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EXHIBIT 10
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AGREEMENT AND PLAN OF MERGER
among
KIMCO REALTY CORPORATION,
REIT SUB, INC.
and
THE PRICE REIT, INC.
Dated as of January 13, 1998
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TABLE OF CONTENTS
ARTICLE 1
THE MERGER................................................................................. 1
1.1. The Merger.................................................................. 1
1.2. The Closing................................................................. 2
1.3. Effective Time.............................................................. 2
ARTICLE 2
CHARTER AND BYLAWS OF THE SURVIVING CORPORATION............................................ 2
2.1. Charter..................................................................... 2
2.2. Bylaws...................................................................... 2
ARTICLE 3
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION........................................ 3
3.1. Directors................................................................... 3
3.2. Officers.................................................................... 3
ARTICLE 4
PRICE REIT STOCK........................................................................... 3
4.1. Conversion of the Price REIT Stock.......................................... 3
4.2. Exchange of Certificates Representing Price REIT
Common Stock................................................................ 5
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PRICE REIT............................................... 8
5.1. Existence; Good Standing; Authority; Compliance
With Law................................................................... 8
5.2. Authorization, Validity and Effect of Agreements........................... 9
5.3. Capitalization............................................................. 9
5.4. Subsidiaries............................................................... 10
5.5. Other Interests............................................................ 10
5.6. No Violation............................................................... 10
5.7. SEC Documents.............................................................. 11
5.8. Litigation................................................................. 12
5.9. Absence of Certain Changes................................................. 12
5.10. Taxes........................................................................ 13
5.11. Books and Records............................................................ 14
5.12. Properties................................................................... 14
5.13. Environmental Matters........................................................ 16
5.14. Employee Benefit Plans....................................................... 16
5.15. Labor Matters................................................................ 17
5.16. No Brokers................................................................... 17
5.17. Opinion of Financial Advisor................................................. 18
5.18. Kimco Stock Ownership........................................................ 18
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5.19. Related Party Transactions................................................... 18
5.20. Contracts and Commitments.................................................... 18
5.21. Leases....................................................................... 19
5.22. Investment Company Act of 1940............................................... 19
5.23. Development Rights........................................................... 19
5.24. Certain Payments Resulting From Transactions................................. 19
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF KIMCO AND MERGER SUB ................................... 20
6.1. Existence; Good Standing; Authority; Compliance
With Law................................................................... 20
6.2. Authorization, Validity and Effect of Agreements........................... 21
6.3. Capitalization............................................................. 22
6.4. Subsidiaries............................................................... 22
6.5. Other Interests............................................................ 23
6.6. No Violation............................................................... 23
6.7. SEC Documents.............................................................. 23
6.8. Litigation................................................................. 24
6.9. Absence of Certain Changes................................................. 25
6.10. Taxes........................................................................ 25
6.11. Books and Records............................................................ 26
6.12. Properties................................................................... 26
6.13. Environmental Matters........................................................ 28
6.14. Employee Benefit Plans....................................................... 28
6.15. Labor Matters................................................................ 29
6.16. No Brokers................................................................... 29
6.17. Opinion of Financial Advisor................................................. 30
6.18. Price REIT Stock Ownership................................................... 30
6.19. Related Party Transactions................................................... 30
6.20. Contracts and Commitments.................................................... 30
6.21. Leases....................................................................... 30
6.22. Investment Company Act of 1940............................................... 31
ARTICLE 7
COVENANTS.................................................................................. 31
7.1. No Solicitation by Price REIT.............................................. 31
7.2. No Solicitation by Kimco................................................... 33
7.3. Conduct of Businesses...................................................... 35
7.4. Meetings of Stockholders................................................... 39
7.5. Filings; Other Action...................................................... 41
7.6. Inspection of Records...................................................... 41
7.7. Publicity.................................................................. 41
7.8. Registration Statement..................................................... 41
7.9. Listing Application........................................................ 42
7.10. Assumption of Debt and Leases................................................ 43
7.11. Affiliates of Price REIT..................................................... 43
7.12. Expenses..................................................................... 44
7.13. Indemnification.............................................................. 44
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7.14. Employees.................................................................... 45
7.15. Reorganization............................................................... 46
7.16. Advice of Changes............................................................ 47
7.17. Disqualifying Event.......................................................... 47
7.18. Governance................................................................... 47
ARTICLE 8
CONDITIONS................................................................................. 47
8.1. Conditions to Each Party's Obligation to
Effect the Merger.......................................................... 47
8.2. Conditions to Obligations of Price REIT to
Effect the Merger.......................................................... 48
8.3. Conditions to Obligation of Kimco and Merger
Sub to Effect the Merger................................................... 49
ARTICLE 9
TERMINATION................................................................................ 51
9.1. Termination by Mutual Consent.............................................. 51
9.2. Termination by Either Kimco or Price REIT.................................. 51
9.3. Termination by Price REIT.................................................. 51
9.4. Termination by Kimco....................................................... 52
9.5. Certain Fees and Expenses Upon Effect
of Termination and Abandonment............................................. 52
9.6. Extension; Waiver.......................................................... 56
ARTICLE 10
GENERAL PROVISIONS......................................................................... 56
10.1. Nonsurvival of Representations, Warranties
and Agreements............................................................. 56
10.2. Notices...................................................................... 56
10.3. Assignment; Binding Effect; Benefit.......................................... 57
10.4. Entire Agreement............................................................. 57
10.5. Confidentiality.............................................................. 57
10.6. Amendment.................................................................... 59
10.7. Governing Law................................................................ 59
10.8. Counterparts................................................................. 59
10.9. Headings..................................................................... 59
10.10. Interpretation.............................................................. 59
10.11. Extension; Waiver. ........................................................ 60
10.12. Incorporation............................................................... 60
10.13. Severability................................................................ 60
10.14. Enforcement of Agreement.................................................... 60
10.15. Definitions................................................................. 60
SCHEDULE 6.2...............................................................................S-1
Exhibit A FORM OF ARTICLES SUPPLEMENTARY
Exhibit B FORM OF AFFILIATE LETTER
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Exhibit C FORM OF OPINION OF ▇▇▇▇▇ & ▇▇▇▇ LLP
Exhibit D FORM OF OPINION OF ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January 13,
1998, among Kimco Realty Corporation, a Maryland corporation ("Kimco"), REIT
Sub, Inc., a Maryland corporation and a wholly owned subsidiary of Kimco
("Merger Sub"), and The Price REIT, Inc., a Maryland corporation ("Price REIT").
RECITALS
A. The Board of Directors of Kimco and the Board of Directors of Price
REIT have both determined that a business combination between Kimco and Price
REIT is in the best interests of their respective companies and stockholders and
presents an opportunity for their respective companies to achieve long-term
strategic and financial benefits, and accordingly have agreed to effect the
merger provided for herein upon the terms and subject to the conditions set
forth herein.
B. For federal income tax purposes, it is intended that the merger
provided for herein shall qualify as a reorganization within the meaning of
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"),
and for financial accounting purposes shall be accounted for as a "purchase."
C. Each of Kimco and Price REIT has received a fairness opinion relating
to the transactions contemplated hereby as more fully described herein.
D. Kimco, Merger Sub and Price REIT desire to make certain
representations, warranties and agreements in connection with the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
2.1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3), Price REIT shall be merged
with and into Merger Sub in accordance with this Agreement and the separate
corporate existence of Price REIT shall thereupon cease (the "Merger"). Merger
Sub shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"). The Merger shall have the
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effects specified in Section 3-114 of the Maryland General Corporation Law (the
"MGCL").
2.2. The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the offices of
▇▇▇▇▇ & Wood llp, One World Trade Center, New York, New York, at 9:00 a.m.,
local time, on the third business day immediately following the day on which the
last to be fulfilled or waived of the conditions set forth in Article 8 shall be
fulfilled or waived in accordance herewith or (b) at such other time, date or
place as Kimco and Price REIT may agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date." As used herein, "business day"
shall mean a day on which banks are not required or authorized to close in The
City of New York.
2.3. Effective Time. If all the conditions to the Merger set forth in
Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, the parties
hereto shall cause Articles of Merger meeting the requirements of the MGCL to be
properly executed, verified and delivered for filing in accordance with the MGCL
on the Closing Date. The Merger shall become effective upon the later of the
acceptance for record of the Articles of Merger by the State Department of
Assessments and Taxation of Maryland (the "SDAT") in accordance with the MGCL or
at such later time which the parties hereto shall have agreed upon and
designated in the Articles of Merger in accordance with the MGCL as the
effective time of the Merger (the "Effective Time").
ARTICLE 2
CHARTER AND BYLAWS OF THE SURVIVING CORPORATION
2.4. Charter. The Charter of Merger Sub in effect immediately prior to
the Effective Time shall be the Charter of the Surviving Corporation, until duly
amended in accordance with applicable law; provided that, as of the Effective
Time, Article Second of such Charter shall be amended to read in its entirety as
follows: "The name of the corporation (which is hereinafter called the
"Corporation") is: The Price REIT, Inc."
2.5. Bylaws. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
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2.6. Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
2.7. Officers. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE 4
PRICE REIT STOCK
2.8. Conversion of the Price REIT Stock.
(a) At the Effective Time, each share of the Common Stock, par value
$.01 per share, of Merger Sub outstanding immediately prior to the Effective
Time shall remain outstanding and shall represent one share of Common Stock, par
value $.01 per share, of the Surviving Corporation.
(b) At the Effective Time, each share of common stock, par value $.01
per share, of Price REIT (the "Price REIT Common Stock"), issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive, upon surrender of the certificate formerly representing such
share (a "Certificate") in accordance with Section 4.2: (A) in the event that
the sum of (i) the Kimco Average Closing Price (as hereinafter defined) and (ii)
$10.00 (the sum being referred to herein as the "Notional Value") is less than
or equal to $45.00: one share of Kimco Common Stock, par value $.01 per share
(the "Kimco Common Stock"), plus a number of depositary shares (the "Kimco
Depositary Shares"), each of which represents an interest in one-tenth of a
share of Kimco Class D Cumulative Convertible Preferred Stock, par value $1.00
per share, having the terms and conditions specified on Exhibit A hereto (the
"Kimco Class D Preferred Stock"), equal to a fraction, the numerator of which is
$45.00 less the Kimco Average Closing Price and the denominator of which is
$25.00; provided, however, that if the Kimco Average Closing Price is less than
$33.75, each share of Price REIT Common Stock shall be converted into the right
to receive 0.45 Kimco Depositary Shares plus a number of shares of Kimco Common
Stock equal to a fraction, the numerator of which is $33.75 and the denominator
of which is the Kimco Average Closing Price; and (B) if the Notional Value is
greater than $45.00: one share of Kimco Common Stock plus a number of Kimco
Depositary Shares equal to 0.4 minus a fraction, the numerator of which is the
Notional Value less $45.00 and the denominator of which is $50.00; provided,
however, that in no event shall the aggregate fractional number of Kimco
Depositary Shares
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issued in respect of one share of Price REIT Common Stock be less than 0.36. As
used herein, the "Kimco Average Closing Price" shall be the average of the
closing sales prices of the Kimco Common Stock on the New York Stock Exchange
(the "NYSE") as reported in The Wall Street Journal, or, if not reported
thereby, by another authoritative source, during the twenty (20) consecutive
trading days ending on and including the third trading day immediately preceding
the date of the special meeting of Kimco's stockholders contemplated by Section
7.4 hereof. The Kimco Common Stock and the Kimco Depositary Shares to be
received as consideration pursuant to the Merger by each holder of Price REIT
Common Stock are referred to herein as the "Merger Consideration."
(c) As a result of the Merger and without any action on the part of the
holder thereof, all shares of Price REIT Common Stock shall cease to be
outstanding and shall be cancelled and retired and shall cease to exist, and
each holder of a certificate (a "Certificate") representing any shares of Price
REIT Common Stock shall thereafter cease to have any rights with respect to such
shares of Price REIT Common Stock, except the right to receive, without
interest, the Merger Consideration and cash in lieu of fractional shares of
Kimco Common Stock and/or Kimco Depositary Shares in accordance with Sections
4.1(b) and 4.2(e) hereto upon the surrender of such Certificate.
(d) Each share of Price REIT Common Stock issued and held in Price
REIT's treasury at the Effective Time, if any, shall, by virtue of the Merger,
cease to be outstanding and shall be cancelled and retired and shall cease to
exist without payment of any consideration therefor.
(e) Each option (a "Price REIT Stock Option") to purchase shares of
Price REIT Common Stock granted under the stock option agreements and under the
Price REIT 1993 Stock Option Plan or the Price REIT 1996 Directors' Stock Option
Plan (the "Price REIT Stock Option Plans") as set forth on Schedule 4.1(e) of
the Price REIT Disclosure Letter (as hereinafter defined), which is outstanding
immediately prior to the Effective Time, whether or not then exercisable or
vested, shall be satisfied and cancelled, at the Effective Time, and, in the
case of each such satisfied and cancelled Price REIT Stock Option, each holder
thereof shall be entitled to receive from Kimco and Kimco shall deliver or shall
cause to be delivered to such holder, as soon as practicable but in no event
later than five business days following the Effective Time, a number of shares
of the Kimco Common Stock and Kimco Depositary Shares in the same proportion as
such stock is issued as Merger Consideration pursuant to Section 4.1(b) (the
"Option Consideration") (and cash in lieu of fractional shares of Option
Consideration) having a value equal to (A) the product of (i) the amount by
which the value of the Merger Consideration payable per share of Price REIT
Common Stock pursuant to Section 4.1(b),
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assuming such Price REIT Stock Option had been exercised immediately prior to
the Effective Time, exceeds the per share exercise price of such Price REIT
Stock Option and (ii) the number of shares subject to such Price REIT Stock
Option (the product of (i) and (ii) being the "Option Spread"), minus (B) the
product of (i) the Option Spread and (ii) the sum of the Federal Withholding
Rate and the State Withholding Rate set forth opposite the name of such holder
on Schedule 4.1(e) of the Price REIT Disclosure Letter (which sum will be
provided to Kimco at least ten (10) business days prior to the Closing Date).
The parties understand, acknowledge and agree that the reduction in the Option
Consideration, described in Clause (B) of the previous sentence, is in full
satisfaction of all federal and state employment and withholding tax
requirements applicable to such holder, and that there shall be no reduction of
any other compensation payable to such holder as a result of the cancellation of
such Price REIT Stock Option. For each holder, Kimco shall remit to the Internal
Revenue Service, in the manner required by the applicable withholding
requirements, the product of (x) the Option Spread for such holder and (y) the
percentage set forth under "Federal Withholding Rate" opposite the name of such
holder on Schedule 4.1(e) of the Price REIT Disclosure Letter. For each holder,
Kimco shall remit to the California Franchise Tax Board (or such other
appropriate state authority) in the manner required by the applicable
withholding requirements, the product of (x) the Option Spread for such holder
and (y) the percentage set forth under "State Withholding Rate" opposite the
name of such holder on Schedule 4.1(e) of the Price REIT Disclosure Letter.
(f) Prior to the Effective Time, Price REIT shall use its best efforts
to (i) obtain any requisite consents or releases from holders of Price REIT
Stock Options and (ii) make any amendments to the terms of the Price REIT Stock
Option Plans or any award granted thereunder that are necessary to give effect
to the transactions contemplated by Section 4.1(e). Notwithstanding any other
provision of Section 4.1(e), delivery of the Option Consideration may be
withheld in respect of any option or award contemplated by Section 4.1(e) until
any necessary consents are obtained.
2.9. Exchange of Certificates Representing Price REIT Common Stock.
(a) As of the Effective Time, Kimco shall deposit, or shall cause to be
deposited, with an exchange agent selected by Kimco, which shall be Kimco's
transfer agent or such other party reasonably satisfactory to Price REIT (the
"Exchange Agent"), for the benefit of the holders of shares of Price REIT Common
Stock, for exchange in accordance with this Article 4, certificates representing
the Merger Consideration and cash in lieu of fractional shares of the Merger
Consideration to be issued pursuant to Section 4.1 and paid pursuant to this
Section 4.2 in exchange for outstanding shares of Price Common Stock.
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(b) Promptly after the Effective Time, Kimco shall cause the Exchange
Agent to mail to each holder of record of a Certificate or Certificates (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Kimco may reasonably specify and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing the Merger Consideration and cash in lieu of fractional shares of
the Merger Consideration. Upon surrender of a Certificate for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) certificates
representing the number of whole shares of the Merger Consideration and (y) a
check representing the amount of cash in lieu of fractional shares of the Merger
Consideration, if any, and unpaid dividends and distributions, if any, which
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article 4, after giving effect to any
required withholding tax, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of fractional
shares of the Merger Consideration and unpaid dividends and distributions, if
any, payable to holders of Certificates. In the event of a transfer of ownership
of Price REIT Common Stock which is not registered in the transfer records of
Price REIT, certificates representing the proper number of shares of the Merger
Consideration, together with a check for the cash to be paid in lieu of
fractional shares of the Merger Consideration, may be issued to such a
transferee if the Certificate representing shares of such Price REIT Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no dividends
or other distributions on the Merger Consideration shall be paid with respect to
any shares of Price REIT Common Stock represented by a Certificate until such
Certificate is surrendered for exchange as provided herein. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of the
Merger Consideration issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with respect to such
whole shares of the Merger Consideration and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other
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distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of the Merger Consideration, less the amount of any withholding taxes
which may be required thereon.
(d) At and after the Effective Time, there shall be no transfers on the
stock transfer books of Price REIT of the shares of Price REIT Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for certificates for whole shares of the Merger
Consideration and cash in lieu of fractional shares of the Merger Consideration,
if any, and unpaid dividends and distributions deliverable in respect thereof
pursuant to this Agreement in accordance with the procedures set forth in this
Article 4. Certificates surrendered for exchange by any person constituting an
"affiliate" of Price REIT for purposes of Rule 145(c) under the Securities Act
of 1933, as amended (the "Securities Act"), shall not be exchanged until Kimco
has received a written agreement from such person as provided in Section 7.11.
(e) No fractional shares of the Merger Consideration shall be issued
pursuant hereto. In lieu of the issuance of any fractional shares of the Merger
Consideration pursuant to Section 4.1(b) cash adjustments will be paid to
holders in respect of any fractional shares of the Merger Consideration that
would otherwise be issuable, and the amount of such cash adjustment shall be
equal to such fractional proportion of the Kimco Average Closing Price per share
of Kimco Common Stock and of the liquidation preference per depositary share of
Kimco Class D Preferred Stock, as applicable.
(f) Any portion of the Merger Consideration held by the Exchange Agent
(together with any cash in lieu of fractional shares of the Merger Consideration
and the proceeds of any investments thereof) that remains unclaimed by the
former stockholders of Price REIT one year after the Effective Time shall be
delivered to the Surviving Corporation. Any former stockholders of Price REIT
who have not theretofore complied with this Article 4 shall thereafter look only
to the Surviving Corporation for payment of their shares constituting the Merger
Consideration, cash in lieu of fractional shares of the Merger Consideration and
unpaid dividends and distributions on the Merger Consideration deliverable in
respect of each share of Price REIT Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon.
(g) None of Kimco, Price REIT, the Exchange Agent or any other person
shall be liable to any former holder of shares of Price REIT Common Stock for
any amount properly delivered to a
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public official pursuant to applicable abandoned property, escheat or similar
laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
or the Surviving Corporation will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration and cash in lieu of fractional
shares of Kimco Class D Preferred Stock, and unpaid dividends and distributions
on shares of the Merger Consideration as provided in Section 4.2(c), deliverable
in respect thereof pursuant to this Agreement.
(i) The holders of shares of Price REIT Common Stock shall not be
entitled to appraisal rights as a result of the Merger.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PRICE REIT
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Kimco, which shall refer to the relevant Sections of
this Agreement (the "Price REIT Disclosure Letter"), Price REIT represents and
warrants to Kimco as follows:
2.10. Existence; Good Standing; Authority; Compliance With Law. Price
REIT is a corporation duly incorporated, validly existing and in good standing
under the laws of Maryland. Price REIT is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of any
other state of the United States in which the character of the properties owned
or leased by it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the business, assets, results of operations or
condition (financial or otherwise) of Price REIT and its Subsidiaries taken as a
whole (a "Price REIT Material Adverse Effect"). Price REIT has all requisite
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted. Each of Price REIT's Subsidiaries is
a corporation, limited liability company or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate, company or partnership power
and authority to own its properties and to carry on its business as it is now
being conducted, and is duly qualified
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to do business and is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not have a Price REIT Material Adverse Effect.
Neither Price REIT nor any of its Subsidiaries is in violation of any order of
any court, governmental authority or arbitration board or tribunal, or any law,
ordinance, governmental rule or regulation to which Price REIT or any of its
Subsidiaries or any of their respective properties or assets is subject, where
such violation would have a Price REIT Material Adverse Effect. To the knowledge
of the executive officers of Price REIT, Price REIT and its Subsidiaries have
obtained all licenses, permits and other authorizations and have taken all
actions required by applicable law or governmental regulations in connection
with their business as now conducted, where the failure to obtain any such item
or to take any such action would have a Price REIT Material Adverse Effect.
Copies of Price REIT's and its Subsidiaries' charter, bylaws, organization
documents and partnership and joint venture agreements have been previously
delivered or made available to Kimco and such documents are listed in the Price
REIT Disclosure Letter and are true and correct. For the purposes of the
immediately preceding sentence, the term "Subsidiary" shall include the entities
set forth on Schedule 5.5 of the Price REIT Disclosure Letter.
2.11. Authorization, Validity and Effect of Agreements. Price REIT has
the requisite corporate power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement. Subject only to
the approval of this Agreement and the transactions contemplated hereby by the
affirmative vote of holders of a majority of the outstanding shares of Price
REIT Common Stock, the consummation by Price REIT of this Agreement and the
transactions contemplated hereby has been duly authorized by all requisite
corporate action on the part of Price REIT. This Agreement constitutes the valid
and legally binding obligations of Price REIT, enforceable against Price REIT in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
2.12. Capitalization. The authorized capital stock of Price REIT
consists of 25,000,000 shares of Price REIT Common Stock and 2,000,000 shares of
preferred stock, par value $.01 per share (the "Price REIT Preferred Stock"). As
of January 12, 1998, there were 11,700,793 shares of Price REIT Common Stock
issued and outstanding and no shares of Price REIT Preferred Stock issued and
outstanding. Price REIT has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Price REIT on any matter. All such issued and outstanding
shares of Price REIT Common Stock are
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duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Other than the Price REIT Stock Options, there are not at the
date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate Price REIT or any of its Subsidiaries to issue, transfer or sell any
shares of capital stock of Price REIT or any of its Subsidiaries. After the
Effective Time, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock or other equity interest of Price
REIT or the Surviving Corporation pursuant to any Price REIT Benefit Plan (as
defined in Section 5.14).
2.13. Subsidiaries. Price REIT owns directly or indirectly each of the
outstanding shares of capital stock or all of the partnership or other equity
interests of each of Price REIT's Subsidiaries. Each of the outstanding shares
of capital stock of or other equity interests in each of Price REIT's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and is owned, directly or indirectly, by Price REIT free and clear of all liens,
pledges, security interests, claims or other encumbrances other than liens
imposed by local law which are not material. The following information for each
Subsidiary of Price REIT is set forth on the Price REIT Disclosure Letter, if
applicable: (i) its name and jurisdiction of incorporation or organization; (ii)
its authorized capital stock or share capital; and (iii) the name of each
stockholder or owner of an equity interest and the number of issued and
outstanding shares of capital stock or share capital or percentage ownership for
non-corporate entities held by it.
2.14. Other Interests. Except for interests in the Price REIT
Subsidiaries, neither Price REIT nor any of its Subsidiaries owns directly or
indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity (other than
investments in short-term investment securities).
2.15. No Violation. Except as set forth on Schedule 5.6 of the Price
REIT Disclosure Letter, neither the execution and delivery by Price REIT of this
Agreement nor the consummation by Price REIT of the transactions contemplated
hereby in accordance with the terms hereof, will (i) conflict with or result in
a breach of any provisions of the charter or bylaws of Price REIT, (ii) result
in a breach or violation of, a default under, or the triggering of any payment
or other material obligations pursuant to, or, except as otherwise contemplated
by Section 4.1(e), accelerate vesting under, any of the Price REIT Stock Option
Plans, or any grant or award made under any of the foregoing, (iii) violate, or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result
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in the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties of Price
REIT or its Subsidiaries under, or result in being declared void, voidable or
without further binding effect, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or any license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Price REIT or any of its Subsidiaries is a party, or by which Price
REIT or any of its Subsidiaries or any of their properties is bound or affected,
except for any of the foregoing matters which, individually or in the aggregate,
would not have a Price REIT Material Adverse Effect, or (iv) require any
consent, approval or authorization of, or declaration, filing or registration
with, any domestic governmental or regulatory authority, other than the filings
provided for in Article 1, any filings required by the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the Securities Act or applicable state
securities and "Blue Sky" laws (collectively, the "Regulatory Filings") and
filings with the NYSE, or such other filings which, if not obtained or made,
would not prevent or delay in any material respect the consummation of any of
the transactions contemplated by this Agreement or otherwise prevent Price REIT
from performing its obligations under this Agreement in any material respect.
2.16. SEC Documents. Price REIT has delivered or made available to Kimco
each registration statement, report, proxy statement or information statement
and all exhibits thereto prepared by it or relating to its properties (including
registration statements covering mortgage pass-through certificates) since
January 1, 1995, which are set forth on the Price REIT Disclosure Letter, each
in the form (including exhibits and any amendments thereto) filed with the
United States Securities and Exchange Commission (the "SEC") (collectively, the
"Price REIT Reports"). The Price REIT Reports, which were filed with the SEC in
a timely manner, constitute all forms, reports and documents required to be
filed by Price REIT under the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder (the "Securities Laws"). As of their
respective dates, the Price REIT Reports (i) complied as to form in all material
respects with the applicable requirements of the Securities Laws and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of Price REIT included in or
incorporated
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by reference into the Price REIT Reports (including the related notes and
schedules) fairly presents the consolidated financial position of Price REIT and
its Subsidiaries as of its date and each of the consolidated statements of
income, retained earnings and cash flows of Price REIT included in or
incorporated by reference into the Price REIT Reports (including any related
notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of Price REIT and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments which would not be material in amount or
effect), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein and except, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC. Except as and to the extent set forth on the
consolidated balance sheet of Price REIT and its Subsidiaries at September 30,
1997, including all notes thereto, or as set forth in the Price REIT Reports,
neither Price REIT 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 Price REIT or in the notes thereto, prepared in accordance with
generally accepted accounting principles consistently applied other than any
such liabilities or obligations that, individually or in the aggregate, would
not have a Price REIT Material Adverse Effect.
2.17. Litigation. There are (i) no continuing orders, injunctions or
decrees of any court, arbitrator or governmental authority to which Price REIT
or any of its Subsidiaries is a party or by which any of its properties or
assets are bound or, to the knowledge of Price REIT, to which any of its
directors, officers, employees or agents is a party or by which any of their
properties or assets are bound and (ii) no actions, suits or proceedings pending
against Price REIT or any of its Subsidiaries or, to the knowledge of Price
REIT, against any of its directors, officers, employees or agents or, to the
knowledge of Price REIT, threatened in writing against Price REIT or any of its
Subsidiaries or against any of its directors, officers, employees or agents, at
law or in equity, or before or by any federal or state commission, board,
bureau, agency or instrumentality, that in the case of clauses (i) or (ii) above
are reasonably likely, individually or in the aggregate, to have a Price REIT
Material Adverse Effect.
2.18. Absence of Certain Changes. Except as disclosed in the Price REIT
Reports filed with the SEC prior to the date hereof, since September 30, 1997,
Price REIT and its Subsidiaries have conducted their business only in the
ordinary course of such business and there has not been (i) any Price REIT
Material Adverse Effect, (ii) as of the date hereof, any declaration, setting
aside or payment of any dividend or other distribution with respect to the Price
REIT Common Stock, (iii) any commitment, contractual obligation, borrowing,
capital expenditure or transaction (each, a "Commitment") entered into by Price
REIT or any of its Subsidiaries, other than Commitments made in the ordinary
course of business none of which exceed $250,000 individually or $1,000,000
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in the aggregate, or (iv) any material change in Price REIT's accounting
principles, practices or methods.
2.19. Taxes. (a) Price REIT and each of its Subsidiaries (i) has timely
filed all federal, state, local and foreign tax returns required to be filed by
any of them for tax years ended prior to the date of this Agreement or requests
for extensions have been timely filed and any such request has been granted and
has not expired and all such returns are complete in all material respects, (ii)
has paid or accrued all taxes shown to be due and payable on such returns or
which have become due and payable pursuant to any assessment, deficiency notice,
30-day letter or other notice received by it and (iii) has properly accrued all
such taxes for such periods subsequent to the periods covered by such returns.
The federal, state or local income or franchise tax returns of Price REIT and
each of its Subsidiaries, have not been examined by the appropriate taxing
authority, except for such examinations that, individually or in the aggregate,
would not have a Price REIT Material Adverse Effect. Neither Price REIT nor any
of its Subsidiaries has executed or filed with the Internal Revenue Service (the
"IRS") or any other taxing authority any agreement now in effect extending the
period for assessment or collection of any income or other taxes. Neither Price
REIT nor any of its Subsidiaries is a party to any pending action or proceeding
by any governmental authority for assessment or collection of taxes, and no
claim for assessment or collection of taxes has been asserted against it. True,
correct and complete copies of all federal, state and local income or franchise
tax returns filed by Price REIT and each of its Subsidiaries and all
communications relating thereto have been delivered to Kimco or made available
to representatives of Kimco. The most recent audited financial statements
contained in the Price REIT Reports reflect an adequate reserve for all material
Taxes payable by Price REIT and the Price REIT Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements.
Since the date of such financial statements, Price REIT has incurred no
liability for taxes under Sections 857(b), 860(c) or 4981 of the Code, including
without limitation, any tax arising from a prohibited transaction described in
Section 857(b)(6) of the Code, and neither Price REIT nor any Price REIT
Subsidiary has incurred any liability for Taxes other than in the ordinary
course of business. As used in this Agreement, "Taxes" shall include all
federal, state, local and foreign income, property, sales, franchise,
employment, excise and other taxes, tariffs or governmental charges of any
nature whatsoever, together with penalties, interest or additions to Tax with
respect thereto.
(b) Price REIT (i) has elected to be taxed as a real estate investment
trust (a "REIT") within the meaning of the Code commencing with its taxable year
ended December 31, 1991, (ii) has been subject to taxation as a REIT within the
meaning of Section
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856 of the Code and has satisfied all requirements to qualify as a REIT for all
taxable years commencing with its taxable year ended December 31, 1991 through
its taxable year ended December 31, 1997, (iii) has operated since December 31,
1997 to the date of this representation, and intends to continue to operate, in
such a manner so as to qualify as a REIT for its taxable year ending the Closing
Date, and (iv) 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 executive officers of Price REIT, no such challenge is
pending or threatened. Price REIT represents that each of its corporate
Subsidiaries is a Qualified REIT Subsidiary as defined in Section 856(i) of the
Code (as in effect prior to the enactment of the Taxpayer Relief Act of 1997),
and that each partnership, limited liability company, joint venture or other
legal entity in which Price REIT (either directly or indirectly) owns any of the
capital stock or other equity interests thereof has been treated since its
formation and continues to be treated for federal income tax purposes as a
partnership and not as an association taxable as a corporation.
2.20. Books and Records.
(a) The books of account and other financial records of Price REIT and
its Subsidiaries are in all material respects true, complete and correct, have
been maintained in accordance with good business practices, and are accurately
reflected in all material respects in the financial statements included in the
Price REIT Reports.
(b) The minute books and other records of Price REIT and its
Subsidiaries, have been made available to Kimco, contain in all material
respects accurate records of all meetings and accurately reflect in all material
respects all other corporate action of the stockholders, members and directors
and any committees of the Board of Directors of Price REIT and its Subsidiaries.
2.21. Properties. Price REIT and its Subsidiaries own fee simple title
to, or hold ground leases in, each of the real properties identified in the
Price REIT Disclosure Letter (the "Price REIT Properties"), which are all of the
real estate properties owned or leased by them. The Price REIT Properties are
not subject to any rights of way, written agreements (other than leases), laws,
ordinances and regulations affecting building use or occupancy, or reservations
of an interest in title (collectively, "Property Restrictions"), except for (i)
liens, mortgages or deeds of trust, claims against title, charges which are
liens, security interests or other encumbrances on title ("Encumbrances") and
Property Restrictions set forth in the Price REIT Disclosure Letter, (ii)
Property Restrictions imposed or promulgated by law or any governmental body or
authority with respect to real property, including zoning regulations, provided
such Property Restrictions
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do not adversely affect in any material respect the current use of the
applicable property, (iii) Encumbrances and Property Restrictions disclosed on
existing title reports or current surveys (in either case copies of which title
reports and surveys have been delivered or made available to Kimco), and (iv)
mechanics', carriers', workmen's, repairmen's liens and other Encumbrances,
Property Restrictions and other limitations of any kind, if any, which,
individually or in the aggregate, do not materially detract from the value of or
materially interfere with the present use of any of the Price REIT Properties
subject thereto or affected thereby, and do not otherwise materially impair
business operations conducted by Price REIT and its Subsidiaries and which have
arisen or been incurred only in the ordinary course of business. Valid policies
of title insurance have been issued insuring Price REIT's or any of its
Subsidiaries' fee simple title to the Price REIT Properties in amounts at least
equal to the purchase price thereof, subject only to the matters set forth
therein or disclosed above and on the Price REIT Disclosure Letter, and such
policies are, at the date hereof, in full force and effect and there are no
pending claims against any such policy. Any material certificate, permit or
license from any governmental authority having jurisdiction over any of the
Price REIT Properties and any agreement, easement or other right which is
necessary to permit the material lawful use and operation of the buildings and
improvements on any of the Price REIT Properties or which is necessary to permit
the lawful use and operation of all driveways, roads and other means of egress
and ingress, which Price REIT has rights to, to and from any of the Price REIT
Properties which are currently occupied has been obtained and is in full force
and effect, and, to the best knowledge of Price REIT, there exists no pending
threat of modification or cancellation of any of same. Price REIT is not in
receipt of any written notice of any violation of any material federal, state or
municipal law, ordinance, order, regulation or requirement affecting any portion
of any of the Price REIT Properties issued by any governmental authority other
than such violations which would not reasonably be expected to have a Price REIT
Material Adverse Effect. To the knowledge of Price REIT, (A) there are no
material structural defects relating to the Price REIT Properties, (B) there are
no Price REIT Properties whose building systems are not in working order in any
material respect (except for temporary and routine maintenance and operating
systems failures which in any event are the subject of adequate pending repair
procedures), (C) there is no physical damage to any Price REIT Property in
excess of $100,000 for which there is no insurance in effect covering the cost
of the restoration as of the date hereof, or (D) no current renovation or
restoration to any Price REIT Property is underway or is being contemplated the
cost of which exceeds $100,000, except as set forth in Schedule 5.12 of the
Price REIT Disclosure Letter. Neither Price REIT nor any of its Subsidiaries
have received any written notice to the effect that (x) any condemnation or
material rezoning proceedings are pending
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or threatened with respect to any of the Price REIT Properties or (y) any
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated in any material respect by the continued maintenance, operation or
use of any buildings or other improvements on any of the Price REIT Properties
as currently maintained, used or operated or by the continued maintenance,
operation or use of the parking areas as currently maintained, used or operated.
All work to be performed, payments to be made and actions to be taken by Price
REIT or its Subsidiaries prior to the date hereof pursuant to any agreement
entered into with a governmental body or authority in connection with a site
approval, zoning reclassification or other similar action relating to the Price
REIT Properties (e.g., Local Improvement District, Road Improvement District,
Environmental Mitigation) has been performed, paid or taken, as the case may be,
and Price REIT is not aware of any planned or proposed work, payments or actions
that may be required after the date hereof pursuant to such agreements.
2.22. Environmental Matters. To the actual knowledge of the executive
officers of Price REIT, none of Price REIT, any of its Subsidiaries or any other
person has caused or permitted (a) the unlawful presence of any Hazardous
Materials on any of the Price REIT Properties, or (b) any unlawful spills,
releases, discharges or disposal of Hazardous Materials to have occurred or be
presently occurring on or from the Price REIT Properties as a result of any
construction on or operation and use of such properties, which presence or
occurrence would, individually or in the aggregate, have a Price REIT Material
Adverse Effect; and in connection with the construction on or operation and use
of the Price REIT Properties, Price REIT and its Subsidiaries have not failed to
comply with all applicable local, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders relating to the
generation, recycling, reuse, sale, storage, handling, transport and disposal of
any Hazardous Materials, except where the failure to so comply would not
reasonably be expected to have a Price REIT Material Adverse Effect.
2.23. Employee Benefit Plans. All employee benefits plans and other
benefit programs, policies and arrangements covering employees of Price REIT and
the Price REIT Subsidiaries (the "Price REIT Benefit Plans") are listed in the
Price REIT Disclosure Letter. True and complete copies of the Price REIT Benefit
Plans have been made available to Kimco. To the extent applicable, the Price
REIT Benefit Plans comply, in all material respects, with the requirements of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the Code, and any Price REIT Benefit Plan intended to be qualified under Section
401(a) of the Code has been determined by the IRS to be so qualified. No Price
REIT Benefit Plan is or has been covered by Title IV of ERISA or Section 412 of
the Code. Neither any Price REIT Benefit Plan nor any fiduciary thereof nor
Price REIT has incurred any material
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liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA.
Each Price REIT Benefit Plan has been maintained and administered in all
material respects in compliance with its terms and with ERISA and the Code to
the extent applicable thereto. To the knowledge of the executive officers of
Price REIT, there are no pending or anticipated claims against or otherwise
involving any of the Price REIT Benefit Plans and no suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
Price REIT Benefit Plan activities) has been brought against or with respect to
any such Price REIT Benefit Plan, except for any of the foregoing which would
not have a Price REIT Material Adverse Effect. All material contributions
required to be made as of the date hereof to the Price REIT Benefit Plans have
been timely made or provided for. Neither Price REIT nor any entity under
"common control" with Price REIT within the meaning of ERISA Section 4001 has
contributed to, or been required to contribute to, any "multiemployer plan" (as
defined in Sections 3(37) and 4001(a)(3) of ERISA). Price REIT does not maintain
or contribute to any plan, program, policy or arrangement which provides or has
any liability to provide life insurance, medical or other employee welfare
benefits or supplemental pension benefits to any employee or former employee
upon his retirement or termination of employment, except as required under
Section 4890B of the Code, and Price REIT has never represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided. Except as disclosed in the Price REIT
Reports, the execution of, and performance of the transactions contemplated in,
this Agreement will not (either alone or upon the occurrence of any additional
subsequent events) constitute an event under any benefit plan, program, policy,
arrangement or agreement or any trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligations to fund
benefits with respect to any employee, director or consultant of Price REIT or
any of its Subsidiaries.
2.24. Labor Matters. Neither Price REIT nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of Price REIT, threatened against Price REIT or any of its
Subsidiaries relating to their business, except for any such proceeding which
would not have a Price REIT Material Adverse Effect. To the knowledge of the
executive officers of Price REIT, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened involving employees of Price REIT or any of its Subsidiaries.
2.25. No Brokers. Price REIT has not entered into any contract,
arrangement or understanding with any person or firm
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which may result in the obligation of Price REIT or Kimco to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that Price REIT has retained ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") as its financial
advisor, pursuant to an engagement letter dated November 20, 1997, a true and
correct copy of which has been delivered to Kimco prior to the date hereof.
Other than the foregoing arrangements, Price REIT is not aware of any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
2.26. Opinion of Financial Advisor. Price REIT has received the opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that, as of the date hereof, the Merger
Consideration to be received by the holders of Price REIT Common Stock pursuant
to the Merger is fair to such holders from a financial point of view.
2.27. Kimco Stock Ownership. Neither Price REIT nor any of its
Subsidiaries owns any shares of Kimco Common Stock or other securities
convertible into any shares of Kimco Common Stock.
2.28. Related Party Transactions. Set forth in the Price REIT Disclosure
Letter is a list of all arrangements, agreements and contracts entered into by
Price REIT or any of its Subsidiaries with any executive officer, director or
family members or affiliates of such persons required to be disclosed in the
Price REIT Reports (including reports and filings analogous to the Price REIT
Reports prior to January 1, 1995) pursuant to the rules and regulations of the
SEC. The copies of such documents, all of which have previously been delivered
or made available to Kimco, are listed on the Price REIT Disclosure Letter and
are true and correct.
2.29. Contracts and Commitments. The Price REIT Disclosure Letter or the
Price REIT Reports set forth (i) all notes, debentures, bonds and other evidence
of indebtedness which are secured or collateralized by mortgages, deeds of trust
or other security interests in the Price REIT Properties or personal property of
Price REIT and its Subsidiaries and (ii) each Commitment entered into by Price
REIT or any of its Subsidiaries which may result in total payments or liability
in excess of $500,000, excluding tenant reimbursements and leases entered into
in the ordinary course. Copies of the foregoing have been previously delivered
or made available to Kimco, are listed on the Price REIT Disclosure Letter or
included in the Price REIT Reports and are true and correct. Each of the
contracts and Commitments described in the preceding sentence is in full force
and effect; none of Price REIT or any of its Subsidiaries has received any
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notice of a default that has not been cured under any of the contracts and
Commitments described in the preceding sentence or is in default respecting any
payment obligations thereunder beyond any applicable grace periods; and, to
Price REIT's knowledge, none of the other parties to such contracts and
Commitments are in default with respect to any obligations, which individually
or in the aggregate are material, thereunder. All joint venture agreements to
which Price REIT or any of its Subsidiaries is a party are set forth on the
Price REIT Disclosure Letter and Price REIT or its Subsidiaries are not in
default with respect to any obligations, which individually or in the aggregate
are material, thereunder.
2.30. Leases.
(a) The Price REIT Disclosure Letter sets forth a list of all Price REIT
Properties that are subject to or encumbered by any non-residential lease
accounting for 1% or more of Price REIT's rental revenues for the most recent
period reflected in the financial statements included in the Price REIT Reports
(a "Material Price REIT Lease") and, with respect to each such Material Price
REIT Lease, sets forth the following information:
(i) the name of the lessee;
(ii) the expiration date of the lease;
(iii) the amount (or method of determining the amount) of monthly
rentals due under the lease; and
(iv) with respect to any Material Price REIT Lease with a remaining
term of less than 24 months, whether the lessee has notified Price REIT
in writing of any intention not to renew, or seek to renew, the lease.
(b) Except as set forth in the Price REIT Disclosure Letter, (i) all
rental payments due under each Material Price REIT Lease have been paid during
the period January 1, 1997 through November 30, 1997, and (ii) to Price REIT'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, under any Material Price REIT
Lease.
2.31. Investment Company Act of 1940. Neither Price REIT nor any of its
Subsidiaries is, or at the Effective Time will be, required to be registered
under the Investment Company Act of 1940, as amended.
2.32. Development Rights. Set forth in the Price REIT Disclosure Letter
is a list of all agreements entered into by Price REIT or any of its
Subsidiaries relating to the development or
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construction of retail shopping center or other real estate properties. The
copies of such agreements, all of which have previously been delivered or made
available to Kimco, are listed on the Price REIT Disclosure Letter and are true
and correct.
2.33. Certain Payments Resulting From Transactions. Except as set forth
in the Price REIT Disclosure Letter, the execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) (i) constitute an event under
any Price REIT Benefit Plan, policy, practice, agreement or other arrangement or
any trust or loan (the "Employee Arrangements") that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee, director or consultant of Price REIT or
any of its Subsidiaries or (ii) result in the triggering or imposition of any
restrictions or limitations on the right of Price REIT, Merger Sub or Kimco to
amend or terminate any Employee Arrangement and receive the full amount of any
excess assets remaining or resulting from such amendment or termination, subject
to applicable taxes. Except as set forth in the Price REIT Disclosure Letter, no
payment or benefit which will be required to be made pursuant to the terms of
any agreement, commitment or Price REIT Benefit Plan, as a result of the
transactions contemplated by this Agreement, to any officer, director or
employee of Price REIT or any of its Subsidiaries, will be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(l) of the Code.
2.34. State Takeover Statutes. Assuming that presently or at any time
within two years prior to the date hereof (i) neither Kimco nor Merger Sub is or
has been an "interested stockholder" of Price REIT, and (ii) neither Kimco nor
Merger Sub has been an "affiliate of an interested stockholder" of Price REIT,
all within the meaning of Section 3-601 of the MGCL, Price REIT has taken all
action necessary to exempt the transactions contemplated by this Agreement from
the operation of any applicable "fair price," "moratorium," "control share
acquisition" or any other applicable anti-takeover statute or similar statute
enacted under the state or federal laws of the United States or similar statute
or regulation.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF KIMCO AND MERGER SUB
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Price REIT, which shall refer to the relevant Sections
of this Agreement (the "Kimco Disclosure Letter"), Kimco and Merger Sub
represent and warrant to Price REIT as follows:
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2.35. Existence; Good Standing; Authority; Compliance With Law. Kimco
and Merger Sub are corporations, and each is duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation. Kimco
is duly licensed or qualified to do business as a foreign corporation and is in
good standing under the laws of any other state of the United States in which
the character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
business, assets, results of operations or condition (financial or otherwise) of
Kimco and its Subsidiaries taken as a whole (a "Kimco Material Adverse Effect").
Kimco has all requisite corporate power and authority to own, operate, lease and
encumber its properties and carry on its business as it is now being conducted.
Each of Kimco's Subsidiaries is a corporation, limited liability company or
partnership duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the corporate, company
or partnership power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not have a Kimco Material Adverse Effect. Neither Kimco nor any or its
Subsidiaries is in violation of any order of any court, governmental authority
or arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which Kimco or any of its Subsidiaries or any of their respective
properties or assets is subject, where such violation would have a Kimco
Material Adverse Effect. To the knowledge of the executive officers of Kimco,
Kimco and its Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their business as now conducted,
where the failure to obtain any such item or to take any such action would have
a Kimco Material Adverse Effect. True and correct copies of Kimco's and its
Subsidiaries' charter, bylaws, organization documents, and partnership and joint
venture agreements have been previously delivered or made available to Price
REIT.
2.36. Authorization, Validity and Effect of Agreements. Each of Kimco
and Merger Sub has the requisite corporate power and authority to enter into the
transactions contemplated hereby and to execute and deliver this Agreement and
the agreements listed on Schedule 6.2 attached hereto (the "Ancillary
Agreements") to which it is a party. Subject only to the approval of the
issuance of the Merger Consideration pursuant to the Merger contemplated hereby
by the holders of a majority of the shares of Kimco Common Stock
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present and voting thereon, the consummation by Kimco and Merger Sub of this
Agreement, the Ancillary Agreement to which they are parties and the
transactions contemplated hereby has been duly authorized by all requisite
corporate action on the part of Kimco and Merger Sub. This Agreement
constitutes, and the Ancillary Agreements to which they are parties (when
executed and delivered pursuant hereto for value received) will constitute, the
valid and legally binding obligations of Kimco and Merger Sub, enforceable
against Kimco and Merger Sub in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
2.37. Capitalization. The authorized capital stock of Kimco consists of
100,000,000 shares of Kimco Common Stock and 5,000,000 shares of Preferred
Stock, 345,000 shares of Class A Cumulative Redeemable Preferred Stock (the
"Class A Preferred Stock"), 230,000 shares of Class B Cumulative Redeemable
Preferred Stock, (the "Class B Preferred Stock") and 460,000 Class C Cumulative
Redeemable Preferred Stock (the "Class C Preferred Stock"), each par value $1.00
per share (collectively, the "Kimco Preferred Stock"). As of the date hereof,
there were 40,394,805 shares of Kimco Common Stock issued and outstanding and
300,000 shares of Class A Preferred Stock, 200,000 shares of Class B Preferred
Stock, 400,000 shares of Class C Preferred Stock and no shares of Preferred
Stock of Kimco issued and outstanding. Kimco has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of Kimco on any matter. All such issued and
outstanding shares of Kimco Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. There are not at the
date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate Kimco or any of its Subsidiaries to issue, transfer or sell any shares
of stock or other equity interest of Kimco or any of its Subsidiaries, other
than the issuance after the date hereof by Kimco of Kimco Common Stock,
consistent with prior practice, upon the exercise of stock options issued to
employees and directors. As of the date hereof, options to purchase an aggregate
number of 1,879,841 shares of Kimco Common Stock are outstanding, of which
options to purchase 1,069,485 are exercisable.
2.38. Subsidiaries.
(a) Except as set forth on Schedule 6.4 of the Kimco Disclosure Letter,
as of the date hereof, Kimco owns directly or indirectly each of the outstanding
shares of capital stock or all of the partnership or other equity interests of
each of Kimco's Subsidiaries. Each of the outstanding shares of capital stock of
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or other equity interests in each of Kimco's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Kimco free and clear of all liens, pledges, security interests,
claims or other encumbrances other than liens imposed by local law which are not
material. The following information for each Subsidiary of Kimco is set forth on
the Kimco Disclosure Letter, if applicable: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock or share
capital; and (iii) the percentage ownership in each Subsidiary.
(b) The authorized stock of Merger Sub consists of one hundred (100)
shares of Common Stock, par value $.01 per share, which shares are issued and
outstanding and owned by Kimco. Kimco has owned and, as of the Closing Date,
will own 100% of the stock of Merger Sub at all times since Merger Sub's
formation. Merger Sub has not engaged in any activities other than in connection
with the transactions contemplated by this Agreement.
2.39. Other Interests. Except for interests in the Kimco Subsidiaries
and as otherwise set forth in the Kimco Disclosure Letter, neither Kimco nor any
of its Subsidiaries owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity (other than investments in short-term investment
securities).
2.40. No Violation. Except as set forth in Schedule 6.6 of the Kimco
Disclosure Letter, neither the execution and delivery by Kimco and Merger Sub of
this Agreement nor the consummation by Kimco and Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof, will (i) conflict with
or result in a breach of any provisions of the charter of Kimco, the Articles of
Incorporation of Merger Sub or their respective bylaws, (ii) result in a breach
or violation of, a default under, or the triggering of any payment or other
material obligations pursuant to, or accelerate vesting under, any of Kimco's
stock option plans, or any grant or award under any of the foregoing, (iii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties of Kimco or its Subsidiaries under, or result in
being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Kimco or any of its Subsidiaries
is a party, or by which Kimco or any of its Subsidiaries or any of their
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properties is bound or affected, except for any of the foregoing matters which,
individually or in the aggregate, would not have a Kimco Material Adverse Effect
or (iv) require any consent, approval or authorization of, or declaration,
filing or registration with, any domestic governmental or regulatory authority,
other than the Regulatory Filings and filings with the NYSE, or such other
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of any of the transactions contemplated by
this Agreement or otherwise prevent Kimco from performing its obligations under
this Agreement in any material respect.
2.41. SEC Documents. Kimco has delivered or made available to Price REIT
each registration statement, report, proxy statement or information statement
and all exhibits thereto prepared by it or relating to its properties since
January 1, 1995, which are set forth on the Kimco Disclosure Letter, each in the
form (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Kimco Reports"). The Kimco Reports, which were filed with
the SEC in a timely manner, constitute all forms, reports and documents required
to be filed by Kimco under the Securities Laws. As of their respective dates,
the Kimco Reports (i) complied as to form in all material respects with the
applicable requirements of the Securities Laws and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of Kimco included in or incorporated by reference
into the Kimco Reports (including the related notes and schedules) fairly
presents the consolidated financial position of Kimco and its Subsidiaries as of
its date and each of the consolidated statements of income, retained earnings
and cash flows of Kimco included in or incorporated by reference into the Kimco
Reports (including any related notes and schedules) fairly presents the results
of operations, retained earnings or cash flows, as the case may be, of Kimco and
its Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein and except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC. Except as and to the extent
set forth on the consolidated balance sheet of Kimco and its Subsidiaries at
September 30, 1997, including all notes thereto, or as set forth in the Kimco
Reports, neither Kimco 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 Kimco or in the notes thereto, prepared in accordance with generally
accepted accounting
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principles consistently applied, other than any such liabilities or obligations
that, individually or in the aggregate, would not have a Kimco Material Adverse
Effect.
2.42. Litigation. There are (i) no continuing orders, injunctions or
decrees of any court, arbitrator or governmental authority to which Kimco or any
of its Subsidiaries is a party or by which any of its properties or assets are
bound or, to the best knowledge of Kimco, to which any of its directors,
officers, employees or agents is a party or by which any of their properties or
assets are bound and (ii) no actions, suits or proceedings pending against Kimco
or any of its Subsidiaries or, to the knowledge of Kimco, against any of its
directors, officers, employees or agents or, to the knowledge of Kimco,
threatened in writing against Kimco or any of its Subsidiaries or against any of
its directors, officers, employees or agents, at law or in equity, or before or
by any federal or state commission, board, bureau, agency or instrumentality,
that in the case of clauses (i) or (ii) above are reasonably likely,
individually or in the aggregate, to have a Kimco Material Adverse Effect.
2.43. Absence of Certain Changes. Except as disclosed in the Kimco
Reports filed with the SEC prior to the date hereof or in Schedule 6.9 of the
Kimco Disclosure Letter, since September 30, 1997, Kimco and its Subsidiaries
have conducted their business only in the ordinary course of such business
(which, for purposes of this section only, shall include all acquisitions of
real estate properties and financing arrangements made in connection therewith)
and there has not been (i) any Kimco Material Adverse Effect, (ii) as of the
date hereof, any declaration, setting aside or payment of any dividend or other
distribution with respect to the Kimco Common Stock or (iii) any material change
in Kimco's accounting principles, practices or methods.
2.44. Taxes. (a) Kimco and each of its Subsidiaries (i) has timely filed
all federal, state, local and foreign tax returns required to be filed by any of
them for tax years ended prior to the date of this Agreement or requests for
extensions have been timely filed and any such request has been granted and has
not expired and all such returns are complete in all material respects, (ii) has
paid or accrued all taxes shown to be due and payable on such returns or which
have become due and payable pursuant to any assessment, deficiency notice,
30-day letter or other notice received by it and (iii) has properly accrued all
such taxes for such periods subsequent to the periods covered by such returns.
The federal, state or local income or franchise tax returns of Kimco and each of
its Subsidiaries have not been examined by the appropriate taxing authority,
except for such examinations that, individually or in the aggregate, would not
have a Kimco Material Adverse Effect. Neither Kimco nor any of its Subsidiaries
has executed or filed with the IRS or any other taxing authority any
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agreement now in effect extending the period for assessment or collection of any
income or other taxes. Neither Kimco nor any of its Subsidiaries is a party to
any pending action or proceeding by any governmental authority for assessment or
collection of taxes, and no claim for assessment or collection of taxes has been
asserted against it. True, correct and complete copies of all federal, state and
local income or franchise tax returns filed by Kimco and each of its
Subsidiaries and all communications relating thereto have been delivered to
Price REIT or made available to representatives of Price REIT. The most recent
audited financial statements contained in the Kimco Reports reflect an adequate
reserve for all material Taxes payable by Kimco and the Kimco Subsidiaries for
all taxable periods and portions thereof through the date of such financial
statements. Since the date of such financial statements, Kimco has incurred no
liability for taxes under Sections 857(b), 860(c) or 4981 of the Code, including
without limitation, any tax arising from a prohibited transaction described in
Section 857(b)(6) of the Code, and neither Kimco nor any Kimco Subsidiary has
incurred any liability for Taxes other than in the ordinary course of business.
(a) Kimco (i) has elected to be taxed as a real estate investment trust
(a "REIT") within the meaning of the Code commencing with its taxable year ended
December 31, 1992, (ii) has been subject to taxation as a REIT within the
meaning of Section 856 of the Code and has satisfied all requirements to qualify
as a REIT for all taxable years commencing with its taxable year ended December
31, 1992 through its taxable year ended December 31, 1997, (iii) has operated
since December 31, 1997 to the date of this representation, and intends to
continue to operate in such a manner so as to qualify as a REIT for its taxable
year ending December 31, 1998, and (iv) 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 executive officers of Kimco, no such
challenge is pending or threatened. Kimco represents that each of its corporate
Subsidiaries is a Qualified REIT Subsidiary as defined in Section 856(i) of the
Code (as in effect prior to the enactment of the Taxpayer Relief Act of 1997),
and that each partnership, limited liability company, joint venture or other
legal entity in which Kimco (either directly or indirectly) owns any of the
capital stock or other equity interests thereof has been treated since its
formation and continues to be treated for federal income tax purposes as a
partnership and not as an association taxable as a corporation.
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2.45. Books and Records.
(a) The books of account and other financial records of Kimco and its
Subsidiaries are in all material respects true, complete and correct, have been
maintained in accordance with good business practices, and are accurately
reflected in all material respects in the financial statements included in the
Kimco Reports.
(b) The minute books and other records of Kimco and its Subsidiaries,
have been made available to Price REIT, contain in all material respects
accurate records of all meetings and accurately reflect in all material respects
all other trust and corporate action of the stockholders, members and directors
and any committees of the Board of Directors of Kimco and its Subsidiaries.
2.46. Properties. Kimco and its Subsidiaries own fee simple title to, or
hold ground leases in, each of the real properties identified in the Kimco
Disclosure Letter (the "Kimco Properties"), which are all the real estate
properties owned or leased by them. The Kimco Properties are not subject to any
Property Restrictions, except for (i) Encumbrances and Property Restrictions set
forth in the Kimco Disclosure Letter, (ii) Property Restrictions imposed or
promulgated by law or any governmental body or authority with respect to real
property, including zoning regulations, provided such Property Restrictions do
not adversely affect in any material respect the current use of the applicable
property, (iii) Encumbrances and Property Restrictions disclosed on existing
title reports or current surveys (in either case copies of which title reports
and surveys have been delivered or made available to Price REIT) and (iv)
mechanics', carriers', workmen's, repairmen's liens and other Encumbrances,
Property Restrictions and other limitations of any kind, if any, which,
individually or in the aggregate, do not materially detract from the value of or
materially interfere with the present use of any of the Kimco Properties subject
thereto or affected thereby, and do not otherwise materially impair business
operations conducted by Kimco and its Subsidiaries and which have arisen or been
incurred only in the ordinary course of business. Valid policies of title
insurance have been issued insuring Kimco's or any of its Subsidiaries' fee
simple title to the Kimco Properties in amounts at least equal to the purchase
price thereof, subject only to the matters set forth therein or disclosed above
and on the Kimco Disclosure Letter, and such policies are, at the date hereof,
in full force and effect and there are no pending claims against such policy.
Any material certificate, permit or license from any governmental authority
having jurisdiction over any of the Kimco Properties and any agreement, easement
or other right which is necessary to permit the material lawful use and
operation of the buildings and improvements on any of the Kimco Properties or
which is necessary to permit the lawful use and operation of all driveways,
roads and other means of egress and ingress, which Kimco has rights to, to and
from any of
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the Kimco Properties which are currently occupied has not been obtained and is
not in full force and effect, and, to the best knowledge of Kimco, there exists
no pending threat of modification or cancellation of any of same. Kimco is not
in receipt of any written notice of any violation of any material federal, state
or municipal law, ordinance, order, regulation or requirement affecting any
portion of any of the Kimco Properties issued by any governmental authority,
other than such violations which would not reasonably be expected to have a
Kimco Material Adverse Effect. To the knowledge of Kimco (A) there are no
material structural defects relating to the Kimco Properties, (B) there are no
Kimco Properties whose building systems are not in working order in any material
respect (except for temporary and routine maintenance and operating systems
failures which in any event are the subject of adequate pending repair
procedures), (C) there is no physical damage to any Kimco Property in excess of
$500,000 for which there is no insurance in effect covering the cost of the
restoration as of the date hereof or (D) no current renovation or restoration to
any Kimco Property is under way or is being contemplated the cost of which
exceeds $500,000, except as set forth on Schedule 6.12 of the Kimco Disclosure
Letter. Neither Kimco nor any of its Subsidiaries have received any written
notice to the effect that (x) any condemnation or material rezoning proceedings
are pending or threatened with respect to any of the Kimco Properties or (y) any
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated in any material respect by the continued maintenance, operation or
use of any buildings or other improvements on any of the Kimco Properties as
currently maintained, used or operated or by the continued maintenance,
operation or use of the parking areas as currently maintained, used or operated.
2.47. Environmental Matters. To the actual knowledge of the executive
officers of Kimco, none of Kimco, any of its Subsidiaries or any other person
has caused or permitted (a) the unlawful presence of any Hazardous Materials on
any of the Kimco Properties or (b) any unlawful spills, releases, discharges or
disposal of Hazardous Materials to have occurred or be presently occurring on or
from the Kimco Properties as a result of any construction on or operation and
use of such properties, which presence or occurrence would, individually or in
the aggregate, have a Kimco Material Adverse Effect; and in connection with the
construction on or operation and use of the Kimco Properties, Kimco and its
Subsidiaries have not failed to comply with all applicable local, state and
federal environmental laws, regulations, ordinances and administrative and
judicial orders relating to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of any Hazardous Materials, except where the
failure to so comply would not reasonably be expected to have a Kimco Material
Adverse Effect.
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2.48. Employee Benefit Plans. All employee benefits plans and other
benefit programs, policies and arrangements covering employees of Kimco and its
Subsidiaries (the "Kimco Benefit Plans") are listed in the Kimco Disclosure
Letter. True and complete copies of the Kimco Benefit Plans have been made
available to Price REIT. To the extent applicable, the Kimco Benefit Plans
comply, in all material respects, with the requirements of ERISA and the Code,
and any Kimco Benefit Plan intended to be qualified under Section 401(a) of the
Code has been determined by the IRS to be so qualified. No Kimco Benefit Plan is
or has been covered by Title IV of ERISA or Section 412 of the Code. Neither any
Kimco Benefit Plan nor any fiduciary thereof nor Kimco has incurred any material
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA.
Each Kimco Benefit Plan has been maintained and administered in all material
respects in compliance with its terms and with ERISA and the Code to the extent
applicable thereto. To the knowledge of the executive officers of Kimco, there
are no pending or anticipated claims against or otherwise involving any of the
Kimco Benefit Plans and no suit, action or other litigation (excluding claims
for benefits incurred in the ordinary course of Kimco Benefit Plan activities)
has been brought against or with respect to any such Kimco Benefit Plan, except
for any of the foregoing which would not have a Kimco Material Adverse Effect.
All material contributions required to be made as of the date hereof to the
Kimco Benefit Plans have been timely made or provided for. Neither Kimco nor any
entity under "common control" with Kimco within the meaning of ERISA Section
4001 has contributed to, or been required to contribute to, any "multiemployer
plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA). Kimco does not
maintain or contribute to any plan, program, policy or arrangement which
provides or has any liability to provide life insurance, medical or other
employee welfare benefits or supplemental pension benefits to any employee or
former employee upon his retirement or termination of employment, except as
required under Section 4890B of the Code, and Kimco has never represented,
promised or contracted (whether in oral or written form) to any employee or
former employee that such benefits would be provided. Except as disclosed in the
Kimco Reports, the execution of, and performance of the transactions
contemplated by, this Agreement will not (either alone or upon the occurrence of
any additional subsequent events) constitute an event under any benefit plan,
program, policy, arrangement or agreement or any trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligations to fund benefits with respect to any employee, director or
consultant of Kimco or any of its Subsidiaries.
2.49. Labor Matters. Neither Kimco nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a
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labor union or labor union organization. There is no unfair labor practice or
labor arbitration proceeding pending or, to the knowledge of Kimco, threatened
against Kimco or any of its Subsidiaries relating to their business, except for
any such proceeding which would not have a Kimco Material Adverse Effect. To the
knowledge of the executive officers of Kimco, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened involving employees of Kimco or any of its
Subsidiaries.
2.50. No Brokers. Kimco has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
Price REIT or Kimco to pay any finder's fees, brokerage or agent's commissions
or other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Kimco has retained Jefferies & Company, Inc. ("Jefferies") as its financial
advisor, pursuant to an engagement letter dated December 16, 1997, a true and
correct copy of which has been delivered to Price REIT prior to the date hereof.
Other than the foregoing arrangements, Kimco is not aware of any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
2.51. Opinion of Financial Advisor. Kimco has received the opinion of
Jefferies to the effect that, as of the date hereof, the Merger Consideration to
be paid by Kimco pursuant to the Merger is fair to the holders of Kimco Common
Stock from a financial point of view.
2.52. Price REIT Stock Ownership. Neither Kimco nor any of its
Subsidiaries owns any shares of capital stock of Price REIT or other securities
convertible into capital stock of Price REIT.
2.53. Related Party Transactions. Set forth in the Kimco Disclosure
Letter is a list of all arrangements, agreements and contracts entered into by
Kimco or any of its Subsidiaries with any executive officer, director or family
members of affiliates of such persons required to be disclosed in the Kimco
Reports (including reports and filings analogous to the Kimco Reports prior to
January 1, 1995) pursuant to the rules and regulations of the SEC. The copies of
such documents, all of which have been previously delivered or made available to
Price REIT, are listed on the Kimco Disclosure Letter and are true and correct.
2.54. Contracts and Commitments. The Kimco Disclosure Letter or the
Kimco Reports set forth, as of the date hereof, (i) all notes, debentures, bonds
and other evidence of indebtedness which are secured or collateralized by
mortgages, deeds of trust or other
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security interests in the Kimco Properties or personal property of Kimco and its
Subsidiaries and (ii) each Commitment entered into by Kimco or any of its
Subsidiaries which may result in total payments or liability in excess of
$500,000, excluding tenant reimbursements and leases entered into in the
ordinary course. Copies of the foregoing have been previously delivered or made
available to Price REIT, are listed on the Kimco Disclosure Letter or included
in the Kimco Reports and are true and correct. None of Kimco or any of its
Subsidiaries has received any notice of a default that has not been cured under
any of the documents described in clause (i) above or is in default respecting
any payment obligations thereunder beyond any applicable grace periods. All
joint venture agreements to which Kimco or any of its Subsidiaries is a party
are set forth on the Kimco Disclosure Letter and Kimco or its Subsidiaries are
not in default with respect to any obligations, which individually or in the
aggregate are material, thereunder.
2.55. Leases.
(a) The Kimco Disclosure Letter sets forth a list of all Kimco
Properties that are subject to or encumbered by any non-residential lease
accounting for 1% or more of Kimco's rental revenues for the most recent period
reflected in the financial statements included in the Kimco Reports (a "Material
Kimco Lease") and, with respect to each such Material Kimco Lease, sets forth
the following information:
(i) the name of the lessee;
(ii) the expiration date of the lease;
(iii) the amount (or method of determining the amount) of monthly
rentals due under the lease; and
(iv) with respect to any Material Kimco Lease with a remaining term
of less than 24 months, whether the lessee has notified Kimco in writing
of any intention not to renew, or seek to renew, the lease.
(b) Except as set forth in the Kimco Disclosure Letter, (i) all rental
payments due under each Material Kimco Lease have been paid during the period
January 1, 1997 through November 30, 1997 and (ii) to Kimco'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, under any Material Kimco Lease.
2.56. Investment Company Act of 1940. Neither Kimco nor any of its
Subsidiaries is, or at the Effective Time will be, required to be registered
under the Investment Company Act of 1940, as amended.
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ARTICLE 7
COVENANTS
2.57. No Solicitation by Price REIT. (a) Price REIT shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any of
its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes any Price REIT Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any Price REIT Takeover
Proposal; provided, however, that if the Board of Directors of Price REIT
determines in good faith, after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary duties to Price REIT's
stockholders under applicable law, Price REIT may, in response to a Price REIT
Takeover Proposal which was not solicited by it or which did not otherwise
result from a breach of this Section 7.1(a), and subject to providing prior
written notice of its decision to take such action to Kimco and compliance with
Section 7.1(c), (x) furnish information with respect to Price REIT and its
Subsidiaries to any person making a Price REIT Takeover Proposal pursuant to a
customary confidentiality agreement (as determined by Price REIT after
consultation with its outside counsel) and (y) participate in discussions or
negotiations regarding such Price REIT Takeover Proposal. For purposes of this
Agreement, "Price REIT Takeover Proposal" means any proposal made by a third
party to acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined voting power of the shares
of Price REIT Common Stock then outstanding or all or substantially all the
assets of Price REIT.
(b) Except as expressly permitted by this Section 7.1, neither the Board
of Directors of Price REIT nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to Kimco,
the approval or recommendation by such Board of Directors or such committee of
the Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Price REIT Takeover Proposal or (iii) cause Price REIT
to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "Price REIT Acquisition
Agreement") related to any Price REIT Takeover Proposal. Notwithstanding the
foregoing,
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in the event that a majority of the Board of Directors of Price REIT determines
in good faith (A) (based on the advice of a financial advisor of nationally
recognized reputation) that a pending Price REIT Takeover Proposal is more
favorable to Price REIT's stockholders than the Merger, (B) that such Price REIT
Takeover Proposal is reasonably capable of being consummated and (C) that there
is a substantial probability that the adoption of this Agreement by holders of
Price REIT Common Stock will not be obtained due to the pending Price REIT
Takeover Proposal, the Board of Directors of Price REIT may (subject to this and
the following sentences and in compliance with Section 9.3(a)) approve and
recommend such Price REIT Takeover Proposal and, in connection therewith,
withdraw or modify its approval or recommendation of this Agreement and the
Merger and terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause Price REIT to enter into any Price REIT
Acquisition Agreement with respect to such Price REIT Takeover Proposal), but
only at a time that is after the fifth business day following Kimco's receipt of
written notice advising Kimco that the Board of Directors of Price REIT is
prepared to accept a Price REIT Takeover Proposal, specifying the material terms
and conditions of such Price REIT Takeover Proposal and identifying the person
making such Price REIT Takeover Proposal.
(c) In addition to the obligations of Price REIT set forth in paragraphs
(a) and (b) of this Section 7.1, Price REIT shall immediately advise Kimco
orally and in writing of any request for information or of any Price REIT
Takeover Proposal, the material terms and conditions of such request or Price
REIT Takeover Proposal and the identity of the person making such request or
Price REIT Takeover Proposal. Price REIT will keep Kimco reasonably informed of
the status and details (including amendments or proposed amendments) of any such
request or Price REIT Takeover Proposal.
(d) Nothing contained in this Section 7.1 shall prohibit Price REIT from
taking and disclosing to its stockholders a position contemplated by Rule 14d-9
and Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to Price REIT's stockholders if, in the good faith judgment of the
Board of Directors of Price REIT, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that neither Price REIT nor its Board of
Directors nor any committee thereof shall withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this Agreement or
the Merger or approve or recommend, or propose publicly to approve or recommend,
a Price REIT Takeover Proposal, except in accordance with this Section 7.1.
2.58. No Solicitation by Kimco. (a) Kimco shall not, nor shall it permit
any of its Subsidiaries to, nor shall it authorize
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or permit any of its directors, officers or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its Subsidiaries to, directly or indirectly through another person,
(i) solicit, initiate or encourage (including by way of furnishing information),
or take any other action designed to facilitate, any inquiries or the making of
any proposal which constitutes any Kimco Takeover Proposal (as defined below) or
(ii) participate in any discussions or negotiations regarding any Kimco Takeover
Proposal; provided, however, that if the Board of Directors of Kimco determines
in good faith, after consultation with outside counsel, that it is necessary to
do so in order to comply with its fiduciary duties to Kimco's stockholders under
applicable law, Kimco may, in response to a Kimco Takeover Proposal which was
not solicited by it or which did not otherwise result from a breach of this
Section 7.2(a), and subject to providing prior written notice of its decision to
take such action to Price REIT and compliance with Section 7.2(c), (x) furnish
information with respect to Kimco and its Subsidiaries to any person making a
Kimco Takeover Proposal pursuant to a customary confidentiality agreement (as
determined by Kimco after consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such Kimco Takeover
Proposal. For purposes of this Agreement, "Kimco Takeover Proposal" means any
proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction,
for consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Kimco Common Stock then outstanding or
all or substantially all the assets of Kimco.
(b) Except as expressly permitted by this Section 7.2, neither the Board
of Directors of Kimco nor any committee thereof shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Price REIT, the
approval or recommendation by such Board of Directors or such committee of the
Merger, this Agreement or the issuance of Kimco Common Stock and Kimco Preferred
Stock in connection with the Merger, (ii) approve or recommend, or propose
publicly to approve or recommend, any Kimco Takeover Proposal or (iii) cause
Kimco to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "Kimco Acquisition Agreement")
related to any Kimco Takeover Proposal. Notwithstanding the foregoing, in the
event that a majority of the Board of Directors of Kimco determines in good
faith (A) (based on the advice of a financial advisor of nationally recognized
reputation) that a pending Kimco Takeover Proposal is more favorable to Kimco's
stockholders than the Merger, (B) that such Price REIT Takeover Proposal is
reasonably capable of being consummated and (C) that there is a substantial
probability that the adoption of this Agreement by holders of Kimco Common Stock
will not be obtained due
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to the existence of the pending Kimco Takeover Proposal, the Board of Directors
of Kimco may (subject to this and the following sentences) approve and recommend
such Kimco Takeover Proposal and, in connection therewith, withdraw or modify
its approval or recommendation of this Agreement and the Merger and terminate
this Agreement (and concurrently with or after such termination, if it so
chooses, cause Kimco to enter into any Kimco Acquisition Agreement with respect
to such Kimco Takeover Proposal), but only at a time that is after the fifth
business day following Price REIT's receipt of written notice advising Price
REIT that the Board of Directors of Kimco is prepared to accept a Kimco Takeover
Proposal, specifying the material terms and conditions of such Kimco Takeover
Proposal and identifying the person making such Kimco Takeover Proposal.
(c) In addition to the obligations of Kimco set forth in paragraphs (a)
and (b) of this Section 7.2, Kimco shall immediately advise Price REIT orally
and in writing of any request for information or of any Kimco Takeover Proposal,
the material terms and conditions of such request or Kimco Takeover Proposal and
the identity of the person making such request or Kimco Takeover Proposal. Kimco
will keep Price REIT reasonably informed of the status and details (including
amendments or proposed amendments) of any such request or Kimco Takeover
Proposal.
(d) Nothing contained in this Section 7.2 shall prohibit Kimco from
taking and disclosing to its stockholders a position contemplated by Rule 14d-9
and Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to Kimco's stockholders if, in the good faith judgment of the Board
of Directors of Kimco, after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable law;
provided, however, that neither Kimco nor its Board of Directors nor any
committee thereof shall withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement, the Merger, the issuance of
Kimco Common Stock and Kimco Preferred Stock in connection with the Merger, or
approve or recommend, or propose publicly to approve or recommend, a Kimco
Takeover Proposal, except in accordance with this Section 7.2.
2.59. Conduct of Businesses.
(i) Prior to the Effective Time, except as set forth in the
Price REIT Disclosure Letter or the Kimco Disclosure Letter or as contemplated
by this Agreement, unless the other party has consented in writing thereto,
Kimco and Price REIT:
(a) shall use their reasonable efforts, and shall cause each of
their respective Subsidiaries to use their reasonable efforts, to
preserve intact their business organizations and
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goodwill and keep available the services of their respective officers
and employees;
(b) shall confer on a regular basis with one or more representatives
of the other to report material operational matters and, subject to
Sections 7.1 and 7.2, respectively, any proposals to engage in material
transactions;
(c) shall promptly notify the other of any material emergency or
other material change in the condition (financial or otherwise),
business, properties, assets, liabilities, prospects or the normal
course of their businesses or in the operation of their properties, any
material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the
breach in any material respect of any representation or warranty
contained herein;
(d) shall set the record date for the quarterly dividend payable
with respect to the Kimco Common Stock and Kimco Preferred Stock and
Price REIT Common Stock, respectively, for the first calendar quarter of
1998 to a date no later than April 1; and
(e) shall promptly deliver to the other true and correct copies of
any report, statement or schedule filed with the SEC subsequent to the
date of this Agreement.
(ii) Prior to the Effective Time, except (1) as disclosed in the
Price REIT Two-Year Projection and the Price REIT Development Pipeline, copies
of which have been previously provided to Kimco, (2) as set forth in the Price
REIT Disclosure Letter, unless Kimco has consented in writing thereto, Price
REIT:
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted, subject to clause
(b) below;
(b) shall not, and shall cause its Subsidiaries not to, acquire,
enter into an option to acquire or exercise an option or contract to
acquire additional real property, encumber assets or commence
construction of, or enter into any agreement or commitment to develop or
construct, retail shopping center properties or other real estate
projects, except in the case of any of the foregoing in an amount not to
exceed $150,000,000 in the aggregate;
(c) shall not amend its charter or bylaws;
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(d) shall not (1) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on the
date hereof and disclosed pursuant to this Agreement, issue any shares
of its capital stock, effect any stock split, reverse stock split, stock
dividend, recapitalization or other similar transaction other than a
private placement or a sale pursuant to Rule 415 of the Securities Act
under an effective Price REIT registration statement of capital stock of
Price REIT for an amount not to exceed $75,000,000, the proceeds of
which shall be applied to pay down outstanding borrowings under Price
REIT's existing credit facilities or to the matters specified in Section
7.3(ii)(b), in each case in a manner consistent with Price REIT's past
practice, (2) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any
shares of its capital stock, (3) increase any compensation or enter into
or amend any employment agreement with any of its present or future
officers or directors or (4) adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase plan) or
amend any existing employee benefit plan in any material respect, except
for changes which are required by applicable law or are less favorable
to participants in such plans;
(e) shall not declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital
stock, except (1)(x) a dividend in an amount not to exceed $0.75 per
share of Price REIT Common Stock for the last quarter of the year ending
December 31, 1997 and (y) a dividend in an amount equal to the greater
of (I) $0.75 per quarter pro-rated for the period from January 1, 1998
up to and including the Closing Date and (II) the sum of (A) Price
REIT's estimated undistributed real estate investment trust taxable
income (calculated without regard to the dividends paid deductions as
defined in Section 561 of the Code and by excluding net capital gain)
within the meaning of Section 857(b)(2) of the Code for Price REIT's
1998 taxable year ending on the Closing Date and (B) Price REIT's
estimated undistributed net capital gain within the meaning of Section
857(b)(3) of the Code for Price REIT's 1998 taxable year ending on the
Closing Date, and except (2) in connection with the use of shares of
capital stock to pay the exercise price or tax withholding in connection
with stock-based employee benefit plans of Price REIT, directly or
indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or capital stock of any of its Subsidiaries, or make any
commitment for any such action;
(f) except in the ordinary course of business consistent with past
practice, shall not, and shall not permit
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any of its Subsidiaries to, sell, lease, mortgage or otherwise encumber
or subject to any Encumbrances or otherwise dispose of (i) any Price
REIT Properties or any of its capital stock of or other interests in its
Subsidiaries or (ii) any of its other assets which are material,
individually or in the aggregate;
(g) shall not, and shall not permit any of its Subsidiaries to, (i)
incur, assume or prepay any indebtedness for borrowed money in an amount
in excess of $100,000,000, which amounts shall be applied to pay down
outstanding borrowings under Price REIT's existing credit facilities or
to the matters specified in Section 7.3(ii)(b), in each case in a manner
consistent with Price REIT's past practice, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any third party or
(iii) make any loans, advances or capital contributions to, or (except
as permitted by Section 7.3(ii)(l)) investments in, any other person,
other than loans, advances and capital contributions to Subsidiaries;
(h) shall not, and shall not permit any of its Subsidiaries to, pay,
discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated financial statements (or the notes
thereto) of Price REIT included in the Price REIT Reports or incurred in
the ordinary course of business consistent with past practice;
(i) shall not, and shall not permit any of its Subsidiaries to,
enter into any Commitment which may result in total payments or
liability by or to it in excess of $200,000, except (1) tenant
reimbursements and leases entered into in the ordinary course consistent
with past practice and (2) capital expenditures disclosed in the Price
REIT Project Pipeline for 1998 and 1999, a copy of which has been
previously provided to Kimco;
(j) shall not, and shall not permit any of its Subsidiaries to,
enter into any Commitment with any officer, director, consultant or
affiliate of Price REIT or any of its Subsidiaries, other than a payment
to each of the three individuals entering into the Ancillary Agreements,
of an amount equal to the respective 1997 bonus awards paid to such
individuals by Price REIT pro-rated for the period from January 1, 1998
up to and including the Effective Time;
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(k) shall not, and shall not permit any of its Subsidiaries to, take
any other action that would cause the representations and warranties set
forth in Section 5.9 (with each reference therein to "ordinary course of
business" being deemed for purposes of this Section 7.3(ii)(k) to be
immediately followed by "consistent with past practice") to no longer be
true and correct;
(l) shall not acquire, or announce any proposed acquisition of, 50%
or more of the Voting Securities, or all or substantially all of the
assets, of another entity which has net assets in excess of $25,000,000.
As used in this Section 7.3(ii)(l), "Voting Securities" shall mean any
capital stock or partnership or membership interests having the right
generally to vote in the election of directors, in the case of a
corporation, or to otherwise generally select the governing body, in the
case of any other entity; and
(m) shall not, and shall not permit any of its Subsidiaries to,
authorize, or commit or agree to take, any of the foregoing actions.
(iii) Prior to the Effective Time, unless Price REIT has
consented in writing thereto, Kimco:
(a) shall not 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 Kimco), except (1)(v) (subject to
Section 7.3(i)(d)) a dividend in an amount not to exceed $0.48 per share
of Kimco Common Stock for the last calendar quarter of 1997, (w) a
dividend in the amount of $0.484375 per depositary share representing
the Class A Preferred Stock, (x) a dividend in the amount of $0.53125
per depositary share representing the Class B Preferred Stock, (y) a
dividend in the amount of $0.52345 per depositary share representing the
Class C Preferred Stock and (z) a dividend in an amount equal to the
greater of (I) $0.48 per quarter pro-rated for the period from January
1, 1998 up to and including the Closing Date and (II) the sum of (A)
Kimco's estimated undistributed real estate investment trust taxable
income (calculated without regard to dividends paid deductions as
defined in Section 561 of the Code and by excluding net capital gain)
within the meaning of Section 857(b)(2) of the Code for Kimco's 1998
taxable year ending on the Closing Date and (B) Kimco's estimated
undistributed net capital gain within the meaning of Section 857(b)(3)
of the Code for Kimco's 1998 taxable year ending on the Closing Date and
except (2) in connection with the use of
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shares of its capital stock to pay the exercise price or tax withholding
in connection with stock-based employee benefit plans of Kimco, directly
or indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or capital stock of any of its Subsidiaries, or make any
commitment for any such action; and
(b) shall not amend its charter or bylaws.
(iv) If Kimco enters into negotiations with another Person who
has a class of securities registered under the Exchange Act regarding the
acquisition of such Person (whether effected through a merger, consolidation,
share exchange, tender offer or other form), then at least three business days
prior to executing any definitive agreement with such Person, Kimco shall notify
Price REIT of such transaction and consult with Price REIT with respect thereto,
it being understood, however, that Price REIT shall have no approval rights with
respect thereto. As used in this Section 7.3(iv), "Person" means an individual,
corporation, partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
(v) Except as required by law, Kimco and Price REIT shall not,
and shall not permit any of their respective Subsidiaries to, voluntarily take
any action that would, or that could reasonably be expected to, result in (a)
any of the representations and warranties of such party set forth in this
Agreement that are qualified as to materiality becoming untrue at the Effective
Time, (b) any of such representations and warranties that are not qualified as
to materiality becoming untrue in any material respect at the Effective Time or
(c) except as contemplated by Sections 7.1 and 7.2, any of the conditions to the
Merger set forth in Article 8 not being satisfied.
2.60. Meetings of Stockholders. Each of Kimco and Price REIT will take
all action necessary in accordance with applicable law and its charter and
bylaws to convene a meeting of its stockholders as promptly as practicable to
consider and vote upon (a) in the case of Kimco, the approval of the issuance of
the Kimco Common Stock constituting a part of the Merger Consideration pursuant
to the Merger contemplated hereby and (b) in the case of Price REIT, the
approval of this Agreement and the transactions contemplated hereby. The Board
of Directors of Kimco and the Board of Directors of Price REIT shall each
recommend such approval and Kimco and Price REIT shall each take all lawful
action to solicit such approval, including, without limitation, timely mailing
the Proxy Statement/Prospectus (as defined in Section 7.8); provided, however,
that such recommendation or solicitation is subject to any action taken by, or
upon authority of, the Board of Directors of Kimco or the Board of Directors of
Price REIT, as the case may be, in the exercise of its good faith judgment as to
its fiduciary
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duties to its stockholders imposed by law. Kimco and Price REIT shall coordinate
and cooperate with respect to the timing of such meetings and shall use their
best efforts to hold such meetings on the same day. If on the date of the
stockholder meetings of Kimco and Price REIT established pursuant to this
paragraph, either Kimco or Price REIT has respectively received less than a
majority of the shares of the Kimco Common Stock present and voting at the
meeting of the holders of Kimco Common Stock in favor of the issuance of the
Kimco Common Stock constituting part of the Merger Consideration or a majority
of the outstanding shares of Price REIT Common Stock at the meeting of the
holders of Price REIT Common Stock in favor of the Merger and neither a Price
REIT Takeover Proposal nor a Kimco Takeover Proposal has been publicly disclosed
and not withdrawn prior to the date of such meeting, then both parties shall
recommend the adjournment of their respective stockholder meetings until the
first to occur of (i) the date (10) days after the originally scheduled date of
the stockholder meetings or (ii) the date on which duly executed proxies for the
requisite number of votes approving the Merger or the issuance of the Kimco
Common Stock constituting a part of the Merger Consideration, as applicable,
shall have been obtained. It shall be a condition to the mailing of the Proxy
Statement/Prospectus that (i) Kimco shall have received a "comfort" letter from
Ernst & Young LLP, independent public accountants for Price REIT, dated as of a
date within two business days before the date on which the Form S-4 (as defined
in Section 7.8) shall become effective, with respect to the financial statements
of Price REIT included in the Proxy Statement/Prospectus, in form and substance
reasonably satisfactory to Kimco, and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
registration statements and proxy statements similar to the Form S-4 and the
Proxy Statement/Prospectus, and (ii) Price REIT shall have received a "comfort"
letter from Coopers & ▇▇▇▇▇▇▇, L.L.P., independent public accountants for Kimco,
dated as of a date within two business days before the date on which the Form
S-4 shall become effective, with respect to the financial statements of Kimco
included in the Proxy Statement/Prospectus, in form and substance reasonably
satisfactory to Price REIT, and customary in scope and substance for "comfort"
letters delivered by independent public accountants in connection with
registration statements and proxy statements similar to the Form S-4 and the
Proxy Statement/ Prospectus.
2.61. Filings; Other Action. Subject to the terms and conditions herein
provided, Price REIT and Kimco shall: (a) to the extent required, promptly make
their respective filings with respect to the Merger; (b) use all reasonable
efforts to cooperate with one another in (i) determining which filings are
required to be made prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
Effective Time from, governmental or regulatory
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authorities of the United States, the several states and foreign jurisdictions
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorizations; (c) use all reasonable efforts to obtain in writing any consents
required from third parties in form reasonably satisfactory to Price REIT and
Kimco necessary to effectuate the Merger; and (d) use all reasonable efforts to
take, or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make effective
the transactions contemplated by this Agreement. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of Kimco and Price
REIT shall take all such necessary action.
2.62. Inspection of Records. From the date hereof to the Effective Time,
each of Price REIT and Kimco shall allow all designated officers, attorneys,
accountants and other representatives of the other access at all reasonable
times to the records and files, correspondence, audits and properties, as well
as to all information relating to commitments, contracts, titles and financial
position, or otherwise pertaining to the business and affairs, of Price REIT and
Kimco and their respective Subsidiaries.
2.63. Publicity. The initial press release relating to this Agreement
shall be a joint press release and thereafter Price REIT and Kimco shall,
subject to their respective legal obligations (including requirements of stock
exchanges and other similar regulatory bodies), consult with each other, and use
reasonable efforts to agree upon the text of any press release, before issuing
any such press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national securities exchange
with respect thereto.
2.64. Registration Statement. Kimco and Price REIT shall cooperate and
promptly prepare and Kimco shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the Merger Consideration issuable in the Merger and the Option
Consideration deliverable pursuant to Section 4.1(e), a portion of which
Registration Statement shall also serve as the joint proxy statement with
respect to the meetings of the stockholders of Price REIT and of Kimco in
connection with the Merger (the "Proxy Statement/Prospectus"). The respective
parties will cause the Proxy Statement/Prospectus and the Form S-4 to comply as
to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder. Kimco
shall use all reasonable efforts, and Price REIT
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will cooperate with Kimco, to have the Form S-4 declared effective by the SEC as
promptly as practicable. Kimco shall use its reasonable efforts to obtain, prior
to the effective date of the Form S-4, all necessary state securities law or
"Blue Sky" permits or approvals required to carry out the transactions
contemplated by this Agreement and will pay all expenses incident thereto. Kimco
agrees that the Proxy Statement/Prospectus and each amendment or supplement
thereto at the time of mailing thereof and at the time of the respective
meetings of stockholders of Kimco and Price REIT, or, in the case of the Form
S-4 and each amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the foregoing shall not apply to the
extent that any such untrue statement of a material fact or omission to state a
material fact was made by Kimco in reliance upon and in conformity with
information concerning Price REIT furnished to Kimco by Price REIT specifically
for use in the Proxy Statement/Prospectus. Price REIT agrees that the
information provided by it for inclusion in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the respective meetings of stockholders of Kimco and Price REIT, or, in
the case of information provided by Price REIT for inclusion in the Form S-4 or
any amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Kimco will advise Price REIT, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the Kimco Class D Preferred Stock issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
2.65. Listing Application. Kimco shall promptly prepare and submit to
the NYSE a listing application covering the Kimco Common Stock and the Kimco
Depositary Shares issuable in the Merger, and shall use its reasonable efforts
to obtain, prior to the Effective Time, approval for the listing of such Kimco
Common Stock and the Kimco Depositary Shares, subject to official notice of
issuance.
2.66. Assumption of Debt and Leases. Without limiting the generality of
Section 7.5, with respect to debt issued by Price REIT under that certain
Indenture by and between Price REIT and First Trust of California, National
Association (the "Trustee"),
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dated as of October 27, 1995 (the "Indenture"), to the extent the provisions of
the Indenture so require, Kimco shall execute and deliver to the Trustee (a) a
Supplemental Indenture, in form and substance as required by the Indenture (the
"Supplemental Indenture"), expressly assuming the obligations of Price REIT with
respect to the due and punctual payment of the principal of (and premium, if
any) and interest, if any, on all debt securities issued by Price REIT under the
Indenture and the due and punctual performance of all the terms, covenants and
conditions of the Indenture to be kept or performed by Price REIT and (b) such
other customary documents as the Trustee may request in accordance with the
Indenture with respect to the Supplemental Indenture.
2.67. Affiliates of Price REIT.
(a) At least 30 days prior to the Closing Date, Price REIT shall deliver
to Kimco a list of names and addresses of those persons who were, in Price
REIT's reasonable judgment, at the record date for its stockholders' meeting to
approve the Merger, "affiliates" (each such person, an "Affiliate") of Price
REIT within the meaning of Rule 145 of the rules and regulations promulgated
under the Securities Act ("Rule 145"). Price REIT shall provide Kimco such
information and documents as Kimco shall reasonably request for purposes of
reviewing such list. Price REIT shall use all reasonable efforts to deliver or
cause to be delivered to Kimco, prior to the Closing Date, from each of the
Affiliates of Price REIT identified in the foregoing list, an Affiliate Letter
in the form attached hereto as Exhibit B. Kimco shall be entitled to place
legends as specified in such Affiliate Letters on the certificates evidencing
any shares of the Merger Consideration to be received by such Affiliates
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Merger Consideration, consistent with
the terms of such Affiliate Letters.
(b) Kimco shall file the reports required to be filed by it under the
Exchange Act and the rules and regulations adopted by the SEC thereunder, and it
will take such further action as any Affiliate of Price REIT may reasonably
request, all to the extent required from time to time to enable such Affiliate
to sell the Merger Consideration received by such Affiliate in the Merger
without registration under the Securities Act pursuant to (i) Rule 145(d)(1)
under the Securities Act, as such Rule may be amended from time to time, or (ii)
any successor rule or regulation hereafter adopted by the SEC.
2.68. Expenses. Subject to Section 9.5, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, except that (a) the filing fee in
connection with the filing of the Form S-4 or Proxy
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Statement/Prospectus with the SEC and (b) the expenses incurred in connection
with printing and mailing the Form S-4 and the Proxy Statement/Prospectus, shall
be shared equally by Price REIT and Kimco.
2.69. Indemnification. (a) From and after the Effective Time, Kimco
shall cause the Surviving Corporation to keep in effect provisions in its
Articles of Incorporation and Bylaws providing for exculpation of director
liability and indemnification of directors, officers, employees and agents at
least to the extent that such persons are entitled thereto under the charter and
bylaws of Price REIT on the date hereof, subject to Maryland law, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors, officers, employees or agents of Price REIT (the "Indemnified
Parties") in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), unless such modification is required by law; provided, that in
the event any claim or claims are asserted or made within such six year period,
all rights to indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims; provided, further, that
from and after the Effective Time, Kimco shall guaranty the obligations of the
Surviving Corporation under the indemnification provisions of the charter and
bylaws of Price REIT existing on the date hereof to the directors, officers,
employees or agents of Price REIT who at any time prior to the Effective Time
were entitled to indemnification thereunder in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement).
(b) For a period of two years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by Price REIT (provided
that the Surviving Corporation may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous) with respect to claims arising from facts or events which occurred
before the Effective Time; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 7.13(b)
more than an amount equal to 200% of current annual premiums paid by Price REIT
for such insurance (which annual premiums Price REIT represents and warrants to
be $130,000 in the aggregate).
(c) In the event that the Surviving Corporation or any of its respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or
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surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case the successors and assigns of such entity shall
assume the obligations set forth in this Section 7.13, which obligations are
expressly intended to be for the irrevocable benefit or, and shall be
enforceable by, each Indemnified Party.
(d) This Section 7.13 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on the Surviving Corporation and its
representatives, successors and assigns.
2.70. Employees.
(a) Subject to considerations relating to the particular geographic
region in which the employee is located, it is the intent of the parties hereto
that the employees of Price REIT employed by the Surviving Corporation after the
Effective Time (the "Former Price REIT Employees") shall in general receive
compensation and benefits on the same basis and subject to the same standards as
the employees of Kimco; provided, that, for a period of one year after the
Closing Date the standards of compensation and benefits received by such
employees shall be substantially similar to, but not less than, those received
from Price REIT immediately prior to the Closing Date. In addition, all Former
Price REIT Employees shall, at the option of the Surviving Corporation, either
(i) continue to be eligible to participate in any "employee benefit plan," as
defined in Section 3(3) of ERISA, and any other benefit programs, policies and
arrangements of Price REIT which are, at the option of the Surviving
Corporation, continued by the Surviving Corporation, or alternatively shall be
eligible to participate in the same manner as other similarly situated employees
of the Surviving Corporation who were formerly employees of Kimco in any
"employee benefit plan," as defined in Section 3(3) of ERISA, and any other
benefit programs, policies and arrangements sponsored or maintained by the
Surviving Corporation after the Effective Time. With respect to each such
employee benefit plan, program, policy or arrangement, service with Price REIT
or any of its Subsidiaries (as applicable) shall be included for purposes of
determining eligibility to participate, vesting (if applicable) and entitlement
to benefits. The medical plan or plans maintained by the Surviving Corporation
after the Effective Time shall waive all limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to Former Price REIT Employees. With respect to
vacation benefits provided by the Surviving Corporation, the vacation benefit of
each Former Price REIT Employee shall include all hours of accrued but unused
vacation hours with Price REIT or its affiliates. Nothing in this Section
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7.14 shall require Kimco to continue the employment of any particular Price REIT
employee from and after the Closing Date.
(b) For purposes of this Section 7.14, the term "employees" shall mean
all current employees of Price REIT and its Subsidiaries (including those on
disability or approved leave of absence, paid or unpaid).
(c) As of the Effective Time, the Surviving Corporation shall adopt a
retention and severance program (the "Retention and Severance Program"). With
respect to the Covered Employees (as defined below), the Surviving Corporation
shall issue to such Covered Employees a letter substantially in the form
previously agreed upon by the parties. The Surviving Corporation shall maintain
the Retention and Severance Program in accordance with the terms thereof. Both
(i) the employees of Price REIT and its Subsidiaries who will participate in the
Retention and Severance Program (the "Covered Employees") and (ii) the aggregate
obligation of the Surviving Corporation under the Retention and Severance
Program shall be determined in the discretion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, subject
to the approval of Kimco, which approval shall not be unreasonably withheld.
(d) Concurrently with the execution and delivery of this Agreement,
Kimco will enter into an employment agreement in the forms attached hereto with
each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, each
of which shall become effective at, and only upon the occurrence of, the
Effective Time.
(e) Kimco agrees that options to purchase an aggregate of 60,000 shares
of Kimco Common Stock shall be available for grant on the Closing date, pursuant
to Kimco's Amended and Restated Stock Option Plan, to be allocated to
individuals in the discretion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, subject to the approval
of Kimco, which approval shall not be unreasonably withheld. The exercise price
of each such option shall be the closing price of a share of Kimco Common Stock
on the Closing Date, as reported by the NYSE.
2.71. Reorganization. From and after the date hereof and until the
Effective Time, neither Kimco nor Price REIT nor any of their respective
Subsidiaries or other affiliates shall (i) knowingly take any action, or
knowingly fail to take any action that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code; or
(ii) enter into any contract, agreement, commitment or arrangement with respect
to the foregoing.
2.72. Advice of Changes. Kimco and Price REIT shall each promptly advise
the other party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality
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becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect, (ii) the failure by it to comply in any material respect with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, and (iii) any change or
event having, or which, insofar as can reasonably be foreseen, could reasonably
be expected to have a material adverse effect on such party or on the truth of
their respective representations and warranties or the ability of the conditions
set forth in Article 8 to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement.
2.73. Disqualifying Event. In connection with the transactions
contemplated by the Merger, the Board of Directors of Price REIT shall not
exercise any power, and shall waive any right at any time, to take any action to
declare a Disqualifying Event (as such term is defined in Price REIT's charter)
under Article IX of Price REIT's charter or to redeem or to refuse to transfer
shares of Price REIT Common Stock pursuant thereto.
2.74. Governance. Kimco's Board of Directors shall take all action
necessary to cause the directors comprising the full Board of Directors of Kimco
at the Effective Time to be increased by one Director and shall take all such
action necessary to cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ to be selected as a Director of
Kimco for a term expiring at the 1999 annual meeting of shareholders following
the Effective Time, in order to fill the vacancy resulting from such newly
created directorship; provided that, notwithstanding the foregoing, in the event
the 1998 annual meeting of Kimco is held after the Effective Time, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ shall be among the nominees submitted to the stockholders of Kimco at
the 1998 annual meeting of shareholders to vote on the election of directors for
the term set forth above in accordance with Maryland law.
ARTICLE 8
CONDITIONS
2.75. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved in the manner required by applicable law or by applicable
regulations of any stock exchange or other
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regulatory body by the holders of the issued and outstanding shares of capital
stock of Price REIT and Kimco entitled to vote thereon.
(b) Neither of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(c) The Form S-4 shall have become effective and all necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement shall have been obtained and no stop
order with respect to any of the foregoing shall be in effect.
(d) Kimco shall have obtained the approval for the listing of the Kimco
Common Stock and Kimco Depositary Shares issuable in the Merger on the NYSE,
subject to official notice of issuance.
(e) All consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board, other regulatory body or
third parties required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time and except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or registration
would not have a material adverse effect on the business, results of operations
or financial condition of Kimco and Price REIT (and their respective
Subsidiaries), taken as a whole, following the Effective Time.
2.76. Conditions to Obligations of Price REIT to Effect the Merger. The
obligation of Price REIT to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, unless
waived by Price REIT:
(a) Kimco shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of Kimco and Merger Sub contained in this
Agreement that are qualified as to materiality or as to a Kimco Material Adverse
Effect shall be true and correct and any of such representations and warranties
that are not so qualified shall be true and correct in all material respects, in
each case, as of the Closing Date as if made on the Closing Date (except to the
extent that the representation or warranty is expressly limited by its terms to
another date), and Price REIT shall have received a certificate of the President
or a Vice President of Kimco, dated the Closing Date, certifying to such effect.
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(b) Price REIT shall have received the opinion dated the Closing Date of
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or another nationally recognized law firm selected
by Price REIT, based upon certificates and letters, which certificates and
letters are in the form agreed upon by the parties and are dated the Closing
Date, to the effect that the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
and that Price REIT and Kimco will each be a party to that reorganization within
the meaning of Section 368(b) of the Code.
(c) Price REIT shall have received the opinion of ▇▇▇▇▇ & Wood LLP in
the form attached as Exhibit C hereto (based upon customary representations in
the form attached thereto), dated the Closing Date, to the effect that,
commencing with its taxable year ended December 31, 1992, Kimco was organized in
conformity with the requirements for qualification and taxation as a REIT under
Section 856 of the Code, and its method of operation has enabled it and will
enable it to continue to meet the requirements for qualification and taxation as
a REIT under the Code.
(d) Price REIT shall have received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, which is acting as Maryland counsel to Price REIT, to the effect
that all requisite approvals of the Merger by the stockholders of Price REIT
have been obtained, that assuming due authorization and approval of the Merger
and the Articles of Merger by Kimco and its stockholders, upon filing of the
Articles of Merger with the SDAT, the Merger will be effective, and as to such
other matters of Maryland law as are customary in a transaction such as the
Merger.
(e) Price REIT shall have received a "comfort" letter from Coopers &
▇▇▇▇▇▇▇, L.L.P., dated the Closing Date, with respect to the financial
statements of Kimco included in the Proxy Statement/Prospectus, substantially in
the form described in Section 7.4.
(f) From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business or
operations of Kimco and its Subsidiaries, taken as a whole, that would have or
would be reasonably likely to have a Kimco Material Adverse Effect other than
any such change that results from a decline or deterioration in general economic
conditions or in conditions in the real estate markets in which either Price
REIT or Kimco operate and that affects both Price REIT and Kimco in a
substantially similar manner.
2.77. Conditions to Obligation of Kimco and Merger Sub to Effect the
Merger. The obligations of Kimco and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior
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to the Closing Date of the following conditions, unless waived by Kimco:
(a) Price REIT shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of Price REIT contained in this Agreement that
are qualified as to materiality or as to a Price REIT Material Adverse Effect
shall be true and correct and any such representations and warranties that are
not so qualified shall be true and correct in all material respects, in each
case, as of the Closing Date as if made on the Closing Date (except to the
extent that the representation or warranty is expressly limited by its terms to
another date), and Kimco shall have received a certificate of the President or a
Vice President of Price REIT, dated the Closing Date, certifying to such effect.
(b) Kimco shall have received the opinion dated the Closing Date of
▇▇▇▇▇ & ▇▇▇▇ LLP or another nationally recognized law firm selected by Kimco,
based upon certificates and letters, which certificates and letters are in the
form agreed to by the parties and are dated the Closing Date, to the effect that
the Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that Kimco and Price REIT
will each be a party to that reorganization within the meaning of Section 368(b)
of the Code.
(c) Kimco shall have received the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
in the form attached as Exhibit D hereto (based upon customary representations
in the form attached thereto), dated the Closing Date, to the effect that,
commencing with its taxable year ended December 31, 1991, Price REIT was
organized in conformity with the requirements for qualification and taxation as
a REIT under Section 856 of the Code, and its method of operation has enabled it
and will enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Code.
(d) Kimco shall have received the opinion of ▇▇▇▇▇ & Wood LLP, which is
acting as Maryland counsel to Kimco, to the effect that this Agreement is
enforceable under New York law, that all requisite approvals of the Merger by
the stockholders of Kimco have been obtained, that assuming due authorization
and approval of the Merger and the Articles of Merger by Price REIT and its
stockholders, upon filing of the Articles of Merger with the SDAT, the Merger
will be effective, and as to such other matters as are customary in a
transaction such as the Merger.
(e) Kimco shall have received a "comfort" letter from Ernst & Young LLP,
dated the Closing Date, with respect to the financial statements of Price REIT
included in the Proxy Statement/Prospectus, substantially in the form described
in Section 7.4.
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(e) From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business or
operations of Price REIT and its Subsidiaries, taken as a whole, that would have
or would be reasonably likely to have a Price REIT Material Adverse Effect other
than any such change that results from a decline or deterioration in general
economic conditions or in conditions in the real estate markets in which either
Price REIT or Kimco operate and that affects both Price REIT and Kimco in a
substantially similar manner.
ARTICLE 9
TERMINATION
2.78. Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval of this Agreement by the stockholders of Price REIT or
Kimco, by the mutual written consent of Kimco and Price REIT.
2.79. Termination by Either Kimco or Price REIT. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of Price REIT or the Board of Directors of Kimco if (a) the Merger shall not
have been consummated by June 30, 1998 or (b) a meeting of Price REIT's
stockholders shall have been duly convened and held and the approval of Price
REIT's stockholders required by Section 8.1(a) shall not have been obtained at
such meeting or at any adjournment thereof, or (c) a meeting of Kimco's
stockholders shall have been duly convened and held and the approval of Kimco's
stockholders required by Section 8.1(a) shall not have been obtained at such
meeting or at any adjournment thereof, or (d) a United States federal or state
court of competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable, provided, that the party seeking to terminate this Agreement
pursuant to this clause (d) shall have used all reasonable efforts to remove
such order, decree, ruling or injunction; and provided, in the case of a
termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the occurrence of the
failure referred to in said clause.
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2.80. Termination by Price REIT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the adoption and approval by the stockholders of Price REIT referred to in
Section 8.1(a), by action of the Board of Directors of Price REIT, (a) in
accordance with Section 7.1(b); provided, however, that in order for the
termination of this Agreement pursuant to this Section 9.3(a) to be deemed
effective, Price REIT shall have complied with all provisions contained in
Section 7.1, including the notice provisions therein, and with applicable
requirements, including the payment of all amounts due under Section 9.5 or (b)
if Kimco or any of its directors or officers shall participate in discussions or
negotiations in breach of Section 7.2, or (c) if there has been a breach by
Kimco or Merger Sub of any representation or warranty contained in this
Agreement which would have or would be reasonably likely to have a Kimco
Material Adverse Effect, which breach is not curable by June 29, 1998, or (d) if
there has been a material breach of any of the covenants or agreements set forth
in this Agreement on the part of Kimco, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by Price REIT to Kimco. Notwithstanding the foregoing, any termination
pursuant to Section 9.3(a) shall only be effective if, simultaneously with such
termination, all sums that Price REIT is required to pay to Kimco or deposit
with the escrow agent pursuant to Section 9.5 have been paid or deposited in
immediately available funds.
2.81. Termination by Kimco. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the stockholders of Kimco referred to in Section 8.1(a), by
action of the Board of Directors of Kimco, (a) in accordance with Section
7.2(b); provided, however, that in order for the termination of this Agreement
pursuant to this Section 9.4(a) to be deemed effective, Kimco shall have
complied with all provisions contained in Section 7.2, including the notice
provisions therein, or (b) if Price REIT or any of its directors or officers
shall participate in discussions or negotiations in breach of Section 7.1, or
(c) if there has been a breach by Price REIT of any representation or warranty
contained in this Agreement which would have or would be reasonably likely to
have a Price REIT Material Adverse Effect, which breach is not curable by June
29, 1998, (d) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of Price REIT, which breach
is not curable or, if curable, is not cured within 30 days after written notice
of such breach is given by Kimco to Price REIT or (e) in the event the Kimco
Average Closing Price or the closing price of Kimco Common Stock on the date
scheduled for the Closing or on either of the two immediately preceding business
days is less than $32.00.
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2.82. Certain Fees and Expenses Upon Effect of Termination and
Abandonment. (a) If this Agreement shall be terminated (i) pursuant to Section
9.3(a), 9.4(b) or 9.4(d) (to the extent such termination pursuant to Section
9.4(d) results from a material breach by Price REIT of the covenants set forth
in Sections 7.3(i)(a), 7.3(i)(c), 7.3(ii) (other than 7.3(ii)(c), 7.3(ii)(j) and
7.3(ii)(m) as it applies to Sections 7.3(ii)(c) and 7.3(ii)(j)), 7.5, 7.8 or
7.17; provided, that, the Board of Directors of Kimco makes a good faith
determination that such breach materially impairs either the ability to
consummate the Merger on the terms contemplated herein as of the date hereof or
the economic benefit of the Merger to Kimco anticipated at the date hereof),
then Price REIT will pay Kimco (provided Price REIT was not entitled to
terminate this Agreement pursuant to Section 9.3(c) or 9.3(d) at the time of
such termination) a fee equal to the Break-up Fee (as defined below) or (ii)
pursuant to Section 9.4(c), 9.4(d) (to the extent such termination pursuant to
Section 9.4(d) results from a material breach by Price REIT of any of its
covenants in this Agreement other than those enumerated in clause (i) of this
Section 9.5(a) to the extent that the Board of Directors of Kimco has made the
determination set forth in the first proviso of said clause (i)) or 9.2(b), then
Price REIT will pay Kimco (provided Price REIT was not entitled to terminate
this Agreement pursuant to Section 9.3(c) or 9.3(d) at the time of such
termination) an amount equal to the Break-Up Expenses (as defined below).
(b) If this Agreement shall be terminated (i) pursuant to Section
9.4(e), then Kimco will pay Price REIT (provided Kimco was not entitled to
terminate this Agreement pursuant to Section 9.4(b) or 9.4(c) at the time of
such termination) an amount equal to $6,250,000, (ii) pursuant to Section 9.4(a)
or 9.3(b), then Kimco will pay to Price REIT (provided Kimco was not entitled to
terminate this Agreement pursuant to Section 9.4(c) or 9.4(d) at the time of
such termination) a fee equal to the Break-up Fee or (iii) pursuant to Section
9.3(c), 9.3(d) or 9.2(c), then Kimco will pay Price REIT (provided Kimco was not
entitled to terminate this Agreement pursuant to Section 9.4(c) or 9.4(d) at the
time of such termination) an amount equal to the Break-Up Expenses.
(c) If the Merger is not consummated (other than due to the termination
of this Agreement pursuant to Section 9.1 or 9.2(c) or Kimco's failure to
perform its obligations under this Agreement in such a manner so as to entitle
Price REIT to terminate this Agreement pursuant to Section 9.3(c) or 9.3(d)) and
at the time of the termination of this Agreement a Price REIT Takeover Proposal
has been received by Price REIT, and either prior to the termination of this
Agreement or within twelve (12) months thereafter Price REIT enters into any
written Price REIT Acquisition Agreement which is subsequently consummated
(whether or not such Price REIT Acquisition Agreement is related to the Price
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REIT Takeover Proposal which had been received at the time of the termination of
this Agreement), then Price REIT shall pay the Break-Up Fee to Kimco. If the
Merger is not consummated (other than due to the termination of this Agreement
pursuant to Section 9.1 or 9.2(b) or Price REITs's failure to perform its
obligations under this Agreement in such a manner so as to entitle Kimco to
terminate this Agreement pursuant to Section 9.4(c) or 9.4(d)) and at the time
of the termination of this Agreement a Kimco Takeover Proposal has been received
by Kimco, and either prior to the termination of this Agreement or within twelve
(12) months thereafter Kimco enters into any written Kimco Acquisition Agreement
which is subsequently consummated (whether or not such Kimco Acquisition
Agreement is related to the Kimco Takeover Proposal which had been received at
the time of the termination of this Agreement), then Kimco shall pay the
Break-Up Fee to Price REIT. Any and all amounts to be paid pursuant to this
Section 9.5, shall be paid, by Price REIT to Kimco or Kimco to Price REIT (as
applicable), in immediately available funds within three days of termination
(except as otherwise provided in Section 9.3).
(d) As used in this Agreement, "Break-Up Fee" shall be an amount equal
to the lesser of (i) $12,500,000 plus Break-Up Expenses (the "Base Amount") and
(ii) the maximum amount that can be paid to Kimco without causing it to fail to
meet the requirements of Sections 856(c)(2) and (3) of the Code determined as if
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"), as
determined by independent accountants to the party hereto which becomes entitled
to the Break-Up Fee (the "Fee Recipient"). Notwithstanding the foregoing, in the
event the Fee Recipient receives a letter from outside counsel (the "Break-Up
Fee Tax Opinion") indicating that the Fee Recipient has received a ruling from
the IRS holding that the Fee Recipient'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
Break-Up Fee shall be an amount equal to the Base Amount. The obligation of the
party required to pay the Break-Up Fee to pay any unpaid portion of the Break-Up
Fee shall terminate five years from the date of this Agreement. In the event
that the Fee Recipient is not able to receive the full Base Amount, the other
party shall place the unpaid amount in escrow by wire transfer within three days
of termination (except as otherwise provided in Section 9.3) and shall not
release any portion thereof to the Fee Recipient unless and until the other
party receives either one or a combination of the following: (i) a letter from
the Fee Recipient's independent accountants indicating the maximum amount that
can be paid at that time to the Fee Recipient without causing the Fee Recipient
to fail to meet the REIT Requirements or (ii) a Break-Up Fee Tax Opinion, in
either of which events the other party shall pay to the Fee Recipient the lesser
of the unpaid
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Base Amount or the maximum amount stated in the letter referred to in (i) above.
Each of Price REIT and Kimco agrees to amend this Section 9.5 at the request of
the Fee Recipient in order to (x) maximize the portion of the Break-Up Fee that
may be distributed to the Fee Recipient hereunder without causing the Fee
Recipient to fail to meet the requirements of Sections 856 (c)(2) and (3) of the
Code or (y) improve the Fee Recipient's chances of securing a favorable ruling
described in this Section 9.5(b), provided that no such amendment may result in
any additional cost or expense to the other party. Amounts remaining in escrow
after the obligation of a party to pay the Break-Up Fee terminates shall be
released to the party making such escrow deposit.
(e) The "Break-Up Expenses" payable to Kimco or Price REIT, as the case
may be (the "Expenses Recipient"), shall be an amount equal to the lesser of (i)
$2,000,000, (ii) the Expenses Recipient's out-of-pocket expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, all attorneys', accountants and investment
bankers' fees and expenses) and (iii) the maximum amount that can be paid to the
Expenses Recipient without causing it to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute Qualifying Income, as determined by independent
accountants to the Expenses Recipient. Notwithstanding the foregoing, in the
event the Expenses Recipient receives a letter from outside counsel (the
"Break-Up Fee Tax Opinion") indicating that the Expenses Recipient has received
a ruling from the IRS holding that the Expenses Recipient's receipt of the
Break-Up Expenses would either constitute Qualifying Income or would be excluded
from gross income within the meaning of the REIT Requirements, the Break-Up
Expenses shall be determined without regard to clause (iii) above. The
obligation of Kimco or Price REIT, as applicable ("Payor"), to pay any unpaid
portion of the Break-Up Expenses shall terminate five years from the date of
this Agreement. In the event that the Expenses Recipient is not able to receive
the full Break-Up Expenses, the Payor shall place the unpaid amount in escrow
and shall not release any portion thereof to the Expenses Recipient unless and
until the Payor receives any one or combination of the following: (i) a letter
from the Expenses Recipient's independent accountants indicating the maximum
amount that can be paid at the time to the Expenses Recipient without causing
the Expenses Recipient to fail to meet the REIT Requirements or (ii) a Break-Up
Expense Tax Opinion, in either of such events the Payor shall pay to the
Expenses Recipient the lesser of the unpaid Break-Up Expenses or the maximum
amount stated in the letter referred to in (i) above. Amounts remaining in
escrow after the obligation of a party to pay the Break-Up Expenses terminates
shall be released to the party making such escrow deposit.
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(f) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article 9, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
9.5 and Section 7.12 and except for the provisions of Section 10.3, 10.4, 10.5,
10.6, 10.7, 10.9, 10.10, 10.13, 10.14 and 10.15. In the event either party is
required to file suit to seek all or a portion of Break-up Fee and/or Break-up
Expenses, and it ultimately succeeds, it shall be entitled to all expenses,
including attorneys' fees and expenses, which it has incurred in enforcing its
rights hereunder.
2.83. Extension; Waiver. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
2.84. Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger,
provided, however, that the agreements contained in Article 4, the last sentence
of Section 7.5 and Sections 7.11, 7.13 and 7.14, and this Article 10 shall
survive the Merger.
2.85. Notices. Any notice required to be given hereunder shall be in
writing and shall be sent by facsimile transmission (confirmed by any of the
methods that follow), courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid) and addressed as follows:
If to Kimco or Merger Sub:
▇▇▇▇▇▇ ▇▇▇▇▇▇
Kimco Realty Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & Wood LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Price REIT:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
The Price REIT, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
2.86. Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Sections 7.13 and 7.14(e) (collectively, the "Third Party Provisions"),
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement. The Third Party Provisions may
be enforced by the beneficiaries thereof.
2.87. Entire Agreement. This Agreement, the Exhibits, the Price REIT
Disclosure Letter and the Kimco Disclosure Letter and any documents delivered by
the parties in connection herewith constitute the entire agreement among the
parties with respect to
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the subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
2.88. Confidentiality. (a) Except to the extent that any of the
provisions of that certain confidentiality agreement dated December 9, 1997
between Kimco and Price REIT (the "Confidentiality Agreement") are inconsistent
with this Agreement, in which case the terms of this Agreement shall govern and
supersede such provisions, the parties hereto acknowledge and agree that the
Confidentiality Agreement remains in full force and effect and shall survive any
termination of this Agreement.
(a) Each party hereto further agrees that if this Agreement is
terminated in accordance with its terms, until June 30, 1998, (1) it will not
offer to hire or hire any person currently or formerly employed by the other
party with whom such party has had contact prior hereto other than persons whose
employment shall have been terminated by such other party prior to the date of
such offer to hire or hiring and (2) neither it nor its Affiliates shall,
directly or indirectly, (A) (w) solicit, seek or offer to effect or effect, (x)
negotiate with or provide any information to the Board of Directors of the other
party, any director or officer of the other party or any stockholder of the
other party with respect to, (y) make any statement or proposal, whether written
or oral, either alone or in concert with others, to the Board of Directors of
the other party, any director or officer of the other party or any stockholder
of the other party or any other person with respect to, or (z) make any public
announcement (except as required by law in respect of actions permitted hereby)
or proposal or offer whatsoever (including, but not limited to, any
"solicitation" of "proxies" as such terms are defined or used in Regulation 14A
of the Exchange Act) with respect to, (i) any form of business combination or
similar or other extraordinary transaction involving the other party or any
Affiliate thereof, including, without limitation, a merger, tender or exchange
offer or liquidation of the other party's assets, (ii) any form of
restructuring, recapitalization or similar transaction with respect to the other
party or any Affiliate thereof, (iii) any purchase of any securities or assets,
or rights or options to acquire any securities or assets (through purchase,
exchange, conversion or otherwise), of the other party or any Affiliate thereof,
(iv) any proposal to seek representation on the Board of Directors of the other
party or otherwise to seek to control or influence the management, Board of
Directors or policies of the other party or any Affiliate thereof, (v) any
request or proposal to waive, terminate or amend the provisions of this Section
10.5, or (vi) any proposal or other statement inconsistent with the terms of
this Section 10.5 or (B) instigate, encourage, join, act in concert with
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or assist (including, but not limited to, providing or assisting in any way in
the obtaining of financing for, or acting as a joint or co-bidder for the other
party with) any third party to do any of the foregoing, unless and until such
party has received the prior written invitation or approval of a majority of the
Board of Directors of the other party to do any of the foregoing; provided that
without such invitation or approval, either party may at any time, on a
confidential, non-public basis, submit to the Chief Executive Officer or, if
none, the President of the other party a proposal to (I) amend any of the
provisions of this Section 10.5(e) or (II) effect a business combination or
other extraordinary transaction with the other party providing for the
acquisition of all or substantially all of the assets or the securities of the
other party, including, without limitation, a merger, tender offer or exchange
offer. Each party hereto agrees that it will not agree with any third party not
to waive its rights under this Section 10.5.
2.89. Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of Price REIT and Kimco and prior to the filing of the Articles of
Merger with the State Department of Assessments and Taxation of Maryland;
provided, however, that after any such stockholder approval is obtained, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. The parties agree to amend
this Agreement in the manner provided in the immediately preceding sentence to
the extent required to (a) continue the status of the parties as REITs or (b)
preserve the Merger as a tax-free reorganization under Section 368 of the Code.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
2.90. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its rules
of conflict of laws, except that the validity of the Merger shall be governed by
the MGCL. Each of Price REIT and Kimco hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States of America located in the State of New York
(the "New York Courts") for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any litigation relating thereto except in such courts), waives any objection to
the laying of venue of any such litigation in the New York Courts and agrees not
to plead or claim in any New York Court that such litigation brought therein has
been brought in an inconvenient forum.
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2.91. Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
2.92. Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
2.93. Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
2.94. Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
or warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
10.6, waive compliance with any of the agreements or conditions of the other
party contained in this Agreement. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. 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 those rights.
2.95. Incorporation. The Price REIT Disclosure Letter, the
Confidentiality Agreement and the Kimco Disclosure Letter and all Exhibits
attached hereto and thereto and referred to herein and therein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
2.96. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
2.97. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with
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its specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any New York Court, this being in addition to any other remedy to which they are
entitled at law or in equity.
2.98. Definitions. As used in this Agreement: (a) "Subsidiary" when used
with respect to any party means any corporation, partnership, limited liability
company, joint venture, business trust or other entity, of which such party
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization; and (b) "knowledge" or "best knowledge"
of any person means the actual knowledge of such person or of such person's
directors and executive officers after reasonable inquiry.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
KIMCO REALTY CORPORATION
ATTEST:
By: _____________________________ By: _____________________________
REIT SUB, INC.
ATTEST:
By: _____________________________ By: _____________________________
THE PRICE REIT, INC.
ATTEST:
By: _____________________________ By: _____________________________
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SCHEDULE 6.2
1. Executive Employment Agreement dated January 13, 1998 between Kimco and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
2. Executive Employment Agreement dated January 13, 1998 between Kimco and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
3. Executive Employment Agreement dated January 13, 1998 between Kimco and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
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EXHIBIT A
ARTICLES SUPPLEMENTARY
OF
KIMCO REALTY CORPORATION
Kimco Realty Corporation, a corporation organized and existing under the laws of
the State of Maryland (the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in the Board of
Directors of the Corporation (the "Board of Directors") in accordance with
Article IV.D. of the charter of the Corporation, including these Articles
Supplementary (the "Charter"), the Board of Directors, at a meeting held on
January 13, 1998, adopted resolutions reclassifying 700,000 shares (the
"Shares") of Preferred Stock (as defined in the Charter) as a separate class of
stock, 7.5% Class D Cumulative Convertible Preferred Stock, par value $1.00 per
share ("Class D Preferred Stock"), and reclassifying 700,000 shares (the "Class
D Excess Shares") of Preferred Stock (as defined in the Charter) as a separate
class of stock, Class D Excess Preferred Stock, par value $1.00 per share
("Class D Excess Preferred Stock"), each with the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications, and terms and conditions of redemption set forth
below:
7.5% Class D Cumulative Convertible Preferred Stock
2.99. Certain Definitions.
Unless the context otherwise requires, the terms defined in this
paragraph (A) shall have, for all purposes of the provisions of the Charter in
respect of the Class D Preferred Stock, the meanings herein specified (with
terms defined in the singular having comparable meanings when used in the
plural).
Beneficial Ownership. The term "Beneficial Ownership" shall mean
ownership of Class D Preferred Stock or Class D Excess Preferred Stock by a
Person who is or would be treated as an owner of such Class D Preferred Stock or
Class D Excess Preferred Stock either directly or constructively through the
application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of
the
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Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned"
shall have the correlative meanings.
Beneficiary. The term "Beneficiary" shall mean the beneficiary of the
Trust as determined pursuant to subparagraph (11)(e)(1) of paragraph (G) below.
Business Day. The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in The City of New York are authorized or required by law,
regulation or executive order to close.
Class A Preferred Stock. The term "Class A Preferred Stock" shall mean
the 7 3/4% Class A Cumulative Redeemable Preferred Stock, $1.00 par value per
share, of the Corporation.
Class B Preferred Stock. The term "Class B Preferred Stock" shall mean
the 8 1/2% Class B Cumulative Redeemable Preferred Stock, $1.00 par value per
share, of the Corporation.
Class C Preferred Stock. The term "Class C Preferred Stock" shall mean
the 8 3/8% Class C Cumulative Redeemable Preferred Stock, $1.00 par value per
share, of the Corporation.
Code. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
Common Equity. The term "Common Equity" shall mean all shares now or
hereafter authorized of any class of common stock of the Corporation, including
the Common Stock, and any other stock of the Corporation, howsoever designated,
authorized after the Initial Issue Date, which has the right (subject always to
prior rights of any class or series of preferred stock) to participate in the
distribution of the assets and earnings of the Corporation without limit as to
per share amount.
Common Stock. The term "Common Stock" shall mean the common stock, par
value $.01 per share, of the Corporation.
Constructive Ownership. The term "Constructive Ownership" shall mean
ownership of Class D Preferred Stock or Class D Excess Preferred Stock by a
Person who is or would be treated as an owner of such Class D Preferred Stock or
Class D Excess Preferred Stock either directly 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.
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Conversion Price. The term "Conversion Price" shall mean a conversion
price of $402.50 per share of Common Stock, subject to adjustment as set forth
in paragraph E.
Depositary Shares. The term "Depositary Shares" shall mean the
Depositary Shares each representing 1/10 of a share of Class D Preferred Stock.
Dividend Payment Date. The term "Dividend Payment Date" shall have the
meaning set forth in subparagraph (2) of paragraph (B) below.
Dividend Period. The term "Dividend Period" shall mean the period from,
and including, the Initial Issue Date to, but not including, the first Dividend
Payment Date, and thereafter each quarterly period from, and including, the
Dividend Payment Date to, but not including, the next Dividend Payment Date.
Initial Issue Date. The term "Initial Issue Date" shall mean the date
that shares of Class D Preferred Stock are first issued by the Corporation.
Junior Stock. The term "Junior Stock" shall mean, as the case may be,
(i) the Common Equity and any other class or series of stock of the Corporation
which is not entitled to receive any dividends in any Dividend Period unless all
dividends required to have been paid or declared and set apart for payment on
the Class D Preferred Stock shall have been so paid or declared and set apart
for payment or (ii) the Common Equity and any other class or series of stock of
the Corporation which is not entitled to receive any assets upon liquidation,
dissolution or winding up of the affairs of the Corporation until the Class D
Preferred Stock shall have received the entire amount to which such Class D
Preferred Stock is entitled upon such liquidation, dissolution or winding up.
IRS. The term "IRS" shall mean the United States Internal Revenue
Service.
Liquidation Preference. The term "Liquidation Preference" shall mean
$250.00 per share of Class D Preferred Stock, plus any accumulated, accrued and
unpaid dividends.
Market Price. The term "Market Price" shall mean the price of the Class
D Preferred Stock (i) as determined by multiplying by ten the last reported
sales price of the Depositary Shares reported on the New York Stock Exchange
("NYSE") on the trading day immediately preceding the relevant date or, (ii) if
the Depositary Shares are not then traded on the NYSE, as determined by the last
reported sales price of the Depositary Shares on the trading day immediately
preceding the relevant date as reported on any exchange or quotation system over
which the Depositary Shares may be traded, or
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(iii) if the Depositary Shares are not then traded over any exchange or
quotation system, as determined in good faith by the Board of Directors of the
Corporation.
Ownership Limit. The term "Ownership Limit" shall mean not more than
9.8% of the outstanding shares of Preferred Equity Stock.
Parity Stock. The term "Parity Stock" shall mean, as the case may be,
(i) any class or series of stock of the Corporation which is entitled to receive
payment of dividends on a parity with the Class D Preferred Stock or (ii) any
class or series of stock of the Corporation which is entitled to receive assets
upon liquidation, dissolution or winding up of the affairs of the Corporation on
a parity with the Class D Preferred Stock. The term "Parity Stock" shall include
the Class A Preferred Stock, the Class B Preferred Stock and the Class C
Preferred Stock.
Person. The term "Person" shall mean an individual, corporation,
partnership, 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, and also includes a group as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; but does not include an underwriter which participates in a
public offering of the Class D Preferred Stock or any interest therein, provided
that such ownership by such underwriter would not result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or
otherwise result in the Corporation failing to qualify as a REIT.
Preferred Equity Stock. The term "Preferred Equity Stock" shall mean
shares of stock that are either Class D Preferred Stock or Class D Excess
Preferred Stock.
Press Release. The term "Press Release" shall mean the press release
issued pursuant to subparagraph (1) of paragraph (D).
Purported Beneficial Transferee. The term "Purported Beneficial
Transferee" shall mean, with respect to any purported Transfer which results in
Class D Excess Preferred Stock, the purported beneficial transferee or owner for
whom the Purported Record Transferee would have acquired or owned shares of
Class D Preferred Stock if such Transfer had been valid under subparagraph (1)
of paragraph (G) below.
Purported Record Transferee. The term "Purported Record Transferee"
shall mean, with respect to any purported Transfer which results in Class D
Excess Preferred Stock, the record holder
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of the Preferred Equity Stock if such Transfer had been valid under subparagraph
(1) of paragraph (G) below.
REIT. The term "REIT" shall mean a real estate investment trust under
Section 856 of the Code.
Record Date. The term "Record Date" shall mean the date designated by
the Board of Directors of the Corporation at the time a dividend is declared;
provided, however, that such Record Date shall be the first day of the calendar
month in which the applicable Dividend Payment Date falls or such other date
designated by the Board of Directors for the payment of dividends that is not
more than thirty (30) days nor less than ten (10) days prior to such Dividend
Payment Date.
Redemption Date. The term "Redemption Date" shall have the meaning set
forth in subparagraph (1) of paragraph (D) below.
Redemption Shares. The term "Redemption Shares" shall mean such number
of shares of Common Stock into which Class D Preferred Stock is convertible at
the Conversion Price as of the opening of business on the Redemption Date.
Senior Stock. The term "Senior Stock" shall mean, as the case may be,
(i) any class or series of stock of the Corporation created after the Initial
Issue Date in accordance with subparagraph (1) of paragraph (F) ranking senior
to the Class D Preferred Stock in respect of the right to receive dividends or
(ii) any class or series of stock of the Corporation created after the Initial
Issue Date in accordance with subparagraph (1) of paragraph (F) ranking senior
to the Class D Preferred Stock in respect of the right to participate in any
distribution upon liquidation, dissolution or winding up of the affairs of the
Corporation.
Trading Day. The term "Trading Day" shall mean any day on which the
securities in question are traded on the NYSE.
Transfer. The term "Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Preferred Equity Stock, including (i)
the granting of any option or entering into any agreement for the sale, transfer
or other disposition of Preferred Equity Stock or (ii) the sale, transfer,
assignment or other disposition of any securities (or rights convertible into or
exchangeable for Preferred Equity Stock), whether voluntary or involuntary,
whether of record or beneficially or Beneficially or Constructively (including
but not limited to transfers of interests in other entities which result in
changes in Beneficial or Constructive Ownership of Preferred Equity Stock), and
whether by operation of law or otherwise.
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Trust. The term "Trust" shall mean the trust created pursuant to
subparagraph (11)(a) of paragraph (G).
Trustee. The term "Trustee" shall mean the Corporation as trustee for
the Trust, and any successor trustee appointed by the Corporation.
100. Dividends.
(a) The record holders of Class D Preferred Stock shall be entitled to
receive dividends, when and as declared by the Board of Directors of the
Corporation, out of funds legally available for payment of dividends. Such
dividends shall be payable by the Corporation in cash at the rate per share
equal to the greater of (i) $18.75 per annum or (ii) the cash dividends
(determined on each Dividend Payment Date referred to in subsection (2) of this
paragraph (B)) on the shares of Common Stock (or portion thereof) into which a
share of the Class D Preferred Stock is convertible, plus $0.275 per quarter.
(b) Dividends on shares of Class D Preferred Stock shall accrue and be
cumulative from the Initial Issue Date. Dividends shall be payable quarterly in
arrears when and as declared by the Board of Directors of the Corporation on
January 15, April 15, July 15 and October 15 of each year (each, a "Dividend
Payment Date"), commencing, with respect to the period commencing on the Initial
Issue Date and ending on June 30, 1998, on July 15, 1998. If any Dividend
Payment Date occurs on a day that is not a Business Day, any accrued dividends
otherwise payable on such Dividend Payment Date shall be paid on the next
succeeding Business Day. The amount of dividends payable on Class D Preferred
Stock for each full Dividend Period shall be computed by dividing by four (4)
the annual dividend rate set forth in subparagraph (1) of this paragraph (B)
above. Dividends payable in respect of the first Dividend Period and any
subsequent Dividend Period which is less than a full Dividend Period in length
will be computed on the basis of a 360-day year consisting of twelve 30-day
months. Dividends shall be paid to the holders of record of the Class D
Preferred Stock as their names shall appear on the stock transfer records of the
Corporation at the close of business on the Record Date for such dividend.
Dividends in respect of any past Dividend Periods that are in arrears may be
declared and paid at any time to holders of record on the Record Date therefor.
Any dividend payment made on shares of Class D Preferred Stock shall be first
credited against the earliest accrued but unpaid dividend due which remains
payable. Upon issuance, the Class D Preferred Stock will rank on parity as to
dividends with the Class A Preferred Stock, the Class B Preferred Stock and the
Class C Preferred Stock.
(c) If any shares of Class D Preferred Stock are outstanding, no full
dividends shall be declared or paid or set
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apart for payment on any other class or series of Preferred Stock ranking junior
to or on a parity with the Class D Preferred Stock as to dividends for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Class D Preferred Stock for all past Dividend
Periods and the then current Dividend Period. When dividends are not paid in
full (or a sum sufficient for such full payment is not so set apart) upon the
shares of the Class D Preferred Stock and any other class or series of Preferred
Stock ranking on a parity as to dividends with the Class D Preferred Stock, all
dividends declared upon the shares of the Class D Preferred Stock and any other
such class or series of Preferred Stock shall be declared pro rata so that the
amount of dividends declared per share on the Class D Preferred Stock and such
class or series of Preferred Stock shall in all cases bear to each other the
same ratio that accrued and unpaid dividends per share on the shares of the
Class D Preferred Stock and such class or series of Preferred Stock bear to each
other. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Class D Preferred Stock which
may be in arrears.
(d) Except as provided in subparagraph (3) of this paragraph (B), unless
full cumulative dividends on the Class D Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past Dividend Periods and the then
current Dividend Period, no dividends (other than in common stock or other stock
ranking junior to the Class D Preferred Stock as to dividends and upon
liquidation, dissolution and winding up of the affairs of the Corporation) shall
be declared or paid or set apart for payment or other distribution shall be
declared or made upon any Junior Stock or Parity Stock nor shall any Junior
Stock or Parity Stock be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange for other stock of the Corporation ranking junior to
the Class D Preferred Stock as to dividends and upon liquidation, dissolution or
winding up).
(e) Notwithstanding anything contained herein to the contrary, no
dividends on shares of Class D Preferred Stock shall be authorized or declared
by the Board of Directors of the Corporation or paid or set apart for payment by
the Corporation at such time as the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness, prohibits
such authorization, declaration, payment or setting apart for payment or
provides that such authorization, declaration, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or to the
extent such declaration or payment shall be restricted or prohibited by law.
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(f) Notwithstanding anything contained herein to the contrary, dividends
on the Class D Preferred Stock, if not paid on the applicable Dividend Payment
Date, will accrue whether or not dividends are authorized or declared for such
Dividend Payment Date, whether or not the Corporation has earnings and whether
or not there are funds legally available for the payment of such dividends.
(g) If, for any taxable year, the Corporation 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
stock (the "Total Dividends"), then the portion of the Capital Gains Amount that
shall be allocable to holders of the Class D Preferred Stock shall be the amount
that the total dividends paid or made available to the holders of the Class D
Preferred Stock for the year bears to the Total Dividends.
101. Distributions Upon Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, subject to the prior preferences
and other rights of any class or series of stock ranking senior to the Class D
Preferred Stock as to the distribution of assets upon liquidation, dissolution
or winding up of the affairs of the Corporation, but before any distribution or
payment shall be made to the holders of any class or series of stock ranking
junior to the Class D Preferred Stock as to the distribution of assets upon any
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Class D Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution to its stockholders
liquidating distributions in cash or property at its fair market value as
determined by the Board of Directors of the Corporation in the amount of the
Liquidation Preference per share plus an amount equal to all dividends accrued
and unpaid thereon to the date of such liquidation, dissolution or winding up.
After payment of the full amount of the liquidating distributions to which they
are entitled, the holders of Class D Preferred Stock will have no right or claim
to any of the remaining assets of the Corporation and shall not be entitled to
any other distribution in the event of liquidation, dissolution or winding up of
the affairs of the Corporation.
(b) In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the legally available assets of the
Corporation are insufficient to pay the amount of the Liquidation Preference per
share plus an amount equal to all dividends accrued and unpaid on the Class D
Preferred Stock
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and the corresponding amounts payable on each class or series of stock ranking
on a parity with the Class D Preferred Stock as to the distribution of assets
upon liquidation, dissolution or winding up of the affairs of the Corporation,
then the holders of the Class D Preferred Stock and all such stock shall share
ratably in any such distribution of assets in proportion to the full liquidating
distributions to which they otherwise would be respectively entitled. Upon
issuance, the Class D Preferred Stock will rank on parity with the Class A
Preferred Stock, the Class B Preferred Stock and the Class C Preferred Stock as
to the distribution of assets upon any liquidation, dissolution or winding up of
the affairs of the Corporation. Neither the consolidation or merger of the
Corporation into or with another corporation or corporations nor the sale,
lease, transfer or conveyance of all or substantially all of the assets of the
Corporation to another corporation or any other entity shall be deemed a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this paragraph (C).
102. Redemption by the Corporation.
(a) The Class D Preferred Stock may be redeemed for Redemption Shares,
in whole or from time to time in part, on any date on or after the third
anniversary of the Initial Issue Date (or if such date is not a Business Day, on
the first Business Day after such date) at the option of the Corporation if for
any 20 Trading Days within any period of 30 consecutive Trading Days, including
the last Trading Day of such period, the average closing price per share of the
Common Stock exceeds 12% of the Conversion Price. In order to exercise its
redemption option, the Corporation shall issue a press release announcing the
redemption (the "Press Release") prior to the opening of business on the fifth
Trading Day after the condition in the preceding sentence has, from time to
time, been met. The Press Release shall announce the redemption and set forth
the number of shares of Class D Preferred Stock that the Corporation intends to
redeem. The redemption date shall be selected by the Corporation, shall be
specified in the notice of the redemption and shall not be less than 30 days or
more than 60 days after the date on which the Corporation issues the Press
Release (the "Redemption Date").
(b) Upon any redemption of the Class D Preferred Stock, the Corporation
shall pay in cash any accrued and unpaid dividends in arrears for any Dividend
Period ending on or prior to the redemption Date. If the Redemption Date falls
after a Record Date and prior to the corresponding Dividend Payment Date, then
each holder of Class D Preferred Stock at the close of business on such Record
Date shall be entitled to the dividend payable on such shares of Class D
Preferred Stock on the corresponding dividend payment date notwithstanding the
redemption of such shares of Class D Preferred Stock before such Dividend
Payment Date. Except as
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provided above, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on such shares of Class D Preferred Stock
to be redeemed or on the shares of Common Stock issued upon such redemption.
(c) If the Corporation shall redeem shares of Class D Preferred Stock
pursuant to subparagraph (1) of this paragraph (D), notice of such redemption
shall be given not more than five Business Days after the date on which the
Corporation issues the Press Release to each holder of record of the shares of
Class D Preferred Stock to be redeemed. Notice shall be by publication in a
newspaper of general circulation in The City of New York, such publication to be
made once a week for two successive weeks commencing not less than 30 nor more
than 60 days prior to the Redemption Date. A similar notice will be mailed by
the Corporation, postage prepaid, not less than 30 nor more than 60 days prior
to the Redemption Date, addressed to the respective holders of record of the
Class D Preferred Stock to be redeemed at their respective addressees as they
appear on the stock transfer records of the Corporation. No failure to give such
notice or any defect therein or in the mailing thereof shall affect the validity
of the proceedings for the redemption of any shares of Class D Preferred Stock
except as to any holder to whom the Corporation has failed to give notice or
except as to any holder to whom notice was defective or not given. In addition
to any information required by law or by the applicable rules of any exchange
upon which Class D Preferred Stock may be listed or admitted to trading, such
notice shall state: (i) the Redemption Date; (ii) the Conversion Price; (iii)
the number of shares of Class D Preferred Stock to be redeemed and, if less than
all shares held by the particular holder are to be redeemed, the number of such
shares to be redeemed; (iv) the place or places where certificates for such
shares are to be surrendered in exchange for certificates evidencing the
Redemption Shares; and (v) that dividends on the shares to be redeemed will
cease to accrue on the Redemption Date.
(d) Notice having been published or mailed in accordance with
subparagraph (3) of this paragraph (D), from and after the Redemption Date
(unless the Corporation shall fail to make available a number of shares of
Common Stock or amount of cash necessary to effect such redemption), (i) except
as otherwise provided herein, dividends on the shares of Class D Preferred Stock
so called for redemption shall cease to accrue, (ii) said shares shall no longer
be deemed to be outstanding and (iii) all rights of the holders thereof as
holders of Class D Preferred Stock of the Corporation shall cease (except the
rights to receive the shares of Common Stock and cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any dividends payable thereon). The
Corporation's obligation to provide Common Stock and cash in accordance with the
preceding sentence shall be deemed
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fulfilled if, on or before the Redemption Date, the Corporation shall deposit
with a bank or trust company (which may be an affiliate of the Corporation) that
has an office in the Borough of Manhattan, City of New York, or in Baltimore,
Maryland and that has, or is an affiliate of a bank or trust company that has, a
capital and surplus of a least $50,000,000, Common Stock and any cash necessary
for such redemption, in trust, with irrevocable instructions that such Common
Stock and cash be applied to the redemption of the shares of Class D Preferred
Stock so called for redemption. At the close of business on the Redemption Date,
each holder of shares of Class D Preferred Stock to be redeemed (unless the
Corporation defaults in the delivery of the Common Stock or cash payable on such
Redemption Date) shall be deemed to be the record holder of the number of shares
of Common Stock into which such shares of Class D Preferred Stock is to be
redeemed, regardless of whether such holder has surrendered the certificates
representing the shares of Class D Preferred Stock. No interest shall accrue for
the benefit of the holder of shares of Class D Preferred Stock to be redeemed on
any cash so set aside by the Corporation. Subject to applicable escheat laws,
any such cash unclaimed at the end of two years from the Redemption Date shall
revert to the general funds of the Corporation, after which reversion the
holders of such shares so called for redemption shall look only to the general
funds of the Corporation for the payment of such cash.
(e) As promptly as practicable after the surrender in accordance with
said notice of the certificates for any such shares of Class D Preferred Stock
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and if the notice shall so state), such shares of Class D
Preferred Stock shall be exchanged for certificates representing shares of
Common Stock and any cash (without interest thereon) for which such shares of
Class D Preferred Stock have been redeemed. In case of redemption of less than
all shares of Class D Preferred Stock at the time outstanding, the shares to be
redeemed shall be selected by the Corporation pro rata from the holders of
record of such shares in proportion to the number of shares held by such holders
(with adjustments to avoid redemption of fractional shares) or by any other
equitable method determined by the Corporation that will not result in the
issuance of any Class D Excess Preferred Stock. If fewer than all the shares of
Class D Preferred Stock represented by any certificate are redeemed, than new
certificates representing the unredeemed shares of Class D Preferred Stock shall
be issued without cost to the holder thereof.
(f) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon the redemption of Class D Preferred
Stock. Instead of any fractional shares of Common Stock which would otherwise be
issuable upon redemption of Class D Preferred Stock, the Corporation shall pay
to the holder of
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the shares of Class D Preferred Stock which were mandatorily converted a cash
adjustment in respect of such fractional shares in an amount equal to the same
fraction of the market price per share of the Common Stock (as determined in a
reasonable manner prescribed by the Board of Directors at the close of business
on the Redemption Date).
(g) Unless full cumulative dividends on all shares of Class D Preferred
Stock shall have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for payment for all past
Dividend Periods and the then current Dividend Period, no shares of any Class D
Preferred Stock shall be redeemed unless all outstanding shares of Class D
Preferred Stock are simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of Class D
Preferred Stock pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of Class D Preferred Stock, and, unless
full cumulative dividends on all outstanding shares of Class D Preferred Stock
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past Dividend
Periods and the then current Dividend Period, the Corporation shall not purchase
or otherwise acquire directly or indirectly any shares of Class D Preferred
Stock (except by conversion into or exchange for stock of the Corporation
ranking junior to the Class D Preferred Stock as to dividends and upon
liquidation, dissolution or winding up).
(h) All shares of Class D Preferred Stock redeemed pursuant to this
paragraph (D) shall be retired and shall be reclassified as authorized and
unissued shares of Preferred Stock, without designation as to class or series
and may thereafter be reissued as shares of any class or series of Preferred
Stock.
103. Conversion.
(a) Subject to paragraph (D), each holder of shares of Class D Preferred
Stock shall have the right, at his or her option at any time, to convert all or
a portion of such shares (including fractions of such shares so long as such
fractions are in integral multiples of 1/10 of a share), unless previously
redeemed, into Common Stock at the Conversion Price. The Conversion Price shall
be subject to adjustment from time to time as hereinafter provided. For purposes
of such conversion, each share of Class D Preferred Stock shall be valued at
$250.00. However, the right to convert shares of Class D Preferred Stock called
for redemption pursuant to paragraph (D) hereof shall terminate at the close of
business on the Redemption Date fixed for such redemption, unless the
Corporation shall default in making of payment of the Common Stock and any cash
payable upon redemption under paragraph (D) hereof.
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(b) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall pay or make a dividend or other
distribution on Common Stock in shares of Common Stock, the Conversion Price in
effect at the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. For purposes of this subparagraph (2)(a),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation but shall include shares issuable
in respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Corporation will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the corporation.
(ii) If the Corporation shall issue additional rights or warrants to
all holders of its shares of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the then current
market price per share (determined as provided in subparagraph (2)(g) of this
paragraph (E)) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants (other than pursuant to
a dividend reinvestment plan), the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such current market price (determined as provided in subparagraph (2)(g) of this
paragraph (E)) and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for subscription or
purchase, such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this subparagraph (2)(b), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Corporation but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares
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of Common Stock. The Corporation will not issue any rights or warrants in
respect of shares of Common Stock held in the treasury of the Corporation during
the period so held.
(iii) If outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the date following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
if outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(iv) If the Corporation shall, by dividend or otherwise, distribute
to all holders of its shares of Common Stock evidences of its indebtedness,
assets or securities of the Corporation or other Persons (but excluding (i) any
rights or warrants referred to in subparagraph (2)(b) of this paragraph (E),
(ii) any dividend or distribution referred to in subparagraph (2)(e) of this
paragraph (E), (iii) any cash dividend or cash distribution out of current or
accumulated funds from operations (as determined by the Board of Directors) and
(iv) any dividend or distribution referred to in subparagraph (2)(a) of this
paragraph (E)), the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the current market price per share
(determined as provided in subparagraph (2)(g) of this paragraph (E)) of a share
of Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and shall be described in a statement filed with the transfer
agent for the Class D Preferred Stock) of the portion of the evidences of the
indebtedness, assets or securities so distributed applicable to a share of
Common Stock and the denominator shall be such current market price of a share
of Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution. Notwithstanding the
foregoing, in the event of a distribution to all holders of shares of Common
Stock of rights to subscribe for additional shares of the Corporation's capital
stock (other than rights described in subparagraph (2)(b) of this paragraph
(E)), the Corporation may, instead of making the adjustment in the Conversion
Price set forth in this subparagraph (2)(d), provide that each holder of shares
of Class D Preferred Stock who converts such shares shall be entitled
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to receive upon such conversion, in addition to the applicable number of shares
of Common Stock, the number of such rights such holder would have been entitled
to receive had such holder converted such shares immediately prior to the record
date applicable to such distribution of rights.
(v) If the Corporation shall, by dividend or otherwise, distribute
to all holders of its shares of Common Stock securities of one of its
subsidiaries that is (i) organized to qualify as a real estate investment trust
under applicable federal tax laws and regulations and (ii) identified in any
informational materials distributed to stockholders as being intended to operate
on a leveraged basis, then the Conversion Price shall be adjusted so that the
same shall equal the price determined by subtracting from the Conversion Price
in effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution (the
"Determination Date") the per share amount of the distribution for tax purposes,
as determined by the Board of Directors. The Corporation will publish notice of
such distribution to holders of Class D Preferred Stock in a newspaper of
general circulation at least ten business days prior to the Determination Date.
(vi) For the purposes of this subparagraph (2), the reclassification
of shares of Common Stock into securities including securities other than shares
of Common Stock (other than any reclassification upon a consolidation or merger
to which subparagraph (6) of this paragraph (E) applies) shall be deemed to
involve (i) a distribution of such securities other than shares of Common Stock
to all holders of shares of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution" and the "date fixed for such
determination" within the meaning of subparagraph (2)(d) of this paragraph (E)),
and (ii) a subdivision or combination, as the case may be, of the number of
shares of Common Stock outstanding immediately prior to such reclassification
into the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be "the day
upon which such subdivision became effective" and "the day upon which such
subdivision or combination becomes effective," as the case may be, within the
meaning of subparagraph (2)(c) of this paragraph (E)).
(vii) For the purpose of any computation under subparagraphs (2)(b)
and 2(d) of this paragraph (E), the current market price of a share of Common
Stock on any day shall be deemed to be the average of the daily closing prices
for the 30 consecutive trading days commencing 45 trading days before the day in
question. The closing price for each day shall be the reported last sale price
or, in case no such reported sale takes place on
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such day, the average of the reported closing bid and asking prices, in either
case on the NYSE, or, if the shares of Common Stock are no longer quoted on such
exchange, on the principal national securities exchange on which the shares of
Common Stock are then listed or admitted to trading or, if the shares of Common
Stock are not quoted on any national securities exchange, the closing sale price
of the shares of Common Stock or, in case no reported sale takes place, average
of the shares of Common Stock or, in case no reported sale takes place, average
of the closing bid and asked prices on the Nasdaq National Market or any
comparable system, or if the shares of Common Stock are not quoted on the Nasdaq
National Market or any comparable system, the closing sale price, or, in case no
reported sale takes place, the average of the closing bid and asked prices, as
furnished by any NYSE member firm selected from time to time by the Board of
Directors for that purpose.
(viii) Notwithstanding the foregoing, no adjustment in the
Conversion Price for the Class D Preferred Stock shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this subparagraph (h)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this subparagraph (2)(h) shall
be made to the nearest cent or to the nearest one-hundredth of a share, as the
case may be.
(ix) In the event that, as a result of an adjustment made pursuant
to paragraph (E), the holder of any shares of Class D Preferred Stock thereafter
surrendered for conversion shall become entitled to receive any capital stock
other than shares of Common Stock, thereafter the number of shares of such
capital stock so received shall be subject to adjustment from time to time in a
manner and on terms equivalent as nearly as practicable to the provisions
relating to the Class D Preferred Stock contained in subparagraph (2) of this
paragraph (E).
(c) Upon the occurrence of a conversion as specified in this paragraph
(E), the holders of Class D Preferred Stock shall, upon notice from the
Corporation, surrender the certificates representing shares of Class D Preferred
Stock at the office of the Corporation or of its transfer agent for the Common
Stock. Thereupon, there shall be issued and delivered to such holder a
certificate or certificates for the number of shares of Common Stock into which
the shares of Class D Preferred Stock surrendered were convertible on the date
on which such conversion occurred. The Corporation shall not be obligated to
issue such certificates unless certificates evidencing such shares of Class D
Preferred Stock being converted are either delivered to the Corporation or any
such transfer agent, or the holder notifies the Corporation or any such transfer
agent that such certificates have been lost,
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stolen or destroyed and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection therewith.
(d) Holders of shares of Class D Preferred Stock at the close of
business on a Record Date shall be entitled to receive the dividend payable on
the shares of Class D Preferred Stock on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such Record Date and prior to
such Dividend Payment Date. However, shares of Class D Preferred Stock
surrendered for conversion during the period between the close of business on
any Record Date and the opening of business on the corresponding Dividend
Payment Date (except shares of Class D Preferred Stock converted after the
issuance of a notice of redemption with respect to a Redemption Date during such
period or coinciding with such Dividend Payment Date, the Class D Preferred
Stock being entitled to such dividend on the Dividend Payment Date) must be
accompanied by payment of an amount equal to the dividend payable on such Class
D Preferred Stock on such Dividend Payment Date. A holder of shares of Class D
Preferred Stock on a Record Date who (or whose transferees) tenders any such
shares of Class D Preferred Stock for conversion into shares of Common Stock on
such Dividend Payment Date will receive the dividend payable by the Corporation
on such Class D Preferred Stock on such date, and the converting holder need not
include payment of the amount of such dividend upon surrender of shares of Class
D Preferred Stock for conversion. Except as provided above, the Corporation
shall make no payment or allowance for unpaid dividends, whether or not in
arrears, on converted shares of Class D Preferred Stock or for dividends on the
shares of Common Stock issued upon such conversion.
(e) If the Common Stock issuable upon the conversion of the Class D
Preferred Stock shall be changed into the same or different number of shares of
any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for elsewhere in this paragraph (E), or the sale of all or
substantially all of the Corporation's properties and assets to any other
person), then and in each such event the holder of each share of Class D
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification or other change by holders of the
number of shares of Common Stock into which such shares of Class D Preferred
Stock might have been converted immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as provided
herein.
(f) If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a
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subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this paragraph (E)) or a merger or consolidation of the Corporation
with or into another corporation (other than a merger or consolidation with or
transfer of assets to the Corporation by any subsidiary), or the sale of all or
substantially all of the Corporation's properties and assets to any other
person, then, as a part of such reorganization, merger, or consolidation or
sale, provision shall be made so that the holders of Class D Preferred Stock
shall thereafter be entitled to receive upon conversion of the Class D Preferred
Stock, the number of shares of stock or other securities or property of the
Corporation, or of the successor corporation resulting from such merger,
consolidation or sale, to which such holder would have been entitled if such
holder had converted its shares of Class D Preferred Stock immediately prior to
such capital reorganization, merger, consolidation or sale.
(g) In each case of an adjustment or readjustment of the Conversion
Price for the Class D Preferred Stock, the Corporation at its expense will
furnish each holder of Class D Preferred Stock with a certificate, prepared by
independent public accountants of recognized standing certified by the chief
financial officer of the Corporation, showing such adjustment or readjustment,
and stating in detail the facts upon which such adjustment or readjustment is
based.
(h) To exercise its conversion privilege, a holder of shares of Class D
Preferred Stock shall surrender the certificate or certificates representing the
shares being converted to the Corporation at its principal office in accordance
with subparagraph (3) of this paragraph (E), and shall give written notice to
the Corporation at that office that such holder elects to convert such shares.
Such notice shall also state the name or names (with address or addresses) in
which the certificate or certificates for shares of Common Stock issuable upon
such conversion shall be issued. The certificate or certificates for shares of
Class D Preferred Stock surrendered for conversion shall be accompanied by
proper assignment thereof to the Corporation or in blank. The date when such
written notice is received by the Corporation, together with the certificated or
certificates representing the shares of Preferred Stock being converted, shall
be the "Conversion Date." As promptly as practicable after the Conversion Date,
the Corporation shall issue and shall deliver to the holder of the shares of
Class D Preferred Stock being converted, or on its written order, such
certificate or certificates as it may request for the number of whole shares of
Common Stock issuable upon the conversion of such shares of Class D Preferred
Stock as the case may be, in accordance with the provisions of this subparagraph
(8), cash in the amount of all accrued and unpaid dividends on such shares of
Class D Preferred Stock, up to and including the Conversion Date, and cash, as
provided in subparagraph (9) of this
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paragraph (E), in respect of any fraction of a share of Common Stock issuable
upon such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the Conversion Date, and at such
time the rights of the holder as holder of the converted shares of Class D
Preferred Stock shall cease and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Common Stock represented thereby.
(i) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon the conversion of Class D Preferred
Stock. Instead of any fractional shares of Common Stock which would otherwise be
issuable upon conversion of shares of Class D Preferred Stock, the Corporation
shall pay to the holder of the shares of Class D Preferred Stock which were
converted a cash adjustment in respect of such fractional shares in an amount
equal to the same fraction of the market price per share of the Common Stock (as
determined in a reasonable manner prescribed by the Board of Directors at the
close of business on the Conversion Date).
(j) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Class D Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Class D Preferred Stock, and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Class D
Preferred Stock, the Corporation shall take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
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104. Voting Rights.
(a) The holders of record of shares of Class D Preferred Stock shall not
be entitled to any voting rights except as hereinafter provided in this
paragraph (F). The Corporation shall not, without either (a) the affirmative
vote of the holders of at least two-thirds of the shares of the Class D
Preferred Stock outstanding at the time, given in person or by proxy, at a
meeting (such Class D Preferred Stock voting separately as a class) or (b) the
unanimous written consent of all of the holders of shares of Class D Preferred
Stock, (i) authorize or create, or increase the authorized or issued amount of,
any class or series of Senior Stock, or reclassify any authorized stock into
Senior Stock, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such Senior Stock; or
(ii) amend or repeal the provisions of the Charter in respect of the Class D
Preferred Stock so as to materially and adversely affect any right, preference,
privilege or voting power of the Class D Preferred Stock or the holders thereof;
provided, however, that any increase in the amount of the authorized Preferred
Stock or the creation or issuance of any other class or series of Preferred
Stock, or any increase in the amount of authorized shares of the Class D
Preferred Stock, in each case ranking on a parity with or junior to the Class D
Preferred Stock with respect to payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers.
(b) If and whenever dividends payable on Class D Preferred Stock shall
be in arrears for six (6) or more quarterly periods, regardless of whether such
quarterly periods are consecutive, then the holders of Class D Preferred Stock
(voting separately as a class with such other class or series as provided in
subparagraph (6) of this paragraph (F)) shall be entitled at the next annual
meeting of the stockholders or at any special meeting to elect two (2)
additional directors. Upon election, such directors shall become directors of
the Corporation and the authorized number of directors of the Corporation shall
thereupon be automatically increased by such number of directors.
(c) Whenever such voting right shall have vested, such right may be
exercised initially either at a special meeting of the holders of Class D
Preferred Stock, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at such
annual meetings or by the written consent of the holders of Class D Preferred
Stock. Such right of the holders of Class D Preferred Stock to elect directors
may be exercised until all dividends to which the holders of Class D Preferred
Stock shall have been entitled for (i) all previous Dividend Periods and (ii)
the current Dividend Period
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shall have been paid in full or declared and a sum of money sufficient for the
payment thereof set aside for payment, at which time the right of the holders of
Class D Preferred Stock to elect such number of directors shall cease, the term
of such directors previously elected shall, upon the resignation thereof,
thereupon terminate, and the authorized number of directors of the Corporation
shall thereupon return to the number of authorized directors otherwise in
effect, but subject always to the same provisions for the renewal and divestment
of such special voting rights in the case of any such future dividend default or
defaults.
(d) At any time when such voting right shall have vested in the holders
of Class D Preferred Stock and if such right shall not already have been
initially exercised, a proper officer of the Corporation shall, upon the written
request of any holder of record of Class D Preferred Stock then outstanding,
addressed to the Secretary of the Corporation, call a special meeting of holders
of Class D Preferred Stock. Such meeting shall be held on the earliest
practicable date upon the notice required for annual meetings of stockholders at
the place for holding annual meetings of stockholders of the Corporation or, if
none, at a place designated by the Secretary of the Corporation. If such meeting
shall not be called by the proper officers of the Corporation within thirty (30)
days after the personal service of such written request upon the Secretary of
the Corporation, or within thirty (30) days after mailing the same within the
United States, by registered mail, addressed to the Secretary of the Corporation
at its principal office (such mailing to be evidenced by the registry receipt
issued by the postal authorities), then the holders of record of ten percent
(10%) of the shares of Class D Preferred Stock then outstanding may designate in
writing a holder of Class D Preferred Stock to call such meeting at the expense
of the Corporation, and such meeting may be called by such person so designated
upon the notice required for annual meetings of stockholders and shall be held
at the place for holding annual meetings of the Corporation or, if none, at a
place designated by such holder. Any holder of Class D Preferred Stock that
would be entitled to vote at such meeting shall have access to the stock
transfer records of the Corporation for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions of this paragraph (F).
Notwithstanding the provisions of this paragraph (F), however, no such special
meeting shall be called if any such request is received less than ninety (90)
days before the date fixed for the next ensuing annual or special meeting of
stockholders.
(e) If a director so elected by the holders of Class D Preferred Stock
shall cease to serve as a director before his/her term shall expire, the holders
of Class D Preferred Stock then outstanding may, at a special meeting of the
holders called as
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provided above, elect a successor to hold office for the unexpired term of the
director whose place shall be vacant.
(f) If, at any time when the holders of Class D Preferred Stock are
entitled to elect directors pursuant to the foregoing provisions of this
paragraph (F), the holders of any one or more classes or series of Preferred
Stock are entitled to elect directors by reason of any default or event
specified in the Charter, as in effect at the time, and if the terms for such
classes or series of Preferred Stock so provide, then the voting rights of the
Class D Preferred Stock and the one or more classes or series of Preferred Stock
then entitled to vote shall be combined (with each having a number of votes
proportional to the aggregate liquidation preference of its outstanding shares).
In such case, the holders of Class D Preferred Stock and of all such classes or
series of Preferred Stock then entitled so to vote, voting together as a class,
shall elect such directors. If the holders of any such classes or series of
Preferred Stock have elected such directors prior to the happening of the
default or event providing for the election of directors by the holders of Class
D Preferred Stock, or prior to a written request for the holding of a special
meeting being received by the Secretary of the Corporation as elsewhere required
in subparagraph (4) of paragraph (F) above, then a new election shall be held
with all such classes or series of Preferred Stock and the Class D Preferred
Stock voting together as a single class for such directors, resulting in the
termination of the term of such previously elected directors upon the election
of such new directors. If the holders of any such classes or series of Preferred
Stock are entitled to elect in excess of two directors, the Class D Preferred
Stock shall not participate in the election of more than two such directors, and
those directors whose terms first expire shall be deemed to be the directors
elected by the holders of Class D Preferred Stock; provided that if at the
expiration of such terms the holders of Class D Preferred Stock are entitled to
vote in the election of directors pursuant to the provisions of this paragraph
(F), then the Secretary of the Corporation shall call a meeting (which meeting
may be the annual meeting or special meeting of stockholders referred to in
subparagraph (3) of this paragraph (F)) of holders of Class D Preferred Stock
for the purpose of electing replacement directors (in accordance with the
provisions of this paragraph (F)) to be held at or prior to the time of
expiration of the expiring terms referred to above.
105. Restrictions on Ownership and Transfer to Preserve Tax Benefit; Conversion
and Exchange for Class D Excess Preferred Stock; and Terms of Class D Excess
Preferred Stock.
(a) Restriction on Ownership and Transfer.
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(i) Except as provided in subparagraph (8) of this paragraph (G), no
Person shall Beneficially own or Constructively Own Class D Preferred Stock in
excess of the Ownership Limit;
(ii) Except as provided in subparagraph (8) of this paragraph (G),
any Transfer (whether or not such Transfer is the result of a transaction
entered into through the facilities of the NYSE) that, if effective, would
result in any Person Beneficially Owning Class D Preferred Stock in excess of
the Ownership Limit shall be void ab initio as to the Transfer of such Class D
Preferred Stock which would be otherwise Beneficially Owned by such Person in
excess of the Ownership Limit; and the intended transferee shall acquire no
rights in such Class D Preferred Stock;
(iii) Except as provided in subparagraph (8) of this paragraph (G),
any Transfer (whether or not such Transfer is the result of a transaction
entered into through the facilities of the NYSE) that, if effective, would
result in any Person Constructively Owning Class D Preferred Stock in excess of
the Ownership Limit shall be void ab initio as to the Transfer of such Class D
Preferred Stock which would be otherwise Constructively Owned by such Person in
excess of the Ownership Limit; and the intended transferee shall acquire no
rights in such Class D Preferred Stock; and
(iv) Notwithstanding any other provisions contained in this
paragraph (G), any Transfer (whether or not such Transfer is the result of a
transaction entered into through the facilities of the NYSE) or other event
that, if effective, would result in the Corporation being "closely held" within
the meaning of Section 856(h) of the Code, or would otherwise result in the
Corporation failing to qualify as a REIT (including, but not limited to, a
Transfer or other event that would result in the Corporation owning (directly 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 Corporation from such
tenant would cause the Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code) shall be void ab initio as to the
Transfer of the Class D Preferred Stock or other event which would cause the
Corporation to be "closely held" within the meaning of Section 856(h) of the
Code or would otherwise result in the Corporation failing to qualify as a REIT;
and the intended transferee or owner or Constructive or Beneficial owner shall
acquire or retain no rights in such Class D Preferred Stock.
(b) Conversion Into and Exchange For Class D Excess Preferred Stock. If,
notwithstanding the other provisions contained in this paragraph (G), at any
time after the date of the Initial Issue Date, there is a purported Transfer
(whether or not such Transfer is the result of a transaction entered into
through the facilities of the NYSE), change in the capital structure of the
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Corporation or other event such that one or more of the restrictions on
ownership and transfers described in subparagraph (1) of this paragraph (G),
above, has been violated, then the Class D Preferred Stock being Transferred (or
in the case of an event other than a Transfer, the Class D Preferred Stock owned
or Constructively Owned or Beneficially Owned or, if the next sentence applies,
the Class D Preferred Stock identified in the next sentence) which would cause
one or more of the restrictions on ownership or transfer to be violated (rounded
up to the nearest whole share) shall be automatically converted into an equal
number of shares of Class D Excess Preferred Stock. If at any time of such
purported Transfer any of the shares of the Class D Preferred Stock are then
owned by a depositary to permit the trading of beneficial interests in
fractional shares of Class D Preferred Stock, then shares of Class D Preferred
Stock that shall be converted to Class D Excess Preferred Stock shall be first
taken from any Class D Preferred Stock that is not in such depositary that is
Beneficially Owned or Constructively Owned by the Person whose Beneficial
Ownership or Constructive Ownership would otherwise violate the restrictions of
subparagraph (1) of this paragraph (G) prior to converting any shares in such
depositary. Any conversion pursuant to this subparagraph shall be effective as
of the close of business on the business day prior to the date of such Transfer
or other event.
(c) Remedies For Breach. If the Board of Directors or its designees
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of subparagraph (1) of this paragraph (G) or that a
Person intends to acquire, has attempted to acquire or may acquire direct
ownership, beneficial ownership (determined without reference to any rules of
attribution), Beneficial Ownership or Constructive Ownership of any shares of
the Corporation in violation of subparagraph (1) of this paragraph (G), the
Board of Directors or its designees shall take such action as it deems advisable
to refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, causing the Corporation to purchase such shares
upon the terms and conditions specified by the Board of Directors in its sole
discretion, refusing to give effect to such Transfer or other event on the books
of the Corporation or instituting proceedings to enjoin such Transfer or other
event; provided, however, that any Transfer (or, in the case of events other
than a Transfer, ownership or Constructive Ownership or Beneficial Ownership) in
violation of subparagraph (1) of this paragraph (G) shall automatically result
in the conversion described in subparagraph (ii), irrespective of any action (or
non-action) by the Board of Directors.
(d) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire Class D Preferred Stock or other securities in violation of
subparagraph (1) of this paragraph (G), or any
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Person who owns or will own Class D Excess Preferred Stock as a result of an
event under subparagraph (2) of this paragraph (G), shall immediately give
written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted Transfer or other
event on the Corporation's status as a REIT.
(e) Owners Required To Provide Information. From and after the Initial
Issue Date, each Person who is a beneficial owner or Beneficial Owner or
Constructive Owner of Class D Preferred Stock and each Person (including the
stockholder of record) who is holding Class D Preferred Stock for a Beneficial
Owner or Constructive Owner shall provide to the Corporation such information
that the Corporation may request, in good faith, in order to determine the
Corporation's status as a REIT.
(f) Remedies Not Limited. Nothing contained in this paragraph (G) (but
subject to subparagraph (12) of this paragraph (G)) shall limit the authority of
the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its stockholders by
preservation of the Corporation's status as a REIT.
(g) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this paragraph (G), including any definition contained in
paragraph (A), the Board of Directors shall have the power to determine the
application of the provisions of this paragraph (G) with respect to any
situation based on the facts known to it (subject, however, to the provisions of
paragraph (12) of this paragraph (G)).
(h) Exceptions.
(i) Subject to subparagraph (1)(d) of this paragraph (G), the Board
of Directors, in its sole and absolute discretion, with the advice of the
Corporation's tax counsel, may exempt a Person from the limitation on a Person
Beneficially owning Class D Preferred Stock in excess of the Ownership Limit if
such Person is not an individual for purposes of Section 542(a)(2) of the Code
and the Board of Directors obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no individual's
Beneficial Ownership of such Class D Preferred Stock will violate the Ownership
Limit and such Person agrees that any violation of such representations or
undertaking (or other action which is contrary to the restrictions contained in
this paragraph (G)) or attempted violation will result in such Class D Preferred
Stock being exchanged for Class D Excess Preferred Stock in accordance with
subparagraph (2) of this paragraph (G).
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(ii) Subject to subparagraph (1)(d) of this paragraph (G), the Board
of Directors, in its sole and absolute discretion, with advice of the
Corporation's tax counsel, may exempt a Person from the limitation on a Person
Constructively Owning Class D Preferred Stock in excess of the Ownership Limit
if such Person does not and represents that it will not own, directly or
constructively (by virtue of the application of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code), more than a 9.8% interest (as set
forth in Section 856(d)(2)(B) of the Code) in a tenant of the Corporation and
the Board of Directors obtains such representations and undertakings from such
Person as are reasonably necessary to ascertain this fact and such Person agrees
that any violation or attempted violation will result in such Class D Preferred
Stock in excess of the Ownership Limit being exchanged for Class D Excess
Preferred Stock in accordance with subparagraph (2) of this paragraph (G).
(iii) Prior to granting any exception pursuant to subparagraph
(8)(a) or (8)(b) of this paragraph (G), the Board of Directors may require a
ruling from the IRS, 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
Corporation's status as a REIT; provided, however, that obtaining a favorable
ruling or opinion shall not be required for the Board of Directors to grant an
exception hereunder.
(i) Legend. Each certificate for Class D Preferred Stock shall bear
substantially the following legend:
"The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the information required by Section 2-211(b) of the
Corporations and Associations Article of the Annotated Code of Maryland with
respect to the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemptions of the
stock of each class which the Corporation has authority to issue and, if the
Corporation is authorized to issue any preferred or special class 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. The foregoing summary
does not purport to be complete and is subject to and qualified in its entirety
by reference to the charter of the Corporation (the "Charter"), a copy of which
will be sent without charge to each stockholder who so requests. Such request
must be made to the Secretary of the Corporation at its principal office.
"The securities represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the
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Corporation's maintenance of its status as a real estate investment trust under
the Internal Revenue Code of 1986, as amended. Except as otherwise provided
pursuant to the Charter of the Corporation, no Person may Beneficially Own or
Constructively Own shares of Class D Preferred Stock in excess of 9.8% of the
outstanding Class D Preferred Stock and any Class D Excess Preferred Stock of
the Corporation. Any Person who attempts to Beneficially own or Constructively
Own shares of Class D Preferred Stock in excess of the above limitation must
immediately notify the Corporation. All capitalized terms in this legend have
the meanings defined in the Charter of the Corporation, a copy of which,
including the restrictions on transfer, will be sent to any stockholder on
request and without charge. Transfers in violation of the restrictions described
above shall be void ab initio. If the restrictions on ownership and transfer are
violated, the securities represented hereby will be designated and treated as
shares of Class D Excess Preferred Stock which will be held in trust by the
Corporation. The foregoing summary does not purport to be complete and is
subject to and qualified in its entirety by reference to the Charter, a copy of
which, including the restrictions on transfer, will be sent without charge to
each stockholder who so requests. Such request must be made to the Secretary of
the Corporation at its principal office."
(j) Severability. If any provision of this paragraph (G) or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction, 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.
(k) Class D Excess Preferred Stock.
(i) Ownership In Trust. Upon any purported Transfer (whether or not
such Transfer is the result of a transaction entered into through the facilities
of the NYSE) that results in the issuance of Class D Excess Preferred Stock
pursuant to subparagraph (2) of this paragraph (G), such Class D Excess
Preferred Stock shall be deemed to have been transferred to the Corporation, as
Trustee of a Trust for the exclusive benefit of such Beneficiary or
Beneficiaries to whom an interest in such Class D Excess Preferred Stock may
later be transferred pursuant to subparagraph (11)(e) of this paragraph (G).
Class D Excess Preferred Stock so held in trust shall be issued and outstanding
shares of stock of the Corporation. The Purported Record Transferee shall have
no rights in such Class D Excess Preferred Stock except the right to designate a
transferee of such Class D Excess Preferred Stock upon the terms specified in
subparagraph (11)(e) of this paragraph (G). The Purported Beneficial Transferee
shall have no rights in such Class D Excess Preferred Stock except as provided
in subparagraph (11)(e) of this paragraph (G).
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(ii) Dividend Rights. Class D Excess Preferred Stock shall not be
entitled to any dividends or other distribution (except as provided in
subparagraph (11)(d) of this paragraph (G). Any dividend or distribution paid
prior to the discovery by the Corporation that shares of Class D Preferred Stock
have been converted into Class D Excess Preferred Stock shall be repaid to the
Corporation upon demand.
(iii) Conversion Rights. Holders of shares of Class D Excess
Preferred Stock shall not be entitled to convert any shares of Class D Excess
Preferred Stock into shares of Common Stock. Any conversion made prior to the
discovery by the Corporation that shares of Class D Preferred Stock have been
converted into Class D Excess Preferred Stock shall be void ab initio and the
Purported Record Transferee shall return the shares of Class D Preferred Stock
so converted to the Corporation upon demand.
(iv) Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of shares of Class D Excess
Preferred Stock shall be entitled to receive, ratably with each other holder of
shares of Preferred Equity Stock, that portion of the assets of the Corporation
available for distribution to the holders of shares of Preferred Stock as the
number shares of Class D Excess Preferred Stock held by such holder bears to the
total number of shares of Preferred Equity Stock then outstanding. The
Corporation, as holder of the Class D Excess Preferred Stock in trust, or if the
Corporation shall have been dissolved, any trustee appointed by the Corporation
prior to its dissolution, shall distribute ratably to the Beneficiaries of the
Trust, when and if determined in accordance with subparagraph (11)(e) of this
paragraph (G), any such assets received in respect of the Class D Excess
Preferred Stock in any liquidation, dissolution or winding up of, or any
distribution of the assets of the Corporation.
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(v) Restrictions On Transfer; Designation of Beneficiary.
(A) Shares of Class D Excess Preferred Stock shall not be
transferable. Subject to the last sentence of this clause (1), the Purported
Record Transferee may freely designate a Beneficiary of an interest in the Trust
(representing the number of shares of Class D Excess Preferred Stock held by the
Trust attributable to a purported Transfer that resulted in the issuance of
Class D Excess Preferred Stock), if (i) the Class D Excess Preferred stock held
in the Trust would not be Class D Excess Preferred Stock in the hands of such
Beneficiary and (ii) the Purported Beneficial Transferee does not receive a
price from such Beneficiary that reflects a price per share for such Class D
Excess Preferred Stock that exceeds (x) the price per share such Purported
Beneficial Transferee paid for the Class D Preferred Stock in the purported
Transfer that resulted in the issuance of Class D Excess Preferred Stock, or (y)
if the Transfer or other event that resulted in the issuance of Class D Excess
Preferred Stock was not a transaction in which the Purported Beneficial
Transferee gave full value for such Class D Excess Preferred Stock, a price per
share equal to the Market Price on the date of the purported Transfer or other
event that resulted in the issuance of Class D Excess Preferred Stock. Upon such
transfer of an interest in the Trust, the corresponding shares of Class D Excess
Preferred Stock in the Trust shall be automatically exchanged for an equal
number of shares of Class D Preferred Stock and such Class D Preferred Stock
shall be transferred of record to the transferee of the interest in the Trust if
such Class D Preferred Stock would not be Class D Excess Preferred Stock in the
hands of such transferee. Prior to any transfer of any interest in the Trust,
the Purported Record Transferee must give advance notice to the Corporation of
the intended transfer and the Corporation must have waived in writing its
purchase rights under subparagraph (11)(g) of this paragraph (G).
(B) Notwithstanding the foregoing, if a Purported Beneficial
Transferee receives a price for designating a Beneficiary of an interest in the
Trust that exceeds the amounts allowable under subparagraph (11)(e)(1) of this
paragraph (G), such Purported Beneficial Transferee shall pay, or cause such
Beneficiary to pay, such excess to the Corporation.
(vi) Voting and Notice Rights. The holders of shares of Class D
Excess Preferred Stock shall have no voting rights and shall have no rights to
receive notice of any meetings.
(vii) Purchase Rights in Class D Excess Preferred Stock.
Notwithstanding the provisions of subparagraph (11)(e) of this paragraph (G),
shares of Class D Excess Preferred Stock shall be deemed to have been offered
for sale to the Corporation, or its
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designee, at a price per share equal to the lesser of (i) the price per share in
the transaction that required the issuance of such Class D Excess Preferred
Stock (or, if the Transfer or other event that resulted in the issuance of Class
D Excess Preferred Stock was not a transaction in which the Purported Beneficial
Transferee gave full value for such Class D Excess Preferred Stock, a price per
share equal to the Market Price on the date of the purported Transfer or other
event that resulted in the issuance of Class D Excess Preferred Stock) and (ii)
the Market Price on the date the Corporation, or its designee, accepts such
offer. The Corporation shall have the right to accept such offer for a period of
ninety (90) days after the later of (i) the date of the Transfer or other event
which resulted in the issuance of such shares of Class D Excess Preferred Stock
and (ii) the date the Board of Directors determines in good faith that a
Transfer or other event resulting in the issuance of shares of Class D Excess
Preferred Stock has occurred, if the Corporation does not receive a notice of
such Transfer or other event pursuant to subparagraph (4) of this paragraph (G).
The Corporation may appoint a special trustee of the Trust for the purpose of
consummating the purchase of Class D Excess Preferred Stock by the Corporation.
In the event that the Corporation's actions cause a reduction in the number of
shares of Class D Preferred Stock outstanding and such reduction results in the
issuance of Class D Excess Preferred Stock, the Corporation is required to
exercise its option to repurchase such shares of Class D Excess Preferred Stock
if the Beneficial Owner notifies the Corporation that it is unable to sell its
rights to such Class D Excess Preferred Stock.
(l) Settlement. Nothing in this paragraph (G) shall preclude the
settlement of any transaction entered into through facilities of the NYSE.
106. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares of Class D
Preferred Stock shall not have any preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of conversion or redemption other than
those specifically set forth in the Charter. The shares of Class D Preferred
Stock and Class D Excess Preferred Stock shall have no preemptive or
subscription rights.
107. Headings of Subdivisions.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
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108. Severability of Provisions.
If any preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of conversion or redemption of the Class D Preferred
Stock set forth in the Charter is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
conversion or redemption of Class D Preferred Stock set forth in the Charter
which can be given effect without the invalid, unlawful or unenforceable
provision thereof shall, nevertheless, remain in full force and effect, and no
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications or terms or
conditions of conversion or redemption of Class D Preferred Stock herein set
forth shall be deemed dependent upon any other provision thereof unless so
expressed therein.
K. Registration as Depositary Shares.
Shares of Class D Preferred Stock shall be registered in the form of
Depositary Shares representing a one-tenth fractional interest in a share of
Class D Preferred Stock on such terms and conditions as may be provided for in
any agreement binding upon the Corporation (whether directly or through merger
with any other corporation).
SECOND:The Shares and the Class D Excess Shares have been
reclassified by the Board of Directors under a power contained in the Charter.
THIRD: These Articles Supplementary have been approved by the
Board of Directors in the manner and by the vote required by law.
FOURTH: 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.
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IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
attested to by its Secretary on this ____ day of __________________, 1998.
ATTEST: KIMCO REALTY CORPORATION
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary President
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EXHIBIT B
FORM OF AFFILIATE LETTER
Kimco Realty Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of The Price REIT, Inc., a Maryland corporation ("Price
REIT"), as the term "affiliate" is (i) 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"), or (ii) used in and for the
purposes of Accounting Series, Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of January 13, 1998 (the "Agreement"), among Kimco Realty Corporation, a
Maryland corporation ("Kimco"), REIT Sub, Inc., a Maryland corporation and a
wholly owned subsidiary of Kimco ("Merger Sub"), and Price REIT, Price REIT will
be merged with and into Merger Sub (the "Merger").
As a result of the Merger, I may receive Common Stock, par value $.01
per share, and depositary shares each of which represents an interest in
one-tenth of a share of Class D Cumulative Convertible Preferred Stock, par
value $1.00 per share, of Kimco (the "Merger Consideration") in exchange for
shares owned by me of Common Stock, par value $.01 per share, of Price REIT
("Price REIT Common Stock").
I represent, warrant and covenant to Kimco that in the event I receive
any Merger Consideration as a result of the Merger:
(i) I shall not make any sale, transfer or other disposition of the
Merger Consideration in violation of the Act or the Rules and Regulations.
(ii) I have carefully read this letter and the Agreement and discussed
the requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of the Merger Consideration to
the extent I felt necessary, with my counsel or counsel of Price REIT.
(iii) I have been advised that the issuance of Merger Consideration to
me pursuant to the Merger has been registered with
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the Commission under the Act on a Registration Statement on Form S-4. However, I
have also been advised that, since at the time the Merger was submitted for a
vote of the stockholders of Price REIT, I may be deemed to have been an
affiliate of Price REIT and any subsequent distribution by me of the Merger
Consideration has not been registered under the Act, I may not sell, transfer or
otherwise dispose of the Merger Consideration issued to me in the Merger 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 Kimco 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.
(iv) I understand that Kimco is under no obligation to register the
sale, transfer or other disposition of the Merger Consideration by me or on my
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.
(v) I do not own in excess of 1% of the outstanding Price REIT Common
Stock and, upon consummation of the Merger, will not own in excess of 1% of the
outstanding Kimco Common Stock.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Price REIT as described in the first paragraph
of this letter or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
Very truly yours,
------------------------------------
Name:
Accepted this ____day of
___________, 1998 by
KIMCO REALTY CORPORATION
By:_____________________________
Name: _____________________
Title:_____________________
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EXHIBIT C
[Form of Opinion]
____________________, 1998
The Price REIT, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel for Kimco Realty Corporation, a Maryland
corporation ("Kimco"), in connection with the proposed merger (the "Merger") of
The Price REIT, Inc., a Maryland corporation ("Price REIT"), with and into REIT
Sub, Inc., a Maryland corporation ("Merger Sub"), pursuant to an Agreement and
Plan of Merger dated as of January 13, 1998 (the "Merger Agreement"), among
Kimco, Price REIT and Merger Sub, under which each issued and outstanding share
of Price REIT common stock will be converted into Kimco common stock and
depositary shares representing preferred stock.
In that connection, you have requested our opinion regarding certain
Federal income tax matters as further set forth below. In providing our opinion,
we have examined the Merger Agreement, the joint proxy statement/prospectus of
Kimco and Price REIT to be dated as of ______________, 1998 (the "Proxy
Statement/ Prospectus"), and such other documents and corporate records as we
have deemed necessary or appropriate for purposes of our opinion. In addition,
we have assumed that (i) the Merger will be consummated in the manner
contemplated by the Proxy Statement/Prospectus and in accordance with the
provisions of the Merger Agreement and (ii) the representations made to us by
Kimco and Price REIT in a letter, dated ______________, 1998, and delivered to
us for purposes of this opinion (the "Kimco Representation Letter") are accurate
and complete.
Based on the foregoing information and representations, in our opinion,
commencing with its taxable year ending December 31, 1992, Kimco was organized
in conformity with the requirements for qualification and taxation as a REIT
under Section 856 of the Internal Revenue Code of 1986, as amended (the "Code"),
and its method of operation has enabled it and will enable it to meet the
requirements for qualification and taxation as a REIT under the Code.
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The opinions expressed herein are based upon existing statutory,
regulatory and judicial authority, any of which may be changed at any time with
retroactive effect. In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements contained in the Kimco Representation Letter, which we have assumed
will be true as of the effective time of the Merger. Our opinions cannot be
relied upon if any of the facts pertinent to the Federal income tax treatment of
the Merger stated in such documents or in such additional information is, or
later becomes, inaccurate, or if any of the statements contained in the Kimco
Representation Letter are, or later become, inaccurate. Finally, our opinions
are limited to the tax matters specifically covered hereby, and we have not been
asked to address, nor have we addressed, any other tax consequences in this
opinion
Furthermore, our opinion as to the status of Kimco as a REIT under the
Code is based upon the accuracy of the representations made by Kimco as to
factual matters relating to the organization, operation, income, assets,
distributions and stock ownership of Kimco. Kimco's qualification as a REIT
depends upon its having met and continuing to meet, through source of income,
nature of assets held, distribution levels and diversity of stock ownership, the
various qualifications tests imposed under the Code and described in the Proxy
Statement/Prospectus and the Kimco Representation Letter, the results of which
have not been and will not be reviewed by ▇▇▇▇▇ & ▇▇▇▇ LLP. Accordingly, we give
no assurance that the actual results of Kimco's operations for any taxable year
have satisfied or will satisfy such requirements.
This opinion is being provided solely for the benefit of Price REIT. No
other person or party shall be entitled to rely on this opinion.
Very truly yours,
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Exhibit D
[Form of Opinion]
__________, 1998
(▇▇▇) ▇▇▇-▇▇▇▇
Kimco Realty Corporation
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▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Opinion Pursuant to Section 8.3(c) of Agreement and Plan of Merger
Gentlemen:
We are acting as special counsel to The Price REIT, Inc., a Maryland
corporation ("Price REIT"), in connection with (i) the Proxy
Statement/Prospectus, including the Registration Statement on Form S-4 (File No.
____________) (the "Merger Registration Statement"), relating to the proposed
merger (the "Merger") of Price REIT with and into REIT Sub, Inc. ("Merger Sub"),
a Maryland corporation, and a wholly-owned subsidiary of Kimco Realty
Corporation ("Kimco"). You have requested our opinion as to certain federal
income tax matters described below.
The Merger will be effected pursuant to the terms and conditions of the
Agreement and Plan of Merger (the "Merger Agreement") dated of January 13, 1998,
among Kimco, Price REIT and Merger Sub. This opinion is being rendered pursuant
to Section 8.3(c) of the Merger Agreement.
In rendering our opinion, we have with your permission, relied upon and
assumed as correct now and as of the effective time of the Merger, (i) the
factual information contained in the Merger Registration Statement, (ii) certain
factual representations made by Price REIT, which are attached as Exhibits
hereto and made a part hereof, and (iii) such other materials as we have deemed
necessary or appropriate as a basis for our opinion.
On the basis of the information and representations contained in the
foregoing materials, we are of the opinion that:
Commencing with its taxable year ending December 31, 1991, Price REIT
was organized in conformity with the requirements for
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qualification as a real estate investment trust, and its method of operation has
enabled it to meet the requirements for qualification and taxation as a real
estate investment trust under the Internal Revenue Code of 1986, as amended (the
"Code").
This opinion expresses our views as to federal income tax laws in effect
as of the date hereof, including the Code, applicable Treasury Regulations,
published rulings and administrative practices of the Internal Revenue Service
(the "Service") and court decisions. This opinion represents our best legal
judgment as to the matters addressed herein, but is not binding on the Service
or the courts. Furthermore, the legal authorities upon which we rely are subject
to change either prospectively or retroactively. Any change in such authorities
or any change in the facts or representations, or any past or future actions by
Price REIT or Kimco contrary to such representations might adversely affect the
conclusions stated herein.
Furthermore, our opinion as to the status of Price REIT as a REIT under
the Code is based upon the accuracy of the representations made by Price REIT as
to factual matters relating to the organization, operation, income, assets,
distributions and stock ownership of Price REIT. Price REIT's qualification as a
REIT depends on its having met and continuing to meet, through actual operating
results, distribution levels and diversity of stock ownership, the various
qualifications tests imposed under the Code and described in the Merger
Registration Statement and the Exhibits attached thereto, the results of which
have not been and will not be reviewed by ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
Accordingly, we give no assurance that the actual results of Price REIT's
operations for any taxable year have satisfied or will satisfy such
requirements.
This opinion is being delivered to you solely for your use pursuant to
Section 8.3(c) of the Merger Agreement.
Very truly yours,
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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