly, all of the issued and outstanding capital stock and
other ownership interests of each of its Subsidiaries, free and clear of
all Liens, and there are no existing options, warrants, calls,
subscriptions, convertible securities or other securities, agreements,
commitments or obligations of any character relating to the outstanding
capital stock or other securities of any Subsidiary of the Company or which
would require any Subsidiary of the Company to issue or sell any shares of
its capital stock, ownership interests or securities convertible into or
exchangeable for shares of its capital stock or ownership interests.
Section 3.5 Other Interests.
Neither the Company nor any of the Company's Subsidiaries owns or
has the right or option to acquire, directly or indirectly, any interest or
investment in (whether equity or debt) any business or Person (other than
the Company's Subsidiaries and other than the rights held by the Company or
its Subsidiaries identified in Section 3.4 of the Company Disclosure
Schedule or as permitted, after the date hereof, under Section 5.2 (of
which the Company will have provided notice to HCPI prior to any such
acquisition)). Without limiting the generality of the foregoing sentence,
neither the Company nor any "Affiliate" or "Associate" (as such terms are
defined in Section 3-601 of the MGCL) of the Company, is, or was at any
time, the "Beneficial Owner" (as defined in Section 3-601) of the MGCL),
directly or indirectly, of 5% or more of the voting power of the
outstanding voting stock of HCPI. To the Knowledge of the Company, no
Person owns or has owned, actually or constructively (as such term is used
for purposes of the not closely held requirement set forth in Section
856(a)(6) of the Code or as set forth in Section 856(d)(5) of the Code) in
excess of 9.8% in value of the outstanding stock of the Company.
Section 3.6 No Conflict; Required Filings and Consents.
(a) Neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder, nor the
consummation of the transactions contemplated hereby, will: (i) conflict
with the Company's certificate of incorporation or bylaws or the comparable
charter or organizational documents of any of its Subsidiaries;
(ii) assuming satisfaction of the requirements set forth in Section 3.6(b)
below, violate any statute, law, ordinance, rule or regulation, applicable
to the Company or any of its Subsidiaries or any of their Assets; or
(iii) violate, breach, be in conflict with or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, permit the termination of any provision of, result in the
termination of, the acceleration of the maturity of, or the acceleration of
the performance of any obligation of the Company or any of its Subsidiaries
under, result in the creation or imposition of any Lien upon any Assets of
the Company or any of its Subsidiaries under, or give rise to any third
party's right of first refusal, or other similar right, under any note,
bond, indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective Assets are bound or encumbered, or
give any Person the right to require the Company or any of its Subsidiaries
to purchase or repurchase any notes, bonds or instruments of any kind
except, in the case of clauses (ii) and (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or
in the aggregate, would not cause a Company Material Adverse Effect.
(b) Except (i) for applicable requirements, if any, of the
Exchange Act, the Securities Act, and state securities or "blue sky" laws
("Blue Sky Laws"), (ii) for the filing of the Certificate of Merger
pursuant to the DGCL and the filing of the Articles of Merger pursuant to
the MGCL, (iii) for other governmental approvals required under the
applicable laws of any foreign jurisdiction, (iv) for the approval of this
Agreement by the requisite vote of the holders of Company Common Stock, and
(v) with respect to matters set forth in Sections 3.6(a) or 3.6(b) of the
Company Disclosure Schedule, no consent, approval or authorization of,
permit from, or declaration, filing or registration with, any Governmental
Entity, or any other Person is required to be made or obtained by the
Company or any of its Subsidiaries in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, except where the failure to obtain such
consent, approval, authorization, permit or declaration or to make such
filing or registration would not, individually or in the aggregate, cause a
Company Material Adverse Effect.
Section 3.7 Compliance.
The Company and each of its Subsidiaries is in compliance with
all foreign, federal, state and local laws and regulations applicable to
its operations or with respect to which compliance is a condition of
engaging in the business thereof, except to the extent that failure to
comply would not, individually or in the aggregate, cause a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any written notice asserting a failure, or possible failure,
to comply with any such law or regulation, the subject of which written
notice has not been resolved as required thereby or otherwise to the
satisfaction of the party sending the notice, except for such failures as
would not, individually or in the aggregate, cause a Company Material
Adverse Effect.
Section 3.8 SEC Reports.
(a) The Company has filed with the SEC and made available to
HCPI true and complete copies of each registration statement, proxy or
information statement, form, report and other document required to be filed
by the Company or any of its Subsidiaries with the SEC since January 1,
1996 (collectively, the "Company SEC Reports"). As of their respective
dates, with respect to Company SEC Reports filed pursuant to the Exchange
Act, and as of their respective effective dates, as to Company SEC Reports
filed pursuant to the Securities Act, the Company SEC Reports and any
registration statements, reports, forms, proxy or information statements
and other documents filed by the Company with the SEC after the date of
this Agreement (i) complied, or, with respect to those not yet filed, will
comply, in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, and (ii) did not, or, with respect to
those not yet filed, will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Company SEC Reports (including the
related notes and schedules) presents fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries as of its date, and each of the consolidated statements of
income, retained earnings and cash flows of the Company included in or
incorporated by reference into the Company SEC Reports (including any
related notes and schedules) presents fairly, in all material respects, the
results of operations, retained earnings or cash flows, as the case may be,
of the Company and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein.
(c) Except as set forth in the Company SEC Reports, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would
be required to be reflected on, or reserved against in, a balance sheet of
the Company or in the notes thereto, prepared in accordance with GAAP
consistently applied, except for (i) liabilities or obligations that were
so reserved on, or reflected in (including the notes to), the consolidated
balance sheet of the Company as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) liabilities or
obligations arising in the ordinary course of business (including trade
indebtedness and liabilities, obligations and secured debt assumed in
connection with the acquisition of properties by the Company or its
Subsidiaries) since March 31, 1999, and (iii) liabilities or obligations
which would not, individually or in the aggregate, cause a Company Material
Adverse Effect.
Section 3.9 Absence of Certain Changes.
Except as set forth in the Company SEC Reports and except for the
transactions expressly contemplated hereby, since March 31, 1999, the
Company and its Subsidiaries have conducted their respective businesses
only in the ordinary and usual course consistent with past practices
(including the incurrence of trade indebtedness and liabilities,
obligations and secured debt assumed in connection with the acquisition of
properties by the Company or its Subsidiaries) and there has not been any
change in the Company's business, operations, condition (financial or
otherwise), results of operations, Assets or liabilities, except for
changes expressly contemplated hereby or changes which, individually or in
the aggregate, have not caused or will not cause a Company Material Adverse
Effect.
Section 3.10 Litigation.
Except as set forth in the Company SEC Reports, there is no
Action instituted, pending or, to the Knowledge of the Company, threatened,
in each case against the Company, any of its Subsidiaries or any of their
respective Assets which, individually or in the aggregate, directly or
indirectly, would have a Company Material Adverse Effect, nor is there any
outstanding judgment, decree or injunction, in each case against the
Company, any of its Subsidiaries or any of their respective Assets or any
statute, rule or order of any Governmental Entity applicable to the Company
or any of its Subsidiaries which, individually or in the aggregate, has
caused, or would cause, a Company Material Adverse Effect.
Section 3.11 Taxes.
(a) The Company and its Subsidiaries have (i) duly filed (or
there have been filed on their behalf) or have duly filed for an
appropriate extension with the appropriate Governmental Entities all Tax
Returns required to be filed by them and such Tax Returns are true, correct
and complete in all material respects, and (ii) duly paid in full all Taxes
required to have been paid by them, whether or not shown to be due on such
Tax Returns, provided, however, to the extent the foregoing clauses (i) or
(ii) relate to Taxes for which a tenant is responsible pursuant to a
Company Lease, to the Knowledge of the Company, such clauses (i) and (ii)
are true with respect to such tenant;
(b) No written claim is pending by an authority in a
jurisdiction where any of the Company and its Subsidiaries does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction;
(c) No federal income Tax Returns of the Company or its
Subsidiaries have been audited for the Company's taxable years beginning on
or after January 1, 1990, and no federal or state, local or foreign audits
or other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries has
received a written notice of any threatened audits with respect to Taxes or
Tax Returns of the Company or any of its Subsidiaries, and neither the
Company nor any of its Subsidiaries has waived any statute of limitations
with respect to Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency;
(d) Section 3.11(d) of the Company Disclosure Schedule sets
forth, with respect to those taxable years for which Tax Returns have not
yet been filed, the taxable years of the Company and its Subsidiaries as to
which extensions to file Tax Returns have been requested or any waiver of
the applicable statute of limitations has been executed;
(e) The Internal Revenue Service has not asserted against the
Company or any of its Subsidiaries any deficiency or claim for Taxes with
respect to the Company's taxable years beginning on or after January 1,
1990, and no other taxing authority (whether domestic or foreign) has
asserted against the Company or any of its Subsidiaries any deficiency or
claim for Taxes in excess of $100,000 for any of the Company's taxable
years beginning on or after January 1 1990;
(f) There are no Liens for Taxes upon any Assets of the Company
or any Subsidiary thereof, except for Liens for Taxes not yet due or
delinquent or for which a tenant is responsible under a lease for real
property. With respect any such Taxes for which a tenant is responsible,
to the Knowledge of the Company, no such Taxes are delinquent. No written
power of attorney that has been granted by the Company or any of its
Subsidiaries (other than to the Company or a Subsidiary) currently is in
force with respect to any matter relating to Taxes;
(g) Neither the Company nor any of its Subsidiaries has, with
regard to any Assets held by any of them, agreed to have Section 341(f)(2)
of the Code apply to any disposition of a "subsection (f) asset" (as such
term is defined in Section 341(f)(4) of the Code) owned by the Company or
any of its Subsidiaries;
(h) None of the Company and its Subsidiaries is a party to any
Tax allocation or sharing agreement;
(i) None of the Company and its Subsidiaries (i) has been a
member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was the Company) or
(ii) has any liability for the Taxes of any Person (other than any of the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee
or successor, by contract, or otherwise;
(j) Since the Company's taxable year ending December 31, 1987,
the Company has not incurred and does not expect to incur through the
Closing Date any liability for Taxes under Section 857(b), 860(c) or 4981
of the Code, and neither the Company nor any of its Subsidiaries has
incurred any material liability for Taxes other than in the ordinary course
of business. To the Knowledge of the Company, no event has occurred and no
condition or circumstance exists which presents a material risk that any
material Tax described in the preceding sentence will be imposed upon the
Company.
(k) The Company (i) for all taxable years commencing with 1987
through the most recent December 31, has been subject to taxation as a REIT
and has satisfied all requirements to qualify as a REIT for such years,
(ii) has operated in such a manner as to qualify as a REIT, and will
continue to operate through the Closing Date in such a manner as to qualify
as a REIT, (iii) has not taken or omitted to take any action which would
reasonably be expected to result in a challenge to its status as a REIT,
and, to the Knowledge of the Company, no such challenge is pending or
threatened, and (iv) has not granted any exception to its stock ownership
limits set forth in its certificate of incorporation or other governing
document(s) relating to its tax status as a REIT. Each Subsidiary of the
Company that is a state law partnership or limited liability company has
been since its formation and continues to be treated for federal income tax
purposes as a partnership (or a disregarded entity) and not as a
corporation or an association or publicly traded partnership taxable as a
corporation. Each other Subsidiary of the Company has been since its
formation, and continues to be treated for federal income purposes as a
"qualified REIT subsidiary" as defined in Section 856(i) of the Code.
Neither the Company nor any Subsidiary of the Company holds any Asset the
disposition of which would be subject to rules similar to Section 1374 of
the Code as a result of an election under IRS Notice 88-19.
Section 3.12 Employee Benefit Plans.
(a) Section 3.12 of the Company Disclosure Schedule contains a
complete list of all Employee Plans of the Company and its Subsidiaries as
of the date hereof. True and complete copies or descriptions of the
Employee Plans of the Company and its Subsidiaries, including, without
limitation, trust instruments, if any, that form a part thereof, and all
amendments thereto, have been furnished or made available to HCPI and its
counsel.
(b) Each of the Employee Plans of the Company and its
Subsidiaries (other than any Multiemployer Plan) has been administered and
is in substantial compliance with the terms of such Employee Plan and all
applicable laws, rules and regulations. Each Pension Plan of the Company
or its Subsidiaries which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the Internal
Revenue Service with respect to "TRA" (as defined in Section 1 of Rev.
Proc. 93-39) (except with respect to the amendment to the Company's Money
Purchase Pension Plan referred to in Section 5.1(e)), and the Company is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter. All contributions required to be made
under the terms of any Employee Plan of the Company or its Subsidiaries
have been timely made or have been reflected in the consolidated balance
sheets included in or incorporated by reference in the Company SEC Reports.
Neither the Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan of the Company or its
Subsidiaries pursuant to Section 401(a)(29) of the Code.
(c) No "reportable event" (as such term is used in Section 4043
of ERISA) for which the notice requirements to the Pension Benefit Guaranty
Corporation have not been waived, or "accumulated funding deficiency" (as
such term is used in Section 412 of the Code or Section 302 of ERISA),
whether or not waived, has heretofore occurred with respect to any Pension
Plan (other than any Multiemployer Plan) of the Company or its
Subsidiaries. Neither the Company nor any of its Subsidiaries has engaged
in a transaction in violation of Section 406 or 407 of ERISA or any
transaction with respect to any Employee Plan that, in either case,
assuming the taxable period of such transaction expired as of the date
hereof, could subject the Company or any Subsidiary to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(d) There is no material Action relating to or seeking benefits
under any Employee Plan of the Company or any of its Subsidiaries that is
pending or, to the Company's Knowledge, threatened against the Company, any
of its Subsidiaries, any of their ERISA Affiliates, or any of the Employee
Plans of the Company or any of its Subsidiaries, other than routine claims
for benefits.
(e) The Company has not incurred any withdrawal or other
liability with respect to any Multiemployer Plan of the Company or any of
its Subsidiaries under Title IV of ERISA which remains unsatisfied.
(f) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company, any of its Subsidiaries
or their ERISA Affiliates with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them.
(g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in the
acceleration or creation of any rights of any current or former employee of
the Company or any of its Subsidiaries to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any
benefits under any Pension Plan or the acceleration or creation of any
rights under any severance, parachute or change in control agreement).
(h) Under each Pension Plan of the Company or its Subsidiaries
which is a single-employer plan, as of the last day of the most recent plan
year ended prior to the date hereof, the actuarially determined present
value of all "benefit liabilities," within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the Plan's most recent actuarial valuation), did
not exceed the then current value of the assets of such Pension Plan, and
there has been no material change in the financial condition of such
Pension Plan since the last day of the most recent plan year.
(i) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life insurance benefits under any
Employee Plan of the Company or its Subsidiaries, except as required under
Section 4980B of the Code or Title I, Subtitle B, Part 6 of ERISA.
Section 3.13 Properties.
(a) Section 3.13(a) of the Company Disclosure Schedule lists all
real properties owned in fee simple by the Company and its Subsidiaries
(the "Company Owned Property") and all real properties leased by the
Company and its Subsidiaries as lessee (the "Company Leased Property"),
which are all of the real properties owned or leased by them. The Company
Owned Property and the Company Leased Property is referred to herein
collectively as the "Company Real Property."
(b) The Company and its Subsidiaries have fee simple title to
the Company Owned Property, and a valid leasehold interest in the Company
Leased Property, sufficient to allow the Company and its Subsidiaries,
taken as a whole, to conduct its business of leasing property to third
parties as currently conducted. The Company Real Property is not subject
to any Encumbrances, except for any Permitted Encumbrances.
(c) Except as set forth on Section 3.14(a) of the Company
Disclosure Schedule or as disclosed in the Company SEC Reports, the Company
Real Property is not encumbered by any material debt.
(d) Valid policies of title insurance have been issued insuring
the Company's or its applicable Subsidiary's fee simple title to the
Company Owned Property or the Company's or its applicable Subsidiary's
leasehold interest in the Company Leased Property, as appropriate, in an
amount at least equal to the original purchase price thereof, subject only
to the matters disclosed in Sections 3.13(a), (b) and (c) above together
with the corresponding provisions of the Company Disclosure Schedule, and,
to the Knowledge of the Company, such policies are, at the date hereof, in
full force and effect and no material claim has been made against any such
policy.
(e) To the Knowledge of the Company all (i) certificates,
permits or licenses from any Governmental Entity having jurisdiction over
any Company Real Property and (ii) agreements, easements or other rights,
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Company Real Property have been obtained and are
in full force and effect, except where the failure to maintain the same
would not cause a Company Material Adverse Effect, and the Company does not
have any Knowledge of any pending threat or modification or cancellation of
the same. No Company Real Property is located outside of the United States
and neither the Company nor any of its Subsidiaries conducts its business
of owning, leasing or operating properties outside of the United States.
All work to be performed, payments to be made and actions to be taken by
the Company or its Subsidiaries prior to the date hereof pursuant to any
agreement entered into with a Governmental Entity in connection with a site
approval, zoning reclassification or other similar action relating to a
Company Real Property has been performed, paid or taken, as the case may
be, and the Company has no Knowledge of any planned or proposed work,
payments or actions that may be required after the date hereof pursuant to
such agreements in each such case, which is, individually or in the
aggregate, material to the Company and its Subsidiaries taken as a whole.
(f) The Company has not received any written notice or written
notices of any violation of any federal, state or municipal law, ordinance,
order, regulation or requirement affecting any portion of any Company Real
Property issued by any Governmental Entity except for such notice or
notices which would not have, individually or in the aggregate, a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any written notice to the effect that any condemnation or
rezoning proceedings are pending or threatened with respect to any Company
Real Property, except where any such written notice of such a proceeding
would not, individually or in the aggregate, cause a Company Material
Adverse Effect.
(g) Except as would not, individually or in the aggregate, cause
a Company Material Adverse Effect, there is no (i) material structural
defect relating to the Company Real Property, (ii) Company Real Property
whose building systems are not in working order in any material respect or
(iii) physical damage to any Company Real Property in excess of $100,000 or
current renovation or restoration of Company Real Property the remaining
cost of which exceeds $100,000 for which there is no insurance in effect
covering the cost of such damage, renovation or restoration, except for the
payment by the Company of a deductible under the applicable insurance
policy.
(h) Each copy of any Company Lease which has been delivered to,
or made available for review by, HCPI as of the date hereof has been a true
and correct copy of such Company Lease as amended to date. True and
correct copies of all other Company Leases, as amended, will be delivered
to, or made available for review by, HCPI reasonably promptly after the
date hereof. Section 3.13(h) of the Company Disclosure Schedule lists the
following information with respect to each Company Lease that covers more
than 7,500 square feet of space:
(i) the name of the lessee;
(ii) the expiration date;
(iii) the term of any options by the lessee to renew
(exclusive of any Company Leases relating to multi-tenant medical office
space); and
(iv) the amount of periodic fixed rentals due under the
Company Lease.
(i) All regularly scheduled rent payments due under each Company
Lease have been paid during the period March 31, 1999 through the date
hereof, and to the Company's Knowledge, no lessee is in material default,
and no condition or event exists which with the giving of notice or the
passage of time, or both, would constitute a material default by any lessee
or contracting party, under any Company Lease.
(j) The Company Leases are in full force and effect except where
the failure of the foregoing to be true would not have a material affect on
the ability of the Company and its Subsidiaries, taken as a whole, to
operate their businesses. None of the Company nor any of its Subsidiaries
is in material default under any Company Lease, and, to the Knowledge of
the Company, no material defaults (unless subsequently cured) by the
Company or its Subsidiaries have been alleged thereunder.
Section 3.14 Contracts.
(a) Section 3.14(a) of the Company Disclosure Schedule contains
a complete and accurate list of all Company Contracts, other than the
Company Contracts which have been filed as an exhibit to the Company SEC
Reports. Each copy of a Company Contract which has been delivered to, or
made available for review by, HCPI is a true and correct copy of such
Company Contract as amended to date.
(b) As of the date of this Agreement, (i) each of the Company
Contracts is valid and binding upon the Company or the applicable
Subsidiary of the Company in accordance with its terms and is in full force
and effect, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally or
general equitable principles (whether considered in a proceeding in equity
or at law), (ii) there is no material breach or violation of or default by
the Company or any of its Subsidiaries under any of the Company Contracts,
except if such breach, violation or default has been waived, and (iii) no
event has occurred with respect to the Company or any of its Subsidiaries
which, with notice or lapse of time or both, would constitute a material
breach, violation or default, or give rise to a right of termination,
modification, cancellation, foreclosure, imposition of a Lien, prepayment
or acceleration under any of the Company Contracts, which breach,
violation, default or other occurrence referred to in clauses (ii) or
(iii), individually or in the aggregate with other such breaches,
violations, defaults or other occurrences referred to in clauses (ii) or
(iii), would cause a Company Material Adverse Effect.
Section 3.15 Labor Relations.
Except as would not cause a Company Material Adverse Effect,
(i) there are no controversies pending or, to the Knowledge of the Company,
threatened between the Company or any of its Subsidiaries and any of their
respective employees; (ii) neither the Company nor any of its Subsidiaries
is a party, or otherwise subject, to any collective bargaining agreement or
similar contract; (iii) there are no proceedings asserting unfair labor
practice charges pending against the Company or any of its Subsidiaries
before the National Labor Relations Board, or any similar foreign labor
relations governmental bodies; and (iv) there is no strike, slowdown, work
stoppage or lockout, or, to the Knowledge of the Company, threat thereof,
by or with respect to any employees of the Company or any of its
Subsidiaries.
Section 3.16 Intellectual Property.
The Company and each of its Subsidiaries has good title to, or is
validly licensed to use, all of the Intellectual Property material to the
business of the Company and its Subsidiaries, taken as a whole, free of all
material Liens. The consummation of the Merger will not result in the loss
of any rights by the Company or any of its Subsidiaries in any Intellectual
Property material to the business of the Company and its Subsidiaries,
taken as a whole.
Section 3.17 Environmental Matters.
Except as set forth in the Company SEC Reports, and except as,
individually or in the aggregate, has not had, and would not cause, a
Company Material Adverse Effect, the Company, each of its Subsidiaries and,
to the Knowledge of the Company, each tenant or operator of Company Real
Property (a) have obtained all applicable permits, licenses and other
authorizations which are required to be obtained under all applicable
Environmental Laws by the Company or its Subsidiaries; (b) are in material
compliance with all terms and conditions of such required permits, licenses
and authorizations, and also are in material compliance with all other
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (c) have not received a written notice of any uncured
past or present violations of Environmental Laws, or of any event, incident
or Action preventing continued compliance with such Environmental Laws, or
giving rise to any common law environmental liability, or forming the basis
of any Action against the Company or any of its Subsidiaries based on or
resulting from the manufacture, processing, use, treatment, storage,
disposal, transport or handling, or the emission, discharge or release into
the environment, of any Hazardous Material; and (d) have taken all actions
required under applicable Environmental Laws to register any products or
materials required to be registered by the Company or its Subsidiaries
thereunder. This Section 3.17 constitutes the sole representation of the
Company concerning any Environmental Law or Hazardous Substance.
Section 3.18 Opinion of Financial Advisor.
The Company Board has received an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
(the "Company Financial Advisor") to the effect that, as of the date
hereof, Exchange Ratio is fair to the holders of shares of Company Common
Stock from a financial point of view. As of the date of the filing of the
Joint Proxy Statement/Prospectus with the SEC, and as of the effective date
of the Registration Statement, the Company will have been authorized by the
Company Financial Advisor to permit, subject to prior review and consent by
such Company Financial Advisor, the inclusion of such fairness opinion (or
a reference thereto) in the Joint Proxy Statement/Prospectus and in the
Registration Statement, respectively.
Section 3.19 Brokers.
No broker, finder or investment banker (other than the Company
Financial Advisor, the fees and expenses of which will be paid by the
Company) is entitled to any brokerage, finder's or other fee or commission
in connection with the Merger or the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or
any of its Subsidiaries. The Company has heretofore furnished to HCPI a
complete and correct copy of all agreements between the Company and the
Company Financial Advisor pursuant to which such firm would be entitled to
any such payment.
Section 3.20 Vote Required.
The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon is the
only vote of the holders of any class or series of the Company's capital
stock necessary to approve the Merger. The Company Board, at a meeting
duly called and held, by vote, subject to its right to withdraw its support
of the Merger and the transactions contemplated by this Agreement and
recommend an Acquisition Proposal or Acquisition Transaction pursuant to
Section 6.3 hereof, (a) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and in the best
interests of the Company, (b) approved this Agreement and the transactions
contemplated hereby, including the Merger, (c) declared that this Agreement
is advisable, and (d) resolved to recommend that the holders of the shares
of the Company Common Stock approve this Agreement and the transactions
contemplated hereby, including the Merger.
Section 3.21 Accounting and Tax Matters.
None of the Company, its Subsidiaries, directors, officers or
agents has taken or agreed to take any action, nor does any executive
officer know of any circumstances, that (without regard to any action taken
or agreed to be taken by HCPI or any of its Affiliates) would prevent the
Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
Section 3.22 Insurance.
All fire and casualty, general liability, business interruption,
product liability, and sprinkler and water damage insurance policies
maintained by the Company or any of its Subsidiaries with coverage of loss
payouts in excess of $15,000,000 are with reputable insurance carriers,
provide full and adequate coverage for all normal risks incident to the
business of the Company and its Subsidiaries and their respective Assets,
and are in character and amount at least equivalent to that carried by
Persons engaged in similar businesses and substantially equivalent to that
carried by Persons engaged in similar businesses and subject to the same or
similar perils or hazards except for any such failures to carry or maintain
insurance policies that, individually or in the aggregate, would not cause
a Company Material Adverse Effect.
Section 3.23 Takeover Provisions Inapplicable.
The Company has taken all action necessary, if any, to exempt the
transactions contemplated by this Agreement from the operation of any "fair
price," "moratorium," "control share acquisition" or any other anti-
takeover statute enacted under the laws of the State of Delaware.
Section 3.24 No Material Adverse Effect.
Except as disclosed in the Company SEC Reports, to the Knowledge
of the Company, no current fact alone or together with another current fact
would cause a Company Material Adverse Effect.
Section 3.25 Rights Plan.
The entering into of this Agreement and the consummation of the
transactions contemplated hereby (whether or not in combination with the
existing ownership of shares of Company Common Stock by HCPI or its
Subsidiaries as described in Section 4.26) do not and will not result in
the grant of any rights to any Person under the Company Rights Plan or
enable or require the Company Rights to be exercised, distributed or
triggered and there has been no event which has enabled or required the
Company Rights to be exercised, distributed or triggered.
Section 3.26 ▇▇▇▇▇▇▇ Replacement Properties.
Section 3.26 of the Company Disclosure Schedule lists certain
properties that have been identified as potential replacement properties in
accordance with Treasury Regulation Section 1.1031(k)-1(c) and sets forth,
for each such property, (a) the purchase price reflected in a letter of
intent or purchase agreement relating thereto (or, if there is no letter of
intent or purchase agreement reflecting a purchase price, a good faith
reasonable estimate of the price at which the Company believes such
property could be purchased) and (b) a good faith reasonable estimate of
the first 12 months' cash return on investment based on such purchase price
or estimated purchase price (calculated in a manner consistent with the
manner in which the Company customarily calculates returns on investment
for similar acquisitions).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HCPI
HCPI represents and warrants to the Company that the statements
contained in this Article IV are true and correct except as set forth
herein and in the disclosure schedule delivered by HCPI to the Company on
or before the date of this Agreement (the "HCPI Disclosure Schedule"). The
HCPI Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Agreement and the
disclosure in any paragraph shall qualify other paragraphs in this
Agreement only to the extent that such disclosure specifically references
the fact that it also qualifies or applies to such other specified
paragraphs.
Section 4.1 Organization and Qualification.
HCPI and each of its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, with the corporate power and authority to own and operate its
businesses as presently conducted. HCPI and each of its Subsidiaries is
duly qualified as a foreign corporation or other entity to do business and
is in good standing in each jurisdiction where the ownership or operation
of its properties or the nature of its activities makes such qualification
necessary, except for such failures of HCPI and any of its Subsidiaries to
be so qualified as would not, when taken with all other such failures,
cause a HCPI Material Adverse Effect. HCPI has previously made available
to the Company true and correct copies of its articles of restatement and
bylaws as currently in effect.
Section 4.2 Authorization; Validity and Effect of Agreement.
HCPI has the requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby subject to the adoption and approval
of this Agreement by the requisite vote of the holders of HCPI Common
Stock. The execution and delivery of this Agreement by HCPI and the
performance by HCPI of its obligations hereunder and the consummation of
the transactions contemplated hereby have been duly authorized by the HCPI
Board and all other necessary corporate action on the part of HCPI, other
than the adoption and approval of this Agreement by the requisite vote of
the holders of HCPI Common Stock, and no other corporate proceedings on the
part of HCPI are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by HCPI and constitutes a legal, valid and binding obligation of
HCPI, enforceable against it in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law).
Section 4.3 Capitalization.
(a) The authorized capital stock of HCPI consists of (i)
100,000,000 shares of HCPI Common Stock and (ii) 50,000,000 shares of
preferred stock, par value $1.00 per share, of which 2,760,000 shares have
been designated as HCPI Series A Preferred Stock, 5,750,000 shares have
been designated HCPI Series B Preferred Stock, and 40,000 shares have been
designated HCPI Series C Preferred Stock. As of July 16, 1999, there were
issued and outstanding (i) 32,044,176 shares of HCPI Common Stock,
(ii) 2,760,000 shares of HCPI Series A Preferred Stock and (iii) 5,385,000
shares of HCPI Series B Preferred Stock. HCPI have reserved for issuance a
sufficient number of shares of HCPI Stock to consummate the Merger.
Section 4.3(a) of the HCPI Disclosure Schedule sets forth the number of
shares of HCPI Stock and each other class of capital stock of HCPI reserved
for future issuance as of July 16, 1999 under each of the HCPI Stock Plans
or otherwise and the HCPI Stock Plan or other agreement pursuant to which
they have been reserved. Since July 16, 1999, no shares of HCPI Stock or
any other capital stock of HCPI have been issued or reserved for issuance,
except for shares of HCPI Stock issued in respect of the exercise,
conversion or exchange of HCPI Stock Rights outstanding as of July 16,
1999. Section 4.3(a) of the HCPI Disclosure Schedule also sets forth as of
the date hereof, the date on which each HCPI Stock Right currently
outstanding was issued, the dates on which each such outstanding and
unvested HCPI Stock Right vests, the class and number of shares of HCPI
Stock or other capital stock of HCPI for or into which each such HCPI Stock
Right is exercisable, convertible or exchangeable and the exercise price
thereof. Except as set forth in this Section 4.3(a) or Section 4.3(a) of
the HCPI Disclosure Schedule, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which HCPI or any of its Subsidiaries is a party or by which any of
them is bound obligating HCPI or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of
HCPI Stock or any other capital stock of HCPI or its Subsidiaries or other
voting securities of HCPI or its Subsidiaries, or obligating HCPI or its
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking, and neither HCPI and its Subsidiaries have granted any stock
appreciation rights or any other contractual rights the value of which is
derived from the financial performance of HCPI or the value of shares of
HCPI Stock or any other capital stock of HCPI. There are no obligations,
contingent or otherwise, of HCPI or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of HCPI Stock or any other capital
stock of HCPI or the capital stock or ownership interests of any Subsidiary
of HCPI or to provide funds to or make any material investment (in the form
of a loan, capital contribution or otherwise) in any other entity, other
than guarantees of bank obligations or indebtedness for borrowed money of
Subsidiaries entered into in the ordinary course of business. Neither HCPI
nor any of its Subsidiaries is holding or owns any shares of HCPI Stock on
behalf of third parties.
(b) There is no issued and outstanding Voting Debt of HCPI or
any of its Subsidiaries. Except as reserved for future grants of options
under the HCPI Stock Plans as of the date hereof, (i) there are no shares
of capital stock of any class of, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding; (ii) there are no options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which HCPI or any of
its Subsidiaries is a party or by which it is bound obligating HCPI or any
of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other ownership
interests (including Voting Debt) of HCPI or any of its Subsidiaries or
obligating HCPI or any of its Subsidiaries to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call,
right, commitment or agreement; and (iii) there are no voting trusts,
proxies or other voting agreements or understandings currently in effect
with respect to the shares of capital stock of HCPI to which HCPI or any of
its Subsidiaries is currently a party or of which HCPI currently has
Knowledge. All shares of HCPI Common Stock subject to issuance as
specified in this Section 4.3(b) or in Section 4.3(b) of the HCPI
Disclosure Schedule are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable.
Section 4.4 Subsidiaries.
Other than Subsidiaries of HCPI formed or acquired after the date
hereof in connection with the acquisition of real property in the ordinary
course of business (of which HCPI has provided notice to the Company prior
to any such formation or acquisition), Section 4.4 of the HCPI Disclosure
Schedule sets forth all Subsidiaries of HCPI. All of the outstanding
shares of capital stock (including shares which may be issued upon exercise
of outstanding options) or other ownership interests of each of HCPI's
Subsidiaries are duly authorized, validly issued, fully paid and non-
assessable and all such shares and ownership interests are owned by HCPI or
a Subsidiary of HCPI free and clear of all Liens. HCPI owns, directly or
indirectly, all of the issued and outstanding capital stock and other
ownership interests of each of its Subsidiaries, free and clear of all
Liens, and there are no existing options, warrants, calls, subscriptions,
convertible securities or other securities, agreements, commitments or
obligations of any character relating to the outstanding capital stock or
other securities of any Subsidiary of HCPI or which would require any
Subsidiary of HCPI to issue or sell any shares of its capital stock,
ownership interests or securities convertible into or exchangeable for
shares of its capital stock or ownership interests.
Section 4.5 Other Interests.
Neither HCPI nor any of HCPI's Subsidiaries owns or has the right
or option to acquire, directly or indirectly, any interest or investment in
(whether equity or debt) any business or Person (other than HCPI's
Subsidiaries and other than rights held by HCPI or its Subsidiaries
identified in Section 4.4 of the HCPI Disclosure Schedule or, after the
date hereof, acquisitions of real property in the ordinary course of
business, and Persons owning real property, in the ordinary course of
business (of which HCPI will have provided notice to the Company prior to
any such acquisition)). To the Knowledge of HCPI, no Person owns or has
owned, actually or constructively (as such term is used for purposes of the
not closely held requirement set forth in Section 856(a)(6) of the Code or
Section 856(d)(5) of the Code) in excess of 9.9% in value of the
outstanding stock of HCPI.
Section 4.6 No Conflict; Required Filings and Consents.
(a) Neither the execution and delivery of this Agreement nor the
performance by HCPI of its obligations hereunder, nor the consummation of
the transactions contemplated hereby, will: (i) conflict with HCPI's
charter or bylaws or the comparable charter or organizational documents of
any of its Subsidiaries; (ii) assuming satisfaction of the requirements set
forth in Section 4.6(b) below, violate any statute, law, ordinance, rule or
regulation, applicable to HCPI or any of its Subsidiaries or any of their
Assets; or (iii) violate, breach, be in conflict with or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, permit the termination of any provision of,
result in the termination of, the acceleration of the maturity of, or the
acceleration of the performance of any obligation of HCPI or any of its
Subsidiaries under, result in the creation or imposition of any Lien upon
any Assets of HCPI or any of its Subsidiaries under, or give rise to any
third party's right of first refusal, or other similar right, under any
note, bond, indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which HCPI or any of its
Subsidiaries is a party or by which HCPI or any of its Subsidiaries or any
of their respective Assets are bound or encumbered, or give any Person the
right to require HCPI or any of its Subsidiaries to purchase or repurchase
any notes, bonds or instruments of any kind except, in the case of clauses
(ii) and (iii), for such violations, breaches, conflicts, defaults or other
occurrences which, individually or in the aggregate, would not cause a HCPI
Material Adverse Effect.
(b) Except (i) for applicable requirements, if any, of the
Exchange Act, the Securities Act, and Blue Sky Laws, (ii) for the filing of
the Certificate of Merger pursuant to the DGCL and the filing of the
Articles of Merger pursuant to the MGCL, (iii) for other governmental
approvals required under the applicable laws of any foreign jurisdiction,
(iv) for the approval of this Agreement by the requisite vote of the
holders of HCPI Common Stock, and (v) with respect to matters set forth in
Sections 4.6(a) or 4.6(b) of the HCPI Disclosure Schedule, no consent,
approval or authorization of, permit from, or declaration, filing or
registration with, any Governmental Entity, or any other Person is required
to be made or obtained by HCPI or any of its Subsidiaries in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except where the
failure to obtain such consent, approval, authorization, permit or
declaration or to make such filing or registration would not, individually
or in the aggregate, cause a HCPI Material Adverse Effect.
Section 4.7 Compliance.
HCPI and each of its Subsidiaries is in compliance with all
foreign, federal, state and local laws and regulations applicable to its
operations or with respect to which compliance is a condition of engaging
in the business thereof, except to the extent that failure to comply would
not, individually or in the aggregate, cause a HCPI Material Adverse
Effect. Neither HCPI nor any of its Subsidiaries has received any written
notice asserting a failure, or possible failure, to comply with any such
law or regulation, the subject of which written notice has not been
resolved as required thereby or otherwise to the satisfaction of the party
sending the notice, except for such failure as would not, individually or
in the aggregate, cause a HCPI Material Adverse Effect.
Section 4.8 SEC Reports.
(a) HCPI has filed with the SEC and made available to the
Company true and complete copies of each registration statement, proxy or
information statement, form, report and other document required to be filed
by HCPI or any of its Subsidiaries with the SEC since January 1, 1996
(collectively, the "HCPI SEC Reports"). As of their respective dates, with
respect to HCPI SEC Reports filed pursuant to the Exchange Act, and as of
their respective effective dates, as to HCPI SEC Reports filed pursuant to
the Securities Act, the HCPI SEC Reports and any registration statements,
reports, forms, proxy or information statements and other documents filed
by HCPI with the SEC after the date of this Agreement (i) complied, or,
with respect to those not yet filed, will comply, in all material respects
with the applicable requirements of the Securities Act and the Exchange
Act, and (ii) did not, or, with respect to those not yet filed, will not,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into HCPI SEC Reports (including the related
notes and schedules) presents fairly, in all material respects, the
consolidated financial position of HCPI and its consolidated Subsidiaries
as of its date, and each of the consolidated statements of income, retained
earnings and cash flows of HCPI included in or incorporated by reference
into HCPI SEC Reports (including any related notes and schedules) presents
fairly, in all material respects, the results of operations, retained
earnings or cash flows, as the case may be, of HCPI and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments), in each case in
accordance with GAAP consistently applied during the periods involved,
except as may be noted therein.
(c) Except as set forth in the HCPI SEC Reports, neither HCPI
nor any of its Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of
HCPI or in the notes thereto, prepared in accordance with GAAP consistently
applied, except for (i) liabilities or obligations that were so reserved
on, or reflected in (including the notes to), the consolidated balance
sheet of HCPI as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) liabilities or obligations arising
in the ordinary course of business (including trade indebtedness and
liabilities, obligations and secured debt assumed in connection with the
acquisition of properties by HCPI or its Subsidiaries) since March 31,
1999, and (iii) liabilities or obligations which would not, individually or
in the aggregate, cause a HCPI Material Adverse Effect.
Section 4.9 Absence of Certain Changes.
Except as set forth in the HCPI SEC Reports and except for the
transactions expressly contemplated hereby, since March 31, 1999, HCPI and
its Subsidiaries have conducted their respective businesses only in the
ordinary and usual course consistent with past practices (including the
incurrence of trade indebtedness and liabilities, obligations and secured
debt assumed in connection with the acquisition of properties by HCPI or
its Subsidiaries) and there has not been any change in HCPI's business,
operations, condition (financial or otherwise), results of operations,
Assets or liabilities, except for changes expressly contemplated hereby or
changes which, individually or in the aggregate, have not caused or will
not cause a HCPI Material Adverse Effect.
Section 4.10 Litigation.
Except as set forth in the HCPI SEC Reports, there is no Action
instituted, pending or, to the Knowledge of HCPI, threatened, in each case
against HCPI, any of its Subsidiaries or any of their respective Assets
which, individually or in the aggregate, directly or indirectly, would have
a HCPI Material Adverse Effect, nor is there any outstanding judgment,
decree or injunction, in each case against HCPI, any of its Subsidiaries or
any of their respective Assets, or any statute, rule or order of any
Governmental Entity applicable to HCPI or any of its Subsidiaries which,
individually or in the aggregate, has caused, or would cause, a HCPI
Material Adverse Effect.
Section 4.11 Taxes.
(a) HCPI and its Subsidiaries have (i) duly filed (or there have
been filed on their behalf) or have duly filed for an appropriate
extension, with the appropriate Governmental Entities all Tax Returns
required to be filed by them and such Tax Returns are true, correct and
complete in all material respects, and (ii) duly paid in full all Taxes
required to have been paid by them, whether or not shown to be due on such
Tax Returns, provided, however, to the extent the foregoing clauses (i) or
(ii) relate to Taxes for which a tenant is responsible pursuant to a HCPI
Lease, to the Knowledge of HCPI, such clauses (i) and (ii) are true with
respect to such tenant;
(b) No written claim is pending by an authority in a
jurisdiction where any of HCPI and its Subsidiaries does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction;
(c) No federal income Tax Returns of HCPI or its Subsidiaries
have been audited for HCPI's taxable years beginning on or after January 1,
1990, and no federal or state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of HCPI or its Subsidiaries, and neither
HCPI nor any of its Subsidiaries has received a written notice of any
threatened audits with respect to Taxes or Tax Returns of HCPI or any of
its Subsidiaries, and neither HCPI nor any of its Subsidiaries has waived
any statute of limitations with respect to Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency;
(d) Section 4.11(d) of the HCPI Disclosure Schedule sets forth ,
with respect to those taxable years for which Tax Returns have not yet been
filed, the taxable years of HCPI and its Subsidiaries as to which
extensions to file Tax Returns have been requested or any waiver of the
applicable statute of limitations has been executed;
(e) The Internal Revenue Service has not asserted against HCPI
or any of its Subsidiaries any deficiency or claim for Taxes with respect
to HCPI's taxable years beginning on or after January 1, 1990, and no other
taxing authority (whether domestic or foreign) has asserted against HCPI or
any of its Subsidiaries any deficiency or claim for Taxes in excess of
$100,000 for any of HCPI's taxable years beginning on or after January 1,
1990;
(f) There are no Liens for Taxes upon any Assets of HCPI or any
Subsidiary thereof, except for Liens for Taxes not yet due or delinquent or
for which a tenant is responsible under a lease for real property. With
respect to any such Taxes for which a tenant is responsible, to the
Knowledge of HCPI no such Taxes are delinquent. No written power of
attorney that has been granted by HCPI or any of its Subsidiaries (other
than to HCPI or a Subsidiary) currently is in force with respect to any
matter relating to Taxes;
(g) Neither HCPI nor any of its Subsidiaries has, with regard to
any Assets held by any of them, agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by HCPI or any of its
Subsidiaries;
(h) None of HCPI and its Subsidiaries is a party to any Tax
allocation or sharing agreement;
(i) None of HCPI and its Subsidiaries (i) has been a member of
an affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was HCPI) or (ii) has any liability
for the Taxes of any Person (other than any of HCPI and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract,
or otherwise;
(j) Since HCPI's taxable year ending December 31, 1985, HCPI has
not incurred and does not expect to incur through the Closing Date any
liability for Taxes under Section 857(b), 860(c) or 4981 of the Code, and
neither HCPI nor any of its Subsidiaries has incurred any material
liability for Taxes other than in the ordinary course of business. To the
Knowledge of HCPI, no event has occurred and no condition or circumstance
exists which presents a material risk that any material Tax described in
the preceding sentence will be imposed upon HCPI.
(k) HCPI (i) for all taxable years commencing with 1985 through
the most recent December 31, has been subject to taxation as a REIT and has
satisfied all requirements to qualify as a REIT for such years, (ii) has
operated in such a manner as to qualify as a REIT, and will continue to
operate through the Closing Date in such a manner as to qualify as a REIT,
(iii) has not taken or omitted to take any action which would reasonably be
expected to result in a challenge to its status as a REIT, and, to the
Knowledge of HCPI, no such challenge is pending or threatened, and (iv) has
not granted any exception to its stock ownership limits set forth in its
charter or other governing document(s) relating to its tax status as a
REIT. Each Subsidiary of HCPI that is a state law partnership or limited
liability company has been since its formation and continues to be treated
for federal income tax purposes as a partnership (or a disregarded entity)
and not as a corporation or an association or publicly traded partnership
taxable as a corporation. Each other Subsidiary of HCPI has been since its
formation, and continues to be treated for federal income Tax purposes as a
"qualified REIT subsidiary" as defined in Section 856(i) of the Code.
Neither HCPI nor any Subsidiary of HCPI holds any Asset the disposition of
which would be subject to rules similar to Section 1374 of the Code as a
result of an election under IRS Notice 88-19.
Section 4.12 Employee Benefit Plans.
(a) Section 4.12 of the HCPI Disclosure Schedule contains a
complete list of all Employee Plans of HCPI and its Subsidiaries as of the
date hereof. True and complete copies or descriptions of the Employee
Plans of HCPI and its Subsidiaries, including, without limitation, trust
instruments, if any, that form a part thereof, and all amendments thereto,
have been furnished or made available to the Company and its counsel.
(b) Each of the Employee Plans of HCPI and its Subsidiaries
(other than any Multiemployer Plan) has been administered and is in
substantial compliance with the terms of such Employee Plan and all
applicable laws, rules and regulations. Each Pension Plan of HCPI or its
Subsidiaries which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal
Revenue Service with respect to "TRA" (as defined in Section 1 of Rev.
Proc. 93-39), and HCPI is not aware of any circumstances likely to result
in revocation of any such favorable determination letter. All
contributions required to be made under the terms of any Employee Plan of
HCPI or its Subsidiaries have been timely made or have been reflected in
the consolidated balance sheets included in or incorporated by reference in
the HCPI SEC Reports. Neither HCPI nor any of its Subsidiaries has
provided, or is required to provide, security to any Pension Plan of HCPI
or its Subsidiaries pursuant to Section 401(a)(29) of the Code.
(c) No "reportable event" (as such term is used in Section 4043
of ERISA) for which the notice requirements to the Pension Benefit Guaranty
Corporation have not been waived, or "accumulated funding deficiency" (as
such term is used in section 412 of the Code or Section 302 of ERISA),
whether or not waived, has heretofore occurred with respect to any Pension
Plan (other than any Multiemployer Plan) of HCPI or its Subsidiaries.
Neither HCPI nor any of its Subsidiaries has engaged in a transaction in
violation of Section 406 or 407 of ERISA or any transaction with respect to
any Employee Plan that, in either case, assuming the taxable period of such
transaction expired as of the date hereof, could subject HCPI or any
Subsidiary to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA in an amount which would be material.
(d) There is no material Action relating to or seeking benefits
under any Employee Plan of HCPI or any of its Subsidiaries that is pending
or, to HCPI's Knowledge, threatened against HCPI, any of its Subsidiaries,
any of their ERISA Affiliates, or any of the Employee Plans of HCPI or any
of its Subsidiaries, other than routine claims for benefits.
(e) HCPI has not incurred any withdrawal or other liability with
respect to any Multiemployer Plan of HCPI or any of its Subsidiaries under
Title IV of ERISA which remains unsatisfied.
(f) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by HCPI, any of its Subsidiaries or
their ERISA Affiliates with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them.
(g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in the
acceleration or creation of any rights of any current or former employee of
HCPI or any of its Subsidiaries to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any
benefits under any Pension Plan or the acceleration or creation of any
rights under any severance, parachute or change in control agreement).
(h) Under each Pension Plan of HCPI or its Subsidiaries which is
a single-employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present value of
all "benefit liabilities," within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions contained in
the Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such Pension Plan, and there has been no
material change in the financial condition of such Pension Plan since the
last day of the most recent plan year.
(i) Neither HCPI nor any of its Subsidiaries has an obligations
for retiree health and life insurance benefits under any Employee Plan of
HCPI or its Subsidiaries, except as required under Section 4980B of the
Code of Title I, Subtitle B, Part 6 of ERISA.
Section 4.13 Properties.
(a) Section 4.13(a) of the HCPI Disclosure Schedule lists all
real properties owned in fee simple by HCPI and its Subsidiaries (the "HCPI
Owned Property") and all real properties leased by HCPI and its
Subsidiaries as lessee (the "HCPI Leased Property"), which are all of the
real properties owned or leased by them. The HCPI Owned Property and the
HCPI Leased Property is referred to herein collectively as the "HCPI Real
Property."
(b) HCPI and its Subsidiaries have fee simple title to the HCPI
Owned Property, and a valid leasehold interest in the HCPI Leased Property,
sufficient to allow HCPI and its Subsidiaries, taken as a whole, to conduct
its business of leasing properties to third parties as currently conducted.
The HCPI Real Property is not subject to any Encumbrances, except for any
Permitted Encumbrances.
(c) Except as set forth on Section 4.14(a) of the HCPI
Disclosure Schedule or as disclosed in the HCPI SEC Reports, the HCPI Real
Property is not encumbered by any material debt.
(d) Valid policies of title insurance have been issued insuring
HCPI's or its applicable Subsidiary's fee simple title to the HCPI Owned
Property or HCPI's or its applicable Subsidiary's leasehold interest in the
HCPI Leased Property, as appropriate, in an amount at least equal to the
original purchase price thereof, subject only to the matters disclosed in
Sections 4.13(a), (b) and (c) above together with the corresponding
provisions of the HCPI Disclosure Schedule, and, to the Knowledge of HCPI,
such policies are, at the date hereof, in full force and effect and no
material claim has been made against any such policy.
(e) To the Knowledge of HCPI all (i) certificates, permits or
licenses from any Governmental Entity having jurisdiction over any HCPI
Real Property and (ii) agreements, easements or other rights, necessary to
permit the lawful use and operation of the buildings and improvements on
any of the HCPI Real Property have been obtained and are in full force and
effect, except where the failure to maintain the same would not cause a
HCPI Material Adverse Effect and HCPI does not have any Knowledge of any
pending threat or modification or cancellation of the same. No HCPI Real
Property is located outside of the United States and neither HCPI nor any
of its Subsidiaries conducts its business of owning, leasing or operating
properties outside of the United States. All work to be performed,
payments to be made and actions to be taken by HCPI or its Subsidiaries
prior to the date hereof pursuant to any agreement entered into with a
Governmental Entity in connection with a site approval, zoning
reclassification or other similar action relating to a HCPI Real Property
has been performed, paid or taken, as the case may be, and HCPI has no
Knowledge of any planned or proposed work, payments or actions that may be
required after the date hereof pursuant to such agreements in each such
case, which is, individually or in the aggregate, material to HCPI and its
Subsidiaries taken as a whole.
(f) HCPI has not received any written notice or written notices
of any violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any HCPI Real Property
issued by any Governmental Entity except for such notice or notices which
would not have, individually or in the aggregate, a HCPI Material Adverse
Effect. Neither HCPI nor any of its Subsidiaries has received any written
notice to the effect that any condemnation or rezoning proceedings are
pending or threatened with respect to any HCPI Real Property, except where
any such written notice of such a proceeding would not, individually or in
the aggregate, cause a HCPI Material Adverse Effect.
(g) Except as would not, individually or in the aggregate, cause
a HCPI Material Adverse Effect, there is no (i) material structural defect
relating to the HCPI Real Property, (ii) HCPI Real Property whose building
systems are not in working order in any material respect or (iii) physical
damage to any HCPI Real Property in excess of $100,000 or current
renovation or restoration to any HCPI Real Property the remaining cost of
which exceeds $100,000 for which there is no insurance in effect covering
the cost of such damage, renovation or restoration except for the payment
by HCPI of a deductible under the applicable insurance policy.
(h) Each copy of any HCPI Lease which has been delivered to, or
made available for review by, the Company as of the date hereof has been a
true and correct copy of such HCPI Lease as amended to date. True and
correct copies of all other HCPI Leases, as amended, will be delivered to,
or made available for review by, the Company reasonably promptly after the
date hereof. Section 4.13(h) of the HCPI Disclosure Schedule lists the
following information with respect to each HCPI Lease that covers more than
7,500 square feet of space:
(i) the name of the lessee;
(ii) the expiration date;
(iii) the term of any options by the lessee to renew
(exclusive of any HCPI's Leases relating to multi-tenant medical office
space); and
(iv) the amount of periodic fixed rentals due under the HCPI
Lease.
(i) All regularly scheduled rent payments due under each HCPI
Lease have been paid during the period March 31, 1999 through the date
hereof, and to HCPI's Knowledge, no lessee is in material default, and no
condition or event exists which with the giving of notice or the passage of
time, or both, would constitute a material default by any lessee or
contracting party, under any HCPI Lease.
(j) The HCPI Leases are in full force and effect, except where
the failure of the foregoing to be true would not have a material effect on
the ability of HCPI and its Subsidiaries, taken as a whole, to operate
their businesses. None of HCPI nor any of its Subsidiaries is in material
default under any HCPI Lease, and, to the Knowledge of HCPI, no material
defaults (unless subsequently cured) by HCPI or its Subsidiaries have been
alleged thereunder.
Section 4.14 Contracts.
(a) Section 4.14(a) of HCPI Disclosure Schedule contains a
complete and accurate list of all HCPI Contracts, other than the HCPI
Contracts which have been filed as an exhibit to the HCPI SEC Reports.
Each copy of a HCPI Contract which has been delivered to, or made available
for review by, the Company is a true and correct copy of such HCPI Contract
as amended to date.
(b) As of the date of this Agreement, (i) each of the HCPI
Contracts is valid and binding upon HCPI or the applicable Subsidiary of
HCPI in accordance with its terms and is in full force and effect, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally or general equitable
principles (whether considered in a proceeding in equity or at law),
(ii) there is no material breach or violation of or default by HCPI or any
of its Subsidiaries under any of the HCPI Contracts, except if such breach,
violation or default has been waived, and (iii) no event has occurred with
respect to HCPI or any of its Subsidiaries which, with notice or lapse of
time or both, would constitute a material breach, violation or default, or
give rise to a right of termination, modification, cancellation,
foreclosure, imposition of a Lien, prepayment or acceleration under any of
the HCPI Contracts, which breach, violation, default or other occurrence
referred to in clauses (ii) or (iii), individually or in the aggregate with
other such breaches, violations, defaults or other occurrences referred to
in clauses (ii) or (iii), would cause a HCPI Material Adverse Effect.
Section 4.15 Labor Relations.
Except as would not cause a HCPI Material Adverse Effect,
(i) there are no controversies pending or, to the Knowledge of HCPI,
threatened between HCPI or any of its Subsidiaries and any of their
respective employees; (ii) neither HCPI nor any of its Subsidiaries is a
party, or otherwise subject, to any collective bargaining agreement or
similar contract; (iii) there are no proceedings asserting unfair labor
practice charges pending against HCPI or any of its Subsidiaries before the
National Labor Relations Board, or any similar foreign labor relations
governmental bodies; and (iv) there is no strike, slowdown, work stoppage
or lockout, or, to the Knowledge of HCPI, threat thereof, by or with
respect to any employees of HCPI or any of its Subsidiaries.
Section 4.16 Intellectual Property.
HCPI and each of its Subsidiaries has good title to, or is
validly licensed to use, all of the Intellectual Property material to the
business of HCPI and its Subsidiaries, taken as a whole, free of all
material Liens. The consummation of the Merger will not result in the loss
of any rights by HCPI or any of its Subsidiaries in any Intellectual
Property that is material to the businesses of HCPI and its Subsidiaries,
taken as a whole.
Section 4.17 Environmental Matters.
Except as set forth in the HCPI SEC Reports, and except,
individually or in the aggregate, as has not had, and would not cause, a
HCPI Material Adverse Effect, HCPI, each of its Subsidiaries and, to the
Knowledge of HCPI, each tenant or operator of HCPI Real Property (a) have
obtained all applicable permits, licenses and other authorizations which
are required to be obtained under all applicable Environmental Laws by HCPI
or its Subsidiaries; (b) are in material compliance with all terms and
conditions of such required permits, licenses and authorizations, and also
are in material compliance with all other applicable limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in applicable Environmental
Laws; (c) have not received a written notice of any uncured past or present
violations of Environmental Laws, or of any event, incident or Action
preventing continued compliance with such Environmental Laws, or giving
rise to any common law environmental liability, or forming the basis of any
Action against HCPI or any of its Subsidiaries based on or resulting from
the manufacture, processing, use, treatment, storage, disposal, transport,
or handling, or the emission, discharge or release into the environment, of
any Hazardous Material; and (d) have taken all actions required under
applicable Environmental Laws to register any products or materials
required to be registered by HCPI or its Subsidiaries thereunder. This
Section 4.17 constitutes the sole representation of HCPI concerning any
Environmental Law or Hazardous Substance.
Section 4.18 Opinion of Financial Advisor.
HCPI has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc., (the
"HCPI Financial Advisor"), as of the date of this Agreement, to the effect
that the consideration to be paid by HCPI in connection with the Merger is
fair to HCPI from a financial point of view. As of the date of the filing
of the Joint Proxy Statement/Prospectus with the SEC, and as of the date of
the effectiveness of the Registration Statement, HCPI will have been
authorized by the HCPI Financial Advisor to permit, subject to prior review
and consent by such HCPI Financial Advisor, the inclusion of such fairness
opinion (or a reference thereto) in the Joint Proxy Statement/Prospectus
and in the Registration Statement, respectively.
Section 4.19 Brokers.
No broker, finder or investment banker (other than the HCPI
Financial Advisor the fees and expenses of which shall be paid by HCPI) is
entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of HCPI or any of
its subsidiaries. HCPI has heretofore furnished to the Company a complete
and correct copy of all agreements between HCPI and the HCPI Financial
Advisor pursuant to which such firm would be entitled to any such payment.
Section 4.20 Vote Required.
The affirmative vote of the holders of two-thirds of the
outstanding shares of HCPI Common Stock entitled to vote thereon is the
only vote of the holders of any class or series of HCPI's capital stock
necessary to approve the Merger. The HCPI Board, at a meeting duly called
and held, by vote (a) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are in the best interests of
HCPI, (b) approved this Agreement and the transactions contemplated hereby,
including the Merger, (c) declared that the Merger is advisable on the
terms and conditions set forth in this Agreement, and (d) resolved to
submit for consideration, and recommend that the holders of the shares of
the HCPI Common Stock approve, the Merger, substantially in the form set
forth by this Agreement, and the transactions contemplated hereby.
Section 4.21 Accounting and Tax Matters.
None of HCPI, its Subsidiaries, directors, officers or agents,
has taken or agreed to take any action, nor does any executive officer know
of any circumstances, that (without regard to any action taken or agreed to
be taken by the Company or any of its Affiliates) would prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
Section 4.22 Insurance.
All fire and casualty, general liability, business interruption,
product liability, and sprinkler and water damage insurance policies
maintained by HCPI or any of its Subsidiaries with coverage of loss payouts
in excess of $15,000,000 are with reputable insurance carriers, provide
full and adequate coverage for all normal risks incident to the business of
HCPI and its Subsidiaries and their respective Assets, and are in character
and amount at least equivalent to that carried by Persons engaged in
similar businesses and substantially equivalent to that carried by Persons
engaged in similar businesses and subject to the same or similar perils or
hazards except for any such failures to carry or maintain insurance
policies that, individually or in the aggregate, would not cause a HCPI
Material Adverse Effect.
Section 4.23 Takeover Provisions Inapplicable.
HCPI has taken all action necessary, if any, to exempt the
transactions contemplated by this Agreement from the operation of any "fair
price," "moratorium," "control share acquisition" or any other anti-
takeover statute enacted under the laws of the State of Maryland.
Section 4.24 No Material Adverse Effect.
Except as disclosed in the HCPI SEC Reports, to the Knowledge of
HCPI, no current fact alone or together with another current fact would
cause a HCPI Material Adverse Effect.
Section 4.25 Rights Plan.
Other than as Merger Consideration pursuant to this Agreement,
the entering into of this Agreement and the consummation of the
transactions contemplated hereby do not and will not result in the grant of
any rights to any Person under the HCPI Rights Plan or enable or require
the HCPI Rights to be exercised, distributed or triggered and there has
been no event which has enabled or required the HCPI Rights to be
exercised, distributed or triggered.
Section 4.26 Ownership of Company Common Stock.
To the Knowledge of HCPI, none of HCPI or any of its Affiliates,
is the Beneficial Owner or record owner of any shares of Company Stock,
other than HCPI's ownership of approximately 52,900 shares of Company
Common Stock and such securities, if any, held by, or for the account of
employees or former employees of, HCPI or any of its Affiliates.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business of the Company Pending the
Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, the
Company agrees as to itself and each of its Subsidiaries (except to the
extent that HCPI shall otherwise consent in writing or as expressly
contemplated by this Agreement) to carry on its business in the ordinary
course in substantially the same manner as previously conducted, to pay its
debts and Taxes when due, subject to good faith disputes over such debts or
Taxes, in the ordinary course in substantially the same manner as
previously paid, to pay or perform its other material obligations when due
in the ordinary course in substantially the same manner as previously paid
or performed, to maintain insurance coverages and its books, accounts and
records in the usual manner consistent with past practices, to comply in
all material respects with all applicable laws, ordinances and regulations
of Governmental Entities, to maintain and keep its properties and equipment
in good repair, working order and condition (except ordinary wear and
tear), and, to the extent consistent with such business, use all reasonable
efforts, consistent with past practices and policies, to preserve intact
its present business organization, and preserve its relationships with
officers, employees and others having business dealings with it. Without
limiting the generality of the foregoing and except as expressly
contemplated by this Agreement, or in the Company Disclosure Schedule,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, without
the written consent of HCPI, the Company shall not and shall not permit any
of its Subsidiaries to:
(a) adopt or propose any amendment to (i) its certificate of
incorporation, its bylaws, the Certificate of Designation dated October 24,
1997 which relates to the Company Series B Preferred Stock or comparable
charter or organizational documents or (ii) the Company Rights Plan (except
as contemplated by Section 6.15 hereof) and the Company Board shall not
take any action with respect to the Company Rights Plan to facilitate an
Acquisition Proposal;
(b) (i) except for the payment of Company Deferred Directors
Fees (and Company Dividend Equivalent Rights appurtenant thereto), issue,
pledge or sell, or propose or authorize the issuance, pledge or sale of
additional shares of capital stock of any class (other than upon exercise
of Company Stock Rights outstanding on the date of this Agreement upon
payment of the exercise price thereof), or securities convertible into
capital stock of any class, or any subscriptions, rights, warrants or
options to acquire any convertible securities or capital stock, or any
other securities in respect of, in lieu of, or in substitution for, shares
of Company Stock outstanding on the date hereof, (ii) except as permitted
by Section 5.1(e), amend, waive or otherwise modify any of the terms of any
option, warrant or stock option plan of the Company or any of its
Subsidiaries, including without limitation, the Company Stock Rights and
the Company Stock Plans, or authorize cash payments in exchange for any
options granted under any of such plans, or (iii) adopt or implement any
stockholder rights plan;
(c) except as set forth in and subject to Sections 5.4 and 5.5,
declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock (including any
dividend distribution payable in, or otherwise make a distribution of,
shares of capital stock of any existing or subsequently formed Subsidiary
of the Company), except, (i) the regular quarterly dividend paid by the
Company in an amount not to exceed $.565 per share of Company Common Stock;
(ii) the regular quarterly dividend paid by the Company per share of
Series B Preferred Stock or (iii) dividends or distributions to the Company
or one of its Subsidiaries;
(d) split (including reverse split), combine, subdivide,
reclassify or redeem, purchase or otherwise acquire, or propose to redeem
or purchase or otherwise acquire, any shares of its capital stock, or any
of its other securities except as permitted by Section 5.1(e);
(e) increase the compensation or fringe benefits payable or to
become payable to its directors, officers or employees (whether from the
Company or any of its Subsidiaries), or pay any benefit not required by any
existing plan or arrangement (including, without limitation, the granting
of stock options, stock appreciation rights, shares of restricted stock or
performance units) or grant any severance or termination pay to, or enter
into any employment or severance agreement with, any director, officer or
employee of the Company or any of its Subsidiaries or establish, adopt,
enter into, or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
savings, welfare, deferred compensation, employment, termination, severance
or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any directors, officers or
current or former employees, including any Benefit Arrangement, Pension
Plan or Welfare Plan, except, in any case referred to in this
Section 5.1(e) (i) to the extent required by applicable law or regulation,
(ii) pursuant to any collective bargaining agreements or Employee Plan as
in effect on the date of this Agreement consistent with past practices,
(iii) for salary and benefit increases in the ordinary course of business
consistent with past practice to employees other than executive officers of
the Company, (iv) pursuant to Section 2.8, (v) pursuant to existing
agreements or policies previously disclosed in writing to HCPI, which shall
be interpreted and implemented in a manner consistent with past practice,
(vi) that the Company shall be permitted to amend the Company's Money
Purchase Pension Plan effective as of January 1, 1994, to provide that
severance pay shall be excluded from the definition of "compensation" under
the Company's Money Purchase Pension Plan; and (vii) that the Company shall
be permitted to amend the Company's Retirement Plan for Outside Directors
effective as of July 1, 1991, to provide for an actuarially equivalent lump
sum payment election upon termination of service as a director provided,
however, such amendment shall provide that actuarial equivalence is to be
determined using a discount rate equal to the annual rate of interest on
United States Treasury Securities with a 10-year maturity, as specified by
the Secretary of the Treasury (or his or her delegate) for the last month
of the calendar quarter immediately preceding the payment date, and the
1983 Group Annuity Mortality Tables (blended 50% males and 50% females);
(f) (i) sell, pledge, lease, dispose of, grant, encumber,
transfer or otherwise authorize the sale, pledge, disposition, grant,
encumbrance or transfer of any of the material Assets of the Company or any
of its Subsidiaries (including stock, partnership or equity interests of
Subsidiaries), including by operation of law, or (ii) acquire any real
property, any other material Assets or any material interest (including,
without limitation, by merger, consolidation or acquisition of stock or
Assets) in a corporation, partnership, other business organization or any
division thereof (or a substantial portion of the Assets thereof); provided
that the Company shall notify HCPI of any immaterial interest in a
corporation, partnership, other business organization or any division
thereof (or a substantial portion of the Assets thereof) prior to any such
acquisition;
(g) (i) incur, assume or pre-pay any debt for borrowed money,
other than pursuant to credit agreements in effect as of the date hereof
consistent with past practice, (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person, (iii) make any loans, advances
(including advances to employees) or capital contributions to, or
investments in, any other Person or with respect to any other material
Assets, except for loans, advances, capital contributions or investments
between any wholly-owned Subsidiary of the Company and the Company or
another wholly-owned Subsidiary of the Company and those made pursuant to
existing commitments, which if material have been listed in Section 5.1(g)
of the Company Disclosure Schedule; provided that the Company shall notify
HCPI of any loans, advances, capital contributions or investments prior to
the funding of the same and those made pursuant to existing commitments, or
(iv) enter into any "keep well" or other agreement to maintain the
financial condition of another entity (other than the Company or any of its
wholly-owned Subsidiaries);
(h) make or rescind any material express or deemed election
relating to Taxes, settle or compromise any material Action relating to
Taxes, amend any material Tax Return except in each case in the ordinary
course of business consistent with past practice or as required by law, or
except as may be required by applicable law, make any change to any of its
material methods of reporting income or deductions (including, without
limitation, any change to its methods or basis or write-offs of accounts
receivable) for federal income Tax purposes from those employed in the
preparation of its federal income Tax return for the taxable year ending
December 31, 1997;
(i) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted, unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the consolidated financial
statements of the Company;
(j) other than in the ordinary course of business and consistent
with past practice, waive any rights of substantial value or make any
payment, direct or indirect, of any material liability of the Company or of
any of its Subsidiaries before the same comes due in accordance with its
terms;
(k) fail to maintain any material existing insurance coverage of
all types in effect or, in the event any such coverage shall be terminated
or lapse, to the extent available at reasonable cost, procure substantially
similar substitute insurance policies which in all material respects are in
at least such amounts and against such risks as are currently covered by
such policies;
(l) change its methods of accounting as in effect on March 31,
1999 except as required by GAAP, or take any action, other than reasonable
and usual actions in the ordinary course of business and consistent with
past practice, with respect to accounting policies or procedures, unless
required by GAAP or the SEC;
(m) modify, amend or terminate any of the Company Contracts or
waive, release or assign any rights or claims in connection therewith,
except for such modifications, amendments, terminations, waivers, releases
or assignments that are not, individually or in the aggregate, material to
the Company and its Subsidiaries, taken as a whole;
(n) take, or agree to commit to take, any action that would
cause the representations and warranties of the Company contained herein,
individually or in the aggregate, not to be true and correct in all
material respects;
(o) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any Company
Affiliates, other than a Company Subsidiary, which involves the transfer of
consideration or has a financial impact on the Company, other than pursuant
to such agreements, arrangements, or understandings existing on the date of
this Agreement or disclosed on the Company Disclosure Schedule;
(p) consent to the closure, shut down or other elimination of
any facility or office except where such closures, shut downs or
eliminations are not, individually or in the aggregate, material to the
Company and its Subsidiaries, taken as a whole;
(q) take or agree to take or cause to be taken any action that
would prevent the Merger from qualifying as a reorganization as described
in Section 368(a) of the Code;
(r) make or commit to make any capital expenditures other than
as required pursuant to commitments existing on the date hereof or made
without violation of this Section 5.1, or other than capital expenditures
or tenant improvements in the ordinary course of business;
(s) initiate, compromise, or settle any material litigation or
arbitration proceeding; and
(t) enter into an agreement, contract, commitment or arrangement
to do any of the foregoing, or to authorize, recommend, propose or announce
an intention to do any of the foregoing.
Section 5.2 Permitted Conduct of Business by the Company
Pending the Merger.
Notwithstanding anything to the contrary set forth in Section
5.1, the Company shall be permitted, without the prior consent of HCPI:
(a) to use the equity balance (including interest or other
amounts paid thereon) held by BancOne Colorado, N.A. ("Intermediary"), in
its capacity as qualified intermediary for the Company and its qualified
REIT Subsidiaries pursuant to the Exchange Agreement between Intermediary
and the Company and AMIREIT (▇▇▇▇▇▇▇), Inc., dated April 7, 1999, and
Treasury Regulation Section 1.1031(k)-1(g)(4), or cash of the Company, and
to assume debt and take other reasonable actions, in order to acquire any
or all of the properties identified in Section 3.26 of the Company
Disclosure Schedule; provided, however, that the Company may not enter into
or amend a purchase agreement for the purchase of any such property if
(i) the purchase price for such property would be materially greater than
the purchase price (or estimated purchase price) set forth for such
property in Section 3.26 of the Company Disclosure Schedule or (ii) the
expected first 12 months' cash return on investment for such property (as
reasonably estimated in good faith in a manner consistent with the manner
in which the Company customarily calculates returns on investment for
similar acquisitions) would be materially less than the estimated 12
months' cash return on investment set forth for such property in Section
3.26 of the Company Disclosure Schedule, unless in any case referred to in
this proviso the Company is acting in a reasonable manner consistent with
its past practice for similar acquisitions (ignoring for this purpose the
fact that such acquisition is in the context of a like-kind exchange);
(b) to complete the acquisition, development and/or funding and
assumption of debt of any property for which the Company has entered into a
binding agreement relating to the same and which are described in Section
5.2(b) of the Company Disclosure Schedule;
(c) in addition to any properties acquired in accordance with
the restrictions of Sections 5.2(a) and (b) above, to acquire up to
$25,000,000 of additional properties, provided that each such acquired
property has an initial cash on cash annual return of at least 9.99% based
on leases in place, and the Company and its Subsidiaries use credit
underwriting parameters to assess the credit profile of tenants at such
properties consistent with the credit underwriting parameters used by the
Company and its Subsidiaries during the past three years;
(d) to assume any existing secured debt in connection with the
acquisition of any properties acquired in accordance with the restrictions
of section (c) above if such debt cannot otherwise be prepaid without a
substantial premium or penalty, and provided that the consummation of the
Merger will not (i) require any further consent of the lender thereunder,
(ii) cause an acceleration of the outstanding principal amount of such loan
or (iii) give rise to the payment of any assumption fee, prepayment or
other charge under such debt.
(e) to dispose of any Company Real Property which is subject to
a tenant purchase option pursuant to a Company Lease, which is identified
in Section 5.2(e) of the Company Disclosure Schedule upon the exercise by
such tenant of such purchase option in accordance with the terms of such
Company Lease;
(f) to sell the Sunrise Regional Medical Center in Sunrise,
Florida for not less than $2 million or the Anclote Manor Facility
(Northpointe Behavioral Health) in Tarpon Springs, Florida for a price of
not less than $1 million (but not both) and, in any case, only if necessary
to meet the conditions set forth in Section 7.3(i); provided, however, that
if HCPI consents in writing to the terms of the sale of the Anclote Manor
Facility, the Company shall also be permitted, without the additional
consent of HCPI, to sell the Sunrise Regional Medical Center for a price of
not less than $2 million if necessary to meet the condition set forth in
Section 7.3(i).
(g) to modify, amend, renew, extend any of the Company Leases,
and to waive, release or assign rights or claims, provided that such
modifications, amendments, renewals, extensions, waivers, releases or
assignments are consistent with past practices and in the ordinary course
of business and not, individually or in the aggregate, material to the
Company and its Subsidiaries, taken as a whole.
Section 5.3 Conduct of Business of HCPI Pending the Merger.
During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective
Time, HCPI agrees as to itself and each of its Subsidiaries (except to the
extent that the Company shall otherwise consent in writing or as expressly
contemplated in this Agreement) to carry on its business in the ordinary
course in substantially the same manner as previously conducted, to pay its
debts and Taxes when due, subject to good faith disputes over such debts or
Taxes, in the ordinary course in substantially the same manner as
previously paid, to pay or perform its other material obligations when due
in the ordinary course in substantially the same manner as previously paid
or performed, to maintain insurance coverages and its books, accounts and
records in the usual manner consistent with past practices, to comply in
all material respects with all applicable laws, ordinances and regulations
of Governmental Entities, to maintain and keep its properties and equipment
in good repair, working order and condition (except ordinary wear and
tear), and, to the extent consistent with such business, use all reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, and preserve its relationships with
officers, employees and customers, suppliers, distributors, and others
having business dealings with it. Without limiting the generality of the
foregoing and except as expressly contemplated by this Agreement or in the
HCPI Disclosure Schedule, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or
the Effective Time, without the written consent of the Company, HCPI shall
not and shall not permit any of its Subsidiaries to:
(a) except for the adoption of articles supplementary relating
to the HCPI Series C Preferred Stock in the form attached hereto as Exhibit
B, adopt or propose any amendment to (i) its charter or comparable charter
or organizational documents or (ii) the HCPI Rights Plan;
(b) except as set forth in and subject to Sections 5.4 and 5.5,
declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock (including any
dividend distribution payable in, or otherwise make a distribution of,
shares of capital stock of any existing or subsequently formed Subsidiary
of HCPI), except (i) any regular quarterly dividend or distribution paid by
HCPI or any of its Subsidiaries on capital stock or other equity interests
in the ordinary course of business, consistent with past practices
(including any increases in such dividends as are consistent with HCPI's
past practice of increasing dividends) or (ii) dividends or distributions
to HCPI or one of its Subsidiaries;
(c) split (including reverse split), combine, subdivide,
reclassify or redeem, purchase or otherwise acquire, or propose to redeem
or purchase or otherwise acquire, any shares of its capital stock, or any
of its other securities; and
(d) enter into an agreement, contract, commitment or arrangement
to do any of the foregoing, or to authorize, recommend, propose or announce
an intention to do any of the foregoing.
Section 5.4 Continued Qualification as a Real Estate
Investment Trust; Final Company Dividend.
From and after the date hereof through the Effective Time, each
of Company and HCPI will maintain its respective qualification as a "real
estate investment trust" under the Code and the rules and regulations
thereunder. Without limiting the generality of the foregoing, if necessary
to enable the Company to make aggregate dividend distributions during its
final taxable period equal to the Minimum Distribution Dividend, Company
shall declare and pay a dividend (the "Final Company Dividend") to holders
of Company Common Stock in an amount equal to the minimum dividend
sufficient to permit Company to make aggregate dividend distributions
during its final taxable period equal to the Minimum Distribution Dividend.
If Company determines it is necessary to declare the Final Company
Dividend, it shall notify HCPI at least ten days prior to the date for the
Company Stockholder Meeting so that HCPI may, at its option, declare and
pay a dividend per share to holders of HCPI Common Stock in an amount per
share equal to the quotient obtained by dividing (x) the Final Company
Dividend per share of Company Common Stock by (y) the Exchange Ratio. For
purposes of this paragraph, the term "Minimum Distribution Dividend" shall
mean a distribution with respect to Company's taxable year ending at the
Effective Time which is sufficient to allow Company to (i) satisfy the
distribution requirements set forth in Section 857(a) of the Code, and (ii)
avoid, to the extent possible, the imposition of income tax under Section
857(b) of the Code and the imposition of excise tax under Section 4981 of
the Code.
Section 5.5 Dividend Payment Coordination.
Each of HCPI and Company shall coordinate with the other the
declaration of any dividends in respect of HCPI Common Stock and Company
Common Stock and the record and payment dates therefor, it being the
intention of the Parties that holders of Company Common Stock shall not
receive (i) dividends for any period with respect to both shares of Company
Common Stock and shares of HCPI Common Stock received in exchange therefor
in connection with the Merger or (ii) fail to receive dividends for any
period on shares of Company Common Stock or shares of HCPI Common Stock
received in exchange therefor in connection with the Merger.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.1 Preparation of Form S-4 and the Proxy Statement;
Stockholder Meeting.
(a) As promptly as practicable after the execution of this
Agreement, the Company and HCPI shall cooperate with each other regarding,
and, prepare and file with the SEC, the Joint Proxy Statement/Prospectus
and HCPI shall prepare and file the Registration Statement, provided that
HCPI may delay the filing of the Registration Statement until approval of
the Joint Proxy Statement/Prospectus by the SEC. The Company and HCPI will
cause the Joint Proxy Statement/Prospectus and the Registration Statement
to comply as to form in all material respects with the applicable
provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Each of HCPI and the Company shall use all
reasonable efforts to have or cause the Joint Proxy Statement/Prospectus to
be cleared by the SEC and to cause the Registration Statement to become
effective as promptly as practicable. Without limiting the generality of
the foregoing, each of the Company and HCPI shall cause its respective
Representatives to fully cooperate with the other Party and its respective
Representatives in the preparation of the Joint Proxy Statement/Prospectus
and the Registration Statement, and shall, upon request, furnish the other
Party with all information concerning it and its Affiliates, as the other
as may be reasonably necessary or advisable in connection with the
preparation of the Joint Proxy Statement/Prospectus and the Registration
Statement. The Company hereby agrees that the recommendations of the
Company Board described in Section 3.20 with respect to the transactions
contemplated hereby (subject to the right of the Company Board to withdraw,
amend or modify such recommendation in accordance with Section 6.3) may be
included in the Registration Statement and the Joint Proxy
Statement/Prospectus. HCPI hereby agrees that the recommendation of HCPI
Board described in Section 4.20 may be included in the Registration
Statement and the Joint Proxy Statement/Prospectus. HCPI shall use its
commercially reasonable best efforts to take all actions required under any
applicable federal or state securities or Blue Sky Laws in connection with
the issuance of shares of HCPI Common Stock pursuant to the Merger and will
pay all filing fees incident thereto. As promptly as practicable after the
Registration Statement becomes effective, the Company and HCPI shall cause
the Joint Proxy Statement/Prospectus to be mailed to their respective
stockholders.
(b) The Company and HCPI each agrees that none of the
information supplied by it or its Subsidiaries to be included or
incorporated by reference in the Joint Proxy Statement/Prospectus or any
amendment thereof or supplement thereto, will, on the date of the mailing
of the Joint Proxy Statement/Prospectus or any amendment or supplement
thereto, and at the time of the Company Stockholder Meeting and the HCPI
Stockholder Meeting, 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. The Company and HCPI each
agrees that none of the information supplied by it or its Subsidiaries to
be included or incorporated by reference in the Registration Statement
will, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(c) Without limiting the generality of the foregoing, prior to
the Effective Time (i) the Company and HCPI shall notify each other as
promptly as practicable upon becoming aware of any event or circumstance
which should be described in an amendment of, or supplement to, the Joint
Proxy Statement/Prospectus or the Registration Statement, and (ii) the
Company and HCPI shall each notify the other as promptly as practicable
after the receipt by it of any written or oral comments of the SEC on, or
of any written or oral request by the SEC for amendments or supplements to,
the Joint Proxy Statement/Prospectus or the Registration Statement, and
shall promptly supply the other with copies of all correspondence between
it or any of its Representatives and the SEC with respect to any of the
foregoing filings.
(d) The Company and HCPI shall each take all action necessary to
duly call the Company Stockholders Meeting and the HCPI Stockholders
Meeting, respectively, each to be held as promptly as practicable for the
purpose of voting upon the approval of this Agreement and the Merger.
Subject to the right of the Company Board to withdraw, amend or modify such
recommendation in accordance with Section 6.3, each of the Company and HCPI
shall, through its respective board of directors, (i) recommend to their
respective stockholders adoption of this Agreement and approval of the
Merger and related matters, (ii) coordinate and cooperate with respect to
the timing of the Company Stockholders Meeting and HCPI Stockholders
Meeting, and (iii) use their reasonable best efforts to hold the Company
Stockholders Meeting and HCPI Stockholders Meeting on the same day.
Without limiting the generality of the foregoing, the Company agrees that
its obligations pursuant to this Section 6.1(d) to call for and conduct the
Company Stockholders Meeting shall not be affected by the commencement,
public proposal or communication to the Company of any Acquisition
Proposal.
Section 6.2 Cooperation; Notice; Cure.
Subject to compliance with applicable law, including any law
regarding the exchange of information, from the date hereof and until the
Effective Time, each of HCPI and the Company shall confer on a regular
basis with one or more Representatives of the other Party to report on the
general status of ongoing operations. Each of HCPI and the Company shall
promptly notify the other in writing of, and will use all commercially
reasonable efforts to cure before the Closing Date, any event, transaction
or circumstance, as soon as practical after it becomes known to such Party,
that causes or will, with the passage of time, cause any covenant or
agreement of HCPI or the Company, as the case may be, under this Agreement
to be breached in any material respect or that renders or will, with the
passage of time, render untrue in any material respect any representation
or warranty of HCPI or the Company contained in this Agreement. No notice
given pursuant to this paragraph shall have any effect on the
representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition
contained herein. The Company will reasonably cooperate with HCPI and,
immediately prior to the Merger, take any commercially reasonable actions
(including restructuring their ownership of Texas properties) reasonably
requested by HCPI, to minimize HCPI's Texas tax liabilities arising
subsequent to the Merger.
Section 6.3 No Solicitation.
(a) The Company shall immediately cease and terminate any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by the Company, its
Subsidiaries or any of their respective Representatives with respect to any
proposed, potential or contemplated Acquisition Proposal.
(b) From and after the date hereof, without the prior written
consent of HCPI, the Company will not, will not authorize or permit any of
its Subsidiaries to, and shall use its reasonable best efforts to cause any
of its or their respective Representatives not to, directly or indirectly,
(i) solicit, initiate or encourage (including by way of furnishing
information) or take any other action to facilitate any inquiries or the
making of any proposal which constitutes or may reasonably be expected to
lead to an Acquisition Proposal from any Person, or (ii) engage in any
discussion or negotiations with, or provide any non-public information to,
any Person (or group of Persons) other than HCPI or its Representatives
concerning an Acquisition Proposal, or (iii) enter into any agreement with
respect to any Acquisition Proposal; provided, however, that nothing
contained in this Section 6.3(b) shall prevent the Company or the Company
Board from furnishing non-public information to, or entering into
discussions or negotiations with, any Person in connection with an
unsolicited, bona fide written proposal for an Acquisition Proposal by such
Person or recommending such Acquisition Proposal to its stockholders, if
and only to the extent that (1) such Person has made a written proposal to
the Company Board to consummate an Acquisition Proposal, (2) the Company
Board determines in good faith, after consultation with a financial advisor
of nationally recognized reputation, that such Acquisition Proposal if
accepted is reasonably capable of being consummated on substantially the
terms proposed, and after taking into account the strategic benefits
anticipated to be derived from the Merger and the long term prospects of
HCPI and the Company as a combined company, would, if consummated, result
in a transaction that would be more favorable to the holders of Company
Common Stock than the transaction contemplated by this Agreement
(a "Superior Proposal"), (3) the failure to take such action would, in the
reasonable good faith judgment of the Company Board, after consultation
with outside legal counsel, be inconsistent with its fiduciary duties to
the Company's stockholders under applicable law, and (4) prior to
furnishing such non-public information to, or entering into discussions or
negotiations with, such Person, the Company Board receives from such Person
an executed confidentiality and standstill agreement with material terms no
less favorable to the Company than those contained in the Confidentiality
Agreement. The Company agrees not to release any Person from, or waive any
provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another Person who has made, or
who may reasonably be considered likely to make, an Acquisition Proposal,
unless the failure to take such action would, in the reasonable good faith
judgment of the Company Board, after consultation with outside legal
counsel, be inconsistent with its fiduciary duties to the Company's
stockholders under applicable law.
(c) The Company shall notify HCPI in writing of any such
inquiries, offers or proposals (including, without limitation, the terms
and conditions of any such offers or proposals, any amendments or
revisions, and the identity of the Person making it), as promptly as
practicable following the receipt thereof, and shall keep HCPI informed of
the status and material terms of any such inquiry, offer or proposal.
(d) The Company shall notify HCPI promptly after receipt by the
Company or, to the Company's Knowledge, any of its Representatives of any
Acquisition Proposal or any request for non-public information in
connection with an Acquisition Proposal or for access to the properties,
books or records of the Company by a Person that informs such party that is
considering making or has made an Acquisition Proposal. Such notice shall
be in writing and shall indicate the identity of the offeror and the terms
and conditions of such proposal, inquiry or contact. The Company shall
keep HCPI informed of the status (including any change to the material
terms) of any such Acquisition Proposal or request for non-public
information.
(e) Neither the Company Board nor any committee thereof shall
withdraw or modify, or propose to withdraw or modify, in a manner adverse
to HCPI the approval or recommendation by the Company Board of this
Agreement or the Merger unless, following the receipt of a Superior
Proposal, failing to withdraw or modify such approval or recommendation in
the reasonable good faith judgment of the Company Board, after the receipt
of advice from outside legal counsel, would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law;
provided, however, that, the Company Board shall submit this Agreement to
the Company's stockholders for approval, whether or not the Company Board
at any time subsequent to the date hereof determines that this Agreement is
no longer advisable or recommends that the stockholders of the Company
reject it or otherwise modifies or withdraws its recommendation. Unless
the Company Board has withdrawn its recommendation of this Agreement in
compliance herewith, the Company shall use all lawful efforts to solicit
from stockholders of the Company proxies in favor of the approval and
adoption of this Agreement and the Merger and to secure the vote or consent
of stockholders required by the DGCL and its certificate of incorporation
and bylaws to approve and adopt this Agreement and the Merger.
(f) Nothing contained in this Agreement shall prohibit the
Company from complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer or from making any other
disclosures to its stockholders to the extent required by law.
Section 6.4 Access to Information.
Upon reasonable notice, each of HCPI and the Company (and each of
their respective Subsidiaries) shall afford to the other Party and its
Representatives reasonable access, during normal business hours during the
period prior to the Effective Time, to all its personnel, properties,
books, contracts, commitments and records and, during such period, each of
HCPI and the Company shall, and shall cause each of its respective
Subsidiaries to, furnish promptly to the other (a) copies of monthly
financial reports and development reports relating to the business of the
Company or the business of HCPI, as the case may be, that are normally
prepared by the Company or HCPI, as the case may be, in its ordinary course
of business, (b) a copy of each report, schedule, registration statement
and other documents filed or received by it during such period pursuant to
the requirements of federal or state securities laws and (c) all other
information concerning its business, Assets, personnel and tax status as
the other Party may reasonably request; provided, however the foregoing
shall not require the Company or HCPI to permit any inspection or disclose
any information that would result in the disclosure of confidential
information of third parties or violate a confidentiality obligation of
such party. Each Party making such requests will hold any such information
furnished to it by the other Party or Parties which is nonpublic in
confidence in accordance with the Confidentiality Agreement dated as of
June 30, 1999, between HCPI and the Company (the "Confidentiality
Agreement"). All requests for information made pursuant to this Section
shall be directed to an executive officer of the Company or HCPI, as the
case may be, or such Person designated by such officers. No information or
knowledge obtained in any investigation pursuant to this Section 6.4 shall
affect or be deemed to modify any representation or warranty contained in
this Agreement or the conditions to the obligations of the Parties to
consummate the Merger.
Section 6.5 Governmental Approvals.
(a) The Parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings,
to obtain as promptly as practicable all permits, registrations, licenses,
consents, variances, exemptions, orders, approvals and authorizations of
all third parties and Governmental Entities which are necessary to
consummate the transactions contemplated by this Agreement ("Governmental
Approvals"), and to comply with the terms and conditions of all such
Governmental Approvals. Each of the Parties shall use their reasonable
best efforts to, and shall use their reasonable best efforts to cause their
respective Representatives and other Affiliates to, file within 30 days
after the date hereof, and in all events shall file within 60 days after
the date hereof, all required initial applications and documents in
connection with obtaining the Governmental Approvals and shall act
reasonably and promptly thereafter in responding to additional requests in
connection therewith. HCPI and the Company shall have the right to review
in advance, and to the extent practicable, each will consult the other on,
in each case subject to applicable laws relating to the exchange of
information, all the information relating to HCPI and the Company, as the
case may be, and any of their respective Subsidiaries, directors, officers
and stockholders which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with
the transactions contemplated by this Agreement. Without limiting the
foregoing, each of HCPI and the Company (the "Notifying Party") will notify
the other promptly of the receipt of comments or requests from Governmental
Entities relating to Governmental Approvals, and will supply the other
Party with copies of all correspondence between the Notifying Party or any
of its Representatives and Governmental Entities with respect to
Governmental Approvals.
(b) HCPI and the Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by
this Agreement which causes such Party to believe that there is a
reasonable likelihood that any approval needed from a Governmental Entity
will not be obtained or that the receipt of any such approval will be
materially delayed. HCPI and the Company shall take any and all actions
reasonably necessary to vigorously defend, lift, mitigate and rescind the
effect of any litigation or administrative proceeding adversely affecting
this Agreement or the transactions contemplated hereby or thereby,
including, without limitation, promptly appealing any adverse court or
administrative order or injunction to the extent reasonably necessary for
the foregoing purposes.
Section 6.6 Publicity.
HCPI and the Company shall agree on the form and content of the
initial press release regarding the transactions contemplated hereby and
thereafter shall consult with each other before issuing any press release
or other public statement with respect to any of the transactions
contemplated hereby and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required
by law or obligations pursuant to any listing agreement with, or rules of
any national securities exchange.
Section 6.7 Benefit Plans.
Except as provided in Section 2.8 and Section 6.20 hereof, HCPI
shall, and shall cause the Surviving Corporation to, from and after the
Effective Time, (i) comply with the Employee Plans of the Company in
accordance with their terms, (ii) provide former employees of the Company
who remain as employees of the Surviving Corporation with employee benefit
plans no less favorable in the aggregate than those provided to similarly
situated employees of HCPI, (iii) provide employees of the Company who
remain as employees of the Surviving Corporation credit for years of
service with the Company or any of its Subsidiaries prior to the Effective
Time for (A) the purpose of eligibility and vesting but not benefit accrual
under the Employee Plans of HCPI, and (B) any and all pre-existing
condition limitations and eligibility waiting periods under group health
plans of HCPI, and (iv) cause to be credited to any deductible out-of-
pocket expense under any Employee Plans of HCPI any deductibles or out-of-
pocket expenses incurred by employees of the Company and their
beneficiaries and dependents during the portion of the calendar year prior
to their participation in Employee Plans of HCPI. HCPI shall, and shall
cause the Surviving Corporation to, honor in accordance with their terms,
all Employee Plans of the Company and its Subsidiaries, vested or accrued
benefit obligations to, and contractual rights of, current and former
employees of the Company and its Subsidiaries.
Section 6.8 Indemnification.
(a) From and after the Effective Time, HCPI agrees that it will,
and will cause the Surviving Corporation to, indemnify and hold harmless
each present and former director and officer of the Company (the
"Indemnified Parties"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities or amounts
paid in settlement incurred in connection with any Action whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the
fullest extent that HCPI is permitted under applicable law.
(b) For a period of six years after the Effective Time, HCPI
shall maintain or shall cause the Surviving Corporation to maintain in
effect a directors' and officers' liability insurance policy covering those
persons who are currently covered by the Company's directors' and officers'
liability insurance policy (copies of which have been heretofore delivered
by the Company to HCPI) with coverage in amount and scope at least as
favorable as the Company's existing coverage; provided that in no event
shall HCPI or the Surviving Corporation be required to expend, in the
aggregate, in excess of $360,000 per year in payment of the annual premium
for such coverage; and if such premium would at any time exceed $360,000
per year, then HCPI or the Surviving Corporation shall maintain insurance
policies which provide the maximum and best coverage available at an annual
premium equal to $360,000 per year.
(c) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) shall transfer all or substantially
all of its Assets to any Person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations of the Surviving
Corporation set forth in this Section 6.8.
(d) The provisions of this Section 6.8 are intended to be an
addition to the rights otherwise available to the current officers and
directors of the Company by law, charter, statute, bylaw or agreement, and
shall operate for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their Representatives.
Section 6.9 Affiliate Agreements.
No later than 45 days prior to the Closing the Company shall
deliver to HCPI a list identifying, in the view of the Company, each person
who may be, at the time of the Company Stockholder Meeting, a Company
Affiliate. The Company shall provide to HCPI such information and
documents as HCPI shall reasonably request for purposes of reviewing such
list and shall notify HCPI in writing regarding any change in the identity
of the Company Affiliates prior to the Closing Date; provided, however,
that no such Person identified to HCPI shall be added to the list of
Company Affiliates if HCPI shall receive from the Company, on or before the
date of the Company Stockholder Meeting, an opinion of counsel reasonably
satisfactory to HCPI to the effect that such Person is not a Company
Affiliate. The Company shall use its reasonable best efforts to deliver or
cause to be delivered to HCPI as promptly as practicable but in no event
later than 35 days prior to the Closing (and in any case prior to the
Effective Time) an Affiliate Agreement from each of its Affiliates.
Section 6.10 Tax Treatment of Reorganization.
(a) The Parties intend the Merger to qualify as a reorganization
under Section 368(a) of the Code and shall use their best efforts (and
shall cause their respective Subsidiaries to use their best efforts) to
cause the Merger to so qualify. Neither the Company, HCPI, nor any of
their respective Subsidiaries or other Affiliates shall take any action, or
fail to take any action, that is not specifically provided for by this
Agreement that would or would be reasonably likely to adversely affect the
treatment of the Merger as a reorganization under Section 368(a) of the
Code. HCPI and the Company shall, and shall cause their respective
Subsidiaries to, take the position for all purposes that the Merger
qualifies as a reorganization under that Section of the Code.
(b) HCPI and the Company shall cooperate and use their best
efforts in obtaining the opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the
Company, and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to HCPI, dated as of the Closing
Date, to the effect that the Merger will qualify for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code.
Section 6.11 Further Assurances and Actions.
(a) Subject to the terms and conditions herein, each of the
Parties agrees to use its reasonable efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable on its part under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement, including, without limitation, (i) using their
respective reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Entities and parties to contracts with each Party as are necessary for
consummation of the transactions contemplated by this Agreement, and
(ii) to fulfill all conditions precedent applicable to such Party pursuant
to this Agreement. HCPI further agrees to make all necessary filings in
connection with the issuance of the HCPI Series C Preferred Stock.
Notwithstanding anything to the contrary set forth in this Agreement,
neither the Company nor HCPI shall be precluded from complying with federal
securities laws.
Section 6.12 Stock Exchange Listing.
HCPI shall use its best efforts to list on the NYSE prior to the
Effective Time, subject to official notice issuance, the shares of HCPI
Common Stock to be issued in the Merger.
Section 6.13 Letter of the Company's Accountants.
The Company shall use all reasonable efforts to cause to be
delivered to HCPI a letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, the Company's
independent auditors, dated (a) a date within two Business Days before the
date on which the Registration Statement shall become effective and (b) the
Closing Date, in each case addressed to HCPI and its directors, in form
reasonably satisfactory to HCPI and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
Section 6.14 Letter of HCPI's Accountants.
HCPI shall use all reasonable efforts to cause to be delivered to
the Company a letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, HCPI's independent auditors,
dated (a) a date within two Business Days before the date on which the
Registration Statement shall become effective and (b) the Closing Date, in
each case addressed to the Company and its directors, in form reasonably
satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
Section 6.15 Rights Plan.
Prior to the Effective Time, the Company Board shall take all
action reasonably necessary in order to render the Company Rights Plan
inapplicable to the Merger and the other transactions contemplated by this
Agreement.
Section 6.16 Company REIT Status.
Notwithstanding anything to the contrary set forth in this
Agreement, nothing in this Agreement shall prohibit the Company from
taking, and the Company hereby agrees to take any action at any time or
from time to time that in the reasonable judgment of the Company Board,
upon advice of counsel, is legally necessary for the Company to maintain
its qualification as a REIT within the meaning of Sections 856-860 of the
Code for any period or portion thereof ending on or prior to the Effective
Time, including without limitation, making dividend or distribution
payments to stockholders of the Company in accordance with Section 5.4 or
otherwise.
Section 6.17 HCPI REIT Status.
Notwithstanding anything to the contrary set forth in this
Agreement, nothing in this Agreement shall prohibit HCPI from taking, and
HCPI hereby agrees to take any action at any time or from time to time that
in the reasonable judgment of HCPI Board, upon advice of counsel, is
legally necessary for HCPI to maintain its qualification as a REIT within
the meaning of Sections 856-860 of the Code for any period or portion
thereof ending on or prior to the Effective Time, including without
limitation, making dividend or distribution payments to stockholders of
HCPI.
Section 6.18 Obtaining Consents.
Each of HCPI and the Company shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, their commercially reasonable
efforts to obtain any third party consents related to or required in
connection with the Merger that are (a) necessary to consummate the
transactions contemplated hereby, (b) disclosed or required to be disclosed
in the Company Disclosure Schedule or the HCPI Disclosure Schedule, as the
case may be, or (c) required to prevent a Company Material Adverse Effect
or a HCPI Material Adverse Effect from occurring prior to or after the
Effective Time.
Section 6.19 Exemption from Section 16(b) of the Exchange Act.
Prior to the Effective Time, the HCPI Board will pass an
appropriate resolution exempting the securities and derivative securities
owned by any officer or director of the Company (as defined for purposes of
Section 16 of the Exchange Act), from the application of Section 16(b) of
the Exchange Act, according to Rule 16b-3, as interpreted by the staff of
the SEC.
Section 6.20 Termination of Other Stock Rights.
Except with respect to Company Stock Rights disclosed in Section
3.3(a) of the Company Disclosure Schedule and subject to Section 2.8, the
Company and the Company Board (or, if appropriate, any committee thereof)
shall take all actions necessary such that there shall be no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its Subsidiaries is
a party or by which any of them is bound, obligating the Company or any of
its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of Company Common Stock or HCPI Common
Stock or any other capital stock of the Company or HCPI or other voting
securities of the Company or HCPI, or obligating the Company or HCPI to
issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking ("Other
Stock Rights") outstanding at or after the Effective Time, and no holder
thereof will have any right to acquire any interest in the Company or HCPI
as a result of the exercise of any such rights or awards at or after the
Effective Time.
ARTICLE VII.
CONDITIONS OF MERGER
Section 7.1 Conditions to Obligation of each Party to Effect
the Merger.
The respective obligations of each Party to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) this Agreement and the Merger shall have been approved by
the stockholders of the Company in the manner required under the DGCL and
the certificate of incorporation of the Company;
(b) this Agreement and the Merger shall have been approved by
the stockholders of HCPI in the manner required under the MGCL and the
charter of HCPI.
(c) no statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by any
Governmental Entity of competent jurisdiction and no other legal restraint
or prohibition shall be in effect which prohibits, restrains, enjoins or
restricts the consummation of the Merger; provided, however, that the
Parties shall use their reasonable best efforts to cause any such decree,
ruling, injunction or other order to be vacated or lifted;
(d) the Registration Statement shall have become effective under
the Securities Act and shall not be the subject of any stop order
suspending the effectiveness of the Registration Statement nor shall
proceedings for that purpose have been threatened, and any material Blue
Sky Law permits and approvals applicable to the registration of the HCPI
Common Stock to be exchanged for Company Stock shall have been obtained;
(e) all filings required to be made prior to the Closing by any
Party or any of its respective Subsidiaries with, and all consents,
approvals and authorizations required to be obtained prior to the Closing
by any Party or any of its respective Subsidiaries from, any Governmental
Entity in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby shall have been
made or obtained, except where the failure to obtain such consents would
not cause a Company Material Adverse Effect or a HCPI Material Adverse
Effect and could not reasonably be expected to subject the Parties or their
Affiliates or any directors, trustees, officers, agents or advisors of any
of the foregoing to the risk of criminal liability;
(f) all consents or approvals of all Persons (other than
Governmental Entities) required for, in connection with, or as a result of
the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby shall have been
obtained and shall be in full force and effect, except for those the
failure of which to obtain would not cause a Company Material Adverse
Effect or a HCPI Material Adverse Effect; and
(g) the shares of HCPI Common Stock issuable to the holders of
Company Stock pursuant to this Agreement shall have been approved for
listing on the NYSE upon official notice of issuance.
Section 7.2 Conditions to Obligations of the Company to Effect
the Merger.
The obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Each representation and warranty of HCPI contained in this
Agreement that is qualified by materiality shall be true and correct at and
as of the Effective Time as if made at and as of the Effective Time and
each representation and warranty of HCPI that is not so qualified shall be
true and correct in all material respects at and as of the Effective Time
as if made as of the Effective Time, in each case, except (i) as
contemplated or permitted by this Agreement and (ii) to the extent that any
such representation or warranty shall have been expressly made as of an
earlier date, in which case such representation and warranty shall have
been true and correct, or true and correct in all material respects, as the
case may be, as of such earlier date;
(b) HCPI shall have performed or complied in all material
respects with all obligations required by this Agreement to be performed or
complied with by it at or prior to the Closing Date;
(c) The Company shall have received a certificate executed on
behalf of HCPI by the Chief Executive Officer or Chief Financial Officer of
HCPI to the effect set forth in clauses (a) and (b) of this Section 7.2;
(d) The Company shall have received an opinion of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Company, substantially to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion that
are consistent with the state of facts existing as of such time, for
federal income tax purposes, (i) the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and (ii)
Company and HCPI will each be a party to that reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinion, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ may receive and rely upon representations including those
contained in this Agreement or in certificates of officers of the Parties
and others;
(e) The Company shall have received the opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ in the form attached as Exhibit C hereto (based upon customary
representations including those contained in this Agreement or in
certificates of officers of the Parties and others), dated the Closing
Date, to the effect that, (i) commencing with its taxable year ended
December 31, 1985, HCPI was organized in conformity with the requirements
for qualification and taxation as a REIT under the Code, and (ii) its
method of operation has enabled it and its proposed method of operation
will enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Code; and
(f) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP shall have delivered to the Company the
letter described in clause (a) of Section 6.14 at the time provided in
clause (a) of Section 6.14.
Section 7.3 Conditions to Obligations of HCPI to Effect the
Merger.
The obligations of HCPI to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Each representation and warranty of the Company contained in
this Agreement that is qualified by materiality shall be true and correct
at and as of the Effective Time as if made at and as of the Effective Time
and each representation and warranty of the Company that is not so
qualified shall be true and correct in all material respects at and as of
the Effective Time as if made as of the Effective Time, in each case,
except (i) as contemplated or permitted by this Agreement and (ii) to the
extent that any such representation or warranty shall have been expressly
made as of an earlier date, in which case such representation and warranty
shall have been true and correct, or true and correct in all material
respects, as the case may be, as of such earlier date;
(b) The Company shall have performed or complied in all material
respects with all obligations required by this Agreement to be performed or
complied with by it at or prior to the Closing Date;
(c) HCPI shall have received a certificate executed on behalf of
the Company by the Chief Executive Officer or Chief Financial Officer of
the Company to the effect set forth in clauses (a) and (b) of this Section
7.3;
(d) HCPI shall have received an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
dated as of the Closing Date, in form and substance reasonably satisfactory
to HCPI, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion that are
consistent with the state of facts existing as of such time, for federal
income tax purposes, (i) the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and (ii) Company and HCPI
will each be a party to that reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may
receive and rely upon representations including those contained in this
Agreement or in certificates of officers of the Parties or others;
(e) HCPI shall have received the opinion of ▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP and the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ in the forms attached
hereto as Exhibit D and Exhibit E, respectively (based upon customary
representations including those contained in this Agreement or in
certificates of officers of the Parties and others), dated the Closing
Date, that, taken together, are to the effect that, commencing with its
taxable year ended December 31, 1987, the Company was organized in
conformity with the requirements for qualification and taxation as a REIT
under the Code, and its method of operation has enabled it to meet, through
the Effective Time, the requirements for qualification and taxation as a
REIT under the Code;
(f) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP shall have delivered to HCPI the
letters described in clause (a) of Section 6.13, at the time provided in
clause (a) of Section 6.13;
(g) The amount of the equity balance held by the Intermediary
used to acquire properties during the period from June 30, 1999 to the
Effective Date plus the amount of cash the Company uses to acquire other
properties, in accordance with the provisions of this Agreement, during
that period shall have totaled at least $40 million;
(h) The Company shall not have declared, set aside or paid any
dividends or other distributions or payments with respect to any shares of
its capital stock with respect to its 1999 taxable year except as
specifically permitted in clauses (i) and (ii) of Section 5.1(c); and
(i) Based on the Company's taxable income for its 1999 short
taxable year ending on the Effective Date (as reasonably estimated in good
faith by the Company and set forth in a certificate executed on behalf of
the Company by a senior officer of the Company), the Company will not owe
any federal income or Code Section 4981 excise taxes in respect of such
short taxable year.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination.
This Agreement may be terminated at any time before the Effective
Time (except as otherwise provided), whether before or after the approval
of the stockholders of the Company and HCPI referred to in Sections 7.1(a)
and (b), as the case may be, as follows:
(a) by mutual written consent of each of HCPI and the Company;
(b) by either the Company or HCPI, if the Effective Time shall
not have occurred on or before January 31, 2000 (the "Termination Date");
provided however, that the right to terminate this Agreement under this
Section 8.1(b) shall not be available to any Party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before the Termination
Date;
(c) by either the Company or HCPI, if a Governmental Entity
shall have issued an order, decree or injunction having the effect of
making the Merger illegal or permanently prohibiting the consummation of
the Merger, and such order, decree or injunction shall have become final
and nonappealable;
(d) by either the Company or HCPI, if there shall have been a
breach by the other of any of its (i) representations or warranties
contained in this Agreement, which breach would result in the failure to
satisfy one or more of the conditions set forth in Section 7.2(a) (in the
case of a breach by HCPI) or Section 7.3(a) (in the case of a breach by the
Company), or (ii) covenants or agreements contained in this Agreement,
which breach would result in the failure to satisfy one or more of the
conditions set forth in Section 7.2(b) (in the case of a breach by HCPI) or
Section 7.3(b) (in the case of a breach by the Company), and in any such
case such breach shall be incapable of being cured or, if capable of being
cured, shall not have been cured within 30 days after written notice
thereof shall have been received by the Party alleged to be in breach;
(e) by HCPI, if the Company Board or any committee of the
Company Board (i) shall withdraw or modify in any manner adverse to HCPI,
its approval or recommendation of this Agreement or the Merger, (ii) shall
fail to reaffirm such approval or recommendation within five Business Days
of HCPI's request, (iii) shall approve or recommend any Acquisition
Proposal or Acquisition Transaction or (iv) shall resolve to take any of
the actions specified in clauses (i), (ii) or (iii) above; or
(f) by either the Company or HCPI, if the stockholders' meetings
to consider the Merger shall have been held by the Company and HCPI, as the
case may be, and the required approval of the stockholders of the Company
or HCPI shall not have been obtained at any such stockholders' meetings,
including any adjournments or postponements.
Section 8.2 Effect of Termination.
(a) In the event that:
(i) any Person shall have made an Acquisition Proposal to
the Company or to its stockholders and thereafter this Agreement is
terminated (A) by HCPI pursuant to Sections 8.1(b) or 8.1(d) or (B) by
either Party pursuant to Section 8.1(f) as a result of the required
approval of the Company stockholders having not been obtained; or
(ii) this Agreement is terminated by HCPI pursuant to
Section 8.1(e), then, in any such case, if the Company is not also entitled
to terminate this Agreement by reason of Section 8.1(b), Section 8.1(d) or
Section 8.1(f) as a result of the required approval of HCPI's stockholders
having not been obtained, the Company shall in no event later than two days
after such termination pay HCPI the Termination Fee by wire transfer of
same day funds to a bank account designated by HCPI.
(b) Unless the Company would be entitled to terminate this
Agreement pursuant to Sections 8.1(b) or 8.1(d) or pursuant to Section
8.1(f) as a result of the required vote of HCPI's stockholders having not
been obtained, in the event that this Agreement is terminated (i) by HCPI
pursuant to Sections 8.1(b), 8.1(d), or 8.1(e) or (ii) by either Party
pursuant to Section 8.1(f) as a result of the required approval of the
Company's stockholders having not been obtained, then, after any such
termination, the Company shall reimburse HCPI, promptly after being
requested to do so by HCPI, for up to $2,000,000 toward the payment of the
out-of-pocket costs and expenses incurred by HCPI in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, fees and expenses of accountants, attorneys, financial advisors
(except for any contingent fee of a financial advisor for which a
contingency has not been satisfied), commercial banks, experts and
consultants and fees and expenses otherwise allocated to HCPI pursuant to
this Agreement. If a payment is due under Section 8.2(a), the payment to
HCPI of the amount set forth in this Section 8.2(b) shall be made in
addition to the payment required to be made pursuant to Section 8.2(a).
(c) Unless HCPI would be entitled to terminate this Agreement
pursuant to Sections 8.1(b) or 8.1(d) or pursuant to Section 8.1(f) as a
result of the required vote of the Company's stockholders having not been
obtained, in the event that this Agreement is terminated (i) by the Company
pursuant to Sections 8.1(b) or 8.1(d), or (ii) by either Party pursuant to
Section 8.1(f) as a result of the required approval of the HCPI's
stockholders having not been obtained, then, after any such termination,
HCPI shall reimburse the Company, promptly after being requested to do so
by the Company, for up to $2,000,000 toward the payment of the out-of-
pocket costs and expenses incurred by the Company in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, fees and expenses of accountants, attorneys, financial advisors
(except for any contingent fee of a financial advisor for which a
contingency has not been satisfied), commercial banks, experts and
consultants and fees and expenses otherwise allocated to the Company
pursuant to this Agreement.
(d) As used in this Agreement, "Termination Fee" shall be an
amount equal to the lesser of (i) $18,700,000 (the "Base Amount") and
(ii) the maximum amount, if any, that can be paid to HCPI without causing
it to fail to meet the requirements of Sections 856(c)(2) and (3) of the
Code for such year determined as if (a) the payment of such amount did not
constitute income described in Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-
(I) of the Code ("Qualifying Income"), and (b) HCPI has $1,000,000 of
income from unknown sources during such year which was not Qualifying
Income (in addition to any known or anticipated income of HCPI which was
not Qualifying Income), in each case as determined by independent
accountants to HCPI. Notwithstanding the foregoing, in the event HCPI
receives a reasoned opinion from outside counsel or a ruling from the IRS
(the "Tax Guidance") providing that HCPI's receipt of the Base Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code (the "REIT
Requirements"), the Termination Fee shall be an amount equal to the Base
Amount and the Company shall, upon receiving notice that HCPI has received
the Tax Guidance, pay to HCPI the unpaid Base Amount within five business
days. In the event that HCPI is not able to receive the full Base Amount
due to the above limitations, the Company shall place the unpaid amount in
escrow by wire transfer within three days of termination and shall not
release any portion thereof to HCPI unless and until HCPI receives either
one or a combination of the following once or more often: (i) a letter from
HCPI's independent accountants indicating the maximum amount that can be
paid at that time to HCPI without causing HCPI to fail to meet the REIT
Requirements (calculated as described above) or (ii) the Tax Guidance, in
either of which events the Company shall pay to HCPI the lesser of the
unpaid Base Amount or the maximum amount stated in the letter referred to
in (i) above within five business days after the Company has been notified
thereof. The payment of the amount required to be paid pursuant to Section
8.2(a) in connection with the circumstances described therein, together
with the amount required to be paid pursuant to Section 8.2(b) (but only to
the extent such amount is paid together with the amount set forth in
Section 8.2(a)), shall be compensation and liquidated damages for the loss
suffered by HCPI as a result of the failure of the Merger to be consummated
and to avoid the difficulty of determining damages under such
circumstances. Neither Party shall have any other liability to the other
for damages after the payment of such amounts. The obligation of Company
to pay any unpaid portion of the Termination Fee shall terminate on the
December 31 following the date which is three years from the date of this
Agreement. Amounts remaining in escrow after the obligation of the Company
to pay the Termination Fee terminates shall be released to the Company.
(e) The Parties acknowledge that the agreements contained in
this Section 8.2 are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, the Parties would not
enter into this Agreement; accordingly, if the Company fails to promptly
pay the Termination Fee or the fees and expenses of HCPI or if HCPI fails
to pay the fees and expenses of the Company, each as required by this
Section 8.2, and in order to obtain such payment the non-defaulting Party
commences a suit which results in a judgment against the defaulting Party
for any amount of the fees and expenses set forth in this Section 8.2, the
defaulting Party shall pay to the non-defaulting Party its costs and
expenses (including attorneys' fees) in connection with such suit together
with interest on such amount in respect of the period from the date such
amount became due until the date such amount is paid at the prime rate of
The Chase Manhattan Bank in effect from time to time during such period.
(f) In the event of termination of this Agreement pursuant to
this Article VIII, this Agreement (other than as set forth in Section 9.1)
shall become void and of no effect with no liability under the terms of the
Agreement (other than as set forth in this Section 8.2) on the part of any
Party; provided, however, no such termination shall relieve any Party from
any liability for breach of this Agreement.
Section 8.3 Expenses.
The Surviving Corporation shall pay all charges and expenses,
including those of the Exchange Agent, in connection with the transactions
contemplated in Article II. Except as otherwise specifically provided
herein, each Party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
Section 8.4 Amendment.
This Agreement may be amended by the Parties by action taken by
or on behalf of their respective Boards of Directors at any time before or
after any required approval of matters presented in connection with the
Merger by the stockholders of the Company and HCPI; provided, however, that
after any such approval, there shall be made no amendment that by law
requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an
instrument in writing signed by the Parties.
Section 8.5 Waiver.
At any time prior to the Closing Date, any Party may (a) extend
the time for the performance of any of the obligations or other acts of the
other Parties hereto, (b) waive any inaccuracies in the representations and
warranties of the other Parties contained herein or in any document
delivered pursuant hereto and (c) waive compliance by any other Party with
any of the agreements or conditions contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by
the Party or Parties to be bound thereby. The failure of any Party to this
Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties and
Agreements.
The representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that (a) the agreements
set forth in Sections 2.8, 2.9, 2.10(b), 2.10(c), 2.10(e), 2.10(f), 2.11,
2.13, 2.14, 6.7, 6.8, 6.10, 6.11, 6.12, 6.19, 9.5, 9.6 and 9.7 shall
survive the Effective Time and (b) the agreements set forth in the
Confidentiality Agreement and in Sections 8.1, 8.2 and 8.3, this Section
9.1, Section 9.6 and Section 9.7 shall survive termination indefinitely.
Section 9.2 Notices.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person, by cable, telecopy,
telegram or telex, by registered or certified mail (postage prepaid, return
receipt requested), or by overnight courier, to the respective Parties at
the following addresses (or at such other address for a Party as shall be
specified by like notice):
If to HCPI:
Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with an additional copy to:
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Attention:▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.:(▇▇▇) ▇▇▇-▇▇▇▇
and
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Attention:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.:(▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
American Health Properties, Inc.
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.:(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Attention:▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Fax No.:(▇▇▇) ▇▇▇-▇▇▇▇
Section 9.3 Severability.
If any term or other provision of this agreement is invalid,
illegal or incapable of being enforced by any rule of 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 the transactions contemplated hereby is not affected in any manner
adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled
to the fullest extent possible.
Section 9.4 Entire Agreement; Assignment.
This Agreement (including the Company Disclosure Schedule and the
HCPI Disclosure Schedule), together with the Confidentiality Agreement,
constitute the entire agreement among the Parties with respect to the
subject matter hereof and supersede all prior agreements and undertakings,
both written and oral, among the Parties, or any of them, with respect to
the subject matter hereof. This Agreement shall not be assigned by any
Party by operation of law or otherwise without the express written consent
of each of the other Parties.
Section 9.5 Parties in Interest.
This Agreement shall be binding upon and inure solely to the
benefit of each Party hereto, and, except for Sections 2.8, 6.7, 6.8 and
6.19, nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 9.6 Governing Law.
Except to the extent to which the Merger is subject to the MGCL
and the DGCL, this Agreement shall be governed by and construed in
accordance with, the laws of the State of Delaware without regard, to the
fullest extent permitted by law, to the conflicts of laws provisions
thereof which might result in the application of the laws of any other
jurisdiction. Each of the Parties submits to the non-exclusive
jurisdiction of the state and federal courts of the United States located
in the County of Orange, California with respect to any claim or cause of
action arising out of this Agreement or the transactions contemplated
hereby.
Section 9.7 No Trial by Jury.
Each of the Parties hereto hereby irrevocably and unconditionally
waives any right it may have to trial by jury in connection with any
litigation arising out of or relating to this Agreement, the
Confidentiality Agreement, the Merger or any of the other transactions
contemplated hereby or thereby.
Section 9.8 Action by Subsidiaries and Boards.
Whenever this Agreement requires or purports to require any
Subsidiary of the Company or the Company Board or any Subsidiary of HCPI or
the HCPI Board to take any action, such purported requirement shall be
deemed to include an undertaking on the part of the Company or HCPI to
cause such Subsidiary or the Company Board or the HCPI Board, as
applicable, to take such action.
Section 9.9 Headings.
The descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.10 Specific Performance.
Each of the Parties hereto acknowledges and agrees that the other
Parties would be irreparably damaged in the event any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. Accordingly, each of the Parties agrees that
they each shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and conditions hereof in any Action instituted
in any court of the United States or any state having competent
jurisdiction, in addition to any other remedy to which such Party may be
entitled, at law or in equity.
Section 9.11 Counterparts.
This Agreement may be executed in two or more counterparts, and
by the different Parties in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
[Signature page follows.]
IN WITNESS WHEREOF, HCPI and the Company have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
HEALTH CARE PROPERTY INVESTORS, INC., a
Maryland corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman, President and Chief Executive
Officer
AMERICAN HEALTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman, President and Chief Executive
Officer
[Signature Page to Merger Agreement]
EXHIBIT A
Form of Affiliate Letter
Health Care Property Investors, Inc.
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Ladies and Gentlemen:
The undersigned has been advised that as of the date of this
letter it may be deemed to be an "affiliate" of American Health Properties,
Inc., a Delaware corporation (the "Company"), as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Act"). Pursuant to the terms of the Agreement and Plan of Merger
dated as of August 4, 1999 (the "Agreement"), between Health Care Property
Investors, Inc., a Maryland corporation ("HCPI") and the Company, the
Company will be merged with and into HCPI (the "Merger").
As a result of the Merger, the undersigned may receive shares
(the "Shares") of common stock, par value $1.00 per share, of HCPI (the
"HCPI Common Stock") in exchange for shares of common stock, par value $.01
per share, of the Company (the "Company Common Stock").
1. The undersigned represents, warrants and covenants to HCPI
that in the event it receives Shares as a result of the Merger:
A. It shall not make any sale, transfer or other
disposition of the Shares in violation of the Act or the Rules and
Regulations.
B. It has carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon its ability to sell, transfer or otherwise dispose of the
Shares to the extent it determines necessary, with its counsel or counsel
of the Company.
C. It has been advised that the issuance of the Shares
pursuant to the Merger has been registered with the Commission under the
Act on a Registration Statement on Form S-4. The undersigned has also been
advised that, since at the time the Merger was submitted for a vote of the
stockholders of the Company, it may be deemed to have been an affiliate of
the Company and any subsequent distribution by it of the Shares has not
been registered under the Act, it may not sell, transfer or otherwise
dispose of the Shares unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or other
disposition is made in conformity with Rule 145 promulgated by the
Commission under the Act or (iii) in the opinion of counsel reasonably
acceptable to HCPI or a "no action" letter obtained by the undersigned from
the staff of the Commission, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
D. The undersigned does not own in excess of 9.8% of the
outstanding the Company Common Stock and, upon consummation of the Merger,
will not own in excess of 9.8% of the outstanding HCPI Common Stock.
E. The undersigned understands that HCPI is under no
obligation to register the sale, transfer or other disposition of the
Shares by it or on its behalf under the Act, or except as expressly set
forth in the Agreement, to take any other action necessary in order to make
compliance with an exemption from such registration available.
F. The undersigned also understands that HCPI may give
stop transfer instructions to its transfer agent with respect to the Shares
to enforce the restrictions on the undersigned set forth herein and that it
reserves the right to place on the certificates for HCPI Common Stock
issued to the undersigned, or any substitutions therefor, a legend stating
in substance:
"The securities represented by this certificate
have been issued in a transaction to which Rule
145 promulgated under the Securities Act of 1933
applies and may be sold or otherwise transferred
only in compliance with the requirements of Rule
145 or pursuant to a registration statement under
said Act or an exemption from such registration."
G. The undersigned also understands that unless the
transfer by it of the Shares has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, HCPI reserves the right
to put the following legend on the certificates issued to transferees of
the undersigned:
"The securities represented by this certificate
have not been registered under the Securities Act
of 1933 and were acquired from a person who
received such shares in a transaction to which
Rule 145, promulgated under the Securities Act of
1933, applies. The securities have been acquired
by the holder not with a view to, or for resale in
connection with, any distribution thereof within
the meaning of the Securities Act of 1933 and may
not be sold, pledged or otherwise transferred
except in accordance with an exemption from the
registration requirements of the Securities Act of
1933."
Execution of this letter should not be considered an admission on
the part of the undersigned that it is an "affiliate" of the Company as
described in the first paragraph of this letter or as a waiver of any
rights it may have to object to any claim that it is such an affiliate on
or after the date of this letter.
2. By HCPI's acceptance of this letter, HCPI hereby agrees with
the undersigned to the extent applicable as follows:
A. For so long as and to the extent necessary to permit
the undersigned to sell HCPI Common Stock pursuant to Rule 145 and, to the
extent applicable, Rule 144 under the Act, HCPI shall (a) use its
reasonable efforts to (i) file, on a timely basis, all reports and data
required to be filed with the Commission by it pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
(ii) furnish to the undersigned upon request a written statement as to
whether HCPI complied with such reporting requirements during the 12 months
preceding any proposed sale of HCPI Common Stock by the undersigned under
Rule 145, and (b) otherwise use its reasonable efforts to permit such sales
pursuant to Rule 145 and Rule 144. HCPI has filed all reports required to
be filed with the Commission under Section 13 of the Exchange Act during
the preceding 12 months.
B. It is understood and agreed that certificates with the
legend set forth in subparagraphs F and G of Paragraph 1 above will be
substituted by delivery of certificates without such legend if (i) transfer
by the undersigned of HCPI Common Stock of the undersigned has been
registered under the Act or is a sale made in conformity with the
provisions of Rule 145, (ii) one year shall have elapsed from the date the
undersigned acquired the Shares and the provisions of Rule 145(d)(2) are
then available to the undersigned, (iii) two years shall have elapsed from
the date the undersigned acquired HCPI Common Stock received in the Merger
and the provisions of Rule 145(d)(3) are then available to the undersigned,
or (iv) HCPI has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to it, or a "no-action" or
interpretive letter obtained by the undersigned from the staff of the
Commission, to the effect that the restrictions imposed by Rule 144 and
Rule 145 under the Act no longer apply to the undersigned.
Very truly yours,
Name:
Accepted this ________ day of
___________________, 1999 by
HEALTH CARE PROPERTY INVESTORS, INC.,
a Maryland corporation
By:
Name:
Title:
EXHIBIT B
Articles Supplementary
EXHIBIT B
HEALTH CARE PROPERTY INVESTORS, INC.
ARTICLES SUPPLEMENTARY CLASSIFYING
40,000 SHARES OF
8.60% SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK
Health Care Property Investors, Inc., a Maryland corporation (the
"Company"), certifies to the Maryland State Department of Assessments and
Taxation (the "Department") that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Company by Article IV of the charter of the Company
(inclusive of these Articles Supplementary, the "Charter") and Section 2-
105 of the Maryland General Corporation Law ("MGCL"), the Board of
Directors has adopted resolutions classifying and designating a separate
class of authorized but unissued preferred stock of the Company, par value
$1.00 per share ("Preferred Stock"), to consist of not more than 40,000
shares of Preferred Stock, to be known as "8.60% Series C Cumulative
Redeemable Preferred Stock," setting the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption and
other terms and conditions of such 8.60% Series C Cumulative Redeemable
Preferred Stock and authorizing the issuance of up to 40,000 shares of
8.60% Series C Cumulative Redeemable Preferred Stock.
SECOND: The separate class of Preferred Stock of the Company created
by the resolutions duly adopted by the Board of Directors of the Company
and referred to in Article FIRST of these Articles Supplementary shall have
the following designation, number of shares, preferences, conversion and
other rights, voting powers, restrictions and limitations as to dividends,
qualifications, terms and conditions of redemption and other terms and
conditions.
1. Designation and Rank. The designation of such class of Preferred
Stock authorized by this resolution shall be 8.60% Series C Cumulative
Redeemable Preferred Stock (the "Series C Preferred Stock"). The maximum
number of shares of Series C Preferred Stock shall be forty thousand
(40,000). Shares of the Series C Preferred Stock shall have a liquidation
preference of $2,500.00 per share (the "Liquidation Preference"). The
Series C Preferred Stock shall rank senior to the Company's common stock,
par value $1.00 per share (the "Common Stock"), and to all other classes
and series of equity securities of the Company now or hereafter authorized,
issued or outstanding (the Common Stock and such other classes and series
of equity securities collectively may be referred to herein as the "Junior
Stock"), other than Parity Stock (as defined below) or any classes or
series of equity securities of the Company ranking senior to (the "Senior
Stock") the Series C Preferred Stock as to dividend rights and rights upon
liquidation, winding up or dissolution of the Company; provided, however,
that with respect to any Senior Stock, the Company has satisfied the
provisions of Section 4(c) hereof. The Series C Preferred Stock shall rank
on a parity with the Company's 7O% Series A Cumulative Redeemable Preferred
Stock, par value $1.00 per share (the "Series A Preferred Stock"), and the
Company's 8.70% Series B Cumulative Redeemable Preferred Stock, par value
$1.00 per share (the "Series B Preferred Stock"), and to all other classes
and series of equity securities of the Company now or hereafter authorized,
issued or outstanding, the terms of which specifically provide that such
equity securities rank on a parity with the Series C Preferred Stock with
respect to dividend rights and rights upon liquidation, dissolution or
winding up of the Company (the Series A Preferred Stock, the Series B
Preferred Stock and such other classes and series of equity securities
ranking on a parity with the Series C Preferred Stock collectively may be
referred to herein as "Parity Stock"). The Series C Preferred Stock shall
be junior to all outstanding debt of the Company. The Series C Preferred
Stock shall be subject to creation of Parity Stock and Junior Stock to the
extent not expressly prohibited by the Charter. The Series C Preferred
Stock shall be considered a class of stock of the Company which is separate
from each of the Company's Common Stock, Series A Preferred Stock and
Series B Preferred Stock.
2. Cumulative Dividends Priority.
a. Payment of Dividends. The holders of record of shares of Series
C Preferred Stock shall be entitled to receive, when, as, and if declared
by the Board, out of funds legally available therefor, cumulative cash
dividends at the rate of 8.60% of the Liquidation Preference per annum per
share, which shall accrue from the last payment date through which
dividends shall have been paid on the shares of 8.60% Cumulative Redeemable
Preferred Stock, Series B, of American Health Properties, Inc. in respect
of which shares of Series C Preferred Stock are issued (the "Accrual
Commencement Date") and be payable quarterly in arrears on the last day of
March, June, September and December of each year (and, if the Series C
Preferred Stock is issued on or before November 30, 1999, November 30,
1999) or, if such day is a non-business day, on the next business day (each
of such dates, a "Dividend Payment Date"). Each declared dividend shall be
payable to holders of record as they appear on the stock books of the
Company at the close of business on the record dates therefor, which will
be the 15th day of the calendar month in which the Dividend Payment Date
falls or such other date designated as such, that is not more than 50 nor
less than 10 days preceding the payment dates therefor, as is determined by
the Board or a duly authorized committee thereof (each of such dates, a
"Record Date"). Quarterly dividend periods (each a "Dividend Period")
shall commence on and include either (i) the Accrual Commencement Date or
(ii) first day after the immediately preceding Dividend Period and shall
end on and include the next scheduled Dividend Payment Date, without regard
to whether it falls on a business day.
The amount of dividends payable per share for each full Dividend
Period shall be computed by dividing by four the amount determined by
applying the 8.60% annual dividend rate to the $2,500.00 liquidation
preference of such share. Dividends on the Series C Preferred Stock shall
accrue day by day and shall be cumulative. The amount of any dividend
payable for any other period shorter than a full Dividend Period shall be
computed on the basis of a 360-day year composed of twelve 30-day months
and the actual number of days elapsed in such period. Notwithstanding any
provision to the contrary contained herein, each outstanding share of
Series C Preferred Stock shall be entitled to receive, and shall receive, a
dividend with respect to any Record Date equal to the dividend paid with
respect to each other share of Series C Preferred Stock which is
outstanding on such date.
b. Priority as to Dividends. No full dividends shall be declared or
paid or set apart for payment on Preferred Stock of any series ranking, as
to dividends, on a parity with or junior to the Series C Preferred Stock
for any period unless full dividends for the current Dividend Period on the
Series C Preferred Stock (including any accumulation in respect of unpaid
dividends from prior Dividend Periods) have been or contemporaneously are
declared and paid (or declared and a sum sufficient for the payment thereof
set apart for such payment). When dividends are not paid in full (or
declared and a sum sufficient for such full payment is not so set apart)
upon the Series C Preferred Stock and any other Preferred Stock ranking on
a parity as to dividends with the Series C Preferred Stock, dividends
declared upon shares of Series C Preferred Stock and such other Preferred
Stock ranking on a parity as to dividends shall be declared pro rata, so
that the amount of dividends declared per share on the Series C Preferred
Stock and such other Preferred Stock shall bear in all cases to each other
the same ratio that accrued dividends for the then current Dividend Period
per share on the shares of Series C Preferred Stock (including any
accumulation in respect of unpaid dividends for prior Dividend Periods) and
accrued dividends, including required or permitted accumulations, if any,
of such other Preferred Stock, bear to each other.
Unless full dividends on the Series C Preferred Stock have been
declared and paid or set apart for payment for the current Dividend Period
(including any accumulation in respect of unpaid dividends for prior
Dividend Periods) (i) no cash dividend or other distribution (other than in
shares of Junior Stock or options, warrants or right to subscribe for or
purchase same) shall be declared or paid or set aside for payment on the
Junior Stock, (ii) the Company may not, directly or indirectly, repurchase,
redeem or otherwise acquire any shares of its Junior Stock (or any moneys
paid to or made available for a sinking fund for the redemption of any
shares except by conversion into or exchange for Junior Stock) and (iii)
the Company may not, directly or indirectly, repurchase, redeem or
otherwise acquire any shares of Series C Preferred Stock or Parity Stock
(or any moneys paid to or made available for a sinking fund for the
redemption of any shares of any such stock) otherwise than pursuant to a
pro rata offer to purchase or a concurrent redemption of all, or a pro rata
portion, of the outstanding shares of Series C Preferred Stock and Parity
Stock (except by conversion into or exchange for Junior Stock).
The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company
if, under the preceding paragraph, the Company would be prohibited from
purchasing or otherwise acquiring such shares at such time and in such
manner.
The Series C Preferred Stock will not be entitled to any dividends in
excess of full cumulative dividends as described above and shall not be
entitled to participate in the earnings or assets of the Company, and no
interest, or sum of money in lieu of interest, shall be payable in respect
of any dividend payment or payments on the Series C Preferred Stock which
may be in arrears.
Any dividend payment made on the Series C Preferred Stock shall first
be credited against the earliest accrued but unpaid dividend due with
respect to such shares which remains payable.
If, for any taxable year, the Company elects to designate as "capital
gain dividends" (as defined in Section 857 of the Code), any portion (the
"Capital Gains Amount") of the dividends (as determined for federal income
tax purposes) paid or made available for the year to holders of all classes
of shares (the "Total Dividends"), then the portion of the Capital Gains
Amount that shall be allocated to the holders of the Series C Preferred
Stock shall equal (i) the Capital Gains Amount multiplied by (ii) a
fraction that is equal to (a) the total dividends (as determined for
federal income tax purposes) paid or made available to the holders of the
Series C Preferred Stock for the year over (b) the Total Dividends.
No dividends on the Series C Preferred Stock shall be authorized by
the Board of Directors or be paid or set apart for payment by the Company
at such time as the terms and provisions of any agreement of the Company,
including any agreement relating to its indebtedness, prohibit such
authorization, payment or setting apart for payment or provide that such
authorization, payment or setting apart for payment would constitute a
breach thereof or a default thereunder, or if such authorization or payment
shall be restricted or prohibited by law. Notwithstanding the foregoing,
dividends on the Series C Preferred Stock will accrue whether or not the
Company has earnings, whether or not there are funds legally available for
the payment of such dividends and whether or not such dividends are
authorized.
3. Redemption.
a. General. Subject to the last sentence of this paragraph, the
shares of the Series C Preferred Stock will not be redeemable prior to
October 27, 2002. At any time on or after October 27, 2002, subject to the
applicable restrictions set forth in this Section 3 and applicable law, the
shares of Series C Preferred Stock may be redeemed, in whole or in part, at
the election of the Company, upon notice as provided in Section 3(b)
hereof, by resolution of its Board of Directors, at any time or from time
to time, at the redemption price of $2500.00 per share, plus, in each case,
an amount equal to all accrued and unpaid dividends to the date fixed for
redemption. Notwithstanding the foregoing, the Company may redeem all or
any portion of the Series C Preferred Stock or Parity Stock to preserve the
Company's status of a real estate investment trust.
If less than all the outstanding shares of Series C Preferred Stock
are to be redeemed, the Company will select those to be redeemed pro rata,
by lot or by a substantially equivalent method. On and after the
redemption date, dividends shall cease to accrue on the shares of Series C
Preferred Stock called for redemption, and they shall be deemed to cease to
be outstanding, provided that the redemption price (including any accrued
and unpaid dividends to the date fixed for redemption) has been duly paid
or provided for.
No Series C Preferred Stock may be redeemed except from proceeds from
the sale of other capital stock of the Company, including but not limited
to common stock, preferred stock, depositary shares, interests,
participations or other ownership interests (however designated) and any
rights (other than debt securities convertible into or exchangeable for
equity securities) or options to purchase any of the foregoing.
b. Notice of Redemption. Notice of any redemption, setting forth
(i) the date and place fixed for said redemption and the number of shares
of Series C Preferred Stock to be redeemed, (ii) the redemption price and
(iii) a statement that dividends on the shares of Series C Preferred Stock
to be redeemed will cease to accrue on such redemption date, shall be given
by publication in a newspaper of general circulation in New York, New York
at least once a week for two successive weeks and shall be mailed, postage
prepaid, at least 30 days but not more than 90 days prior to said
redemption date to each holder of record of the Series C Preferred Stock to
be redeemed at his address as the same shall appear on the books of the
Company. If less than all the shares of the Series C Preferred Stock owned
by such holder are then to be redeemed, the notice shall specify the number
of shares thereof which are to be redeemed and the numbers of the
certificates representing such shares.
If such notice of redemption shall have been so given and mailed, and
if on or before the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by the Company
separate and apart from its other funds in trust for the account of the
holders of the shares of the Series C Preferred Stock so to be redeemed (so
as to be and continue to be available therefor), then, on and after said
redemption date, notwithstanding that any certificate for shares of the
Series C Preferred Stock so called for redemption shall not have been
surrendered for cancellation, the shares of the Series C Preferred Stock so
called for redemption shall be deemed to be no longer outstanding, the
dividends thereon shall cease to accrue, and all rights with respect to
such shares of the Series C Preferred Stock so called for redemption shall
forthwith cease and terminate, except only the right of the holders thereof
to receive out of the funds so set aside in trust the amount payable on
redemption thereof, but without interest, upon surrender (and endorsement
or assignment for transfer, if required by the Company) of their
certificates.
However, if such notice of redemption shall have been so given and
mailed, and if prior to the date of redemption specified in such notice all
said funds necessary for such redemption shall have been irrevocably
deposited in trust for the account of the holders of the shares of the
Series C Preferred Stock to be redeemed (so as to be and continue to be
available therefor) with a bank or trust company named in such notice doing
business in the City of New York or the State of California and having
capital surplus and undivided profits of at least $50,000,000, thereupon
and without awaiting the redemption date, all shares of the Series C
Preferred Stock with respect to which such notice shall have been so mailed
and such deposit shall have been so made shall be deemed to be no longer
outstanding, and all rights with respect to such shares of the Series C
Preferred Stock shall forthwith upon such deposit in trust cease and
terminate, except only the right of the holders thereof on or after the
redemption date to receive from such deposit the amount payable upon the
redemption, but without interest, upon surrender (and endorsement or
assignment to transfer, if required by the Company) of their certificates.
In case the holders of shares of the Series C Preferred Stock which
shall have been redeemed shall not within two years (or any longer period
if required by law) after the redemption date claim any amount so depicted
in trust for the redemption of such shares, such bank or trust company
shall, upon demand and if permitted by applicable law, pay over to the
Company any such unclaimed amount so deposited with it, and shall thereupon
be relieved of all responsibility in respect thereof, and thereafter the
holders of such shares shall, subject to applicable escheat laws, look only
to the Company for payment of the redemption price thereof, but without
interest from the date of redemption.
c. Status of Shares Redeemed. Shares of Series C Preferred Stock
redeemed, purchased or otherwise acquired for value by the Company, shall,
after such acquisition, have the status of authorized and unissued shares
of Preferred Stock and may be reissued by the Company at any time as shares
of any series of Preferred Stock other than as shares of Series C Preferred
Stock.
4. Voting Rights.
The voting rights of the Series C Preferred Stock shall be as follows:
a. General Voting Rights. Except as expressly provided hereinafter
in this Section, this Series of Preferred Stock shall have no voting
rights.
b. Voting Rights Upon Dividend Arrears.
i. Right to Elect Directors. In the event that an amount equal
to six quarterly dividend payments on this Series of Preferred Stock
shall have accrued and be unpaid, the holders of this Series of
Preferred Stock shall have the right, voting separately as a class
together with holders of shares of any Parity Stock upon which like
voting rights have been conferred and are exercisable ("Voting Parity
Stock"), to elect two members of the Board of Directors, each member
to be in addition to the then authorized number of directors, at a
special meeting called by the holders of record of at least 25% of the
Series C Preferred Stock or the holders of any other series of
Preferred Stock so in arrears (unless such request is received less
than 90 days before the date fixed for the next annual or special
meeting of stockholders) or at the next annual meeting of stockholders
and at each subsequent annual meeting until all dividends accumulated
on this Series of Preferred Stock have been paid in full for four
consecutive Dividend Periods, including the last preceding Dividend
Period.
ii. Term of Office of Directors. Any director who shall have
been elected by holders of this Series of Preferred Stock and Voting
Parity Stock entitled to vote in accordance with this subparagraph (b)
shall hold office for a term expiring (subject to the earlier payment,
or declaration and setting aside for payment, of dividends on this
Series of Preferred Stock for four consecutive Dividend Periods as
described below) at the next annual meeting of stockholders and during
such term may be removed at any time, either for or without cause, by,
and only by, the affirmative vote of the holders of record of a
majority of the shares of this Series of Preferred Stock and Voting
Parity Stock present and voting, in person or by proxy, at a special
meeting of such stockholders called for such purpose, and any vacancy
created by such removal may also be filled at such meeting. A meeting
for the removal of a director elected by the holders of this Series of
Preferred Stock and Voting Parity Stock and the filling of the vacancy
created thereby shall be called by the Secretary of the company as
promptly as possible and in any event within 10 days after receipt of
a request therefor signed by the holders of not less than 25% of the
outstanding shares of this Series of Preferred Stock, subject to any
applicable notice requirements imposed by law or regulation. Such
meeting shall be held at the earliest practicable date thereafter,
provided that no such meeting shall be required to be held during the
90-day period preceding the date fixed for the annual meeting of
stockholders.
Upon payment, or declaration and setting aside for payment, of
dividends on this Series of Preferred Stock for four consecutive Dividend
Periods, the terms of office of all directors elected by the holders of the
shares of this Series of Preferred Stock and the Voting Parity Stock
pursuant thereto then in office, shall, without further action, thereupon
terminate unless otherwise required by law. Upon such termination the
number of directors constituting the Board of Directors of the company
shall, without further action, be reduced by two, subject always to the
increase of the number of directors pursuant to the foregoing provisions in
the case of the future right of holders of the shares of this Series of
Preferred Stock and Voting Parity Stock to elect directors as provided
above.
iii. Vacancies. Any vacancy caused by the death or resignation
of a director who shall have been elected in accordance with this
subparagraph (b) may be filled by the remaining director so elected
or, if not so filled, by a vote of holders of a plurality of the
shares of this Series of Preferred Stock and Voting Parity Stock
present and voting, in person or by proxy, at a meeting called for
such purpose. Unless such vacancy shall have been filled by the
remaining director as aforesaid, such meeting shall be called by the
Secretary of the Company at the earliest practicable date after such
death or resignation, and in any event within 10 days after receipt of
a written request signed by the holders of record of at least 25% of
the outstanding shares of this Series of Preferred Stock, subject to
any applicable notice requirements imposed by law or regulation.
Notwithstanding the provisions of this paragraph, no such special
meeting shall be required to be held during the 90-day period
preceding the date fixed for the annual meeting of stockholders.
iv. Stockholders' Right to Call Meeting. If any meeting of the
holders of this Series of Preferred Stock and Voting Parity Stock
required by this subparagraph (b) to be called shall not have been
called within 30 days after personal service of a written request
therefor upon the Secretary of the Company or within 30 days after
mailing the same within the United States of America by registered
mail addressed to the Secretary of the Company at its principal
executive offices, subject to any applicable notice requirements
imposed by law or regulation, then the holders of record of at least
25% of the outstanding shares of this Series of Preferred Stock may
designate in writing one of their number to call such meeting at the
expense of the Company, and such meeting may be called by such person
so designated upon the notice required for annual meetings of
stockholders or such shorter notice (but in no event shorter than
permitted by law or regulation) as may be acceptable to the holders of
a majority of the total number of shares of this Series of Preferred
Stock. Any holder of this Series of Preferred Stock so designated
shall have access to the Preferred Stock books of the Company for this
Series of Preferred Stock for the purpose of causing such meeting to
be called pursuant to these provisions.
v. Quorum. At any meeting of the holders of this Series of
Preferred Stock called in accordance with the provisions of this
subparagraph (b) for the election or removal of directors, the
presence in person or by proxy of the holders of a majority of the
total number of shares of this Series of Preferred Stock and Voting
Parity Stock shall be required to constitute a quorum; in the absence
of a quorum, a majority of the holders present in person or by proxy
shall have power to adjourn the meeting from time to time without
notice other than an announcement at the meeting, until a quorum shall
be present.
c. Voting Rights on Extraordinary Matters. So long as any shares of
this Series of Preferred Stock shall be outstanding and unless the consent
or approval of a greater number of shares shall then be required by law,
without first obtaining the approval of the holders of at least two-thirds
of the number of shares of this Series of Preferred Stock at the time
outstanding (voting separately as a class) given in person or by proxy at a
meeting at which the holders of such shares shall be entitled to vote
separately as a class, the Company shall not either directly or indirectly
or through merger or consolidation with any other company, (i) authorize,
create or issue, or increase the authorized or issued amount, of any class
or series of stock ranking prior to the shares of this Series of Preferred
Stock in rights and preferences or (ii) approve any amendment to (or
otherwise alter or repeal) its Charter which would materially and adversely
change the specific terms of this Series of Preferred Stock.
An amendment which increases the number of authorized shares of any
class or series of Preferred Stock or authorizes the creation or issuance
of other classes or series of Preferred Stock, in each case ranking junior
to or on a parity with this Series of Preferred Stock with respect to the
payment of dividends and distribution of assets upon liquidation,
dissolution or winding up, or substitutes the surviving entity in a merger
or consolidation, reorganization or other business combination for the
Company, shall not be considered to be such an adverse change.
A share exchange that affects this Series of Preferred Stock shall be
treated similarly to any merger or consolidation, if such share exchange
would have one of the effects referenced in clauses (i) or (ii) of the
second preceding paragraph. Any merger, consolidation or share exchange,
in which each share of this Series of Preferred Stock remains outstanding
without a material adverse change to its terms and rights, or is converted
into or exchanged for preferred stock of the surviving entity having
preferences, rights, voting powers, restrictions, limitations,
qualifications and terms and conditions that are otherwise identical to
those of this Series of Preferred Stock (except for changes that do not
materially and adversely affect the holders of this Series of Preferred
Stock), shall not be considered to implicate the foregoing Voting Rights on
Extraordinary Matters. Except as provided above, the holders of this
Series of Preferred Stock are not entitled to vote on any merger or
consolidation involving the Company, on any share exchange or on a sale of
all or substantially all of the assets of the Company.
d. One Vote Per Share. In connection with any matter on which
holders of this Series of Preferred Stock are entitled to vote as provided
in paragraphs (b) and (c) of this Section, or any matter on which the
holders of this Series of Preferred Stock are entitled to vote as one class
or otherwise pursuant to the provisions of the Charter, each holder of this
Series of Preferred Stock shall be entitled to one vote for each share of
this Series of Preferred Stock held by such holder.
5. No Sinking Fund; No Conversion, Etc. No sinking fund and no
mandatory redemption provision or maturity date will be established for the
retirement or redemption of shares of Series C Preferred Stock. The
shares of Series C Preferred Stock are not convertible into or exchangeable
for any other property or securities of the Company.
6. Liquidation Rights; Priority.
a. In the event of any liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary, after payment or
provision for payment of the debts and other liabilities of the Company,
the holders of shares of the Series C Preferred Stock shall be entitled to
receive, out of the assets of the Company, whether such assets are capital
or surplus and whether or not any dividends as such are declared, $2,500.00
per share plus an amount equal to all accrued and unpaid dividend for prior
Dividend Periods, and no more, before any distribution shall be made to the
holders of any Junior Stock or any other class of stock or series thereof
ranking junior to the Series C Preferred Stock with respect to the
distribution of assets. After payment of the full amount of the
liquidation preference, the holders of shares of the Series C Preferred
Stock shall not be entitled to any further participation.
b. Nothing contained in this Section 6 shall be deemed to prevent
redemption of shares of the Series C Preferred Stock by the Company in the
manner provided in Section 3. Neither the merger nor consolidation of the
Company into or with any other company, nor the merger or consolidation of
any other company into or with the Company, nor a statutory share exchange
by the Company, nor a sale, transfer or lease of all or any part of the
assets of the Company, shall be deemed to be a liquidation, dissolution or
winding up of the Company within the meaning of this Section 6.
c. Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, stating a payment
date and the place where the distributable amounts shall be payable, shall
be given by mail, postage prepaid, no less than 30 days prior to the
payment date stated therein, to the holders of record of the Series C
Preferred Stock at their respective addresses as the same shall appear on
the books of the Company.
d. If the amounts available for distribution with respect to the
Series C Preferred Stock and all other outstanding stock of the Company
ranking on a parity with the Series C Preferred Stock upon liquidation are
not sufficient to satisfy the full liquidation rights of all the
outstanding Series C Preferred Stock and stock ranking on a parity
therewith, then the holders of each series of such stock will share ratably
in any such distribution of assets in proportion to the full respective
preferential amount (which in the case of the Series C Preferred Stock and
any other preferred stock may include accumulated dividends) to which they
are entitled.
e. In determining whether a distribution (other than upon voluntary
or involuntary liquidation) by dividend, redemption or other acquisition of
shares of stock of the Company or otherwise is permitted under the Maryland
General Corporation Law, no effect shall be given to amounts that would be
needed, if the Company were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
holders of shares of stock of the Company whose preferential rights upon
dissolution are superior to those receiving the distribution.
7. Restrictions on Ownership and Transfer to Preserve Tax Benefit.
a. Definitions. For the purposes of Section 7 of these Articles
Supplementary, the following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of any capital
stock of the Company, inclusive of the Series C Preferred Stock,
by a Person who is or would be treated as an owner of such
capital stock either actually or constructively through the
application of Section 544 of the Code, as modified by Section
856(h)(1)(B) of the Code. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Charitable Beneficiary" shall mean one or more
beneficiaries of a Trust, as determined pursuant to Section
7(c)(vi) of these Articles Supplementary, each of which shall be
an organization described in Sections 170(b)(1)(A), 170(c)(2) and
501 (c)(3) of the Code.
"Code" shall mean the Internal Revenue Code of 1986, as
amended. All section references to the Code shall include any
successor provisions thereof as may be adopted from time to time.
"Constructive Ownership" shall mean ownership of any capital
stock of the Company, inclusive of the Series C Preferred Stock,
by a Person who is or would be treated as an owner of such
capital stock either actually or constructively through the
application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
"IRS" shall mean the United States Internal Revenue Service.
"Market Price" shall mean the last reported sales price
reported on the New York Stock Exchange of the Series C Preferred
Stock on the trading day immediately preceding the relevant date,
or if the Series C Preferred Stock is not then traded on the New
York Stock Exchange, the last reported sales price of the Series
C Preferred Stock on the trading day immediately preceding the
relevant date as reported on any exchange or quotation system
over which the Series C Preferred Stock may be traded, or if the
Series C Preferred Stock is not then traded over any exchange or
quotation system, then the market price of the Series C Preferred
Stock on the relevant date as determined in good faith by the
Board of Directors of the Company.
"Ownership Limit" shall mean 9.8% (by value or by number of
shares, whichever is more restrictive) of the outstanding shares
of capital stock of the Company.
"Person" shall mean an individual, corporation, partnership,
limited liability company, estate, trust (including a trust
qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the
Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity;
but does not include an underwriter acting in a capacity as such
in a public offering of shares of Series C Preferred Stock,
provided that the ownership of such shares of Series C Preferred
Stock by such underwriter would not result in the Company being
"closely held" within the meaning of Section 856(h) of the Code,
or otherwise result in the Company failing to qualify as a REIT.
"Purported Beneficial Transferee" shall mean, with respect
to any purported Transfer (or other event) which results in a
transfer to a Trust, as provided in Section 7(b)(ii) of these
Articles Supplementary, the Purported Record Transferee, unless
the Purported Record Transferee would have acquired or owned
shares of Series C Preferred Stock for another Person who is the
beneficial transferee or beneficial owner of such shares, in
which case the Purported Beneficial Transferee shall be such
Person.
"Purported Record Transferee" shall mean, with respect to
any purported Transfer (or other event) which results in a
transfer to a Trust, as provided in Section 7(b)(ii) of these
Articles Supplementary, the record holder of the Series C
Preferred Stock if such Transfer had been valid under Section
7(b)(i) of these Articles Supplementary.
"REIT" shall mean a real estate investment trust under
Sections 856 through 860 of the Code and, for purposes of
taxation of the Company under applicable state law, comparable
provisions of the law of such state.
"Restriction Termination Date" shall mean the first day
after the date hereof on which the Board of Directors of the
Company determines that it is no longer in the best interests of
the Company to attempt to, or continue to, qualify as a REIT.
"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Series C Preferred Stock,
including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Series C
Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities (or rights convertible into or
exchangeable for Series C Preferred Stock), whether voluntary or
involuntary, whether such transfer has occurred of record or of
beneficial ownership or Beneficial Ownership or Constructive
Ownership (including but not limited to transfers of interests in
other entities which result in changes in Beneficial or
Constructive Ownership of Series C Preferred Stock), and whether
such transfer has occurred by operation of law or otherwise.
"Trust" shall mean each of the trusts provided for in
Section 7(c) of these Articles Supplementary.
"Trustee" shall mean any Person unaffiliated with the
Company, or a Purported Beneficial Transferee, or a Purported
Record Transferee, that is appointed by the Company to serve as
trustee of a Trust.
b. Restriction on Ownership and Transfers.
i. Prior to the Restriction Termination Date:
(A) except as provided in Section 7(i) of these Articles
Supplementary, no Person shall Beneficially Own Series C Preferred Stock
which, taking into account any other capital stock of the Company
Beneficially Owned by such Person, would cause such ownership to exceed the
Ownership Limit;
(B) except as provided in Section 7(i) of these Articles
Supplementary, no Person shall Constructively Own Series C Preferred Stock
which, taking into account any other capital stock of the Company
Constructively Owned by such Person, would cause such ownership to exceed
the Ownership Limit;
(C) no Person shall Beneficially or Constructively Own
Series C Preferred Stock which, taking into account any other capital stock
of the Company Beneficially or Constructively Owned by such Person, would
result in the Company being "closely held" within the meaning of Section
856(h) of the Code, or otherwise failing to qualify as a REIT (including
but not limited to Beneficial or Constructive Ownership that would result
in the Company owning (actually or Constructively) an interest in a tenant
that is described in Section 856(d)(2)(B) of the Code if the income derived
by the Company (either directly or indirectly through one or more
partnerships) from such tenant would cause the Company to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code or
comparable provisions of any applicable state law).
ii. If prior to the Restriction Termination Date, any Transfer
or other event occurs that, if effective, would result in any Person
Beneficially or Constructively Owning Series C Preferred Stock in violation
of Section 7(b)(i) of these Articles Supplementary, (1) then that number of
shares of Series C Preferred Stock that otherwise would cause such Person
to violate Section 7(b)(i) of these Articles Supplementary (rounded up to
the nearest whole share) shall be automatically transferred to a Trust for
the benefit of a Charitable Beneficiary, as described in Section 7(c),
effective as of the close of business on the business day prior to the date
of such Transfer or other event, and such Purported Beneficial Transferee
shall thereafter have no rights in such shares or (2) if, for any reason,
the transfer to the Trust described in clause (1) of this sentence is not
automatically effective as provided therein to prevent any Person from
Beneficially or Constructively Owning Series C Preferred Stock in violation
of Section 7(b)(i) of these Articles Supplementary, then the Transfer of
that number of shares of Series C Preferred Stock that otherwise would
cause any Person to violate Section 7(b)(i) shall be void ab initio, and
the Purported Beneficial Transferee shall have no rights in such shares.
iii. Subject to Section 7(m) and notwithstanding any other
provisions contained herein, prior to the Restriction Termination Date, any
Transfer of Series C Preferred Stock that, if effective, would result in
the capital stock of the Company being beneficially owned by less than 100
Persons (determined without reference to any rules of attribution) shall be
void ab initio, and the intended transferee shall acquire no rights in such
Series C Preferred Stock.
c. Transfers of Series C Preferred Stock in Trust.
i. Upon any purported Transfer or other event described in
Section 7(b)(ii) of these Articles Supplementary, such Series C Preferred
Stock shall be deemed to have been transferred to the Trustee in his
capacity as trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to
be effective as of the close of business on the business day prior to the
purported Transfer or other event that results in a transfer to the Trust
pursuant to Section 7(b)(ii). The Trustee shall be appointed by the
Company and shall be a Person unaffiliated with the Company, any Purported
Beneficial Transferee or any Purported Record Transferee. Each Charitable
Beneficiary shall be designated by the Company as provided in Section
7(c)(vi) of these Articles Supplementary.
ii. Series C Preferred Stock held by the Trustee shall be issued
and outstanding Series C Preferred Stock of the Company. The Purported
Beneficial Transferee or Purported Record Transferee shall have no rights
in the shares of Series C Preferred Stock held by the Trustee. The
Purported Beneficial Transferee or Purported Record Transferee shall not
benefit economically from ownership of any shares held in trust by the
Trustee, shall have no rights to dividends and shall not possess any rights
to vote or other rights attributable to the shares of Series C Preferred
Stock held in the Trust.
iii. The Trustee shall have all voting rights and rights to
dividends with respect to Series C Preferred Stock held in the Trust, which
rights shall be exercised for the exclusive benefit of the Charitable
Beneficiary. Any dividend or distribution paid to or on behalf of the
Purported Record Transferee or Purported Beneficial Transferee prior to the
discovery by the Company that shares of Series C Preferred Stock have been
transferred to the Trustee shall be paid to the Trustee upon demand, and
any dividend or distribution declared but unpaid shall be paid when due to
the Trustee with respect to such Series C Preferred Stock. Any dividends
or distributions so paid over to the Trustee shall be held in trust for the
Charitable Beneficiary.
The Purported Record Transferee and Purported Beneficial
Transferee shall have no voting rights with respect to the Series C
Preferred Stock held in the Trust and, subject to Maryland law, effective
as of the date the Series C Preferred Stock has been transferred to the
Trustee, the Trustee shall have the authority (at the Trustee's sole
discretion) (i) to rescind as void any vote cast by a Purported Record
Transferee with respect to such Series C Preferred Stock prior to the
discovery by the Company that the Series C Preferred Stock has been
transferred to the Trustee and (ii) to recast such vote in accordance with
the desires of the Trustee acting for the benefit of the Charitable
Beneficiary; provided, however, that if the Company has already taken
irreversible corporate action, then the Trustee shall not have the
authority to rescind and recast such vote. Notwithstanding any other
provision of these Articles Supplementary to the contrary, until the
Company has received notification that the Series C Preferred Stock has
been transferred into a Trust, the Company shall be entitled to rely on its
share transfer and other stockholder records for purposes of preparing
lists of stockholders entitled to vote at meetings, determining the
validity and authority of proxies and otherwise conducting votes of
stockholders.
iv. Within 20 days of receiving notice from the Company that
shares of Series C Preferred Stock have been transferred to the Trust, the
Trustee of the Trust shall sell the shares of Series C Preferred Stock held
in the Trust to a Person, designated by the Trustee, whose ownership of the
shares of Series C Preferred Stock will not violate the ownership
limitations set forth in Section 7(b)(i). Upon such sale, the interest of
the Charitable Beneficiary in the shares of Series C Preferred Stock sold
shall terminate and the Trustee shall distribute the net proceeds of the
sale to the Purported Record Transferee and to the Charitable Beneficiary
as provided in this Section 7(c)(iv). The Purported Record Transferee
shall receive the lesser of (1) the price paid by the Purported Record
Transferee for the shares of Series C Preferred Stock in the transaction
that resulted in such transfer to the Trust (or, if the event which
resulted in the transfer to the Trust did not involve a purchase of such
shares of Series C Preferred Stock at Market Price, the Market Price of
such shares of Series C Preferred Stock on the day of the event which
resulted in the transfer of such shares of Series C Preferred Stock to the
Trust) and (2) the price per share received by the Trustee (net of any
commissions and other expenses of sale) from the sale or other disposition
of the shares of Series C Preferred Stock held in the Trust. Any net sales
proceeds in excess of the amount payable to the Purported Record Transferee
shall be immediately paid to the Charitable Beneficiary together with any
dividends or other distributions thereon. If, prior to the discovery by
the Company that shares of such Series C Preferred Stock have been
transferred to the Trustee, such shares of Series C Preferred Stock are
sold by a Purported Record Transferee then (i) such shares of Series C
Preferred Stock shall be deemed to have been sold on behalf of the Trust
and (ii) to the extent that the Purported Record Transferee received an
amount for such shares of Series C Preferred Stock that exceeds the amount
that such Purported Record Transferee was entitled to receive pursuant to
this Section 7(c)(iv), such excess shall be paid to the Trustee upon
demand.
v. Series C Preferred Stock transferred to the Trustee shall be
deemed to have been offered for sale to the Company, or its designee, at a
price per share equal to the lesser of (i) the price paid by the Purported
Record Transferee for the shares of Series C Preferred Stock in the
transaction that resulted in such transfer to the Trust (or, if the event
which resulted in the transfer to the Trust did not involve a purchase of
such shares of Series C Preferred Stock at Market Price, the Market Price
of such shares of Series C Preferred Stock on the day of the event which
resulted in the transfer of such shares of Series C Preferred Stock to the
Trust) and (ii) the Market Price on the date the Company, or its designee,
accepts such offer. The Company shall have the right to accept such offer
until the Trustee has sold the shares of Series C Preferred Stock held in
the Trust pursuant to Section 7(c)(iv). Upon such a sale to the Company,
the interest of the Charitable Beneficiary in the shares of Series C
Preferred Stock sold shall terminate and the Trustee shall distribute the
net proceeds of the sale to the Purported Record Transferee and any
dividends or other distributions held by the Trustee with respect to such
Series C Preferred Stock shall thereupon be paid to the Charitable
Beneficiary.
vi. By written notice to the Trustee, the Company shall
designate one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in
the Trust such that the Series C Preferred Stock held in the Trust would
not violate the restrictions set forth in Section 7(b)(i) in the hands of
such Charitable Beneficiary.
d. Remedies For Breach. If the Board of Directors or a committee
thereof or other designees if permitted by the MGCL shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of Section 7(b)(i) of these Articles Supplementary or that a
Person intends to acquire, has attempted to acquire or may acquire
beneficial ownership (determined without reference to any rules of
attribution), Beneficial Ownership or Constructive Ownership of any shares
of Series C Preferred Stock of the Company in violation of Section 7(b)(i)
of these Articles Supplementary, the Board of Directors or a committee
thereof or other designees if permitted by the MGCL shall take such action
as it deems advisable to refuse to give effect or to prevent such Transfer,
including, but not limited to, causing the Company to redeem shares of
Series C Preferred Stock, refusing to give effect to such Transfer on the
books of the Company or instituting proceedings to enjoin such Transfer;
provided, however, that any Transfers (or, in the case of events other than
a Transfer, ownership or Constructive Ownership or Beneficial Ownership) in
violation of Section 7(b)(ii) of these Articles Supplementary, shall
automatically result in the transfer to a Trust as described in Section
7(b)(i) and any Transfer in violation of Section 7(b)(ii) shall
automatically be void ab initio irrespective of any action (or non-action)
by the Board of Directors.
e. Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire shares of Series C Preferred Stock in violation of
Section 7(b) of these Articles Supplementary, or any Person who is a
Purported Beneficial Transferee such that an automatic transfer to a Trust
results under Section 7(b)(ii) of these Articles Supplementary, shall
immediately give written notice to the Company of such event and shall
provide to the Company such other information as the Company may request in
order to determine the effect, if any, of such Transfer or attempted
Transfer on the Company's status as a REIT.
f. Owners Required To Provide Information. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Beneficial Owner
or Constructive Owner of Series C Preferred Stock and each Person
(including the stockholder of record) who is holding Series C Preferred
Stock for a beneficial owner or Beneficial Owner or Constructive Owner
shall provide to the Company such information that the Company may request,
in good faith, in order to determine the Company's status as a REIT.
g. Remedies Not Limited. Nothing contained in these Articles
Supplementary (but subject to Section 7(m) of Article Second of these
Articles Supplementary) shall limit the authority of the Board of Directors
to take such other action as it deems necessary or advisable to protect the
Company and the interests of its shareholders by preservation of the
Company's status as a REIT.
h. Ambiguity. In the case of an ambiguity in the application of any
of the provisions of this Section 7 of Article Second of these Articles
Supplementary, including any definition contained in Section 7(a), the
Board of Directors shall have the power to determine the application of the
provisions of this Section 7 with respect to any situation based on the
facts known to it (subject, however, to the provisions of Section 7(m) of
Article Second of these Articles Supplementary). In the event Section 7(a)
requires an action by the Board of Directors and these Articles
Supplementary fail to provide specific guidance with respect to such
action, the Board of Directors shall have the power to determine the action
to be taken so long as such action is not contrary to the provisions of
Section 7. Absent a decision to the contrary by the Board of Directors
(which the Board may make in its sole and absolute discretion), if a Person
would have (but for the remedies set forth in Section 7(b)) acquired
Beneficial or Constructive Ownership of Series C Preferred Stock in
violation of Section 7(b)(i), such remedies (as applicable) shall apply
first to the shares of Series C Preferred Stock which, but for such
remedies, would have been actually owned by such Person, and second to
shares of Series C Preferred Stock which, but for such remedies, would have
been Beneficially Owned or Constructively Owned (but not actually owned) by
such Person, pro rata among the Persons who actually own such shares of
Series C Preferred Stock based upon the relative number of the shares of
Series C Preferred Stock held by each such Person.
i. Exceptions.
i. Subject to Section 7(b)(i)(C), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Beneficially Owning shares of Series C Preferred Stock in violation of
Section 7(b)(i)(A) if the Board of Directors obtains any representations
and undertakings from such Person as are reasonably necessary to ascertain
that no individual's Beneficial Ownership of such shares of Series C
Preferred Stock will violate Section 7(b)(i)(A) or that any such violation
will not cause the Company to fail to qualify as a REIT under the Code, and
agrees that any violation of such representations or undertaking (or other
action which is contrary to the restrictions contained in Section 7(b) of
these Articles Supplementary) or attempted violation will result in such
Series C Preferred Stock being transferred to a Trust in accordance with
Section 7(b)(ii) of these Articles Supplementary.
ii. Subject to Section 7(b)(i)(C), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Constructively Owning Series C Preferred Stock in violation of Section
7(b)(i)(B), if the Company obtains any representations and undertakings
from such Person as are reasonably necessary to ascertain that such Person
does not and will not own, actually or Constructively, an interest in a
tenant of the Company (or a tenant of any entity owned in whole or in part
by the Company) that would cause the Company to own, actually or
Constructively more than a 9.8% interest (as set forth in Section
856(d)(2)(B) of the Code) in such tenant and that any violation or
attempted violation will result in such Series C Preferred Stock being
transferred to a Trust in accordance with Section 7(b)(ii) of these
Articles Supplementary. Notwithstanding the foregoing, the inability of a
Person to make the certification described in this Section 7(i)(ii) shall
not prevent the Board of Directors, in its sole discretion, from exempting
such Person from the limitation on a Person Constructively Owning Series C
Preferred Stock in violation of Section 7(b)(i)(B) if the Board of
Directors determines that the resulting application of Section 856(d)(2)(B)
of the Code would affect the characterization of less than 0.5 % of the
gross income (as such term is used in Section 856(c)(2) of the Code) of the
Company in any taxable year, after taking into account the effect of this
sentence with respect to all other Series C Preferred Stock to which this
sentence applies.
iii. Prior to granting any exception pursuant to Section 7(i)(i)
or (ii) of these Articles Supplementary, the Board of Directors may require
a ruling from the Internal Revenue Service, or an opinion of counsel, in
either case in form and substance satisfactory to the Board of Directors in
its sole discretion, as it may deem necessary or advisable in order to
determine or ensure the Company's status as a REIT.
j. Preemptive Rights. No holder of shares of Series C Preferred
Stock shall have any preemptive or preferential right to subscribe for or
to purchase any additional shares of any series, or any bonds or
convertible securities of any nature.
k. Legends. Each certificate for Series C Preferred Stock shall
bear the following legends:
Classes of Stock
"THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF
CAPITAL STOCK CONSISTING OF COMMON STOCK AND ONE OR MORE SERIES
OF PREFERRED STOCK. THE BOARD OF DIRECTORS IS AUTHORIZED TO
DETERMINE THE PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF
EACH SERIES OF PREFERRED STOCK BEFORE THE ISSUANCE OF ANY SUCH
SERIES OF PREFERRED STOCK. THE COMPANY WILL FURNISH, WITHOUT
CHARGE, TO ANY SHAREHOLDER MAKING A REQUEST THEREFOR, A COPY OF
THE COMPANY'S CHARTER AND A FULL STATEMENT WITH RESPECT TO
DESIGNATIONS AND ANY PREFERENCES, CONVERSION OR OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND
OTHER DISTRIBUTIONS, QUALIFICATIONS AND TERMS AND CONDITIONS OF
REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE COMPANY HAS THE
AUTHORITY TO ISSUE AND, SINCE THE COMPANY IS AUTHORIZED TO ISSUE
PREFERRED STOCK IN SERIES, (i) THE DIFFERENCES IN THE RELATIVE
RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES TO THE
EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD OF DIRECTORS TO
SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. REQUEST
FOR SUCH WRITTEN STATEMENT MAY BE DIRECTED TO THE SECRETARY OF
THE COMPANY AT ITS PRINCIPAL OFFICE. "
Restriction on Ownership and Transfer
"THE SHARES OF SERIES C PREFERRED STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND
CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
COMPANY'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT
TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS
EXPRESSLY PROVIDED IN THE ARTICLES SUPPLEMENTARY FOR THE SERIES C
PREFERRED STOCK, (i) NO PERSON MAY BENEFICIALLY OWN SHARES OF THE
COMPANY'S SERIES C PREFERRED STOCK WHICH, TAKING INTO ACCOUNT
ANY OTHER CAPITAL STOCK OF THE COMPANY BENEFICIALLY OWNED BY SUCH
PERSON, WOULD CAUSE SUCH OWNERSHIP TO EXCEED 9.8% (BY VALUE OR BY
NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE
OUTSTANDING CAPITAL STOCK OF THE COMPANY; (ii) NO PERSON MAY
CONSTRUCTIVELY OWN SHARES OF THE COMPANY'S SERIES C PREFERRED
STOCK WHICH, TAKING INTO ACCOUNT ANY OTHER CAPITAL STOCK OF THE
COMPANY CONSTRUCTIVELY OWNED BY SUCH PERSON, WOULD CAUSE SUCH
OWNERSHIP TO EXCEED 9.8% (BY VALUE OR BY NUMBER OF SHARES,
WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING CAPITAL STOCK
OF THE COMPANY; (iii) NO PERSON MAY BENEFICIALLY OR
CONSTRUCTIVELY OWN SERIES C PREFERRED STOCK THAT, TAKING INTO
ACCOUNT ANY OTHER CAPITAL STOCK OF THE COMPANY BENEFICIALLY OR
CONSTRUCTIVELY OWNED BY SUCH PERSON, WOULD RESULT IN THE COMPANY
BEING "CLOSELY HELD" UNDER SECTION 856(h) OF THE CODE OR
OTHERWISE CAUSE THE COMPANY TO FAIL TO QUALIFY AS A REIT; AND
(iv) NO PERSON MAY TRANSFER SERIES C PREFERRED STOCK IF SUCH
TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE COMPANY BEING
OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR
CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY
OWN SERIES C PREFERRED STOCK WHICH CAUSES OR WILL CAUSE A PERSON
TO BENEFICIALLY OR CONSTRUCTIVELY OWN SERIES C PREFERRED STOCK IN
EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
COMPANY. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE
VIOLATED, THE SERIES C PREFERRED STOCK REPRESENTED HEREBY IN
EXCESS OF SUCH RESTRICTIONS WILL BE AUTOMATICALLY TRANSFERRED TO
THE TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE
BENEFICIARIES. IN ADDITION, THE COMPANY MAY REDEEM SHARES UPON
THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN
ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT
OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE
RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE
OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE
RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL TERMS IN
THIS LEGEND WHICH ARE DEFINED IN THE ARTICLES SUPPLEMENTARY FOR
THE SERIES C PREFERRED STOCK SHALL HAVE THE MEANINGS ASCRIBED TO
THEM IN SUCH ARTICLES SUPPLEMENTARY, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF
SERIES C PREFERRED STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS
FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE COMPANY
AT ITS PRINCIPAL OFFICE."
l. Severability. If any provision of this Section 7 or any
application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issues, the validity of
the remaining provisions shall not be affected and other applications of
such provision shall be affected only to the extent necessary to comply
with the determination of such court.
m. NYSE. Nothing in this Section 7 shall preclude the settlement of
a transaction entered into through the facilities of the New York Stock
Exchange. The shares of Series C Preferred Stock that are the subject of
such transaction shall continue to be subject to the provisions of this
Section 7 after such settlement.
n. Applicability of Paragraph. The provisions set forth in this
Section 7 shall apply to the Series C Preferred Stock notwithstanding any
contrary provisions of the Series C Preferred Stock provided for elsewhere
in these Articles Supplementary.
THIRD: The Series C Preferred Stock has been classified by the Board
of Directors under a power contained in the Charter of the Corporation.
FOURTH: These Articles Supplementary have been approved by the Board
of Directors in the manner and by the vote required by law.
FIFTH: The undersigned President of the Corporation acknowledges
these Articles Supplementary to be the corporate act of the Corporation
and, as to all matters or facts required to be verified under oath, the
undersigned President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by
its President and attested to by its Secretary on this ___ day of
______________, 1999.
ATTEST: HEALTH CARE PROPERTY INVESTORS, INC.,
a Maryland Corporation
By: By
Name: Name:
Title: Title:
EXHIBIT C
Form of REIT Opinion
to be delivered by
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
[Month] [day], 1999
American Health Properties, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Health Care Property Investors, Inc.,
a Maryland corporation (the "Company"), in connection with the merger (the
"Merger") of American Health Properties, Inc., a Delaware corporation
("AHP") with and into the Company, with the Company as the surviving
corporation, pursuant to that certain Agreement and Plan of Merger between
the Company and AHP dated as of August 4, 1999 (together with all exhibits
and amendments thereto, the "Merger Agreement"). This opinion is being
rendered to you pursuant to Section 7.2(e) of the Merger Agreement.
In formulating our opinion, we examined, and with your consent
relied upon, such documents as we deemed appropriate, including (i) the
Merger Agreement, (ii) the Joint Proxy Statement/Prospectus filed by the
Company and AHP with the Securities and Exchange Commission (the
"Commission") on [Month] [day], 1999 (the "Joint Proxy Statement"), and
(iii) the Registration Statement on Form S-4, registration number
[___________], as filed by the Company with the Commission on [Month]
[day], 1999, in which the Joint Proxy Statement is included as a prospectus
(with all amendments and exhibits thereto, the "Registration Statement").
In addition, we have obtained such additional information as we deemed
relevant and necessary through consultation with various officers and
representatives of the Company and AHP.
This opinion is based on various facts and assumptions, including
the facts set forth in the Registration Statement concerning the business,
properties, and governing documents of the Company and its subsidiaries.
We have also been furnished with, and with your consent have relied upon,
certain representations made by the Company with respect to factual matters
through a certificate of an officer of the Company (the "Officer's
Certificate").
In our capacity as such counsel, we have made such legal and
factual examinations and inquiries, including an examination of originals
or copies certified or otherwise identified to our satisfaction of such
documents, corporate records and other instruments, as we have deemed
necessary or appropriate for purposes of this opinion. In our examination,
we have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures thereon, the legal capacity of
natural persons executing such documents and the conformity to authentic
original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction
only of the federal income tax laws of the United States and we express no
opinion with respect to the applicability thereto, or the effect thereon,
of other federal laws, the laws of any state or other jurisdiction or as to
any matters of municipal law or the laws of any other local agencies with
any state.
Based upon such facts, assumptions, and representations,
including the facts set forth in the Registration Statement and the
Officer's Certificate, it is our opinion that (i) commencing with the
Company's taxable year ending December 31, 1985, the Company has been
organized in conformity with the requirements for qualification and
taxation as a "real estate investment trust" under the Internal Revenue
Code of 1986, as amended (the "Code"), and (ii) its method of operation has
enabled it to meet, and its proposed method of operation will enable it to
continue to meet the requirements for qualification and taxation as a "real
estate investment trust" under the Code.
No opinion is expressed as to any matter not discussed herein.
This opinion is only being rendered to you as of the date of this
letter, and we undertake no obligation to update this opinion subsequent to
the date hereof. This opinion is based on various statutory provisions,
regulations promulgated thereunder and interpretations thereof by the
Internal Revenue Service and the courts having jurisdiction over such
matters, all of which are subject to change either prospectively or
retroactively. Also, any variation or difference in the facts from those
set forth in the Registration Statement or the Officer's Certificate may
affect the conclusions stated herein.
This opinion is rendered to you solely in connection with the
satisfaction of Section 7.2(e) of the Merger Agreement. This opinion may
not be relied upon by you for any other purpose, or furnished to, quoted to
or relied upon by any other person, firm or corporation for any purpose,
without our prior written consent.
Very truly yours,
EXHIBIT D
Form of REIT Opinion
to be delivered by
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
[Month] [day], 1999
Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to American Health Properties, Inc., a
Delaware corporation (the "Company"), in connection with the merger (the
"Merger") of the Company with and into Health Care Property Investors,
Inc., a Maryland corporation ("Parent"), with Parent as the surviving
corporation, pursuant to that certain Agreement and Plan of Merger between
Parent and the Company dated as of August 4, 1999, (together with all
exhibits and amendments thereto, the "Merger Agreement"). This opinion is
being rendered to you pursuant to Section 7.3(e) of the Merger Agreement.
In formulating our opinion, we examined, and with your consent relied
upon, such documents as we deemed appropriate, including (i) the Merger
Agreement, (ii) the Joint Proxy Statement/Prospectus filed by Parent and
the Company with the Securities and Exchange Commission (the "Commission")
on [Month] [day], 1999 (the "Joint Proxy Statement"), and (iii) the
Registration Statement on Form S-4, registration number [___________], as
filed by Parent with the Commission on [Month] [day], 1999, in which the
Joint Proxy Statement/Prospectus is included as a prospectus (with all
amendments and exhibits thereto, the "Registration Statement"). In
addition, we have obtained such additional information as we deemed
relevant and necessary through consultation with various officers and
representatives of Parent and the Company.
This opinion is based on various facts and assumptions, including the
facts set forth in the Registration Statement concerning the business,
properties, and governing documents of the Company and its subsidiaries.
We have also been furnished with, and with your consent have relied upon,
certain representations made by the Company with respect to factual matters
through a certificate of an officer of the Company (the "Officer's
Certificate"). In addition, we have assumed, with your consent, the
accuracy of the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated the date hereof,
addressed to Parent, with respect to the federal income tax treatment of
the Psychiatric Group Preferred Stock (as such term is defined in the
Merger Agreement) previously issued by the Company (the "▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Opinion"). In rendering this opinion, we express no opinion
concerning the matters addressed in the ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Opinion.
In our capacity as such counsel, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction of such documents,
corporate records and other instruments, as we have deemed necessary or
appropriate for purposes of this opinion. In our examination, we have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures thereon, the legal capacity of natural
persons executing such documents and the conformity to authentic original
documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction only
of the federal income tax laws of the United States and we express no
opinion with respect to the applicability thereto, or the effect thereon,
of other federal laws, the laws of any state or other jurisdiction or as to
any matters of municipal law or the laws of any other local agencies with
any state.
Based upon such facts, assumptions, and representations, including the
facts set forth in the Registration Statement and the Officer's
Certificate, and our assumption concerning the accuracy of the ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Opinion, it is our opinion that (i) commencing with the Company's
taxable year ending December 31, 1987, the Company has been organized in
conformity with the requirements for qualification and taxation as a "real
estate investment trust" under the Internal Revenue Code of 1986, as
amended (the "Code"), and (ii) its method of operation has enabled it to
meet the requirements for qualification and taxation as a "real estate
investment trust" under the Code through the Effective Time (as such term
is defined in the Merger Agreement).
No opinion is expressed as to any matter not discussed herein.
This opinion is only being rendered to you as of the date of this
letter, and we undertake no obligation to update this opinion subsequent to
the date hereof. This opinion is based on various statutory provisions,
regulations promulgated thereunder and interpretations thereof by the
Internal Revenue Service and the courts having jurisdiction over such
matters, all of which are subject to change either prospectively or
retroactively. Also, any variation or difference in the facts from those
set forth in the Registration Statement or the Officer's Certificate may
affect the conclusions stated herein.
This opinion is rendered to you solely in connection with the
satisfaction of Section 7.3(e) of the Merger Agreement. This opinion may
not be relied upon by you for any other purpose, or furnished to, quoted to
or relied upon by any other person, firm or corporation for any purpose,
without our prior written consent.
Very truly yours,
EXHIBIT E
Form of REIT Opinion
to be delivered by
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
[▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Letterhead]
Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
We acted as counsel to American Health Properties, Inc., a
Delaware corporation (the "Company"), in connection with its issuance of
Psychiatric Group Preferred Stock (the "Psychiatric Group Stock") to
holders of record on July 14, 1995 of its Common Stock, as more fully
described in the Information Statement dated June 29, 1995. In that
transaction, each holder of Common Stock of the Company received as a
dividend one share of Psychiatric Group Stock for every ten shares of
Common Stock the holder owned. The Psychiatric Group Stock was redeemed by
the Company in May of 1999.
You have asked whether, in our opinion, the issuance of the
Psychiatric Group Stock and the payment of dividends thereon during the
period it was outstanding affected the qualification of the Company as a
real estate investment trust (a "REIT") within the meaning of Section 856
of the Internal Revenue Code (the "Code"). In rendering this opinion, we
have reviewed such documents and other factual matters and such matters of
law as we have considered necessary or appropriate. In our opinion, the
Psychiatric Group Stock was equity for federal income tax purposes, because
the holders of the Psychiatric Group Stock had no creditor or other non-
equity type rights against the Company and possessed all three rights that
are the cornerstone of an equity interest: (i) the right to vote in the
election of directors and other matters put to the shareholders of the
Company, (ii) the right to participate in the earnings of the Company
through the payment of dividends and (iii) the right to share in the net
assets of the Company upon its liquidation.
Although there is no authority bearing directly on the treatment
of "targeted stock" such as the Psychiatric Group Stock, in our opinion the
Psychiatric Group Stock was a class of equity of the Company for federal
income tax purposes because (i) as a matter of Delaware law, the
Psychiatric Group Stock was stock of the Company, (ii) the holders of such
stock had rights only against the Company and had no direct rights with
respect to the Psychiatric Group assets or subsidiaries, (iii) the holders
of such stock had no voting rights with respect to the Psychiatric Group
subsidiaries and voted only on matters put to the shareholders of the
Company, (iv) the economic expectations of such holders represented only
the intentions of the Board of Directors of the Company, and not legally
enforceable rights of the holders, (v) the Psychiatric Group assets were
available to satisfy creditors of the Company and (vi) the Psychiatric
Group assets were not isolated in a separate subsidiary but were held in
significant part directly by the Company.
Under Section 562(c) of the Code and Treasury Regulations Section
1.562-2(a), distributions by the Company with respect to its Psychiatric
Group Stock or Common Stock were not "preferential dividends" as long as
the distributions (i) were without preference among shares in any given
class and (ii) were without preference among shares of different classes
except to the extent a class is entitled to a preference.
In our opinion, the Psychiatric Group Stock and Common Stock were
separate classes of stock of the Company for purposes of Section 562(c)
because (i) the Psychiatric Group Stock and the Common Stock were separate
classes of stock for corporate law purposes, (ii) the economic expectations
of the holders of each class were different and (iii) the voting and
liquidation rights of the holders of each class were different.
Although there is no authority bearing directly on the
application of preferential dividends under Section 562(c) of the Code to
"targeted stock" such as the Psychiatric Group Stock, in our opinion
dividends paid on the Psychiatric Group Stock and Common Stock were not
"preferential" under Section 562(c) of the Code because (i) the dividends
paid by the Company did not deprive either class of a dividend to which
that class was entitled and neither class received a dividend to which it
was not entitled and (ii) concluding that the dividends paid on the
Psychiatric Group Stock and Common Stock of the Company were not
preferential is consistent with the purpose of Section 562(c) and not
inconsistent with any policy underlying the REIT distribution, income,
asset or shareholder tests.
Very truly yours,
