EXHIBIT 22
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PURCHASE AND SALE AGREEMENT
by and among
STORAGE USA, INC.
STORAGE USA TRUST
SUSA PARTNERSHIP, L.P.
and
SECURITY CAPITAL GROUP INCORPORATED
dated as of
December 5, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
Section 1.1 "Acquisition Proposal"..........................................2
Section 1.2 "Action"........................................................2
Section 1.4 "ADA"...........................................................2
Section 1.3 "Additional Buyer Units"........................................2
Section 1.5 "Affiliate".....................................................2
Section 1.6 "Agreement".....................................................2
Section 1.7 "Alternative Acquisition Agreement".............................2
Section 1.8 "Assignment and Assumption".....................................2
Section 1.9 "Business Day"..................................................2
Section 1.10 "Buyer"....... .................................................2
Section 1.11 "Buyer Amount". ................................................2
Section 1.12 "Buyer Filings".................................................3
Section 1.13 "Buyer Financing"...............................................3
Section 1.14 "Capital Expenditure Budget and Schedule".......................3
Section 1.15 "Capitalized Lease Obligation"..................................3
Section 1.16 "CERCLA"........................................................3
Section 1.17 "Certificate"...................................................3
Section 1.18 "Claim".........................................................3
Section 1.19 "Closing".......................................................3
Section 1.20 "Closing Date"..................................................3
Section 1.21 "Code"..........................................................3
Section 1.22 "Company".......................................................3
Section 1.23 "Company Board".................................................3
Section 1.24 "Company Bylaws"................................................3
Section 1.25 "Company Charter"...............................................3
Section 1.26 "Company Common Stock"..........................................3
Section 1.27 "Company Environmental Reports".................................3
Section 1.28 "Company Expenditure Budget and Schedule "......................3
Section 1.29 "Company Leases"................................................4
Section 1.30 "Company Options"...............................................4
Section 1.31 "Company Plans".................................................4
Section 1.32 "Company Properties"............................................4
Section 1.33 "Company Reports"...............................................4
Section 1.34 "Company Stock".................................................4
Section 1.35 "Controlled Group Liability"....................................4
Section 1.36 "Credit Lines"..................................................4
Section 1.37 "Deferred Units"................................................4
Section 1.38 "Development Budget and Schedule"...............................4
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Section 1.39 "Development Properties"........................................4
Section 1.40 "Effective Time"................................................4
Section 1.41 "Electing Holder"...............................................4
Section 1.42 "Election"......................................................5
Section 1.43 "Election Deadline".............................................5
Section 1.44 "Election Form".................................................5
Section 1.45 "Employee"......................................................5
Section 1.46 "Employee Arrangements".........................................5
Section 1.47 "Environmental Claim"...........................................5
Section 1.48 "Environmental Laws"............................................5
Section 1.49 "Environmental Permits".........................................5
Section 1.50 "ERISA".........................................................5
Section 1.51 "ERISA Affiliates"..............................................5
Section 1.52 "Exchange Act"..................................................5
Section 1.53 "Financial Advisor".............................................5
Section 1.54 "FIRPTA Certificate"............................................5
Section 1.55 "GAAP"..........................................................5
Section 1.56 "Government Authority"..........................................5
Section 1.57 "Holdings"......................................................6
Section 1.58 "Holdings Interest".............................................6
Section 1.59 "HSR Act".......................................................6
Section 1.60 "Indemnifiable Action"..........................................6
Section 1.62 "Indemnified Parties"...........................................6
Section 1.61 "Indenture".....................................................6
Section 1.63 "Information Statement".........................................6
Section 1.64 "Insurance Policies"............................................6
Section 1.65 "Intellectual Property".........................................6
Section 1.66 "Investments"...................................................6
Section 1.67 "IRS"...........................................................6
Section 1.68 "Liabilities"...................................................6
Section 1.69 "Liens".........................................................7
Section 1.70 "Loan Repayment Amount".........................................7
Section 1.71 "Material Adverse Effect".......................................7
Section 1.72 "Materials of Environmental Concern"............................7
Section 1.73 "Merger"........................................................7
Section 1.74 "Merger Certificate"............................................7
Section 1.75 "Merger Consideration"..........................................7
Section 1.76 "Mortgage Notes"................................................7
Section 1.77 "No-Solicitation Period"........................................7
Section 1.78 "No-Solicitation Start Date"....................................8
Section 1.79 "Notes".........................................................8
Section 1.80 "Other Assets"..................................................8
Section 1.81 "Other Filings".................................................8
Section 1.82 "Outside Date"..................................................8
Section 1.83 "Partnership Interests".........................................8
Section 1.84 "Partnerships"..................................................8
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Section 1.85 "Paying Agent"..................................................8
Section 1.86 "Pension Plans".................................................8
Section 1.87 "Permitted Dividends"...........................................8
Section 1.88 "Permitted Liens"...............................................8
Section 1.89 "Permitted Period"..............................................8
Section 1.90 "person"........................................................9
Section 1.91 "Pre-Closing Amount"............................................9
Section 1.92 "Preferred Units"...............................................9
Section 1.93 "Projects"......................................................9
Section 1.94 "Property Joint Venture"........................................9
Section 1.95 "Property Restrictions".........................................9
Section 1.96 "Proxy Statement"...............................................9
Section 1.97 "Purchase"......................................................9
Section 1.99 "Purchase Consideration"........................................9
Section 1.100 "Purchase Price"................................................9
Section 1.101 "Purchase Price Allocation".....................................9
Section 1.101 "Purchased Assets"..............................................9
Section 1.102 "Purchased Shares"..............................................9
Section 1.103 "Purchased Subsidiaries"........................................9
Section 1.104 "Redemption"...................................................10
Section 1.105 "Regulatory Filings"...........................................10
Section 1.106 "REIT".........................................................10
Section 1.107 "Release"......................................................10
Section 1.108 "Rent Summary".................................................10
Section 1.109 "Representatives"..............................................10
Section 1.110 "Schedule 13E-3"...............................................10
Section 1.111 "SEC"..........................................................10
Section 1.112 "SEC Filings"..................................................10
Section 1.113 "Securities Act"...............................................10
Section 1.114 "Securities Laws"..............................................10
Section 1.115 "Sellers"......................................................10
Section 1.116 "Share Consideration"..........................................10
Section 1.117 "Special Committee"............................................10
Section 1.118 "Strategic Alliance Agreement".................................10
Section 1.119 "Subsidiaries".................................................11
Section 1.120 "Superior Proposal"............................................11
Section 1.121 "Superior Transaction".........................................11
Section 1.122 "Support Agreement"............................................11
Section 1.123 "Surviving Partnership"........................................11
Section 1.124 "SUSA".........................................................11
Section 1.125 "SUSA Agreement"...............................................11
Section 1.126 "SUSA Debt"....................................................11
Section 1.127 "SUSA Interest"................................................11
Section 1.128 "SUSA Management Purchase Agreement"...........................11
Section 1.129 "SUSA Subsidiaries Amount".....................................11
Section 1.130 "SUSA Units"...................................................12
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Section 1.131 "Take-Along Period"............................................12
Section 1.132 "Tax" or "Taxes"...............................................12
Section 1.133 "Tax Protection Agreements"....................................12
Section 1.134 "Tax Return"...................................................13
Section 1.135 "Tenancy Leases"...............................................13
Section 1.136 "TBCA".........................................................13
Section 1.137 "TRULPA".......................................................13
Section 1.138 "Transferred Liabilities"......................................13
Section 1.139 "Trust"........................................................13
Section 1.140 "Unit Consideration"...........................................13
Section 1.141 "Welfare Plans"................................................13
ARTICLE 2
THE TRANSACTIONS
Section 2.1 Stock and Asset Purchase; Transferred Liabilities.............13
Section 2.2 Purchase Consideration; Redemption............................14
Section 2.3 Effective Time of the Merger..................................15
Section 2.4 Closing.......................................................15
Section 2.5 Pre-Closing Amount; Deliveries and Proceedings at Closing.....15
Section 2.6 The Merger; Effects of the Merger.............................16
Section 2.7 Conversion of Capital Stock; Conversion and Issuance of SUSA
Units.........................................................16
Section 2.8 Options; Restricted Stock.....................................21
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization and Qualification; Subsidiaries..................21
Section 3.2 Authority Relative to Agreements; Board Approval..............23
Section 3.3 Capital Stock and Units.......................................23
Section 3.4 No Conflicts; No Defaults; Required Filings and Consents......24
Section 3.5 SEC and Other Documents; Financial Statements; Undisclosed
Liabilities ..................................................25
Section 3.6 Litigation; Compliance With Law...............................26
Section 3.7 Absence of Certain Changes or Events..........................26
Section 3.8 Tax Matters; REIT and Partnership Status......................27
Section 3.9 Compliance with Agreements; Material Agreements...............29
Section 3.10 Financial Records; Organizational Documents; Corporate
Records.......................................................31
Section 3.11 Properties....................................................32
Section 3.12 Environmental Matters.........................................36
Section 3.13 Employees and Employee Benefits...............................39
Section 3.14 Labor Matters.................................................41
Section 3.15 Affiliate Transactions........................................41
Section 3.16 Insurance.....................................................41
Section 3.17 Proxy Statement; Schedule 13E-3; Information Statement........42
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Section 3.18 Tennessee Takeover Law........................................42
Section 3.19 Vote Required.................................................42
Section 3.20 Brokers or Finders; Opinion of Financial Advisor..............42
Section 3.21 Intellectual Property.........................................43
Section 3.22 SUSA and Holdings Agreement...................................44
Section 3.23 Knowledge Defined.............................................44
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 4.1 Organization..................................................44
Section 4.2 Due Authorization.............................................44
Section 4.3 Conflicting Agreements and Other Matters............. ........45
Section 4.4 Ownership of Shares...........................................45
Section 4.5 Proxy Statement; Schedule 13E-3; Information Statement........45
Section 4.6 Buyer Financing...............................................45
ARTICLE 5
COVENANTS RELATING TO CLOSINGS
Section 5.1 Taking of Necessary Action....................................46
Section 5.2 Take-Along Right..............................................47
Section 5.3 Strategic Alliance Agreement; Series A Preferred Stock........48
Section 5.4 Public Announcements..........................................49
Section 5.5 Conduct of the Business.......................................49
Section 5.6 No Solicitation...............................................52
Section 5.7 Information and Access........................................57
Section 5.8 Notification of Certain Matters...............................57
Section 5.9 Employee Matters..............................................57
Section 5.10 D&O Insurance; Indemnification................................58
Section 5.11 REIT Status...................................................59
Section 5.12 Shareholder Litigation........................................59
Section 5.13 Purchase Price Allocation.....................................59
Section 5.14 Sale of Shares by the Buyer...................................60
ARTICLE 6
CONDITIONS TO CLOSINGS
Section 6.1 Conditions to Obligations of the Buyer........................60
Section 6.2 Conditions to Obligations of the Sellers......................62
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ARTICLE 7
TERMINATION
Section 7.1 Termination...................................................63
Section 7.2 Effect of Termination.........................................64
Section 7.3 Fees and Expenses.............................................64
ARTICLE 8
MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties.................65
Section 8.2 Governing Law.................................................65
Section 8.3 Entire Agreement..............................................65
Section 8.4 Notices.......................................................65
Section 8.5 Successors and Assigns........................................66
Section 8.6 Amendments and Waivers........................................67
Section 8.7 Interpretation; Absence of Presumption........................67
Section 8.8 Severability..................................................67
Section 8.9 Further Assurances............................................68
Section 8.10 Remedies......................................................68
Section 8.11 Submission to Jurisdiction....................................68
Section 8.12 Waiver of Jury Trial..........................................68
Section 8.13 Counterparts and Signature....................................68
Section 8.14 Post-Closing Tax Matters......................................68
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This PURCHASE AND SALE AGREEMENT (this "AGREEMENT"), dated as of
December 5, 2001, is made by and among Storage USA, Inc., a Tennessee
corporation (the "COMPANY"), Storage USA Trust, a Maryland real estate
investment trust and a wholly owned subsidiary of the Company (the "TRUST"),
SUSA Partnership, L.P., a Tennessee limited partnership of which the Company is
the sole general partner ("SUSA" and, together with the Company and the Trust,
the "SELLERS"), and Security Capital Group Incorporated, a Maryland corporation
(the "BUYER").
RECITALS:
WHEREAS, the Company owns all of the general partnership interest and
a 0.8876% limited partnership interest, and the Trust owns an 87.8741% limited
partnership interest, in SUSA (all such partnership interests, collectively, the
"SUSA INTEREST"), and the Company owns all of the general partnership interest
and a 1% limited partnership interest, and SUSA owns a 99% limited partnership
interest, in SUSA Holdings LP, a Tennessee limited partnership of which the
Company is the sole general partner ("HOLDINGS") (all such partnership
interests, other than those owned by SUSA, collectively, the "HOLDINGS INTEREST"
and, together with the SUSA Interest, the "PARTNERSHIP INTERESTS");
WHEREAS, SUSA owns, or on or prior to the Closing (as defined herein)
will own, all of the issued and outstanding shares of common stock of each of
the Purchased Subsidiaries (as defined herein) (the "PURCHASED SHARES");
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, the Buyer desires to purchase (or cause one or more of its
Subsidiaries (as defined herein) to purchase) (i) any and all assets of the
Company, (ii) the Partnership Interests from the Company, the Trust and SUSA,
and (iii) the Purchased Shares from SUSA, and the Sellers, respectively, desire
to sell all such assets to the Buyer (or such Subsidiaries), and the Buyer
desires to assume (or cause such Subsidiaries to assume), and the Company
desires to transfer, any and all liabilities, direct, indirect, absolute,
contingent or otherwise, of the Company (collectively, the "PURCHASE");
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, following the Purchase, the Buyer and the Sellers desire that the
Company merge with and into SUSA (the "MERGER"), with the effects set forth
herein and in the Revised Uniform Limited Partnership Act of the State of
Tennessee ("TRULPA");
WHEREAS, the Board of Directors of the Buyer has approved this
Agreement and the transactions contemplated hereby, and the Company Board and
the Special Committee (as defined herein) have each determined that this
Agreement and the transactions contemplated herein are in the best interests of
the Company's shareholders, and have approved this Agreement and the
transactions contemplated hereby;
WHEREAS, the parties adopt this Agreement as, and intend for the
transactions (including the Merger) described herein to constitute, a plan of
liquidation for federal income tax purposes;
WHEREAS, the Company, in its capacity as the sole general partner of
SUSA and Holdings and otherwise, has taken all actions necessary to authorize
the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the
following respective meanings:
Section 1.1 "ACQUISITION PROPOSAL" shall have the meaning set forth in
Section 5.6(g).
Section 1.2 "ACTION" shall mean any action, suit, arbitration,
inquiry, proceeding or investigation by or before any Government Authority.
Section 1.3 "ADA" shall have the meaning set forth in Section 3.11(e).
Section 1.4 "ADDITIONAL BUYER UNITS" shall have the meaning set forth
in Section 2.7(a)(iii).
Section 1.5 "AFFILIATE" shall have the meaning ascribed thereto in
Rule 12b-2 promulgated under the Exchange Act, and as in effect on the date
hereof; PROVIDED, HOWEVER, that for purposes of this Agreement, the Buyer shall
not be deemed an Affiliate of the Company.
Section 1.6 "AGREEMENT" shall have the meaning set forth in the first
paragraph hereof.
Section 1.7 "ALTERNATIVE ACQUISITION AGREEMENT" shall have the meaning
set forth in Section 5.6(b)(ii).
Section 1.8 "ASSIGNMENT AND ASSUMPTION" shall have the meaning set
forth in Section 2.5(b)(i).
Section 1.9 "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a bank holiday in New York, N.Y.
Section 1.10 "BUYER" shall have the meaning set forth in the first
paragraph hereof.
Section 1.11 "BUYER AMOUNT" shall have the meaning set forth in
Section 2.2(a).
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Section 1.12 "BUYER FILINGS" shall have the meaning set forth in
Section 5.1(b).
Section 1.13 "BUYER FINANCING" shall have the meaning set forth in
Section 4.6.
Section 1.14 "CAPITAL EXPENDITURE BUDGET AND SCHEDULE" shall have the
meaning set forth in Section 3.11(i).
Section 1.15 CAPITALIZED LEASE OBLIGATION" shall mean any obligation
of SUSA to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real and/or personal property, which obligation is
required to be (and is) classified and accounted for as a capital lease on
SUSA's balance sheet in accordance with GAAP. Each Capitalized Lease Obligation
is listed on Schedule 1.15.
Section 1.16 "CERCLA" shall have the meaning set forth in Section
3.12(e).
Section 1.17 "CERTIFICATE" shall have the meaning set forth in Section
2.7(a)(i).
Section 1.18 "CLAIM" shall have the meaning set forth in Section
3.12(g)(i).
Section 1.19 "CLOSING" shall have the meaning set forth in Section
2.4.
Section 1.20 "CLOSING DATE" shall have the meaning set forth in
Section 2.4.
Section 1.21 "CODE" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto, including all of the rules and regulations
promulgated thereunder. All section references to the Code (or Treasury
Regulations) shall include all similar provisions under applicable state, local
or foreign law.
Section 1.22 "COMPANY" shall have the meaning set forth in the first
paragraph hereof.
Section 1.23 "COMPANY BOARD" shall mean the Board of Directors of the
Company.
Section 1.24 "COMPANY BYLAWS" shall mean the Amended and Restated
Bylaws of the Company, as in effect on the date hereof.
Section 1.25 "COMPANY CHARTER" shall mean the Charter of the Company,
as in effect on the date hereof.
Section 1.26 "COMPANY COMMON STOCK" shall mean the common stock, par
value $0.01 per share, of the Company.
Section 1.27 "COMPANY ENVIRONMENTAL REPORTS" shall have the meaning
set forth in Section 3.12(f).
Section 1.28 "COMPANY EXPENDITURE BUDGET AND SCHEDULE" shall have the
meaning set forth in Section 3.11(i).
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Section 1.29 "COMPANY LEASES" shall have the meaning set forth in
Section 3.11(f).
Section 1.30 "COMPANY OPTIONS" shall have the meaning set forth in
Section 2.8(a).
Section 1.31 "COMPANY PLANS" shall have the meaning set forth in
Section 3.13(h).
Section 1.32 "COMPANY PROPERTIES" shall have the meaning set forth in
Section 3.11(a).
Section 1.33 "COMPANY REPORTS" shall have the meaning set forth in
Section 3.5(a).
Section 1.34 "COMPANY STOCK" shall mean, collectively, the Company
Common Stock and any other shares of capital stock of the Company.
Section 1.35 "CONTROLLED GROUP LIABILITY" shall have the meaning set
forth in Section 3.13(h).
Section 1.36 "CREDIT LINES" shall mean (a) the Third Amended and
Restated Unsecured Revolving Credit Agreement, dated as of September 17, 2001,
among SUSA, as Borrower, the Company, as General Partner, Guarantor and REIT,
the Trust, as Trust and Guarantor, the Lenders described therein, and Bank One,
NA, as Administrative Agent for the Lenders, (b) the Second Amended and Restated
Loan Agreement, dated as of October 16, 2001, among SUSA, as Borrower, the
Company, as General Partner, Guarantor and REIT, the Trust, as Trust and
Guarantor and First Tennessee Bank, N.A., as Lender, and (c) the Unsecured
Revolving Credit Agreement, dated as of December 19, 2000, among Storage USA
Franchise Corp., as Borrower, SUSA, as General Partner and Guarantor, the
Company, as Guarantor and REIT, the Trust, as Trust and Guarantor, and First
Union National Bank, as Lender and Administrative Agent.
Section 1.37 "DEFERRED UNITS" shall mean any SUSA Units which SUSA
has, prior to the date hereof, agreed to issue at future dates, in partial
consideration for the purchase of properties, as set forth on Schedule 1.37.
Section 1.38 "DEVELOPMENT BUDGET AND SCHEDULE" shall have the meaning
set forth in Section 3.11(j).
Section 1.39 "DEVELOPMENT PROPERTIES" shall have the meaning set forth
in Section 3.11(j).
Section 1.40 "EFFECTIVE TIME" shall have the meaning set forth in
Section 2.3.
Section 1.41 "ELECTING HOLDER" shall have the meaning set forth in
Section 2.7(a)(ii).
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Section 1.42 "ELECTION" shall have the meaning set forth in Section
2.7(a)(ii).
Section 1.43 "ELECTION DEADLINE" shall have the meaning set forth in
Section 2.7(a)(ii).
Section 1.44 "ELECTION FORM" shall have the meaning set forth in
Section 2.7(a)(ii).
Section 1.45 "EMPLOYEE" shall have the meaning set forth in Section
3.13(h).
Section 1.46 "EMPLOYEE ARRANGEMENTS" shall have the meaning set forth
in Section 3.13.
Section 1.47 "ENVIRONMENTAL CLAIM" shall have the meaning set forth in
Section 3.12(g)(ii).
Section 1.48 "ENVIRONMENTAL LAWS" shall have the meaning set forth in
Section 3.12(g)(iii).
Section 1.49 "ENVIRONMENTAL PERMITS" shall have the meaning set forth
in Section 3.12(a).
Section 1.50 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.
Section 1.51 "ERISA AFFILIATES" shall mean, with respect to any
entity, trade or business, any other entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
Section 1.52 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
Section 1.53 "FINANCIAL ADVISOR" shall have the meaning set forth in
Section 3.20(a).
Section 1.54 "FIRPTA CERTIFICATE" shall mean a certificate in form and
substance reasonably satisfactory to the Buyer duly executed and acknowledged
certifying facts that would exempt from any withholding requirement under
Section 1445 of the Code any payments to the Sellers for any United States real
property interests being transferred pursuant to this Agreement.
Section 1.55 "GAAP" shall have the meaning set forth in Section
3.5(b).
Section 1.56 "GOVERNMENT AUTHORITY" shall mean any government or state
(or any subdivision thereof) of or in the United States, or any agency,
authority, bureau, commission, department or similar body or instrumentality
thereof, or any governmental court or tribunal.
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Section 1.57 "HOLDINGS" shall have the meaning set forth in the
Recitals hereto.
Section 1.58 "HOLDINGS INTEREST" shall have the meaning set forth in
the Recitals hereto.
Section 1.59 "HSR ACT" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
Section 1.60 "INDEMNIFIABLE ACTION" shall have the meaning set forth
in Section 5.10(a).
Section 1.61 "INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 5.10(a).
Section 1.62 "INDENTURE" shall have the meaning set forth in Section
1.125 (SUSA Debt).
Section 1.63 "INFORMATION STATEMENT" shall have the meaning set forth
in Section 5.1(d).
Section 1.64 "INSURANCE POLICIES" shall have the meaning set forth in
Section 3.16.
Section 1.65 "INTELLECTUAL PROPERTY" shall have the meaning set forth
in Section 3.21(a).
Section 1.66 "INVESTMENTS" shall mean all equity interests of the
Company or its Subsidiaries, as the case may be, in any non-publicly traded
entity (other than a Subsidiary).
Section 1.67 "IRS" shall mean the Internal Revenue Service.
Section 1.68 "LIABILITIES" shall mean, as to any person, all debts,
adverse claims, liabilities and obligations, direct, indirect, absolute or
contingent of such person, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by GAAP to be reflected, in such person's or entity's
balance sheets or other books and records, including (a) obligations arising
from non-compliance with any law, rule or regulation of any Government Authority
or imposed by any court or any arbitrator of any kind, (b) all indebtedness or
liability of such person for borrowed money, or for the purchase price of
property or services (including trade obligations), (c) all obligations of such
person as lessee under leases, capital or other, (d) liabilities of such person
in respect of plans covered by Title IV of ERISA, or otherwise arising in
respect of Company Plans for Employees or their respective families or
beneficiaries, (e) reimbursement obligations of such person in respect of
letters of credit, (f) all obligations of such person arising under acceptance
facilities, (g) all liabilities of other persons or entities, directly or
indirectly, guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business) or discounted with recourse by such person or with
respect to which the person in question is otherwise directly or indirectly
liable, (h) all obligations secured by any Lien on property of such person,
whether or not the obligations
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have been assumed, and (i) all other items which have been, or in accordance
with GAAP would be, included in determining total liabilities on the liability
side of the balance sheet.
Section 1.69 "LIENS" shall mean all liens, mortgages, deeds of trust,
deeds to secure debt, security interests, pledges, claims, charges, easements
and other encumbrances of any nature whatsoever.
Section 1.70 "LOAN REPAYMENT AMOUNT" shall mean an amount in cash,
equal to (a) the amount of any borrowings outstanding under the Credit Lines
minus (b) the SUSA Subsidiaries Amount, and to be used by SUSA for the repayment
at the Closing of any borrowings outstanding under the Credit Lines, in
accordance with Section 2.5(b)(ii).
Section 1.71 "MATERIAL ADVERSE EFFECT" shall mean any change or event
or effect that is or would reasonably be expected to be materially adverse to
the business, assets, financial condition or results of operations of the
Company and its Subsidiaries taken as a whole; it being understood that none of
the following shall be deemed to constitute, and none of the following shall be
taken into account in determining whether there has been or will be, a Material
Adverse Effect: (a) any change in the market price or trading volume of the
Company Common Stock after the date hereof, (b) any change or event or effect
caused by any action taken by Buyer or any of its Affiliates or Representatives,
(c) any change or event or effect caused by any Action previously or hereafter
brought by a shareholder of the Company or a holder of SUSA Units against the
Company, SUSA or any director or officer of the Company relating to the
Strategic Alliance Agreement or this Agreement or the transactions contemplated
hereby, (d) any change or event or effect arising out of or relating generally
to the U.S. economy, (e) any change or event or effect relating generally to the
industry in which the Company and its Subsidiaries operate, and (f) any change
or event or effect arising out of this Agreement, compliance with the Company's
covenants in this Agreement, the announcement or pendency of the transactions
contemplated by this Agreement (including any cancellations of or delays in
customer orders, any reduction in revenues, any disruption in supplier,
distributor, partner or similar relationships or any loss of employees).
Section 1.72 "MATERIALS OF ENVIRONMENTAL CONCERN" shall have the
meaning set forth in Section 3.12(g)(iv).
Section 1.73 "MERGER" shall have the meaning set forth in the Recitals
hereto.
Section 1.74 "MERGER CERTIFICATE" shall have the meaning set forth in
Section 2.3.
Section 1.75 "MERGER CONSIDERATION" shall mean the Share Consideration
and the Unit Consideration.
Section 1.76 "MORTGAGE NOTES" shall mean the notes of the Company
and/or one or more of its Subsidiaries that are secured by one or more Company
Properties, all of which are listed on Schedule 1.76.
Section 1.77 "NO-SOLICITATION PERIOD" shall have the meaning set forth
in Section 5.6(a).
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Section 1.78 "NO-SOLICITATION START DATE" shall have the meaning set
forth in Section 5.6(a).
Section 1.79 "NOTES" shall have the meaning set forth in Section 2.2.
Section 1.80 "OTHER ASSETS" shall have the meaning set forth in
Section 2.1(c).
Section 1.81 "OTHER FILINGS" shall have the meaning set forth in
Section 5.1(b).
Section 1.82 "OUTSIDE DATE" shall have the meaning set forth in
Section 7.1(b).
Section 1.83 "PARTNERSHIP INTERESTS" shall have the meaning set forth
in the Recitals hereto.
Section 1.84 "PARTNERSHIPS" shall have the meaning set forth in
Section 3.8(h).
Section 1.85 "PAYING AGENT" shall have the meaning set forth in
Section 2.7(b)(i).
Section 1.86 "PENSION PLANS" shall have the meaning set forth in
Section 3.13(h).
Section 1.87 "PERMITTED DIVIDENDS" shall mean (a) normal quarterly
dividends (not to exceed $0.71 per share), declared and paid on the Company
Common Stock in the ordinary course of business consistent with past practice,
and (b) any corresponding distribution on SUSA Units as required under and in
accordance with the provisions of the SUSA Agreement.
Section 1.88 "PERMITTED LIENS" shall mean (i) Liens for taxes or other
assessments or charges of Governmental Authorities that are not yet delinquent
or that are being contested in good faith by appropriate proceedings, in each
case, with respect to which adequate reserves or other appropriate provisions
are being maintained by the Company or its Subsidiaries to the extent required
by GAAP, (ii) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other Liens (including Liens imposed under ERISA or any
Environmental Law or in connection with any Environmental Claim) imposed by law
and created in the ordinary course of business for amounts not yet overdue or
which are being contested in good faith by appropriate proceedings, in each
case, with respect to which adequate reserves or other appropriate provisions
are being maintained by the Company or its Subsidiaries, whether or not required
by GAAP, (iii) the Company Leases, (iv) easements, rights-of-way, covenants and
restrictions which are customary and typical for properties similar to the
Company Properties and which do not (x) interfere materially with the ordinary
conduct of the business of the Company and its Subsidiaries as a whole or (y)
detract materially from the value or usefulness of the Company Properties taken
as a whole, (v) the Liens which were granted by the Company or any of its
Subsidiaries to lenders pursuant to credit agreements in existence on the date
hereof which are described on Schedule 3.9(c), (vi) Liens and Property
Restrictions described on Schedule 1.88, and (vii) such imperfections of title
and encumbrances, if any, as are not material to the Company and its
Subsidiaries, taken as a whole.
Section 1.89 "PERMITTED PERIOD" shall have the meaning set forth in
Section 5.6(f).
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Section 1.90 "PERSON" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or Government Authority.
Section 1.91 "PRE-CLOSING AMOUNT" shall mean, with respect to any
share of Company Common Stock or SUSA Unit, as applicable, an amount equal to
the product of (a) the Permitted Dividend relating to the quarterly period in
which the Closing occurs payable on such share or unit multiplied by (b) a
fraction the denominator of which is the number of calendar days included in
such quarterly period and the numerator of which is the number of days included
in the period from (and including) the first day of such quarterly period to
(and including) the Closing.
Section 1.92 "PREFERRED UNITS" means SUSA's 8 7/8% Series A Cumulative
Redeemable Preferred Units of Partnership Interest, as established by the fourth
amendment to the SUSA Agreement.
Section 1.93 "PROJECTS" shall have the meaning set forth in Section
3.11(j).
Section 1.94 "PROPERTY JOINT VENTURE" shall mean each of the joint
venture partnerships listed on Schedule 1.94 which holds a fee or leasehold
interest in one or more Company Properties, as indicated on said Schedule.
Section 1.95 "PROPERTY RESTRICTIONS" shall have the meaning set forth
in Section 3.11(a).
Section 1.96 "PROXY STATEMENT" shall have the meaning set forth in
Section 5.1(b).
Section 1.97 "PURCHASE" shall have the meaning set forth in the
Recitals hereto.
Section 1.98 "PURCHASE CONSIDERATION" shall have the meaning set forth
in Section 2.2.
Section 1.99 "PURCHASE PRICE" shall mean the sum of the Purchase
Consideration and the Transferred Liabilities.
Section 1.100 "PURCHASE PRICE ALLOCATION" shall have the meaning set
forth in Section 5.13.
Section 1.101 "PURCHASED ASSETS" shall have the meaning set forth in
Section 2.1(c).
Section 1.102 "PURCHASED SHARES" shall have the meaning set forth in
the Recitals hereto.
Section 1.103 "PURCHASED SUBSIDIARIES" shall mean Storage USA
Franchise Corp and SUSA Management, Inc.
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Section 1.104 "REDEMPTION" shall have the meaning set forth in Section
2.2(b).
Section 1.105 "REGULATORY FILINGS" shall have the meaning set forth in
Section 3.4(e).
Section 1.106 "REIT" shall have the meaning set forth in Section
3.8(b).
Section 1.107 "RELEASE" shall have the meaning set forth in Section
3.12(g)(v).
Section 1.108 "RENT SUMMARY" shall have the meaning set forth in
Section 3.11(f).
Section 1.109 "REPRESENTATIVES" mean, with respect to any person, such
person's directors, officers, employees, investment bankers, attorneys,
accountants or other advisors or representatives.
Section 1.110 "SCHEDULE 13E-3" shall have the meaning set forth in
Section 5.1(b).
Section 1.111 "SEC" shall mean the United States Securities and
Exchange Commission.
Section 1.112 "SEC FILINGS" shall have the meaning set forth in
Section 5.1(b).
Section 1.113 "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
Section 1.114 "SECURITIES LAWS" shall have the meaning set forth in
Section 3.5(a).
Section 1.115 "SELLERS" shall have the meaning set forth in the first
paragraph hereof.
Section 1.116 "SHARE CONSIDERATION" shall mean $42 in cash, without
interest, per share of Company Common Stock, subject to (a) increase by the per
share amount of any Pre-Closing Amount payable on the Company Common Stock and
(b) reduction by the per share amount of any dividend or distribution in excess
of Permitted Dividends paid by the Company on the Company Common Stock after the
date hereof.
Section 1.117 "SPECIAL COMMITTEE" shall mean the special committee of
the Company Board appointed by the Company Board in connection with the
consideration and negotiation of certain matters relating to the Buyer and
certain related matters.
Section 1.118 "STRATEGIC ALLIANCE AGREEMENT" shall mean the Strategic
Alliance Agreement, dated as of March 19, 1996, by and among the Company, SUSA,
the Trust, Security Capital U.S. Realty, a Luxembourg corporation ("USREALTY"),
and Security Capital Holdings S.A., a Luxembourg corporation and a wholly owned
subsidiary of USRealty ("SC HOLDINGS"), to which the Buyer (both as to itself
and as successor to all the rights of USRealty and SC Hold-
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ings under the Strategic Alliance Agreement) became party as a result of the
transactions between Security Capital, USRealty and SC Holdings and the consent
provided by the Company pursuant to that certain letter agreement dated July 7,
2000 between the Company and the Buyer, as the same has been or may be amended,
modified or waived from time to time.
Section 1.119 "SUBSIDIARIES" shall mean with respect to any person,
any corporation, partnership, joint venture, limited liability company, business
trust or other entity, of which such person, directly or indirectly, owns or
controls at least 50% of the securities or other interests entitled to vote in
the election of directors or others performing similar functions with respect to
such corporation or other organization, or which such person otherwise controls.
Without limiting the generality of the foregoing, the Company's Subsidiaries
shall include (a) the Trust, (b) SUSA, and (c) each of the Purchased
Subsidiaries and any entity that is a direct or indirect Subsidiary of the Trust
or SUSA.
Section 1.120 "SUPERIOR PROPOSAL" shall have the meaning set forth in
Section 5.6(g).
Section 1.121 "SUPERIOR TRANSACTION" shall have the meaning set forth
in Section 5.6(g).
Section 1.122 "SUPPORT AGREEMENT" shall have the meaning set forth in
Section 5.2.
Section 1.123 "SURVIVING PARTNERSHIP" shall have the meaning set forth
in Section 2.6.
Section 1.124 "SUSA" shall have the meaning set forth in the first
paragraph hereof.
Section 1.125 "SUSA AGREEMENT" shall mean the Second Amended and
Restated Agreement of Limited Partnership of SUSA Partnership, L.P., dated as of
September 21, 1994, as amended as of March 19, 1996, June 14, 1996, August 14,
1996 and November 12, 1998.
Section 1.126 "SUSA DEBT" shall mean (a) the 7.125% Notes due 2003,
8.20% Notes due 2017, 6.95% Notes due 2006, 7.45% Debentures due 2018, 7.00%
Notes due 2007 and 7.50% Debentures due 2027, in each case, issued under the
indenture, dated as of November 1, 1996, between SUSA, as issuer, and The First
National Bank of Chicago, as trustee (the "INDENTURE"), (b) the Preferred Units,
(c) the Credit Lines, (d) the Deferred Units, (e) the Mortgage Notes, and (f)
the Capitalized Lease Obligations.
Section 1.127 "SUSA INTEREST" shall have the meaning set forth in the
Recitals hereto.
Section 1.128 "SUSA MANAGEMENT PURCHASE AGREEMENT" shall have the
meaning set forth in Section 6.1(j).
Section 1.129 "SUSA SUBSIDIARIES AMOUNT" shall mean $15,859,000.
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Section 1.130 "SUSA UNITS" shall mean any class of limited partnership
units representing shares of partnership interests in SUSA, but shall not
include the Preferred Units.
Section 1.131 "TAKE-ALONG PERIOD" shall mean the period commencing on
the date of termination of this Agreement pursuant to and in accordance with
Section 7.1(f) (in connection with an agreement providing for a Superior
Transaction and entered into during the Permitted Period) to and including the
date that is four months from such date of termination of this Agreement;
PROVIDED, HOWEVER, that (a) if the meeting of the Company's shareholders
referred to in Section 5.2 (including any adjournment or postponement thereof)
is delayed because of a breach (including any omission by the Buyer or any of
its Affiliates to take, when required, any action as to which they are
contractually obligated hereunder) by the Buyer of this Agreement or any other
action of the Buyer or any of its Affiliates, then the Take-Along Period shall
be extended by the number of days of such delay, or (b) in the event that the
Company has not been able to duly convene and hold the special meeting of its
shareholders referred to in Section 5.2 on or prior to the date that is four
months from such date of termination of this Agreement (x) because the requisite
proxy or other related or required materials have not been cleared by the SEC
sufficiently in advance of such date, PROVIDED that such proxy or other related
or required materials were filed with the SEC in preliminary form within 45 days
following such date of termination of this Agreement, and that the Company and
the person with whom the Company has agreed to enter into a Superior Transaction
have used their reasonable efforts to clear such proxy or other related or
required materials with the SEC as promptly as practicable, or (y) because of
another regulatory obstacle to the convening and holding of such shareholder
meeting or the closing of the Superior Transaction, despite the Company's
reasonable efforts to overcome such obstacle, then, in each such case referred
to in the foregoing clauses (x) and (y), the Take-Along Period shall be extended
until the earlier of (i) two Business Days following the date of such
shareholder meeting or (ii) the date that is six months after such date of
termination of this Agreement.
Section 1.132 "TAX" OR "TAXES" shall mean any federal, state, local,
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not, and shall include any amounts payable pursuant
to any tax sharing agreement or with respect to which any relevant entity is
liable as a successor, pursuant to contract or otherwise.
Section 1.133 "TAX PROTECTION AGREEMENTS" shall mean any agreement
pursuant to which (a) any Liability to holders of SUSA Units relating to Taxes
may arise, whether or not as a result of the consummation of the transactions
contemplated by this Agreement; (b) in connection with the deferral of income
Taxes of a holder of SUSA Units, the Company, SUSA or their respective
Subsidiaries or the Partnerships have agreed to (i) maintain a minimum level of
debt or continue a particular debt, (ii) retain or not dispose of assets for a
period of time that has not since expired, (iii) make or refrain from making Tax
elections, (iv) operate (or refrain from operating) in a particular manner,
and/or (v) only dispose of assets in a particular manner; and/or
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(c) limited partners of a Partnership have guaranteed debt of such Partnership
or any other Partnership or agreed to indemnify another person for a Liability
of or that relates to a Partnership.
Section 1.134 "TAX RETURN" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 1.135 "TENANCY LEASES" shall have the meaning set forth in
Section 3.11(l).
Section 1.136 "TBCA" shall mean the Tennessee Business Corporation
Act.
Section 1.137 "TRULPA" shall have the meaning set forth in the
Recitals hereto.
Section 1.138 "TRANSFERRED LIABILITIES" shall mean all of the
Liabilities of the Company, as set forth or described on Schedule 1.136.
Section 1.139 "TRUST" shall have the meaning set forth in the first
paragraph hereof.
Section 1.140 "UNIT CONSIDERATION" shall mean $42 in cash, without
interest, per SUSA Unit, subject to (a) increase by the per SUSA Unit amount of
any Pre-Closing Amount payable on the SUSA Units and (b) reduction by the per
SUSA Unit amount of any distribution in excess of Permitted Dividends paid by
SUSA on the SUSA Units after the date hereof to comply with the requirements of
Section 5.11.
Section 1.141 "WELFARE PLANS" shall have the meaning set forth in
Section 3.13(h).
ARTICLE 2
THE TRANSACTIONS
Section 2.1 STOCK AND ASSET PURCHASE; TRANSFERRED LIABILITIES. On the
terms and subject to the conditions hereinafter set forth and on the basis of
and in reliance upon the representations, warranties, obligations and agreements
set forth herein, at the Closing:
(a) the Company shall, and shall cause SUSA to, grant, sell, convey,
assign, transfer and deliver to the Buyer, and the Buyer shall purchase, acquire
and accept from the Company, free and clear of all Liens, all of SUSA's right,
title and interest in and to all of the Purchased Shares, constituting all of
the issued and outstanding shares of capital stock of the Purchased
Subsidiaries, as set forth on Schedule 2.1(a), in exchange for the SUSA
Subsidiaries Amount. The transfer of the Purchased Shares from SUSA to the Buyer
shall be in a form acceptable for transfer on the books of the Purchased
Subsidiaries. Unless the context otherwise requires, references in this Article
2 to the Buyer shall be deemed references to the Buyer and the Subsidiary or
Subsidiaries the Buyer may substitute for itself pursuant to Section 8.5;
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(b) immediately after the purchase and sale of the Purchased Shares,
the Company and the Trust shall (and the Company shall cause the Trust to)
grant, sell, convey, assign, transfer and deliver to the Buyer, and the Buyer
shall purchase, acquire and accept from the Company and the Trust, all of the
their respective right, title and interest in and to each of the Partnership
Interests (all limited partnership interests first, followed by the general
partnership interests), in each case, free and clear of all Liens. The transfer
of the SUSA Interest and the Holdings Interest from the Company and the Trust to
the Buyer shall be in a form acceptable for transfer on the books of SUSA and
Holdings, respectively;
(c) immediately after the purchase and sale of the Purchased Shares
and concurrently with the purchase and sale of the Partnership Interests
pursuant to Section 2.1(b), the Company shall grant, sell, convey, assign,
transfer and deliver to the Buyer, and the Buyer shall purchase, acquire and
accept from the Company, free and clear of all Liens (other than Permitted
Liens), all of the Company's right, title and interest in, to and under, all of
the assets, properties and rights of every nature, kind and description,
tangible and intangible (including goodwill), whether real, personal or mixed,
whether accrued, contingent or otherwise, wherever located and whether now
existing or hereafter acquired (other than the Partnership Interests and the
Purchase Consideration) of the Company, and as the same shall exist on the
Closing Date, whether or not any of such assets, properties or rights have any
value for accounting purposes or are carried or reflected on or specifically
referred to in the Company's books or financial statements (collectively, the
"OTHER ASSETS" and, together with the Partnership Interests, the "PURCHASED
ASSETS"); it being understood and agreed that "Other Assets" shall also include
all of the issued and outstanding shares of capital stock of the Trust, Huron
Acquisitions, Inc. and SUSA Finance Corp.; and
(d) the Company shall grant, sell, convey, assign, transfer and
deliver to the Buyer, and the Buyer shall accept, assume and agree to pay,
perform or otherwise discharge, in accordance with the respective terms and
subject to the respective conditions thereof, all of the Transferred
Liabilities; it being understood and agreed that Liabilities relating to the
SUSA Debt shall not constitute Transferred Liabilities and shall continue to be
Liabilities of the Surviving Partnership after the Closing, unless otherwise
satisfied and paid by SUSA as contemplated hereby.
Section 2.2 PURCHASE CONSIDERATION; REDEMPTION. (a) The aggregate
purchase price to be paid by the Buyer to the Sellers for the Purchased Assets,
which shall be in addition to the assumption of the Transferred Liabilities
pursuant to Section 2.1(d), shall be equal to the sum of (a) the aggregate Share
Consideration payable pursuant to Section 2.7 and (b) the aggregate
consideration payable with respect to Company Options pursuant to Section 2.8
(the "PURCHASE CONSIDERATION"); PROVIDED, HOWEVER, that the Buyer may, in its
sole discretion, elect to pay a portion of the Purchase Consideration (up to an
amount equal, in the aggregate, to the product of the number of shares of
Company Common Stock held by the Buyer and its Affiliates multiplied by $42 (the
"BUYER AMOUNT")) in the form of one or more promissory notes (which shall have
terms acceptable to the Buyer in its sole discretion) entitling the holder
thereof (subject to compliance with the provisions of this Agreement) to the
payment of the amount set forth thereon (the "NOTES"). The Purchase
Consideration (other than the amount, if any, represented by the Notes) shall be
payable at the Closing by wire transfer of immediately available funds to such
accounts as the Sellers shall designate at least two Business Days prior to the
Closing Date.
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(b) Immediately after the Purchase and prior to the Merger, the
Company shall purchase from the Buyer and its Affiliates, and the Buyer shall
sell and shall cause its Affiliates to sell, all shares of Company Common Stock
owned at such time by the Buyer and its Affiliates, in accordance with Section
▇▇-▇▇-▇▇▇ of the TBCA, for an amount equal to the Buyer Amount, in cash and/or,
to the extent any portion of the Buyer Amount was paid in the form of Notes,
such Notes (the "REDEMPTION"), and all such shares so acquired shall become
authorized but unissued shares of the Company in accordance with such Section.
Section 2.3 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, prior to the Closing, the Buyer shall prepare, and on the
Closing Date the Buyer shall cause to be filed with the Secretary of State of
the State of Tennessee, a certificate of merger (the "MERGER CERTIFICATE") in
such form as is required by, and executed by the Surviving Partnership in
accordance with, Section 61-2-211 of the TRULPA, and the Buyer, the Company and
the Surviving Partnership shall make all other filings or recordings required
under the TRULPA and the TBCA. The Merger shall become effective upon the filing
of the Merger Certificate with the Secretary of State of the State of Tennessee
or at such later date and time as is agreed to by the Buyer and the Company
prior to such filing and is set forth in the Merger Certificate (the "EFFECTIVE
TIME").
Section 2.4 CLOSING. Unless this Agreement shall have been earlier
terminated in accordance with the terms hereof, the closing of the Purchase, the
Redemption and the Merger (the "CLOSING") shall take place (a) at the New York,
New York offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, at 10:00 a.m. local time, on
a date mutually agreed upon by the Buyer and the Company but not later than two
Business Days after the Business Day on which the conditions precedent set forth
in Article 6 have been satisfied or waived (other than the conditions precedent
that are not capable of being satisfied until the Closing, but subject to the
satisfaction or waiver of those conditions), or (b) at such other place, date or
time as may be mutually agreed upon in writing by the Buyer and the Company. The
date of the Closing is referred to herein as the "CLOSING DATE."
Section 2.5 PRE-CLOSING AMOUNTS; DELIVERIES AND PROCEEDINGS AT
CLOSING. (a) All Pre-Closing Amounts shall be paid as set forth in Section 2.7.
(b) At the Closing and subject to the terms and conditions contained
herein:
(i) DELIVERIES BY SELLERS. The appropriate Seller(s) shall (A)
deliver or cause to be delivered to the Buyer (w) one or more stock
certificates, together with stock powers executed in blank, representing
all of the issued and outstanding Purchased Shares, (x) an instrument or
instruments for the assignment and assumption of the Purchased Assets and
the Transferred Liabilities in the form attached hereto as EXHIBIT A, duly
executed by the Company and the Trust (the "ASSIGNMENT AND ASSUMPTION"),
(y) the Additional Buyer Units, and (z) a FIRPTA Certificate from each
Seller and (B) use the Loan Repayment Amount and the SUSA Subsidiaries
Amount to repay all borrowings outstanding under the Credit Lines;
(ii) DELIVERIES BY THE BUYER. The Buyer shall deliver or cause to
be delivered (A) to the appropriate Seller(s) (w) the Purchase
Consideration, as set forth in
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Section 2.2, (x) the SUSA Subsidiaries Amount, (y) the Loan Repayment
Amount, and (z) the Assignment and Assumption, duly executed by the Buyer,
and (B) to the Paying Agent, in accordance with Section 2.7(b)(i), an
amount of cash equal to the aggregate Unit Consideration payable pursuant
to Sections 2.7(a)(iii) and 2.7(b); and
(iii) OTHER DELIVERIES. The Sellers shall also execute,
acknowledge and deliver to the Buyer bills of sale, endorsements,
assignments and other instruments of sale, conveyance, transfer and
assignment as the Buyer may reasonably request in order to effect the sale,
transfer, assignment, conveyance and delivery of the Purchased Shares and
the Purchased Assets to the Buyer or otherwise carry out the provisions of
this Agreement. Each instrument of transfer referred to in this Section 2.5
that is not attached as an Exhibit to this Agreement shall be in customary
form and shall be reasonably satisfactory in form and substance to the
Buyer.
(iv) OFFICERS. The officers of the Surviving Partnership shall be
such officers as the Buyer shall designate on or prior to the Closing.
Section 2.6 THE MERGER; EFFECTS OF THE MERGER. Upon the terms and
subject to the conditions of this Agreement, at the Effective Time (a) the
separate existence of the Company shall cease and the Company shall be merged
with and into SUSA (SUSA following the Merger is sometimes referred to herein as
the "SURVIVING PARTNERSHIP"), (b) the SUSA Agreement, as amended as set forth in
EXHIBIT B, shall be the agreement of limited partnership of the Surviving
Partnership, until further amended in accordance with the TRULPA and (c) the
Merger shall have the effects set forth herein and in the TRULPA and the TBCA.
The provisions of Sections 2.6 and 2.7 shall constitute a Plan of Merger under
the TRULPA and the TBCA.
Section 2.7 CONVERSION OF CAPITAL STOCK; CONVERSION AND ISSUANCE OF
SUSA UNITS. (a) At the Effective Time, by virtue of the Merger and without any
action on the part of the Buyer, SUSA, the Company or any of the holders of any
of the outstanding securities of the Company, SUSA or any of their respective
Affiliates:
(i) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held by the
Company as treasury stock or owned by any of the Company's wholly owned
Subsidiaries, which shares shall be cancelled without any payment being
made pursuant to this Agreement with respect thereto) shall be
automatically converted into the right to receive the Share Consideration
upon surrender of the certificate representing such share (each a
"CERTIFICATE") in the manner provided in Section 2.7(b). As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist,
and each holder of a Certificate or Certificates shall cease to have any
rights with respect thereto, except the right to receive the Share
Consideration pursuant to this Section 2.7(a). In the event of any
reclassification, stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Company Common
Stock), reorganization, recapitalization or other like change with respect
to Company Common Stock permitted hereunder, occurring (or for which a
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record date is established) after the date hereof and prior to the
Effective Time, the Share Consideration shall be proportionately adjusted
to reflect fully such event;
(ii) each SUSA Unit issued and outstanding immediately prior to
the Effective Time (other than those held by the Buyer of any of its direct
or indirect Subsidiaries or by an Electing Holder) shall be cancelled and
shall be converted automatically into the right to receive the Unit
Consideration, payable to the holder of such SUSA Unit; PROVIDED, HOWEVER,
that each such holder may, at such holder's sole discretion, elect (each an
"ELECTION") to (x) continue as a limited partner of the Surviving
Partnership, in accordance with the terms of the SUSA Agreement, as amended
as set forth in EXHIBIT B hereto (and also to be annexed to the Information
Statement), until further amended in accordance with the TRULPA, in which
case, such holder shall not be entitled to receive the Unit Consideration
and Section 2.7(a)(iii) shall apply or (y) make an Election with respect to
some but not all of such holder's SUSA Units (with the effects set forth in
the foregoing clause (x) with respect to, but only with respect to, the
SUSA Units covered by such Election), in which case, such holder shall be
entitled to receive Unit Consideration with respect to, but only with
respect to, the SUSA Units with respect to which an Election has not been
made, in accordance with Section 2.7(a)(iii); PROVIDED, FURTHER, that any
holder of SUSA Units who (x) is entitled to receive an amount of Unit
Consideration equal to $250,000 or less, in the aggregate, (y) is not an
"accredited investor" (as such term is defined in Rule 501(a) under the
Securities Act) or (z) would not be eligible, in the Buyer's reasonable
judgment (after being advised by outside counsel), based on the Buyer's
(and such counsel's) review of such holder's responses to a questionnaire
sent to the holders of SUSA Units (which questionnaire shall be in form and
substance reasonably acceptable to the Buyer and the Company) and such
other customary matters as are reasonably taken into account by the Buyer
and its counsel ,to continue as a limited partner of the Surviving
Partnership in accordance with this Agreement without registration of such
holder's SUSA Units under the Securities Laws or state securities or blue
sky laws, shall, in each of cases (x), (y) and (z), have no right to make
an Election hereunder. Elections shall be made in a form designated by the
Buyer for that purpose, which form shall be reasonably acceptable to the
Company (an "ELECTION FORM"). The Election Form shall (x) state that, by
making an Election, a holder of SUSA Units shall be deemed to (A) have
consented to the amendment of the SUSA Agreement, as amended as set forth
in EXHIBIT C, and (B) have unconditionally and irrevocably waived any and
all rights such holder may have against the Sellers or the Buyer or any of
their respective Subsidiaries, Affiliates or Representatives under the SUSA
Agreement or, in connection with and with respect to the Purchase, the
Redemption, the Merger, the repayment of the Credit Lines and the other
transactions contemplated by this Agreement, under the Tax Protection
Agreements, (y) when completed, specify the number of SUSA Units, if less
than all, with respect to which an Election is made (failing which, the
holder thereof shall be deemed to have made an Election with respect to all
of such holder's SUSA Units), and (z) provide any other information or
certification relating to Taxes that is reasonably required in connection
with the transactions contemplated hereby. The Election Form shall offer
each holder of SUSA Units who has made an Election , and who is a party to
a Tax Protection Agreement obligating such holder to indemnify the general
partner of SUSA with respect to any SUSA Debt, the opportunity to enter
into an amendment to such Tax Protection Agreement that permits such holder
to continue such
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indemnity, after the transactions contemplated by this Agreement (including
repayment of the Credit Lines), with respect to the same amount of SUSA
Debt to which the indemnity applied before such sale. In order to be
effective, an Election Form must be duly completed, signed and submitted to
the Buyer, and must be received by the Buyer by the date (the "ELECTION
DEADLINE") specified in the Election Form or in the letter of transmittal
referred to in Section 2.7(b)(i). Any holder of SUSA Units who has the
right to make, and has made, an Election pursuant to this Section
2.7(a)(ii) (each an "ELECTING HOLDER") may at any time prior to the
Election Deadline revoke such Election by written notice to the Buyer
received by the Buyer prior to the Election Deadline. Any Electing Holder
who does not submit a properly completed Election Form which is received by
the Buyer prior to the Election Deadline, or who has duly revoked such
Election, shall be deemed not to have made an Election and shall be
entitled to receive the Unit Consideration. The Buyer shall, in its sole
discretion, determine whether an Election Form has been properly completed,
signed and submitted or revoked and to disregard immaterial defects in such
form. Such decision shall be conclusive and binding. If any Electing Holder
shall submit a defective Election Form, upon discovery of such defect, the
Buyer shall use commercially reasonable efforts to notify such holder and
to permit such holder to (prior to the Election Deadline) cure such defect.
Any defective Election not cured prior to the Election Deadline shall be
deemed to be of no force and effect and the holder of SUSA Units making
such purported Election shall be deemed not to have made an Election and
shall be entitled to receive the Unit Consideration;
(iii) each general or limited partnership interest of SUSA owned
by the Buyer or its direct or indirect Subsidiaries immediately prior to
the Effective Time, and each SUSA Unit issued and outstanding immediately
prior to the Effective Time with respect to which the holder thereof has
the right to make, and has duly made, an Election in accordance with
Section 2.7(a)(ii), shall remain a general or limited partnership interest,
as applicable, of the Surviving Partnership and no payment shall be made
pursuant to this Agreement with respect thereto. In addition, Buyer shall
contribute cash to SUSA (directly or indirectly through depositing the same
with the Paying Agent in accordance with Section 2.7(b)) in an amount not
to exceed $128,197,920 as needed to pay the Unit Consideration to
non-Electing Holders, and SUSA Units shall be issued to the Buyer in an
amount equal to the sum of (i) the number of non-Electing Holders' SUSA
Units cancelled pursuant to Section 2.7(a)(ii) (which SUSA Units shall be
treated as having been sold to the Buyer by the non-Electing Holders for
federal income tax purposes) and (ii) a number of SUSA Units equal to the
quotient of (x) the Loan Repayment Amount divided by (y) the Unit
Consideration (the "ADDITIONAL BUYER UNITS"); and
(iv) each SUSA Unit held in the treasury of SUSA immediately
prior to the Effective Time, if any, shall remain issued and held in
treasury after the Merger and no payment shall be made with respect
thereto, and all such SUSA Units shall thereafter constitute limited
partnership interests in the Surviving Partnership.
(b) (i) Prior to the Effective Time, the Buyer shall designate an
agent reasonably satisfactory to the Company (the "PAYING AGENT") for the
holders of Company Common Stock and SUSA Units (other than any Electing
Holders) to receive the Merger Consideration to which they shall become
entitled pursuant to Section 2.7(a), and, at the
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Closing, the Company shall deposit, or cause to be deposited, in trust with
the Paying Agent the Purchase Consideration, and the Buyer shall deposit,
or cause to be deposited, in trust with the Paying Agent an amount in cash
as is necessary to pay (after using the Purchase Consideration for such
purpose) the Merger Consideration to which the holders of shares of Company
Common Stock and SUSA Units (other than Electing Holders), as the case may
be, are entitled to receive in exchange for their Certificates and SUSA
Units, as the case may be, pursuant to Section 2.7(a). Promptly after the
Effective Time, the Surviving Partnership shall cause to be mailed to each
person who was, at the Effective Time, a holder of record of Certificates
or SUSA Units, and who, in each case, is entitled to receive the Merger
Consideration pursuant to Section 2.7(a), a form of letter of transmittal
(which shall (x) specify that delivery shall be effected, and risk of loss
and title to any Certificates shall pass only upon proper delivery of such
Certificates to the Paying Agent, (y) in the case of holders of SUSA Units,
include a Form of Election and (z) otherwise be in such form and have such
other provisions as the Buyer may reasonably specify) and instructions for
use in effecting the surrender of any Certificates pursuant to such letter
of transmittal. Upon surrender to the Paying Agent of a Certificate (if
applicable), together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such
other documents as may be required pursuant to such instructions, the
holder of such Certificate or a holder of SUSA Units (other than an
Electing Holder) shall be entitled to receive in exchange therefor the
Share Consideration for each share of Company Common Stock formerly
evidenced by such Certificate or the Unit Consideration for each such SUSA
Unit, as the case may be, and such Certificate shall then be canceled.
Until such time, each share of Company Common Stock or SUSA Unit (with
respect to which an Election has not been made by the holder thereof)
outstanding after the Effective Time, shall be deemed for all purposes to
evidence only the right to receive the Merger Consideration. No interest
shall accrue or be paid on the Share Consideration or Unit Consideration
payable upon the surrender of any Certificate (if applicable) and a duly
completed and validly executed letter of transmittal for the benefit of the
holder thereof.
(ii) If payment of the Merger Consideration is to be made to a
person other than the person in whose name any surrendered Certificate (if
applicable) is registered and/or who is submitting the letter of
transmittal, it shall be a condition of payment that any Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and otherwise that the person requesting such payment shall have
paid all transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of such
Certificate or holder of SUSA Units to which the letter of transmittal
relates, as the case may be, or shall have established to the satisfaction
of the Surviving Partnership that such taxes either have been paid or are
not applicable.
(iii) At any time following the third month after the Effective
Time, the Buyer or the Surviving Partnership, as applicable, shall be
entitled to require the Paying Agent to deliver to it any funds which had
been made available to the Paying Agent and not disbursed to holders of
shares of Company Common Stock or SUSA Units (including all interest and
other income received by the Paying Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look to
the Buyer (subject
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to abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any Merger Consideration that may be
payable upon due surrender of any Certificates (if applicable) held by them
and a duly completed and validly executed letter of transmittal.
Notwithstanding the foregoing, none of the Buyer, the Surviving
Partnership, the Company, the Trust and the Paying Agent or any other
person shall be liable to any holder of shares of Company Common Stock or
SUSA Units for any Merger Consideration delivered in respect of such shares
or SUSA Units, as the case may be, to a public official pursuant to any
abandoned property, escheat or other similar law.
(iv) Any amounts remaining unclaimed by such holders three years
after the Effective Time (or such earlier date immediately prior to such
time when the amounts would otherwise escheat to or become property of any
Government Authority) shall become, to the extent permitted by applicable
law, the property of Buyer free and clear of any claims or interest of any
person previously entitled thereto.
(v) After the close of business on the day of the Effective Time
or the Effective Time, whichever is earlier, there shall be no further
registration of transfers of shares of Company Common Stock on the stock
transfer books of the Company or of SUSA Units on the records of SUSA for
the SUSA Units. From and after the Effective Time, the holders of shares of
Company Common Stock or SUSA Units outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares
or SUSA Units, respectively, except as otherwise provided herein or by
applicable law, and, if after the Effective Time, any Certificates are
presented to the Surviving Partnership or the Paying Agent for any reason,
they shall be cancelled and exchanged as provided in this Section 2.7.
(vi) If 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 Partnership, the posting by such person of a bond in such
reasonable amount as the Surviving Partnership may direct as indemnity
against any claim that may be made against it with respect to such
Certificate the Paying Agent shall issue in exchange for such lost, stolen
or destroyed Certificate the Share Consideration.
(vii) Each of the Buyer and the Surviving Partnership shall be
entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company
Common Stock or SUSA Units, as the case may be, such amounts as it
reasonably determines that it is required to deduct and withhold with
respect to the making of such payment under the Code, or any other
applicable provision of law. To the extent that amounts are so withheld by
the Buyer or the Surviving Partnership, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Company Common Stock or SUSA Units, as
the case may be, in respect of which such deduction and withholding was
made by the Buyer or the Surviving Partnership, as the case may be.
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Section 2.8 OPTIONS; RESTRICTED STOCK.
(a) Prior to the Closing, the Sellers shall use commercially
reasonable best efforts to take such action as may be necessary or appropriate,
including obtaining consents from holders of options to purchase shares of
Company Common Stock granted pursuant to the Company Plans listed on Schedule
2.8 ("COMPANY OPTIONS"), to the extent required by the applicable Company Plan
or option award agreement, such that immediately prior to the Closing, all
Company Options shall be fully vested and the Company Options shall terminate
and be cashed out pursuant to the following sentence. At or immediately prior to
the Effective Time, in exchange for the cancellation of each Company Option,
each holder of a Company Option shall be paid by the Company in full
satisfaction of such Company Option a cash payment in an amount in respect
thereof equal to the product of (i) the excess, if any, of the Share
Consideration over the exercise price per share of Company Stock subject to such
Company Option and (ii) the number of shares of Company Common Stock subject to
the Company Option, less any income or employment tax withholding required under
the Code or any provision of state or local law and less the amount of any
unpaid loan from the Company to the holder of the Company Option to the extent
the shares of Company Common Stock subject to such Company Option were pledged
as a security interest for the payment of such loan.
(b) Prior to the Closing, the Sellers shall use their commercially
reasonable best efforts to take such action as may be necessary or appropriate
such that, immediately prior to the Closing, each restricted stock award granted
by the Company shall become immediately and fully payable or distributable and
the restrictions thereon shall lapse and any performance targets shall be deemed
achieved in full.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Company Reports filed after January 1,
2001 and publicly available prior to the date of this Agreement, or (ii) as set
forth on the disclosure schedules (with specific reference to the particular
section or subsection of this Agreement to which the information set forth in
the relevant disclosure schedule relates; PROVIDED, HOWEVER, that an item
included on a disclosure schedule with respect to any section or subsection of
this Article 3 shall be deemed to relate to each other section or subsection of
this Article 3 but only to the extent that such relationship is reasonably
inferable) delivered by the Sellers to the Buyer prior to execution hereof, the
Sellers hereby represent and warrant, jointly and severally, to the Buyer as
follows:
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Tennessee. The Company has all requisite
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted, to enter into this Agreement and
perform its obligations hereunder and to consummate the transactions
contemplated hereby.
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(b) The Trust is a Maryland real estate investment trust duly
organized, validly existing and in good standing under the laws of the State of
Maryland. The Trust has all requisite organizational power and authority to own,
operate, lease and encumber its properties and carry on its business as now
conducted, to enter into this Agreement and perform its obligations hereunder
and to consummate the transactions contemplated hereby.
(c) SUSA is a limited partnership duly organized and validly existing
under the laws of the State of Tennessee. SUSA has all requisite partnership
power and authority to own, operate, lease and encumber its properties and carry
on its business as now conducted, to enter into this Agreement and perform its
obligations hereunder and to consummate the transactions contemplated hereby.
(d) Each Subsidiary of the Company (other than the Trust and SUSA) is
a corporation, partnership or limited liability company duly organized, validly
existing and in good standing, as applicable, under the laws of the jurisdiction
of its incorporation or organization, and has all requisite organizational power
and authority to own, operate, lease and encumber its properties and carry on
its business as now conducted.
(e) Each of the Company and its Subsidiaries is duly qualified to do
business, licensed and in good standing, as applicable, in each jurisdiction in
which the ownership of its property or the conduct of its business requires such
qualification or license, except for any failures to be so qualified, licensed
or in good standing as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(f) Schedule 3.1(f) sets forth the name of each Subsidiary of the
Sellers (whether owned, directly or indirectly, through one or more
intermediaries). All of the outstanding shares of capital stock of, or other
equity interest in, each such Subsidiary (including the Purchased Shares) are
duly authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, by the Company, the Trust or SUSA, as applicable, free
and clear of all Liens. The following information for each Subsidiary is set
forth on Schedule 3.1(f), if applicable: (i) its name and jurisdiction of
incorporation or organization, (ii) the type of and percentage interest held by
each Seller in the Subsidiary and the names of and percentage interest held by
the other interest holders, if any, in the Subsidiary, and the partnership
agreement or other organizational documents of the Subsidiary, and (iii) any
loans from any Seller to, or priority payments due to any Seller from, the
Subsidiary, and the rate of return thereon. Except for interests in Subsidiaries
of the Company and for the Investments, neither the Company nor any of its
Subsidiaries owns directly or indirectly any interest or investment (whether
equity or debt) in any person (other than investments in short-term investment
securities). The SUSA Interest and the SUSA Units are not evidenced by any
certificate or document other than the SUSA Agreement. Except for shares of SUSA
Management, Inc. subject to the SUSA Management Purchase Agreement, SUSA owns
all of the outstanding capital stock of each of the Purchased Subsidiaries.
(g) There are no existing options, warrants, calls, subscriptions,
convertible securities or other rights, agreements or commitments which obligate
the Company, the Trust, SUSA or any other Subsidiary of the Company to issue,
transfer or sell or to repurchase, redeem or otherwise acquire any shares of
capital stock or equity interests in the Trust or SUSA and, ex-
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cept as would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, such other Subsidiary.
(h) The Company or its Subsidiaries, as the case may be, own all
right, title and interest in the Investments, free and clear of all Liens other
than Permitted Liens. There are no existing options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
which obligate the Company or its Subsidiaries, as the case may be, to transfer,
sell, decrease or increase the amount of, or otherwise dispose of any
Investment. No event, fact or circumstance exists that has impaired or would
reasonably be expected to impair the value of any Investment, except, in each
case, for events, facts and circumstances that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. Each
Investment is listed on Schedule 3.1(h).
Section 3.2 AUTHORITY RELATIVE TO AGREEMENTS; BOARD APPROVAL. (a) The
execution and delivery of this Agreement, the performance of the obligations
hereunder and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary action (corporate, trust or
partnership, as applicable) on the part of each of the Sellers, subject only to
approval by the Company's shareholders as contemplated by this Agreement. This
Agreement has been duly executed and delivered by each of the Sellers and
constitutes the valid and legally binding obligation of such Seller enforceable
against such Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights or general principles of equity.
(b) Each of the Company Board and the Special Committee, at a meeting
duly called and held, by the unanimous vote of all members of the Special
Committee, (i) determined that the transactions contemplated hereby, including
the Purchase, the Redemption and the Merger, are advisable and in the best
interests of the Company and its shareholders, and approved this Agreement and
the transactions contemplated hereby, including the Purchase, the Redemption and
the Merger, (ii) directed that this Agreement, the Purchase and the Merger and
the other transactions contemplated hereby be submitted to the shareholders of
the Company for their approval and resolved to recommend that the shareholders
of the Company vote in favor of this Agreement and the approval of the Purchase,
the Merger and the other transactions contemplated hereby and (iii) if and to
the extent necessary, adopted a resolution having the effect of causing the
parties hereto not to be subject to any state takeover law that might otherwise
apply to any of the transactions contemplated by this Agreement. The Company, in
its capacity as the sole general partner of SUSA and Holdings and otherwise, has
taken (and caused its Subsidiaries to take) all action necessary or appropriate
under the SUSA Agreement and Holdings' agreement of limited partnership or
otherwise to authorize the Purchase, the Redemption, the Merger, the issuance of
the Additional Buyer Units and the other transactions contemplated by this
Agreement.
Section 3.3 CAPITAL STOCK AND UNITS. (a) The authorized capital stock
of the Company as of November 30, 2001 consists of 150,000,000 shares of Company
Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share.
As of November 30, 2001, there are 28,103,721 shares of Company Common Stock
issued and outstanding, and no shares of preferred stock issued or outstanding.
All issued and outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
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rights. The Company 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 the holders of which have the
right to vote) with the shareholders of the Company on any matter. As of
November 30, 2001, other than (i) for 2,873,760 SUSA Units which may be redeemed
by the holders thereof for Company Common Stock or the cash equivalent thereof
(at the option of the Company) pursuant to the provisions of the SUSA Agreement,
or (ii) 2,160,790 shares of Company Common Stock subject to grant or issuance
under Company Options and pursuant to the Prudential Profit Sharing and 401(k)
Plan, there are no existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate the
Company to issue, transfer or sell or repurchase, redeem or otherwise acquire
any shares of capital stock or other equity interests of the Company.
(b) As of November 30, 2001, 30,261,231 SUSA Units are validly issued
and outstanding, fully paid and nonassessable, 27,387,471 of which are owned
directly or indirectly by the Company or its Subsidiaries as set forth on
Schedule 3.3(b). There is only one class of SUSA Units, and, except for the
Preferred Units (650,000 of which are issued and outstanding as of November 30,
2001), there is no other form of limited partnership interest in SUSA issued or
outstanding. SUSA has not issued or granted securities convertible into
interests in SUSA, and is not a party to any outstanding commitments of any kind
relating to, or any presently effective agreements or understandings with
respect to, interests in SUSA, whether issued or unissued. The Company is the
sole general partner of SUSA. The Conversion Factor (as defined in the SUSA
Agreement) is 1.0.
(c) As of November 30, 2001, all of the limited partnership interests
of Holdings are validly issued and outstanding, fully paid and nonassessable,
and are owned directly or indirectly by the Company or its Subsidiaries, as set
forth on Schedule 3.3(c). There is only one class of Holdings' units of limited
partnership, and there is no other form of limited partnership interest in
Holdings issued or outstanding. Holdings has not issued or granted securities
convertible into interests in Holdings, and is not a party to any outstanding
commitments of any kind relating to, or any presently effective agreements or
understandings with respect to, interests in Holdings, whether issued or
unissued. The Company is the sole general partner of Holdings.
Section 3.4 NO CONFLICTS; NO DEFAULTS; REQUIRED FILINGS AND CONSENTS.
Neither the execution and delivery by any of the Sellers hereof nor the
consummation by such Seller of the transactions contemplated hereby, including
the Purchase, the Redemption and the Merger, will:
(a) conflict with or result in a breach of any provisions of the
Company Charter, the Company Bylaws, the SUSA Agreement or the
organizational documents of the Trust, Holdings or any other Subsidiary of
the Company or any of the Partnerships;
(b) result in a breach or violation of, a default under, or the
triggering of any payment or other obligations pursuant to, or accelerate
vesting under, any Company Plan or any grant or award made under any of the
foregoing, except as specifically contemplated by this Agreement or as
would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect;
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(c) violate or conflict with any statute, regulation, judgment, order,
writ, decree or injunction applicable to the Company or any of its
Subsidiaries, except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect;
(d) violate or conflict with or result in a breach of any provision
of, or constitute a default (or any event which, with notice or lapse of
time or both, would constitute a default) or a change of control (or
equivalent thereof) 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 upon any of the properties or assets
of the Company or any of 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
(including any of the agreements set forth on Schedule 3.9(d)) or other
instrument, commitment or obligation to which the Company or such
Subsidiary is a party, or by which the Company or such Subsidiary or any of
its properties is bound or affected (including the SUSA Debt or the SUSA
Agreement), except for any of the foregoing matters which would not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect; or
(e) require any consent, approval or authorization of, or declaration,
filing, notice to or registration with, any Government Authority, other
than any filings required under the Securities Act, the Exchange Act, the
HSR Act, state securities or blue sky laws or specified on Schedule 3.4
(collectively, the "REGULATORY FILINGS"), and any filings required to be
made with the Secretary of State of Tennessee or any national securities
exchange on which the Company Common Stock is listed, except as would not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
Section 3.5 SEC AND OTHER DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES. (a) Each registration statement, report, proxy statement or
information statement and all exhibits thereto prepared by the Company or SUSA
or relating to their respective properties, since January 1, 1999, each in the
form (including exhibits and any amendments thereto) filed or to be filed by the
Company or SUSA, as applicable, with the SEC (collectively, the "COMPANY
REPORTS") is or will be available on the SEC's Electronic Data Gathering
Analysis and Retrieval (▇▇▇▇▇) System, to the extent such Company Report is
required to be filed through such system. The Company Reports were or will be
filed with the SEC in a timely manner and constitute or will constitute all
forms, reports and documents required to be filed by the Company or SUSA under
the Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SECURITIES LAWS"). As of their respective dates, the Company
Reports (i) complied or will comply as to form in all material respects with the
applicable requirements of the Securities Laws and (ii) did not or will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
There is no unresolved violation asserted by any Government Authority with
respect to any of the Company Reports. No Subsidiary of the Company, other than
SUSA, is subject to the reporting requirements of Section 13 or Section 15(d) of
the Exchange Act.
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(b) Each of the balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and schedules)
fairly presented or will present the financial position of the entity or
entities to which it relates as of its date and each of the statements of
operations, shareholders' equity (deficit) and cash flows included in or
incorporated by reference into the Company Reports (including any related notes
and schedules) fairly presented or will present the results of operations,
retained earnings or cash flows, as the case may be, of the entity or entities
to which it relates for the periods set forth therein, in each case in
accordance with United States generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted therein
and except, in the case of unaudited statements, for normal recurring year-end
adjustments which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. The independent accountants who
have audited the financial statements included in or incorporated by reference
into the Company Reports have not delivered to the Company or the Company Board
any "management letters" with respect to such financial statements or related
matters of internal accounting control structures or procedures.
(c) Neither the Company nor any of its Subsidiaries has any
Liabilities that would, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
Section 3.6 LITIGATION; COMPLIANCE WITH LAW. (a) There are no Actions
pending or, to the Sellers' knowledge, threatened against the Company or any of
its Subsidiaries that would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, or that would question the
validity hereof or any action taken or to be taken in connection herewith. There
are no continuing orders, injunctions or decrees of any Government Authority to
which the Company or any of its Subsidiaries is a party or by which any of its
properties or assets are bound (which orders, injunctions or decrees are listed
on Schedule 3.6), except those orders, injunctions or decrees which would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is in violation of
any statute, rule, regulation, order, writ, decree or injunction of any
Government Authority or any body having jurisdiction over them or any of their
respective properties which, if enforced, would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. The
provisions of Chapter 23 (Dissenters' Rights) of Title 48 of the Tennessee Code
Annotated will not apply to the Purchase, the Redemption or the Merger, and no
holders of securities of any of the Sellers or their respective Subsidiaries
(including holders of shares of Company Common Stock or SUSA Units) shall have
any dissenters', appraisal, redemption, buy-out or other similar rights (other
than the right of holders of SUSA Units under the SUSA Agreement to receive the
Unit Consideration) in connection with the Purchase, the Redemption, the Merger,
the issuance of the Additional Buyer Units or any other transaction contemplated
by this Agreement.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
2001, the Company and each of its Subsidiaries has conducted its business only
in the ordinary course and has acquired real estate and entered into financing
arrangements in connection therewith only in the ordinary course of such
business, and there has not been (a) any change, circumstance or event that,
individually or in the aggregate, has had or would reasonably be expected to
have a
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Material Adverse Effect, (b) any commitment, contractual obligation, borrowing,
capital expenditure or transaction entered into by the Company or any of its
Subsidiaries, other than any such transaction which would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
(c) any change in the Company's or SUSA's accounting principles, practices or
methods which would, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, or (d) any declaration, setting aside or
payment of any dividend or other distribution with respect to the Company Common
Stock or the SUSA Interest or any other action or event that would have required
the consent of the Buyer pursuant to Section 5.5.
Section 3.8 TAX MATTERS; REIT AND PARTNERSHIP STATUS. (a) The Company
and each of its Subsidiaries has timely filed with the appropriate taxing
authority all material Tax Returns required to be filed by it or has timely
requested extensions and any such request has been granted and has not expired.
Each such Tax Return is complete and accurate in all material respects. All
material Taxes owed by the Company or any of its Subsidiaries have been paid or
accrued, except for Taxes being contested in good faith and for which adequate
reserves have been taken. The Company and each of its Subsidiaries has properly
accrued all material Taxes for such periods subsequent to the periods covered by
such Tax Returns. None of the Company or any of its Subsidiaries has executed or
filed with the IRS or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any Tax. None of the
Company or any of its Subsidiaries is a party to any pending action or
proceedings by any taxing authority for assessment or collection of any material
Tax, and no claim for assessment or collection of any material Tax has been
asserted against it. True and complete copies of all federal, state and local
income or franchise Tax Returns filed by the Company and each of its
Subsidiaries for 1998, 1999 and 2000 and all written communications with Taxing
authorities relating thereto have been delivered to the Buyer or made available
to representatives of the Buyer prior to the date hereof. No claim has been made
in writing or, to the Sellers' knowledge, otherwise by an authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There is
no dispute or claim concerning any material Tax liability of the Company or any
of its Subsidiaries, (i) claimed or raised by any taxing authority in writing or
(ii) as to which the Company or any of its Subsidiaries has knowledge. No issues
have been raised in writing in any examination by any taxing authority with
respect to the Company or any of its Subsidiaries which, by application of
similar principles, reasonably could be expected to result in a material
deficiency or increase in Tax for any other period not so examined. Schedule
3.8(a) lists all federal and state income Tax Returns filed with respect to the
Company or SUSA for taxable periods ended on or after December 31, 1996,
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. All federal, state, local, and
foreign income Tax Returns filed with respect to the Company or any of its
Subsidiaries for taxable periods ended on or after December 31, 1996 have been
provided or made available to the Buyer.
(b) The Company (i) intends to be taxed as a real estate investment
trust within the meaning of Section 856 of the Code ("REIT") through the close
of the tax year in which the Closing occurs and has complied (and will comply)
with all applicable provisions of the Code relating to a REIT, through the close
of the tax year in which the Closing occurs, (ii) has operated, and intends to
continue to operate, in such a manner as to qualify as a REIT for 2000 and 2001,
and (iii) has not taken or omitted to take any action which would reasonably be
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expected to result in a challenge to its status as a REIT, and, to the Sellers'
knowledge, no such challenge is pending or threatened.
(c) Any amount or other entitlement that could be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated hereby by any Employee, officer, or director of the
Company or SUSA or any of their Affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any Company Plan currently in effect would not be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the Code).
(d) The disallowance of a deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amount paid or payable by the
Company or any of its Subsidiaries under any Company Plan or other agreement,
program, arrangement or understanding currently in effect.
(e) The Company, for its taxable year ended December 31, 1994 was
eligible to and did validly elect to be taxed as a REIT for federal income tax
purposes and at all times thereafter continued such election and continued to be
so eligible to be taxed as a REIT for federal income tax purposes. Each
Subsidiary that is treated as an association taxed as a corporation for federal
income tax purposes and that is owned directly or indirectly by the Company is
either a "qualified REIT subsidiary" within the meaning of Section 856(i)(2) of
the Code or a "taxable REIT subsidiary" within the meaning of Section 856(l)(1)
of the Code.
(f) The Company and each of its Subsidiaries have withheld and paid
all material Taxes required to have been withheld and/or paid in connection with
amounts paid or owing to any employee, former employee, independent contractor,
creditor, stockholder, or other third party.
(g) The Company and each other entity transferring an interest in
United States real property in the Purchase hereunder is not a foreign person
within the meaning of Section 1445(b)(2) of the Code.
(h) SUSA, each Subsidiary of the Company organized as a partnership,
each Property Joint Venture and each other partnership or other "flowthrough"
entity in which the Company directly or indirectly owns any interest that files
Tax Returns as a partnership for federal income tax purposes (the
"PARTNERSHIPS") is classified as a partnership for federal income tax purposes,
and neither the Partnerships, the Company nor any of the Subsidiaries of the
Company has taken a position inconsistent with such treatment with regard to any
Tax. Schedule 3.8(h) sets forth the Company's interest in profits, losses and
cash distributions in each of the Partnerships as of the date hereof (or such
other dates specified on such Schedule). Storage USA Franchise Corp has not made
any contributions that would subject it to allocations under Section 704(c) of
the Code. Other than the Partnerships, the Company does not own, directly or
indirectly, any material interest in any joint venture, partnership, or other
arrangement or contract that could be treated as a partnership for federal
income tax purposes. SUSA has the right to make or to require and, after the
Closing, will continue to have the right to make or to require each Partnership
to make, in the manner provided in Section 1.754-1(b) of the Treasury
Regulations, an election under Section 754 of the Code (and any corresponding
elections under state or
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local tax law) to adjust the basis of its property as provided in Sections
734(b) and 743(b) of the Code.
(i) Neither the Company nor any of its Subsidiaries has (i) made any
election, and is not required, to treat any asset of any Subsidiary as owned by
another person for tax purposes (other than by reason of a Subsidiary being a
"qualified REIT subsidiary" or a "disregarded entity" for federal income tax
purposes and any comparable provision of state, local or foreign law) or (ii)
carried out or been engaged in any transaction or arrangement such that the law
provides that there may be substituted for the amount or value or the actual
consideration given or received (or to be given or received) by any Subsidiary
any different amount or value for Tax purposes (other than immaterial
differences).
(j) Other than as a result of the Tax Protection Agreements, neither
the Company nor any of its Subsidiaries has received or is subject to any
written ruling of a taxing authority related to Taxes or has entered into any
written and legally binding agreement with a taxing authority relating to Taxes.
(k) Other than the Tax Protection Agreements, neither the Company nor
any of its Subsidiaries (i) is a party to or is otherwise subject to any Tax
allocation or sharing agreement and (ii) has any liability for the Taxes of
another person under law, by contract or otherwise.
(l) A true, complete and correct copy of each Tax Protection Agreement
has been delivered to the Buyer, and each such agreement is listed on Schedule
3.8(l).
(m) The Trust is not subject to federal, state or local income Tax and
will not have any such Tax liability as a result of the transactions
contemplated by this Agreement.
(n) The repayment of any borrowings outstanding under the Credit Lines
will not result in a breach or violation of, a default under, or the triggering
of any payment or other obligations pursuant to, any Tax Protection Agreement.
Section 3.9 COMPLIANCE WITH AGREEMENTS; MATERIAL AGREEMENTS. (a)
Neither the Company nor any of its Subsidiaries is in default under or in
violation of any provision of the Company Charter, the Company Bylaws, the SUSA
Agreement or other organizational document of such Subsidiary, except for such
defaults or violations which would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(b) The Company and each of its Subsidiaries have filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file with any Government
Authority and all other material reports and statements required to be filed by
them, including any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, and have paid all fees or
assessments due and payable in connection therewith, except for such failures to
file or pay which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. To the Sellers' knowledge,
there is no unresolved violation asserted by any Government Authority with
respect to any such report or statement relating to an examination of the
Company or any of its Subsidiaries which, if resolved in a manner unfavorable to
the Company
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or such Subsidiary, would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(c) Schedule 3.9(c) sets forth a list of (i) all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount in excess of $100,000 is
outstanding or may be incurred (whether unsecured, or secured or collateralized
by mortgages, deeds of trust or other security interests in the Company
Properties or any other assets of the Company or any of its Subsidiaries, or
otherwise), and the respective principal amounts outstanding thereunder as of
the date hereof (which outstanding indebtedness, (x) if a Credit Line, may be
prepaid by the Company or such Subsidiary at any time without the consent or
approval of, or prior notice to, any other person, and without payment of any
premium or penalty, and (y) if a Mortgage Note, may be prepaid in full by the
Company or such Subsidiary at any time without the consent or approval of any
other person), (ii) each commitment, whether written or oral, entered into by
the Company or any of its Subsidiaries (including any guarantees of any third
party's debt or any obligations in respect of letters of credit issued for the
account of the Company or any of its Subsidiaries) which may result in total
payments or liability in excess of $100,000 and (iii) each bank account (and the
applicable outstanding balance as of September 30, 2001) of the Company or any
of its Subsidiaries with deposits in excess of $100,000. True and complete
copies of the documents relating clauses (i) and (ii) hereof have been delivered
or made available to Buyer prior to the date hereof. Neither the Company nor any
of its Subsidiaries is in default, and, to the Sellers' knowledge, no event has
occurred which, with the giving of notice or the lapse of time or both, would
constitute a default, under any of the documents described in clause (i) or (ii)
of this paragraph or in respect of any payment obligations thereunder except as
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. There are no outstanding guarantees that would cause
SUSA or the Company not to be in compliance with the limitations on incurrence
of indebtedness under the Indenture.
(d) All joint venture and partnership agreements to which the Company
or any of its Subsidiaries is a party as of the date hereof, as set forth on
Schedule 3.9(d), are in full force and effect as against the Company or such
Subsidiary and, to the Sellers' knowledge, as against the other parties thereto,
and none of the Company or any of its Subsidiaries is in default, and, to the
Sellers' knowledge, no event has occurred which, with the giving of notice or
the lapse of time or both, would constitute a default, with respect to any
obligations thereunder, except as set forth on Schedule 3.9(d) or would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. To the Sellers' knowledge, the other parties to such agreements
are not in breach of any of their respective obligations thereunder, except as
set forth on Schedule 3.9(d) or would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. To the Sellers'
knowledge, there is no condition with respect to the Company's Subsidiaries
(including with respect to the partnership agreements for the Company's
Subsidiaries that are partnerships) that would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
(e) Schedule 3.9(e) sets forth a complete and accurate list of (i)
material agreements entered into by the Company or any of its Subsidiaries as of
the date hereof relating to the development or construction of, additions or
expansions to, or management or leasing
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services for self-storage facilities or other real properties or (ii) all
material agreements relating to the franchise operations or franchised
properties of the Company and its Subsidiaries (including Storage USA Franchise
Corp), in each case, which are currently in effect and under which the Company
or any of its Subsidiaries currently has, or expects to incur, any material
obligation. True and complete copies of such agreements have been delivered or
made available to the Buyer prior to the date hereof.
(f) Except for (i) agreements made in the ordinary course of business
consistent with past practice with a maturity of less than one year or that are
terminable on 30 days or less notice, and (ii) agreements the breach or
non-fulfillment of which would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect, Schedule 3.9(f) sets forth a
complete and accurate list of all material agreements entered into by the
Company or any of its Subsidiaries as of the date hereof which are not listed in
any other Schedule hereto, which list shall also include non-competition or
other similar agreement in favor of a third party, commitment, judgment,
injunction or order to which the Company or any of its Subsidiaries is a party
or subject that has or could reasonably be expected to have the effect of
prohibiting or materially impairing the conduct of the business by the Company
and its Subsidiaries before or after the Closing. Each agreement set forth on
Schedule 3.9(f) is in full force and effect as against the Company or such
Subsidiary and, to the Sellers' knowledge, as against the other parties thereto,
no payments, if any, thereunder are delinquent, the Company or such Subsidiary
is not in default thereunder, and no notice of default thereunder has been sent
or received by the Company or any of its Subsidiaries, except where the same
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. To the Sellers' knowledge, no event has occurred
which, with notice or lapse of time or both, would constitute a default by the
Company or any of its Subsidiaries under any agreement set forth on Schedule
3.9(f), except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. To the Sellers' knowledge, the
other parties to such agreements are not in breach of their respective
obligations thereunder, except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. True and complete
copies of each such agreement have been delivered or made available to the Buyer
prior to the date hereof.
(g) Schedule 3.9(g) sets forth a complete and accurate list of all
agreements and policies of the Company in effect on the date hereof relating to
transactions with Affiliates and potential conflicts of interest. Each agreement
or policy set forth on Schedule 3.9(g) is in full force and effect, and the
Company, each of its Subsidiaries, and, to the Sellers' knowledge, the other
parties thereto are in compliance with such agreements and policies, or such
compliance has been waived by the Company Board or would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
True and complete copies of each such agreement or policy have been delivered or
made available to the Buyer prior to the date hereof.
Section 3.10 FINANCIAL RECORDS; ORGANIZATIONAL DOCUMENTS; CORPORATE
RECORDS. (a) The books of account and other financial records of the Company,
each of its Subsidiaries and each of the Partnerships are in all respects true
and complete, have been maintained in accordance with good business practices,
and are and will be accurately reflected in all respects in the financial
statements included in the Company Reports, except, in each case, as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
-31-
(b) The Company has previously delivered or made available to the
Buyer true and complete copies of the Company Charter, the Company Bylaws, the
SUSA Agreement, and the charter, bylaws, organization documents, partnership
agreements and joint venture agreements of its Subsidiaries, and all amendments
thereto. All such documents are listed on Schedule 3.10(b).
(c) The minute books and other records of corporate or partnership (or
equivalent) proceedings of the Company and each of its Subsidiaries have been
made available to the Buyer, contain accurate records of all meetings and
accurately reflect all other corporate action of the shareholders and directors
and any committees of the Board of Directors of the Company and its Subsidiaries
which are corporations and all actions of the partners of SUSA and its
Subsidiaries which are partnerships, except for documentation of discussions
relating to or in connection with the transactions contemplated hereby or
matters related hereto, and except as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 3.11 PROPERTIES. (a) Schedule 3.11(a) sets forth as of the
date hereof a complete and accurate list and the addresses of all real property
owned or leased by the Company or any of its Subsidiaries or any Property Joint
Venture or otherwise used by the Company or any of its Subsidiaries or any
Property Joint Venture in the conduct of their business (other than Tenancy
Leases which are addressed in Section 3.11(l)) or operations (collectively, and
together with the land at each address referenced on Schedule 3.11(a) and all
buildings, structures and other improvements and fixtures located on or under
such land and all easements, rights and other appurtenances to such land, the
"COMPANY PROPERTIES"). Each of the Company Properties is owned or leased by
SUSA, a Subsidiary of SUSA or a Property Joint Venture, as indicated on Schedule
3.11(a), and the Company itself does not directly own or lease any Company
Property. To the Sellers' knowledge, SUSA or, in the case of Company Properties
owned by Subsidiaries of SUSA or Property Joint Ventures, such Subsidiaries or
Property Joint Ventures, own good and marketable fee simple or leasehold title,
as applicable, to each of the Company Properties, in each case free and clear of
any Liens, title defects, contractual restrictions or covenants, laws,
ordinances or regulations affecting use or occupancy (including zoning
regulations and building codes) or reservations of interests in title
(collectively, "PROPERTY RESTRICTIONS"), except for (i) Permitted Liens and (ii)
Property Restrictions imposed or promulgated by law or by any Government
Authority which are customary and typical for similar properties. To the
Sellers' knowledge, none of the matters described in clauses (i) and (ii) of the
immediately preceding sentence materially interferes with, impairs, or is
violated by, the existence of any building or other structure or improvement
which constitutes a part of, or the present use, occupancy or operation (or, if
applicable, development) of, the Company Properties taken as a whole, and such
matters do not, individually or in the aggregate, have a Material Adverse
Effect. American Land Title Association policies of title insurance (or marked
title insurance commitments having the same force and effect as title insurance
policies) have been issued insuring the fee simple or leasehold, as applicable,
title of SUSA, its Subsidiaries or the Property Joint Ventures, as applicable,
with respect to all of the Company Properties in amounts at least equal to the
original cost thereof, and, to the Sellers' knowledge, such policies are valid
and in full force and effect and no claim has been made under any such policy.
The Sellers have delivered or made available to the Buyer true and complete
copies of all such policies and of the most recent surveys of the Company
Properties indicated on Schedule 3.11(a), and true and complete copies of all
material ex-
-32-
ceptions referenced in such policies and the most recent title reports for and
surveys (to the extent not previously delivered or made available to the Buyer)
of each of the Company Properties available to the Company or any of its
Subsidiaries will be provided or made available by the Sellers for inspection by
the Buyer.
(b) Except for matters which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or to
materially and adversely affect the use or occupancy (or, if applicable,
development) of the Company Properties taken as a whole, the Sellers have no
knowledge (i) that any currently required certificate, permit or license
(including building permits and certificates of occupancy for tenant spaces)
from any Government Authority having jurisdiction over any Company Property, or
any agreement, easement or other right which is necessary to permit the lawful
use, occupancy or operation of the existing buildings, structures or other
improvements which constitute a part of any of the Company Properties or which
are necessary to permit the lawful use and operation of utility service to any
Company Property or of any existing driveways, roads or other means of egress
and ingress to and from any of the Company Properties, has not been obtained or
is not in full force and effect, or of any pending threat of modification or
cancellation of any of same, or (ii) of any violation by any Company Property of
any federal, state or municipal law, ordinance, order, regulation or
requirement, including any applicable zoning law or building code, as a result
of the use or occupancy of such Company Property or otherwise. Except as
communicated to the Buyer in its capacity as claims administrator with respect
to insurance coverage for the Company Properties, the Sellers have no knowledge
of uninsured physical damage to any Company Property in excess of $250,000 in
the aggregate. To the Sellers' knowledge, except for repairs identified in the
Capital Expenditure Budget and Schedule, each Company Property, (i) is in good
operating condition and repair and is structurally sound and free of defects,
with no alterations or repairs being required thereto under applicable law or
insurance company requirements, and (ii) consists of sufficient land, parking
areas, driveways and other improvements and lawful means of access and utility
service and capacity to permit the use thereof in the manner and for the
purposes to which it is presently devoted (or, in the case of the Development
Property, for the development and operation thereon of the applicable Project),
except, in each such case, to the extent that failure to meet such standards
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or to materially and adversely affect the use or
occupancy of the Company Properties taken as a whole (or, in the case of the
Development Property, the development and operation thereon of the applicable
Project). True and complete copies of all engineering reports, inspection
reports, maintenance plans and other documents relating to the condition of any
Company Property prepared for the Company or otherwise in the Company's or any
of its Subsidiaries' possession have been delivered or made available to the
Buyer prior to the date hereof.
(c) The Sellers have no knowledge (i) that any condemnation, eminent
domain or rezoning proceedings are pending or threatened with respect to any of
the Company Properties, (ii) that any road widening or change of grade of any
road adjacent to any Company Property is underway or has been proposed, (iii) of
any proposed change in the assessed valuation of any Company Property other than
customarily scheduled revaluations, (iv) of any special assessment made or
threatened against any Company Property, or (v) that any of the Company
Properties is subject to any so-called "impact fee" or to any agreement with any
Government Authority to pay for sewer extension, oversizing utilities, lighting
or like expenses or charges for
-33-
work or services by such Government Authority, except, in the case of each of
the foregoing, to the extent that same would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or to
materially and adversely affect the use or occupancy (or, if applicable,
development) of the Company Properties taken as a whole.
(d) To the Sellers' knowledge, each of the Company Properties is an
independent unit which does not rely on any facilities located on any property
not included in such Company Property to fulfill any municipal or governmental
requirement or for the furnishing to such Company Property of any essential
building systems or utilities, other than facilities the benefit of which inures
to the Company Properties pursuant to one or more valid easements. Each of the
Company Properties is served by public water and sanitary systems and all other
utilities, and, to the Sellers' knowledge, each of the Company Properties has
lawful access to public roads, in all cases sufficient for the current use and
occupancy of each Company Property (or, in the case of the Development Property,
for the development and operation thereon of the applicable Project). To the
Sellers' knowledge, all parcels of land included in each Company Property that
purport to be contiguous are contiguous and are not separated by strips or
gores. To the Sellers' knowledge, no portion of any Company Property lies in any
flood plain area (as defined by the U.S. Army Corps of Engineers or otherwise)
or includes any wetlands or vegetation or species protected by any applicable
laws. To the Sellers' knowledge, no improvements constituting a part of any
Company Property encroach on real property not constituting a part of such
Company Property. No representation set forth in this subsection (d) shall be
deemed to be untrue unless such untruths are, individually or in the aggregate,
reasonably expected to have a Material Adverse Effect or to materially and
adversely affect the use or occupancy (or, if applicable, development) of the
Company Properties taken as a whole.
(e) The Company Properties comply with the requirements of the
Americans with Disabilities Act (the "ADA"), except for such failures to comply
as would not, in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(f) The Company has provided to the Buyer a complete and accurate rent
summary for each Company Property for the year ended December 31, 2000 and for
the month ended October 31, 2001 (the "RENT SUMMARY"). The Rent Summary
accurately describes, as of the date thereof, for all Company Properties, in the
aggregate, (i) the total number of rentable square feet of self-storage units at
all Company Properties, (ii) the physical occupancy rate of the self-storage
units at all Company Properties on a rented square foot basis, (iii) the average
term under the leases of self-storage units or other space at all Company
Properties (all such leases for all Company Properties, collectively, the
"COMPANY LEASES"), (iv) the delinquency rate of tenants at all Company
Properties, (v) the average rent per rentable square foot at all Company
Properties. True and accurate variance reports for each of the Company
Properties have been delivered or made available to the Buyer prior to the date
hereof.
(g) Schedule 3.11(g) sets forth a complete and accurate list of all
binding commitments, letters of intent or similar written agreements made or
entered into by the Company or any of its Subsidiaries as of the date hereof (x)
to sell, mortgage, pledge or hypothecate any Company Properties, which,
individually or in the aggregate, are material, or to otherwise enter into a
material transaction in respect of the ownership or financing of any Company
Properties, or (y) to purchase or acquire an option, right of first refusal or
similar right in respect of
-34-
any real property or properties, which, in any such case, has not yet been
reduced to a written contract. True and complete copies of each such commitment,
letter of intent or other understanding have been delivered or made available to
the Buyer prior to the date hereof.
(h) Except as set forth in the Rent Summary, none of the Company or
any of its Subsidiaries has granted any outstanding options or has entered into
any outstanding contracts with others for the sale, mortgage, pledge,
hypothecation, assignment, sublease, lease or other transfer of all or any part
of any Company Properties (excluding, however, leases of self-storage facilities
and immaterial commercial and retail leases at the Company Properties), and no
person has any right or option to acquire, or right of first refusal with
respect to, the Company's or any of its Subsidiaries' interest in any Company
Properties or any part thereof. None of the Company or any of its Subsidiaries
has any outstanding options or rights of first refusal or has entered into any
outstanding contracts with others for the purchase of any real property.
(i) Schedule 3.11(i) contains a complete and accurate description of
any non-compliance by any Company Properties, to the Sellers' knowledge, with
any law, ordinance, code, health and safety regulation or insurance requirement
(except for the ADA, which is addressed in this respect in Section 3.11(e)
above), other than such non-compliance as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Schedule
3.11(i) also sets forth the Company's or any of its Subsidiaries' or any
Property Joint Venture's capital expenditure budget and schedule for all Company
Properties taken as a whole (the "CAPITAL EXPENDITURE BUDGET AND SCHEDULE"),
which describes any material capital expenditures (other than periodic
maintenance and repairs to be made in the ordinary course of business) which the
Company or any of its Subsidiaries or any Property Joint Venture has budgeted
for each Company Property for the period running through December 31, 2001, and
such other material capital expenditures as are necessary, to the Sellers'
knowledge, in order to bring such Company Property into compliance with
applicable laws, ordinances, codes, health and safety regulations and insurance
requirements (including in respect of fire sprinklers, compliance with the ADA
and asbestos containing material) or which the Company or such Subsidiary
otherwise plans or expects to make in order to cure or remedy any construction,
electrical, mechanical or other defects, to renovate, rehabilitate or modernize
such Company Property, or otherwise. To the Sellers' knowledge, the costs and
time schedules for 2001 set forth in the Capital Expenditure Budget and Schedule
are reasonable estimates and projections. There are no outstanding or, to the
Sellers' knowledge, threatened requirements by any insurance company which has
issued an insurance policy covering any Company Properties, or by any board of
fire underwriters or other body exercising similar functions, requiring any
repairs or alterations to be made to any Company Properties that would,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. There are no expenditures expected after December 31, 2001 which
would cause any future year's aggregate capital expenditures for the Company
Properties to exceed in any material respect the amounts set forth for 2001 in
the Capital Expenditure Budget and Schedule for such Company Property.
(j) Schedule 3.11(j) contains a list of each Company Property, other
than franchised properties, which consists of or includes undeveloped land or
which is in the process of being developed (collectively, the "DEVELOPMENT
PROPERTIES") and a brief description of the development intended by the Company
or any of its Subsidiaries or any Property Joint Venture to be carried out or
completed thereon (collectively, the "PROJECTS"), including the total estimated
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cost of each Project, the stage of completion of each Project and the amount
expended to date on such Project (collectively, the "DEVELOPMENT BUDGET AND
SCHEDULE"). To the Sellers' knowledge, there are no material impediments to or
constraints on the development or rehabilitation of any Project within the time
frame and for the cost set forth in the Development Budget and Schedule
applicable thereto, and there have not been any material overruns with respect
to any Project the development of which has commenced.
(k) The Sellers have disclosed to the Buyer all adverse matters known
to the Sellers with respect to or in connection with the Company Properties
(including the Company Leases and the Tenancy Leases), which would, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(l) Schedule 3.11(l) sets forth a complete and accurate list of all
leases pursuant to which the Company or any of its Subsidiaries occupies
commercial or office space (collectively, the "TENANCY LEASES"). Each of the
Tenancy Leases is valid, binding and in full force and effect as against the
Subsidiary and, to the Sellers' knowledge, as against the other party thereto.
None of the Tenancy Leases is subject to any pledge, Lien, sublease, assignment,
license or other agreement granting to any third party any interest therein or
any right to the use or occupancy of any premises leased thereunder, except for
such pledges, Liens, subleases, assignments, licenses or other agreements that
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. True and complete copies of the Tenancy Leases
(including all amendments, modifications and supplements thereto) have been
delivered or made available to the Buyer prior to the date hereof. To the
Sellers' knowledge, there is no pending or threatened proceeding which is
reasonably likely to interfere with the quiet enjoyment of the tenant under any
of the Tenancy Leases. Except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, no payments under
any Tenancy Lease are delinquent and no notice of default thereunder has been
sent or received by the Company or any of its Subsidiaries. There does not exist
under any of the Tenancy Leases any default, and, to the Sellers' knowledge, no
event has occurred which, with notice or lapse of time or both, would constitute
such a default, except as would not, individually or in the aggregate, be
reasonably expected to result in a Material Adverse Effect.
(m) The Company and each of its Subsidiaries have good and sufficient
title to all the personal properties and assets reflected in their books and
records as being owned by them (including those reflected in the balance sheets
of the Company and its Subsidiaries as of September 30, 2001, except as since
sold or otherwise disposed of in the ordinary course of business), free and
clear of all Liens, except for Permitted Liens or as would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 3.12 ENVIRONMENTAL MATTERS. (a) To the Sellers' knowledge,
each of the Company and its Subsidiaries has obtained, and now maintains as
currently valid and effective, all permits required under Environmental Laws
(the "ENVIRONMENTAL PERMITS") which are material to the operation of its
businesses and properties, taken as a whole, all of which are listed on Schedule
3.12(a). To the Sellers' knowledge, except as disclosed in the Company
Environmental Reports, each of the Company and its Subsidiaries, and each
Company Property is in
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compliance with the Environmental Permits and all Environmental Laws, except as
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. To the Seller's knowledge, there are no circumstances
that are reasonably likely to prevent or interfere with such compliance as the
operation of the Company Properties is currently conducted.
(b) Each of the Company and its Subsidiaries has provided or made
available to the Buyer all material written communications (whether from a
Government Authority, citizens' group, employee or other person) in its
possession or control regarding (x) alleged or suspected noncompliance of any of
the Company Properties with any Environmental Laws or Environmental Permits or
(y) alleged or suspected Liability of the Company or any of its Subsidiaries
under any Environmental Law, except such noncompliance or Liability which would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
(c) There are no Liens on any of the Company Properties which arose
pursuant to or in connection with any Environmental Law or Environmental Claim
and, to the Sellers' knowledge, no government actions have been taken or are in
process which are reasonably likely to subject any Company Property to any such
Liens.
(d) Except as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect or as otherwise disclosed in
the Company Environmental Reports, no Environmental Claim with respect to the
operations or the businesses of the Company or any of its Subsidiaries, or with
respect to the Company Properties, has been asserted or, to the Sellers'
knowledge, threatened, and, to the Sellers' knowledge, no circumstances exist
with respect to the Company or any of its Subsidiaries or the Company Properties
that would reasonably be expected to result in any Environmental Claim being
asserted, in any such case, against (i) the Company or any of its Subsidiaries,
or (ii) to the Sellers' knowledge, any person whose liability for any
Environmental Claims the Company or any of its Subsidiaries has assumed pursuant
to contract or by operation of law..
(e) Except as set forth in the Company Environmental Reports, (i) none
of the Company and its Subsidiaries has been notified of potential
responsibility in connection with any site that has been placed on, or proposed
to be placed on, the National Priorities List or its state equivalents pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. ss. 9601 et seq., or analogous state laws, (ii) to the
Sellers' knowledge, none of the Company and its Subsidiaries has Released any
Materials of Environmental Concern at any Company Property or any other location
to an extent or in a manner which would, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, (iii) to the
Sellers' knowledge, no underground storage tanks, surface impoundments, disposal
areas, pits, ponds, lagoons, or open trenches is present at any Company Property
in a manner or condition that is reasonably likely to give rise to an
Environmental Claim which would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, (iv) to the Sellers' knowledge,
no transformers, capacitors or other equipment containing fluid with more than
50 parts per million polychlorinated biphenyls are present at any Company
Properties in a manner or condition that is reasonably likely to give rise to an
Environmental Claim which would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, except for any such
transformers, capacitors or other equipment owned by
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any utility company, and (v) to the Sellers' knowledge, no asbestos or
asbestos-containing material is present at any Company Properties other than
floor tiles that do not contain any friable asbestos and no Employee or any
other person is now or has in the past been exposed to friable asbestos or
asbestos-containing material at any Company Properties, except, in the case of
each of the matters set forth in this clause (v), for such matters as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(f) Schedule 3.12(f) contains a list of each material environmental
report prepared by or for the Company or any of its Subsidiaries, in the
possession of any of them (provided that the Company has used, and has caused
its Subsidiaries to use, reasonable efforts to obtain such possession), with
respect to the environmental condition of any Company Properties, including
Phase I and Phase II environmental site assessments (collectively, the "COMPANY
ENVIRONMENTAL REPORTS"). True and complete copies of each Company Environmental
Report have been delivered or made available to the Buyer prior to the date
hereof. To the Sellers' knowledge, there are no facts or circumstances relating
to the environmental condition of any real property that is not a Company
Property that, individually or in the aggregate, are reasonably likely to result
in a Material Adverse Effect.
(g) For purposes hereof, the terms listed below shall have the
following meanings:
(i) "CLAIM" shall mean all Actions, causes of action, suits,
judgments, executions, claims and demands whatsoever, in law or equity.
(ii) "ENVIRONMENTAL CLAIM" shall mean any Claim or written notice
by any person alleging potential liability (including potential liability
for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or
fatalities, or penalties) arising out of, based on or resulting from (A)
the presence, generation, transportation, treatment, use, storage, disposal
or Release of Materials of Environmental Concern or the threatened Release
of Materials of Environmental Concern at any location, or (B) activities or
conditions forming the basis of any violation, or alleged violation of, or
liability or alleged liability under, any Environmental Law.
(iii) "ENVIRONMENTAL LAWS" shall mean federal, state, local,
provincial, municipal and foreign laws, ordinances, principles of common
law, rules, by-laws, orders, governmental policies, statutes, regulations,
agreements and treaties relating to the pollution or protection of the
environment or of flora or fauna or their habitat or of human health and
safety, or to the cleanup or restoration of the environment, including, but
not limited to, any laws relating to (A) generation, treatment, storage,
disposal or transportation of wastes, emissions or discharges or protection
of the environment from the same, (B) exposure of persons to, or Release or
threat of Release of, Materials of Environmental Concern, and (C) noise.
(iv) "MATERIALS OF ENVIRONMENTAL CONCERN" shall mean all
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or
any fraction thereof, petroleum products and hazardous substances (as
defined in Section 101(14) of CERCLA,
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42 U.S.C. ss. 6601(14)), or solid or hazardous wastes as defined and
regulated under any Environmental Laws.
(v) "RELEASE" shall have the meaning set forth in CERCLA.
Section 3.13 EMPLOYEES AND EMPLOYEE BENEFITS. (a) Schedule 3.13(a)
sets forth a complete and accurate list of all employment, severance,
consulting, retention, termination and change-in-control agreements or
arrangements in effect with Employees of the Company or any of its Subsidiaries
("EMPLOYEE ARRANGEMENTS"). Except for the Employees who are parties to the
scheduled employment agreements, all of the current Employees of the Company and
each of its Subsidiaries are employed on an at-will basis.
(b) Schedule 3.13(b) sets forth a complete and accurate list of all
Company Plans. With respect to each Company Plan, the Sellers have delivered or
made available to the Buyer true and complete copies of: (i) the plan documents
and related trust documents and amendments thereto, (ii) the most recent summary
plan descriptions, if any, and the most recent annual report, if any, and (iii)
the most recent actuarial valuation (to the extent applicable).
(c) With respect to each Company Plan, (i) the Company and each of its
Subsidiaries is in compliance in all material respects with the terms of each
Company Plan and with the requirements prescribed by all applicable statutes,
orders or governmental rules or regulations, (ii) the Company and each of its
Subsidiaries has contributed to each Pension Plan included in the Company Plans
not less than the amounts accrued for such plan for all plan periods for which
payment is due, and (iii) none of the Company or any of its Subsidiaries has any
funding commitment or other liabilities except as reserved for in the financial
statements in or incorporated by reference into the Company Reports, and, in the
case of clause (i) through (iii), except for such matters as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. The Internal Revenue Service has issued a favorable
determination letter (or opinion letter, as the case may be) with respect to
each Company Plan that is intended to be a "qualified plan" within the meaning
of Section 401(a) of the Code, and, to the Sellers' knowledge, there are no
circumstances nor any events that reasonably could be expected to adversely
affect the qualified status of any such plan.
(d) None of the Company or any of its Subsidiaries has made any
binding commitment to establish any new Company Plan except as may be required
by law, to modify any Company Plan, or to increase benefits or compensation of
Employees of the Company or any of its Subsidiaries (except for normal increases
in compensation consistent with past practices), and to the Sellers' knowledge,
no intention to do so has been communicated to Employees of the Company or any
of its Subsidiaries.
(e) There are no pending or, to the Sellers' knowledge, anticipated
claims against or otherwise involving any of the Company Plans or any
fiduciaries thereof with respect to their duties to the Plans and no suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of Company Plan activities) has been brought against or with
respect to any such Company Plans.
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(f) None of the Company, SUSA or any entity under "common control"
with the Company or SUSA within the meaning of Section 4001 of ERISA has
contributed to, or been required to contribute to, any "multiemployer plan" (as
defined in Section 3(37) and 4001(a)(3) of ERISA).
(g) The Company and its Subsidiaries do not maintain or contribute to
any plan or arrangement that provides or has any liability to provide life
insurance, medical or other employee welfare benefits to any Employee upon his
retirement or termination of employment, except as required by the Employee
Arrangements or the Consolidated Omnibus Budget Reconciliation Act of 1985 or
equivalent state law and, to the Sellers' knowledge, the Company and its
Subsidiaries have never represented, promised or contracted (whether in oral or
written form) to any Employee that such benefits would be provided.
(h) For purposes hereof, "COMPANY PLANS" means each and all "employee
benefit plans" as defined in Section 3(3) of ERISA maintained within the last
five years or contributed to within the last five years by a Seller or in which
a Seller participates or participated and which provides benefits to Employees,
including (i) any such plans that are "employee welfare benefit plans" as
defined in Section 3(1) of ERISA, including retiree medical and life insurance
plans ("WELFARE PLANS"), and (ii) any such plans that constitute "employee
pension benefit plans" as defined in Section 3(2) of ERISA ("PENSION PLANS"), as
well as all other life and health insurance, hospitalization, savings, equity,
bonus, loan, deferred compensation, incentive compensation, holiday, vacation,
severance pay (including statutory severance), termination pay, sick pay, sick
leave, bereavement leave, maternity leave, military leave, disability, tuition
refund, service award, company car, scholarship, relocation, patent award,
fringe benefit, individual employment, consultancy or severance agreements or
arrangements and any other polices or practices of a party hereto providing
employee or executive compensation or benefits to Employees. As used herein, the
term "EMPLOYEE" refers to any current employee, former employee or retired
employee of the Company or any of its Subsidiaries, including any such employee
on disability, layoff or leave status. "CONTROLLED GROUP LIABILITY" means any
and all liabilities under (i) Title IV of ERISA, (ii) Section 302 of ERISA,
(iii) Sections 412 and 4971 of the Code, and (iv) corresponding or similar
provisions of foreign laws or regulations, other than such liabilities that
arise solely out of, or relate solely to, the Company Plans.
(i) No Company Plan is or was subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code.
(j) To the Sellers' knowledge, there does not now exist, nor do any
circumstances exist that could result in, any Controlled Group Liability that
would be a liability of the Company following the Closing. Without limiting the
generality of the foregoing, to the Sellers' knowledge, neither the Company nor
any ERISA Affiliate has engaged in any transaction described in Section 4069 or
Section 4204 of ERISA.
(k) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
Employee of the Company, and the transactions contemplated by this Agreement
will not constitute constructive termination or "good reason" under any Com-
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pany Plan (it being understood and agreed, however, that the Company is making
no representation or warranty as to whether consummation of the transactions
contemplated hereby constitutes "good reason" under the Employee Arrangements).
(l) All personnel who manage or operate the Company Properties, or any
of them, are employed directly by SUSA or SUSA-TN LLC, and the Company itself
does not have any Employees. Neither SUSA Management, Inc. nor any of its
current Employees are involved in the management or operation of any Company
Property.
(m) No Company Plan or related trust is maintained outside of the
United States or is subject to regulation under non-U.S. laws.
(n) Schedule 3.13(n) sets forth, for each Employee, such Employee's
annual salary (and annual bonus opportunity), department and location.
Section 3.14 LABOR MATTERS. None of the Company and 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.
Except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, there is no unfair labor practice or labor
arbitration proceeding pending or, to the Sellers' knowledge, threatened against
the Company or any of its Subsidiaries. To the Sellers' knowledge, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving Employees of the Company or
any of its Subsidiaries.
Section 3.15 AFFILIATE TRANSACTIONS. There are no transactions, series
of related transactions, or currently proposed transactions or series of related
transactions, entered or to be entered into by the Company or any of its
Subsidiaries which are of the type required to be disclosed by the Company or
SUSA pursuant to Item 404 of Regulation S-K under the Securities Act that are
not so disclosed, other than with the Buyer or any of its Affiliates. True and
complete copies of all agreements or contracts relating to any such transaction
have been delivered or made available to the Buyer prior to the date hereof.
Section 3.16 INSURANCE. The Company maintains policies of insurance
covering the assets, business, properties and assets, Employees, officers and
directors of the Company and each of its Subsidiaries (collectively, the
"INSURANCE POLICIES"), which are of a type and in amounts reasonable for the
business conducted by the Company and its Subsidiaries. Except as previously
communicated in writing to the Buyer in its capacity as claims administrator
with respect to the Company's insurance coverage, there are no claims in excess
of $50,000 individually or $100,000 in the aggregate by the Company or any of
its Subsidiaries pending under any of the Insurance Policies as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies. Except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, (i) each Insurance Policy is in
full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full, (ii) none of the Insurance Policies
shall terminate or lapse (or be affected in any other adverse manner) by reason
of the transactions contemplated by this Agreement, (iii) the Company and each
of its Subsidiaries have complied with the provisions of each Insurance Policy
under which it is the insured party, (iv) no insurer under any Insurance Policy
has canceled or generally
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disclaimed liability under any such policy or indicated any intent to do so or
not to renew any such policy and (v) all claims under the Insurance Policies
have been filed in a timely fashion.
Section 3.17 PROXY STATEMENT; SCHEDULE 13E-3; INFORMATION STATEMENT.
The Proxy Statement and the Schedule 13E-3 and all of the information included
or incorporated by reference therein and all amendments and supplements thereto
(other than any information supplied or to be supplied by the Buyer for
inclusion or incorporation by reference therein) will not, as of the date such
Proxy Statement, Schedule 13E-3, amendments or supplements are filed with the
SEC or the Proxy Statement is mailed to the shareholders of the Company and as
of the time of any meeting of the shareholders of the Company in connection with
the transactions contemplated hereby, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement and the Schedule
13E-3 will at such times comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder. The Information Statement (other than any information supplied
or to be supplied by the Buyer for inclusion therein, and other than information
related to the Election, the terms and conditions of the Agreement of Limited
Partnership set forth in Exhibit B, the consequences of the Election on an
Electing Holder, including Tax consequences, and the proposed business of the
Surviving Partnership) will not, as of the date the Information Statement is
mailed to the holders of SUSA Units, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 3.18 TENNESSEE TAKEOVER LAW. The terms of Chapter 103 of Title
48 of the Tennessee Code Annotated will not apply to the Buyer, the Purchase,
the Redemption, the Merger or any other transaction contemplated hereby.
Section 3.19 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock (including shares of
Company Common Stock held by the Buyer or Affiliates of the Buyer) entitled to
vote hereon is the only vote of the holders of any class or series of Company
Stock or other securities of the Company necessary under the TRULPA, the TBCA,
the Company Charter, the Company Bylaws or any contract binding the Company to
approve this Agreement and the transactions contemplated hereby, including the
Purchase, the Redemption and the Merger. No approval, consent or vote of the
holders of SUSA Units or Preferred Units or holders of securities of any
Subsidiary of the Company is required to effect the transactions contemplated by
this Agreement, including the Purchase, the Redemption and the Merger.
Section 3.20 BROKERS OR FINDERS; OPINION OF FINANCIAL ADVISOR. (a)
Except for ▇▇▇▇▇▇ Brothers, Inc. (in its capacity as the Company's financial
advisor, the "FINANCIAL ADVISOR"), no agent, broker, investment banker or other
firm or person, including any of the foregoing that is an Affiliate of the
Company, is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from the Company or any of its Subsidiaries or
Affiliates in connection with this Agreement or any of the transactions
contemplated hereby, for which the Buyer or any of its Affiliates will be
responsible.
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(b) The Financial Advisor has delivered to the Company an opinion
dated the date of this Agreement to the effect, as of such date, the Merger
Consideration is fair from a financial point of view to the holders of the
Company Common Stock and the holders of SUSA Units unaffiliated with the
Company, a copy of which opinion in the form in which it has been or will be
delivered to the Company has been delivered to the Buyer.
Section 3.21 INTELLECTUAL PROPERTY. (a) Other than with respect to
software programs that are commercially available on a general basis, the
Company and its Subsidiaries own, license or otherwise possess legally
enforceable rights to use all Intellectual Property used in or reasonably
necessary to the conduct of the business of the Company and its Subsidiaries,
except where the failure to own, license or have rights to use such Intellectual
Property would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. For purposes of this Agreement, the term
"INTELLECTUAL PROPERTY" means (i) patents, trademarks, service marks, trade
names, domain names, copyrights, designs and trade secrets, (ii) any
applications for and registrations of such patents, trademarks, service marks,
trade names, domain names and copyrights and designs, and (iii) processes,
formulae, methods, schematics, technology, know-how, computer software programs
and applications (except for computer software programs and applications that
are commercially available on a general basis at a cost that does not exceed
$100,000 in any one case or $250,000 giving effect to multiple licenses to the
same program).
(b) The execution and delivery of this Agreement and consummation of
the transactions contemplated hereby will not result in the breach of, or create
on behalf of any third party the right to terminate or modify, any license,
sublicense or other agreement relating to any Intellectual Property or any
software programs that are commercially available on a general basis, including
software that is used in the manufacture of, incorporated in, or forms a part of
any product or service sold by or expected to be sold by the Company or any of
its Subsidiaries, except for such breaches and rights to terminate or modify as
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. Schedule 3.21(b) sets forth a complete and accurate
list of the Company's issued patents, registered trademarks, material software
license agreements and all other material license agreements.
(c) Except as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect, (i) all patents and
registrations and applications for registered trademarks, service marks and
copyrights which are held by the Company or any of its Subsidiaries are valid
and subsisting and (ii) the Company and its Subsidiaries have taken reasonable
measures to protect the proprietary nature of the Sellers' Intellectual
Property. To the Sellers' knowledge, no other person or entity is infringing,
violating or misappropriating any of the Sellers' Intellectual Property, except
for infringements, violations or misappropriations which would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(d) None of the (i) products sold by the Company or any of its
Subsidiaries or (ii) business or activities conducted by the Company or any of
its Subsidiaries infringes, violates or constitutes a misappropriation of, or
infringed, violated or constituted a misappropriation of, any Intellectual
Property of any third party (including any software programs and applications
that are commercially available), except for infringements, violations or
misappropriations which
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would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
received any written (or has any knowledge of any) complaint, claim or notice
alleging any such infringement, violation or misappropriation. For purposes of
this Section 3.21(d), the word "patents" in the definition of Intellectual
Property shall be deemed a reference to United States patents issued on or
before the date of this Agreement.
Section 3.22 SUSA AND HOLDINGS AGREEMENTS. (a) Schedule 3.22(a) sets
forth all action that is required to be taken under the SUSA Agreement and
Holdings' agreement of limited partnership in order to admit the Buyer as the
general partner and a limited partner, as applicable, of SUSA and Holdings, in
connection with the Purchase, and under the SUSA Agreement to issue the
Additional Buyer Units.
(b) Other than the SUSA Agreement and the Tax Protection Agreements,
there are no (written or oral) agreements currently in effect between the
Company and any holder of SUSA Units (other than the Company), including
agreements pursuant to which the Company has agreed to guarantee the obligations
of such holder or consented to any disposition of any of such holder's SUSA
Units.
Section 3.23 KNOWLEDGE DEFINED. As used herein, the phrase "to the
Sellers' knowledge" (or words of similar import) shall mean the actual
knowledge, after reasonable inquiry, of any of ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ or ▇▇ ▇▇▇▇▇▇;
PROVIDED, HOWEVER, that for purposes of Sections 3.11(b), 3.11(d) and 3.11(i),
the phrase "to the Sellers' knowledge" (or words of similar import) shall mean
the actual knowledge of such individuals as well as the actual knowledge of the
Company's ten Regional Managers and three Division Vice Presidents.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Sellers as follows:
Section 4.1 ORGANIZATION. The Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Maryland. The Buyer has all requisite corporate power and authority to own,
operate, lease and encumber its properties and carry on its business as now
conducted, to enter into this Agreement and perform its obligations hereunder
and to consummate the transactions contemplated hereby.
Section 4.2 DUE AUTHORIZATION. The execution and delivery of this
Agreement, the performance of the obligations hereunder and the consummation of
the transactions contemplated hereby, by the Buyer, have been duly and validly
authorized by all necessary corporate action on the part of the Buyer. This
Agreement has been duly executed and delivered by the Buyer and constitutes the
valid and legally binding obligation of the Buyer enforceable against the Buyer
in accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights or general
principles of equity.
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Section 4.3 CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the
execution and delivery by the Buyer hereof nor the consummation by the Buyer of
the transactions contemplated hereby will conflict with, result in a breach or
violation of the terms, conditions or provisions of, constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, give to others any right of termination, amendment, acceleration or
cancellation of, result in the creation of any Lien upon any of the properties
or assets of the Buyer pursuant to, or require any consent, approval or other
action by or any notice to or filing with any Government Authority under, the
organizational documents of the Buyer or any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, order, judgment, decree, statute, law, rule or regulation by which
the Buyer is bound, except for filings required under the Securities Laws or the
HSR Act or as would not, individually or in the aggregate, reasonably be
expected to result in a material adverse effect on the ability of the Buyer to
consummate the transactions contemplated hereby.
Section 4.4 OWNERSHIP OF SHARES. The Buyer owns as of the date hereof,
either directly or through one or more of its Affiliates, 11,765,654 shares of
Company Common Stock.
Section 4.5 PROXY STATEMENT; SCHEDULE 13E-3; INFORMATION STATEMENT.
None of the information supplied or to be supplied by or on behalf of the Buyer
for inclusion or incorporation by reference in the Proxy Statement or the
Schedule 13E-3 or any amendment or supplements thereto will, as of the date the
Proxy Statement, the Schedule 13E-3 or any such amendment or supplement is filed
with the SEC or the Proxy Statement is mailed to the shareholders of the Company
and as of the time of any meeting of the shareholders of the Company in
connection with the transactions contemplated hereby, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. None of the
information supplied by or on behalf of the Buyer for inclusion in the
Information Statement (including for these purposes, whether or not so supplied,
all information related to the Election, the terms and conditions of the
Agreement of Limited Partnership set forth in Exhibit B, the consequences of the
Election on an Electing Holder, including Tax consequences, and the proposed
business of the Surviving Partnership) will, as of the date the Information
Statement is mailed to the holders of SUSA Units, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 4.6 BUYER FINANCING. Without prejudice to the fact that this
Agreement does not provide for any financing condition or contingency (but
subject to the condition set forth in Section 6.1(c) and to the other terms and
conditions hereof), the Buyer has provided to the Company a true and complete
copy of the Buyer's Revolver Commitment Letter, dated November 28, 2001,
providing for a commitment by ▇▇▇▇▇ Fargo Bank, N.A. of up to $60 million of the
Revolver Financing above the Target Hold level of $55 million, as set forth in
and subject to the terms and conditions of such Letter (the "BUYER FINANCING").
Taking into account and assuming the availability of the $115 million of funds
pursuant to the Buyer Financing, and subject to the terms and conditions thereof
and hereof, at the Closing the Buyer will have sufficient funds to consummate
the transactions contemplated by this Agreement, including to make all payments
(including in respect of fees and expenses) required to be made in connection
with this
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Agreement. The Buyer currently expects that, to the extent necessary, all of the
funds will be available pursuant to the Buyer Financing at the Closing.
ARTICLE 5
COVENANTS RELATING TO CLOSINGS
Section 5.1 TAKING OF NECESSARY ACTION. (a) Each party hereto agrees
to use its commercially reasonable best efforts promptly to take or cause to be
taken all actions and promptly to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, subject to the terms
and conditions hereof, including all actions and things necessary to cause all
conditions precedent set forth in Article 6 to be satisfied.
(b) As promptly as practicable after the date hereof, the Company, in
cooperation with the Buyer, shall prepare and shall file with the SEC (i) a
proxy statement (the "PROXY STATEMENT") by which the Company's shareholders will
be asked to approve the transactions contemplated hereby, including the Purchase
and the Merger and (ii) a statement on Schedule 13E-3 under the Exchange Act
(the "SCHEDULE 13E-3" and, together with the Proxy Statement, the "SEC
FILINGS"). The SEC Filings as initially filed with the SEC, as each may be
supplemented, amended and refiled with the SEC, and the Proxy Statement as it
may be mailed to the Company's shareholders, shall each be in form and substance
reasonably satisfactory to the Buyer. The Company shall use its commercially
reasonable best efforts to, in cooperation with the Buyer, respond to any
comments of the SEC on the SEC Filings and to cause the Proxy Statement to be
mailed to the Company's shareholders at the earliest practicable time. As
promptly as practicable after the date hereof, (i) the Company shall, and shall
cause its Subsidiaries to, prepare and file the Regulatory Filings (other than
the SEC Filings) and any other filings required of the Company or such
Subsidiaries under the U.S. or foreign federal, state or local laws relating to
this Agreement and the transactions contemplated hereby, including under state
takeover laws (the "OTHER FILINGS"), and (ii) the Buyer shall, and shall cause
its Subsidiaries to, prepare and file any filings required of the Buyer or such
Subsidiaries under any such laws (the "BUYER FILINGS"). The Company and the
Buyer will notify each other promptly of the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the SEC Filings or any
Regulatory Filings, Other Filings or Buyer Filings or for additional
information, and will supply each other with copies of all correspondence
between each of them or any of their respective Representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to any such filings. The SEC Filings and any Regulatory
Filing, Other Filing and Buyer Filing shall comply in all material respects with
all applicable requirements of law. The Buyer shall promptly provide to the
Company all information about the Buyer required to be included or incorporated
by reference in the SEC Filings or any Regulatory Filing or Other Filing and
shall otherwise cooperate with the Company in taking the actions described in
this paragraph. Whenever any event occurs which is required to be set forth in
an amendment or supplement to an SEC Filing or any Regulatory Filing, Other
Filing or Buyer Filing, the Company or Buyer, as the case may be, shall promptly
inform the other party of such occurrence and cooperate in filing with the SEC
or its staff or any other Government Authority, and/or mailing to
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shareholders of the Company, such amendment or supplement, and each party shall
bear all responsibility and any liability with respect to the information it
provides.
(c) The Buyer, in cooperation with the Company, shall prepare and mail
to the holders of SUSA Units (other than the Company and its Subsidiaries), as
soon as practicable after the date hereof (but no later than the mailing of the
Proxy Statement to holders of Company Common Stock), an information statement
(the "INFORMATION STATEMENT") containing (i) to the extent relevant,
substantially the same information as the information contained in the Proxy
Statement to be mailed to holders of Company Common Stock, (ii) information
relating to the Unit Consideration, the Election and the other transactions
affecting such holders described in Section 2.7, the terms and conditions of the
Agreement of Limited Partnership set forth on EXHIBIT B, the consequences of the
Election (including tax consequences thereof), and the proposed business of the
Surviving Partnership, and (iii) a prospective Electing Holder questionnaire to
determine whether such holder is an "accredited investor".
(d) Subject to Section 5.6, the Company shall use commercially
reasonable best efforts to take all actions in accordance with applicable law,
the Company Charter and the Company Bylaws to promptly and duly call, give
notice of, convene and hold as promptly as practicable, (and in any event within
45 days after the Proxy Statement and the Schedule 13E-3 have been cleared by
the SEC), a meeting of its shareholders for the purpose of considering and
voting upon the transactions contemplated by this Agreement, including the
Purchase and the Merger. Subject to Section 5.6, to the fullest extent permitted
by applicable law, (i) the Company Board shall recommend and the Special
Committee shall unanimously recommend approval by the shareholders of the
Company of this Agreement and the transaction contemplated hereby, including the
Purchase and the Merger, and include in the Proxy Statement such recommendation,
and (ii) the Company Board and the Special Committee shall not withdraw or
modify, or propose or resolve to withdraw or modify in a manner adverse to the
Buyer, such recommendation. Subject to Section 5.6, the Company shall solicit
from its shareholders proxies in favor of the approval of the transaction
contemplated hereby, including the Purchase and the Merger, and, in connection
therewith, shall use commercially reasonable best efforts to comply with the
applicable requirements of the national securities exchange on which the Company
Common Stock is listed or the TBCA; PROVIDED that, after consultation with the
Buyer, the Company may adjourn or postpone such shareholder meeting to the
extent necessary to ensure that any required supplement or amendment to the
Proxy Statement is provided to the Company's shareholders or if, as of the time
for which the meeting is originally scheduled (as set forth in the Proxy
Statement), there are insufficient shares of Company Common Stock represented
(either in person or by proxy) to constitute a quorum necessary to conduct the
business of the meeting.
(e) The Company shall use its commercially reasonable best efforts to
obtain the consents set forth on Schedule 3.4.
(f) The Buyer shall use commercially reasonable efforts to obtain the
funds under the Buyer Financing as and to the extent necessary in connection
with the transactions contemplated hereby.
Section 5.2 TAKE-ALONG RIGHT. During the Take-Along Period, the Buyer
shall (a) at any meeting of shareholders of the Company called to approve an
agreement providing for
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a Superior Transaction (entered into during the Permitted Period), and at every
adjournment or postponement thereof, vote (and cause its Affiliates to vote) all
of the shares of Company Common Stock owned of record or beneficially as of the
date hereof by the Buyer (or such Affiliates) in favor of the approval of such
Superior Transaction, and (b) sell (or cause to be sold) all of the shares of
Company Common Stock owned of record or beneficially by the Buyer (and its
Affiliates), for the same consideration and on terms no less favorable (except
as otherwise contemplated by the Support Agreement) as are offered to the other
holders of the Company Common Stock in such Superior Transaction, except in each
case as otherwise provided in, and subject to, the definition of Superior
Transaction; PROVIDED that (i) at the time of termination hereof (in connection
with such Superior Transaction) the Company shall have complied with Sections
5.6(c) (after taking into account the provisions of the last sentence of that
Section) and 7.1(f), and (ii) immediately prior to or upon consummation of such
Superior Transaction, the Buyer shall receive cash consideration for all of its
shares of Company Common Stock as set forth in the definition of Superior
Transaction in Section 5.6(g)(ii). In addition, the Buyer shall, and shall cause
each of its Affiliates that owns shares of Company Common Stock to, execute and
deliver to the other party to a definitive agreement relating to a Superior
Transaction that has been agreed and entered into by the Company at the time
such agreement is entered into, a support agreement in the form attached as
EXHIBIT C (the "SUPPORT AGREEMENT"), upon the written request of such party.
Section 5.3 STRATEGIC ALLIANCE AGREEMENT; SERIES A PREFERRED STOCK.
(a) In all respects not inconsistent with the terms and provisions of this
Section, the Strategic Alliance Agreement shall continue to be in full force and
effect in accordance with the terms and subject to the conditions thereof, and
the execution, delivery and performance (other than consummation) hereof, or the
execution, delivery and performance (other than consummation) of an agreement
providing for a Superior Transaction (in compliance with the terms hereof),
shall not constitute an "Early Termination Event" thereunder; PROVIDED that,
upon the Effective Time or consummation of a Superior Transaction, in compliance
with the terms hereof, the Strategic Alliance Agreement shall be terminated and
shall cease to have any force or effect, and provided further that it is
explicitly understood and agreed that nothing in the Strategic Alliance
Agreement or herein shall prevent, limit or restrict in any way the right of the
Buyer and its Affiliates to make, in response to any matter of which the Buyer
is notified in accordance with Section 5.6(c) or of which the Buyer otherwise
becomes aware or for any other reason or no reason, an offer, proposal or
inquiry with respect to an improvement or modification in favor of the Company
and its shareholders in the terms of the transaction to be effected hereby, or
to enter into any negotiation or discussion relating thereto, or to make what
would be a Superior Proposal with respect to any Superior Transaction entered
into by the Company in connection with or following the termination of this
Agreement (or to make any inquiry with respect thereto, or to enter into any
negotiation or discussion relating thereto). The Company, the Buyer and SUSA
hereby acknowledge and agree that the negotiations leading to, or the entering
into, this Agreement, the exercise of any rights hereunder in accordance with
and subject to the terms hereof (including the rights afforded to the Sellers
under Sections 5.6(f) and 7.1(f) of this Agreement), and the consummation of any
of the transactions contemplated by this Agreement shall not, in any event,
constitute a violation or attempted violation by any of such parties of any
provision of the Strategic Alliance Agreement (or of any provision of the
Company Charter or the Company Bylaws), and each such party hereby irrevocably
waives any claim in connection therewith against any of the other par-
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ties or their respective Representatives, including for purposes of Section 7.8
of the Strategic Alliance Agreement.
(b) At or prior to the Closing, and from time to time thereafter, the
Buyer shall take all action necessary and appropriate to designate or cause to
be designated 650,000 shares of preferred stock of the general partner of the
Surviving Partnership as "8 7/8% Series A Cumulative Redeemable Preferred
Stock," having substantially the same terms as the Company's Series A Preferred
Stock (as defined in the Company Charter).
Section 5.4 PUBLIC ANNOUNCEMENTS. Subject to each party's disclosure
obligations imposed by law and any stock exchange or similar rules, the Company
and the Buyer will cooperate with each other in the development and distribution
of all news releases and other public information disclosures with respect to
this Agreement and any of the transactions contemplated hereby.
Section 5.5 CONDUCT OF THE BUSINESS. Except as expressly provided
herein or contemplated hereby or as consented to in writing by the Buyer, from
and after the date of this Agreement until the earlier of the termination of
this Agreement in accordance with the terms hereof or the Closing Date, the
Company shall, and shall cause each of its Subsidiaries to, act and carry on its
business in the ordinary course of business consistent with past practice and
use commercially reasonable efforts, consistent with past practice, to maintain
and preserve its and each Subsidiary's business organization, assets and
properties, keep available the services of its present officers and employees
and preserve its advantageous business relationships with customers, strategic
partners, suppliers, distributors and others having business dealings with it.
Without limiting the generality of the foregoing, from and after the date of
this Agreement until the earlier of the termination of this Agreement in
accordance with the terms hereof or the Closing Date, the Company shall not, and
shall not permit any of its Subsidiaries to, except as set forth on Schedule
5.5, directly or indirectly, do any of the following without the prior written
consent of the Buyer, except as expressly provided herein or contemplated
hereby:
(a) except for the redemption of SUSA Units for Company Stock in the
ordinary course of business, change the number of shares of the authorized
or issued capital stock (or equivalent thereof) of the Company or such
Subsidiary or issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating to
the authorized or issued capital stock (or equivalent thereof) of the
Company or such Subsidiary (unless expressly required by the terms of a
Company Plan or preexisting Employment Arrangement, in each case, as in
effect as of the date of this Agreement), or any securities convertible
into shares of such stock (including, in the case of the Company, SUSA
Units), or split, combine or reclassify any shares of the capital stock (or
equivalent thereof) of the Company or such Subsidiary or declare, set aside
or pay any extraordinary dividend (except for Permitted Dividends or as may
be required to comply with the requirements of Section 5.11), other
distribution (whether in cash, stock or property or any combination
thereof) in respect of the capital stock (or equivalent thereof) of the
Company or such Subsidiary, or redeem or otherwise acquire any shares of
such stock (or equivalent thereof), or take any action that would cause the
Conversion Factor (as defined in the SUSA Agreement) to be other than 1.0;
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(b) except as permitted by Section 5.5(l), issue, deliver, sell,
grant, pledge or otherwise dispose of or encumber any shares of the capital
stock (or equivalent thereof) of the Company or such Subsidiary, any other
voting securities or any securities convertible into or exchangeable for,
or any rights, warrants or options to acquire, any such shares or
securities (other than the issuance of shares of Company Common Stock upon
the exercise of Company Options outstanding on the date of this Agreement
in accordance with their present terms);
(c) amend the Company Charter or the Company Bylaws or the
organizational documents of such Subsidiary (including the SUSA Agreement),
except as provided n this Agreement;
(d) acquire by merging or consolidating with, or by purchasing all or
a substantial portion of the assets or any stock (or equivalent thereof)
of, or by any other manner, any business or any corporation, partnership,
joint venture, limited liability company, association or other business
organization or division thereof, other than acquisitions of self storage
facilities and related assets in the ordinary course of business consistent
with past practice;
(e) except for the sale of inventory or the sale or lease of self
storage facilities and related assets in the ordinary course of business
consistent with past practice or as otherwise provided in this Section 5.5,
sell, lease, license, pledge, encumber, assign, dispose of or otherwise
transfer (including by means of a contribution to a partnership or joint
venture) any Company Properties or other material asset of the Company or
such Subsidiary (including any contracts or stock (or equivalent thereof)
of the Company's Subsidiaries);
(f) except to the extent expressly contemplated by this Agreement,
enter into an agreement with respect to any merger, consolidation,
liquidation or business combination, or any acquisition or disposition of
all or substantially all of the assets or securities of the Company or any
of its Subsidiaries;
(g) (A) incur any indebtedness for borrowed money in excess of $50,000
individually or $150,000 in the aggregate, (B) issue, sell or amend any
debt securities or other rights to acquire any debt securities of the
Company or any of its Subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, (C) make
any loans, advances or capital contributions (other than as expressly
required by the terms of the Property Joint Ventures) to, or investment in,
or repay any indebtedness owing to (except as contemplated hereby with the
Loan Repayment Amount or the SUSA Subsidiaries Amount or as expressly
required by the terms of any contract, as set forth on Schedule 5.5(g)),
any person other than the Company or any of its direct or indirect wholly
owned Subsidiaries or (D) enter into any hedging agreement or other
financial agreement or arrangement designed to protect the Company or its
Subsidiaries against fluctuations in commodities prices or exchange rates;
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(h) make any capital expenditures or other expenditures in excess of
$150,000 in the aggregate with respect to property, plant or equipment for
the Company or its Subsidiaries (or, with respect to Company Properties, in
the Capital Expenditure Budget and Schedule or as may be required to
correct any material deficiencies in the Company Properties that are
discovered after the date hereof, and with respect to Projects, in the
Development Budget and Schedule, respectively);
(i) make any changes in financial accounting methods, principles or
practices, except insofar as may have been required by a change in GAAP or,
except as so required, change any method of calculating any bad debt,
contingency or other reserve;
(j) knowingly modify, amend or terminate in any adverse manner any
contract or agreement to which the Company or any of its Subsidiaries is
party involving payments to or from the Company in excess of $100,000 in
any twelve month period, or knowingly waive, release or assign any material
rights or claims in an adverse manner (including any write-off or other
adverse compromise of any material accounts receivable of the Company or
any of its Subsidiaries);
(k) enter into any contract or agreement requiring the Company or any
of its Subsidiaries to make payments in excess of $100,000 in any twelve
month period;
(l) except as required to comply with applicable law or agreements,
plans or arrangements existing on the date hereof or as contemplated by
Section 5.9, (A) adopt, enter into, terminate or amend any employment,
severance or similar agreement or other Company Plan for the benefit or
welfare of any current or former director, officer, Employee or consultant
or any collective bargaining agreement, (B) increase the compensation or
fringe benefits of, or pay any bonus to, any director, officer, Employee or
consultant, (C) amend or accelerate the payment, right to payment or
vesting of any compensation or benefits, including any outstanding options
or restricted stock awards, (D) pay any material benefit not provided for
as of the date of this Agreement under any Company Plan, (E) grant any
awards under any bonus, incentive, performance or other Company Plan,
including the grant of stock options, stock appreciation rights, stock
based or stock related awards, performance units or restricted stock, or
the removal of existing restrictions in any Company Plans or awards made
thereunder, or (F) take any action to fund or in any other way secure the
payment of compensation or benefits under any Company Plan;
(m) make or rescind any material Tax election, settle or compromise
any material Tax liability or make any material amendment to any Tax
return;
(n) initiate, compromise or settle any litigation or arbitration
proceeding relating to this Agreement or the transactions contemplated
hereby (and subject to Section 5.12) or material to the Company and its
Subsidiaries, taken as a whole;
(o) open or close any facility or office material to the Company and
its Subsidiaries, taken as a whole;
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(p) adopt or implement any shareholder rights plan or similar device
or arrangement; or
(q) authorize any of, or commit or agree, in writing or otherwise, to
take any of, the foregoing actions or any action which would materially
impair or prevent the satisfaction of any conditions in Article 6.
Section 5.6 NO SOLICITATION. (a) NO SOLICITATION OR NEGOTIATION.
Except as expressly permitted by this Section, during the period from and
including the 46th day following the date of this Agreement (the
"NO-SOLICITATION START DATE") until the termination of this Agreement in
accordance with the terms hereof (the "NO-SOLICITATION PERIOD"), the Company
shall not, nor shall it cause, authorize or permit any of its Subsidiaries or
Affiliates or any of its or their Representatives to, directly or indirectly:
(i) solicit, initiate, encourage or take any other action to
facilitate any inquiries or the making of any proposal or offer that
constitutes, relates to, or could reasonably be expected to lead to, any
Acquisition Proposal; or
(ii) enter into, continue or otherwise participate in any
discussions or negotiations regarding, furnish to any person any
information with respect to, assist or participate in any effort or attempt
by, or otherwise cooperate in any way with, any person with respect to, any
proposal or offer that constitutes, or could reasonably be expected to lead
to, any Acquisition Proposal.
Notwithstanding the foregoing, but subject to Section 5.6(f), in response to an
Acquisition Proposal that did not result or arise from a breach of this Section,
and subject to compliance with Section 5.6(c), the Company may (x) furnish
information, including non-public information, with respect to the Company to
any person (and the Representatives of such persons) making an Acquisition
Proposal that the Special Committee determines in good faith (after consultation
with outside counsel and its financial advisor) is a Superior Proposal, pursuant
to a customary confidentiality agreement containing customary standstill
provisions) and (y) engage in discussions or negotiations with such person and
its Representatives regarding any such Superior Proposal. Without limiting the
foregoing, it is agreed that any violation of any of the restrictions set forth
in this Section 5.6(a) by any Affiliate or Representative of the Company or any
of its Subsidiaries, whether or not such person is purporting to act on behalf
of the Company or otherwise, shall be deemed to be a violation of such
restrictions.
(b) NO CHANGE IN RECOMMENDATION OR ALTERNATIVE ACQUISITION AGREEMENT.
The Company Board and the Special Committee shall not, during the
No-Solicitation Period:
(i) except as set forth in this Section 5.6(b), withdraw or
publicly propose to withdraw or modify in any manner adverse to the Buyer
or publicly propose to modify in any manner adverse to the Buyer, its
approval or recommendation of this Agreement or the transactions
contemplated hereby;
(ii) cause or permit the Company to enter into any letter of
intent, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement or similar agreement (an "ALTERNATIVE
ACQUISITION AGREEMENT") constituting or
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relating to any Acquisition Proposal other than a confidentiality agreement
referred to in Section 5.6(a) entered into in the circumstances referred to
in such Section 5.6(a); or
(iii) adopt, approve or recommend, or publicly propose to adopt,
approve or recommend, any Acquisition Proposal.
Notwithstanding the foregoing, the Company Board and the Special Committee may,
during such period, (x) withdraw or publicly propose to withdraw or modify or
publicly propose to modify in a manner adverse to the Buyer its approval or
recommendation of this Agreement and the transactions contemplated hereby, if
the Company Board or the Special Committee determines in good faith (after
consultation with the Company's or the Special Committee's outside counsel and
the financial advisor for the Special Committee) that an Acquisition Proposal
constitutes a Superior Proposal as to which the Company intends to enter into a
binding written agreement as provided in Section 7.1(f) and (y) adopt, approve
or recommend, or propose to adopt, approve or recommend, any Superior Proposal
subject to compliance with Section 7.1(f).
(c) NOTICES TO THE BUYER. The Company shall promptly advise the Buyer
orally, with written confirmation to follow within 24 hours of the occurrence of
the event or circumstance giving rise to the Company's obligation under this
Section 5.6(c), of the Company's receipt of any Acquisition Proposal or any
material negotiation or discussion concerning the material economic terms and
material conditions of such Acquisition Proposal made by any person(s), and the
identity of the person(s) making or engaging in any such Acquisition Proposal,
negotiation or discussion (including a copy of any such Acquisition Proposal, or
negotiation or discussion, if in writing). The Company shall promptly inform the
Buyer orally, with written confirmation to follow within 24 hours of the
occurrence of the event or circumstance giving rise to the Company's obligation
under this Section 5.6(c), of all material changes or material modifications to
the economic terms of any such Acquisition Proposal, negotiation or discussion
(including a copy thereof, if in writing). The Company shall also notify the
Buyer orally, with written confirmation to follow within 24 hours, of the
identity of any entity that has requested or been granted access to the data
room maintained by the Company (but in each case only in the first instance
thereof by any such entity). Notwithstanding the foregoing, if the Company,
acting in good faith, has immaterially or inadvertently breached its obligations
under this Section 5.6(c), it shall nevertheless not in any event be considered
a breach hereof, if, no less than three Business Days prior to entering into an
agreement with respect to any Acquisition Proposal, the Company shall have
provided the Buyer with the then-current material business terms of such
Acquisition Proposal, including any then-current written proposal or agreement
embodying such Acquisition Proposal (but not including any drafts or other
obsolete or superseded materials). For purposes of this Section 5.6(c), the
Company's receipt of any Acquisition Proposal or any material negotiation or
discussion concerning the material economic terms and material conditions of any
Acquisition Proposal (or subsequent communications relating thereto and
described herein, including material changes or material modifications to any
Acquisition Proposal) shall be solely limited to communications made to or which
become known to any one of Messrs. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇. For purposes
of this Section 5.6(c) and notwithstanding Section 8.4 to the contrary, notices
under this Section shall be deemed to have been given by the Company to the
Buyer only if sent by (i) any one of Messrs. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇ by
electronic mail (with con-
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firmation by fax in the manner and to the persons set forth in Section 8.4), to
(ii) the attention of all of Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇), ▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇),
▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇), ▇▇▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇) and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇), or, with
the consent of any one or more of such named recipients, by other confirmed
delivery to him alone or such other of such recipients as he may specify.
(d) CERTAIN PERMITTED DISCLOSURE. Nothing contained in this Section
5.6 or elsewhere in this Agreement shall be deemed to prohibit the Company from
taking and disclosing to its shareholders a position with respect to a tender
offer contemplated by Rule 14e-2(a) and related Item 1012(a) of Regulation M-A
promulgated under the Exchange Act or from making any other disclosure to its
shareholders or in any other regulatory filing if, in the good faith judgment of
the Company Board or the Special Committee, based on the advice of outside
counsel, failure to so disclose would be inconsistent with their or the
Company's obligations under applicable law.
(e) CESSATION OF ONGOING DISCUSSIONS. During the No-Solicitation
Period, subject to the provisions of the penultimate sentence of Section 5.6(a),
the Company shall, and shall cause its Subsidiaries and its and their Affiliates
and Representatives to, cease immediately all discussions and negotiations
commenced on or prior to the No-Solicitation Start Date regarding any proposal
that constitutes, or could reasonably be expected to lead to, an Acquisition
Proposal. From and after the No-Solicitation Start Date, the Company shall use
commercially reasonable efforts to have all copies of all nonpublic information
it or its Subsidiaries and its and their Representatives have distributed since
the date hereof, to persons who have executed a confidentiality agreement in
connection with such person's consideration of an Acquisition Proposal,
destroyed or returned to the Company as soon as possible.
(f) PERMITTED PERIOD. It is understood and agreed that none of the
limitations set forth in this Section 5.6 (other than Section 5.6(c)) with
respect to the solicitation, negotiation or furnishing of information with
respect to Acquisition Proposals shall apply during the period from (and
including) the date of this Agreement to (but excluding) the No-Solicitation
Start Date (the "PERMITTED PERIOD").
(g) DEFINITIONS. For purposes of this Agreement:
"ACQUISITION PROPOSAL" means any proposal, offer or inquiry by
any person or group (as defined in Section 13(d)(3) under the Exchange Act)
(other than the Buyer or any of its Affiliates or any group including Buyer
or any of its Affiliates) (i) for or with respect to or relating to a
merger, consolidation, dissolution, sale of substantial assets, tender
offer, recapitalization, share exchange or other business combination or
similar transaction (or series of transactions) involving the Company and
its Subsidiaries, taken as a whole, (ii) for or with respect to or relating
to a transaction pursuant to which the Company or any of its Subsidiaries
issues or would issue, or such person or group acquires or would acquire,
over 15% of the equity securities of the Company or such Subsidiary or
(iii) for or with respect to or relating to a transaction pursuant to which
such person or group acquires or would acquire in any manner, directly or
indirectly, over 15% of the consolidated total assets of the Company, in
each case, other than the transactions
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contemplated by this Agreement. Any Superior Proposal shall also be deemed
an Acquisition Proposal for the purposes hereof.
"SUPERIOR PROPOSAL" means any unsolicited, bona fide written
proposal made by a third party to effect a Superior Transaction.
"SUPERIOR TRANSACTION" means the acquisition or cancellation of
all of the common equity securities of the Company pursuant to or in
connection with a tender or exchange offer, a merger, a consolidation, a
sale of all or substantially all of its assets or similar transaction:
(i) on terms which the Special Committee determines in its good
faith judgment to be more favorable from a financial point of view to
the holders of Company Common Stock than the transactions contemplated
by this Agreement (based on the advice of a nationally recognized
independent financial advisor), taking into account all the terms and
conditions of such transaction (including the financial terms thereof
and the likelihood of such a proposal being completed) and this
Agreement (including any written proposal by the Buyer to amend the
terms of this Agreement);
(ii) (w) in which all of the holders of Company Common Stock
(except as set forth in clause (z) below) and all of the holders of
SUSA Units (other than the Company) would have the right to receive
consideration, in the form of cash and/or securities (and which
securities will be publicly traded and listed on the NYSE, AMEX or
NASDAQ following consummation of the Superior Transaction), in a per
share amount in excess of $42 (with the value of any common stock or
security determined at the time the Superior Transaction is entered
into, based upon the Trailing Average (as to any such security, if
such security is publicly traded and listed on the NYSE, AMEX or
NASDAQ prior to the time the Superior Transaction is entered into) or
the Agreed Value (as to any such security, if such security is not
publicly traded and listed on the NYSE, AMEX or NASDAQ prior to the
time the Superior Transaction is entered into)), (x) in which SUSA's
limited partners (other than the Company) have the right, at their
sole discretion, to remain as limited partners of SUSA or a successor
limited partnership on terms comparable to those contemplated by this
Agreement or otherwise to continue their equity interest and tax
deferred status, (y) which does not prohibit the Buyer from being able
to propose any amendments to the terms of this Agreement to make them
more favorable from a financial point of view to the holders of
Company Common Stock than the Superior Transaction, and (z) in which
the consideration to be received by the Buyer for all of its shares of
Company Common Stock is payable, and is paid, prior to or
simultaneously with the payment of the consideration to be received by
holders of Company Common Stock other than the Buyer, entirely in cash
(and, if any Company shareholders are to receive or have the option to
receive any securities, in an amount per share equal to the greatest
of (A) if only cash consideration is payable on any shares of Company
Common Stock, the per share cash consideration payable on such shares,
(B) if only securities are payable on any shares of Company Common
Stock, an amount
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in cash equal to value of such securities determined at the time the
Superior Transaction is entered into (with the value of any such
securities determined at the time the Superior Transaction is entered
into, based upon the Trailing Average, as to securities that are
publicly traded and listed on the NYSE, AMEX or NASDAQ prior to the
time the Superior Transaction is entered into, or the Agreed Value, as
to any such securities which are not publicly traded and listed on the
NYSE, AMEX or NASDAQ prior to the time the Superior Transaction is
entered into) and (C) if a combination of cash and securities is
payable as consideration for any shares of Company Common Stock, an
amount in cash equal to the sum of the values determined in accordance
with clause (A), with respect to the cash portion of the per share
consideration payable to holders of Company Common Stock, and clause
(B), with respect to the securities portion of the per share
consideration payable to holders of Company Common Stock); and
(iii) that is reasonably capable of being completed on the terms
proposed, taking into account all financial, regulatory, legal and
other aspects of such transaction, within the same time-period as the
Take-Along Period (giving due consideration to the respective dates
the Buyer and such person executed definitive agreements with the
Company) and with a likelihood of successful consummation not less
favorable than those applicable to the transactions contemplated
hereby.
"TRAILING AVERAGE", with respect to any publicly traded security
listed on the NYSE, AMEX or NASDAQ, means the average Closing Price (as
defined below) of such security on the fifteen consecutive Trading Days
(as defined below) immediately preceding the date of determination.
"TRADING DAY", with respect to any security, means a day on which such
security is traded on the national securities exchange or quotation system
or in the over-the-counter market used to determine Closing Prices for
such security. "CLOSING PRICE" of a security on any day means the last
reported sale price, regular way, of such security on such day, or, in
case no such sale takes place on such day, the average of the reported
closing per share bid and asked prices, regular way, of such security on
such day, in each case, on the national securities exchange or quotation
system or in the over-the-counter market on which such security is listed
or admitted to trading or quoted.
"AGREED VALUE", with respect to any security not publicly traded and
listed on the NYSE, AMEX or NASDAQ, means an amount equal to what the
Special Committee's and the Buyer's respective financial advisors mutually
agree would be the Trailing Average, were such securities then publicly
listed and traded on the NYSE, AMEX or NASDAQ, or, in the event that such
financial advisers are unable to reach agreement as to such hypothetical
Trailing Average within 5 days after a written request by the Buyer or the
Company, as may be determined by the investment banking firm appointed
pursuant to Schedule 5.6(g). Any mutual determination of the financial
advisors or determination by the investment banking firm appointed pursuant
to this definition shall be final and binding on the parties.
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Section 5.7 INFORMATION AND ACCESS. From the date hereof until the
Closing (a) the Company shall, and shall cause its Subsidiaries to, afford to
the Buyer and its Representatives full and reasonable access during normal
business hours (and at such other times as the parties may mutually agree) to
the properties, books, contracts, commitments, records and appropriate personnel
of the Company and such Subsidiaries and, during such period, shall furnish
promptly to the Buyer (i) a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of the Securities Laws or
the HSR Act, and (ii) all other information concerning the businesses, assets or
personnel of the Company and such Subsidiaries or the Company Properties as the
Buyer may reasonably request, and (b) without limiting the generality of the
foregoing, the Buyer shall have the right to conduct or cause to be conducted,
at the Buyer's expense, an environmental, physical, structural, electrical,
mechanical and other inspection and review of any Company Properties or request
that the Company update, at the Buyer's expense, any existing reports, reviews
or inspections thereof, in which case the Company shall promptly cause its
reports, reviews and inspections to be so updated by the firm or person who
prepared such report or conducted such review or inspection. The Buyer and its
Representatives shall, in the exercise of the rights described in this Section,
not unduly interfere with the operation of the businesses of the Company or its
Subsidiaries or unduly interfere with, restrict or restrain the access of other
persons to the properties, books, contracts, commitments, records and senior
management of the Company and such Subsidiaries during the Permitted Period or
otherwise unduly impair the ability of the Company to receive a Superior
Proposal during the Permitted Period. No information or knowledge obtained in
any investigation pursuant to this Section or otherwise shall affect or be
deemed to modify any representation or warranty of the Sellers contained in this
Agreement or the conditions to the obligations of the parties to consummate the
transactions contemplated hereby.
Section 5.8 NOTIFICATION OF CERTAIN MATTERS. The Buyer and the Company
shall use commercially reasonable efforts to give reasonably prompt notice to
each other of the occurrence, or failure to occur, of any event, known to such
party, which occurrence or failure to occur would be reasonably likely to result
in (a) a breach of any representation or warranty of such party contained in
this Agreement or (b) the failure of any covenant, condition or agreement to be
complied with or satisfied by such party under this Agreement. In furtherance of
and without limiting the forgoing, the Buyer shall use commercially reasonable
efforts to (i) inform the Company if the Buyer no longer expects that all of the
funds, to the extent necessary, will be available pursuant to the Buyer
Financing at the Closing, and (ii) reasonably promptly apprise the Company of
circumstances relating to the Buyer Financing upon reasonable request of the
Company from time to time prior to the Closing. Notwithstanding the foregoing,
the delivery of any notice pursuant to this Section will not limit or otherwise
affect the remedies available hereunder to the party receiving such notice or
the conditions to such party's obligation to consummate the transactions
contemplated hereby.
Section 5.9 EMPLOYEE MATTERS.
(a) The Buyer agrees to comply with the terms of all employment and
change-in-control agreements set forth (and designated as such) on Schedule
3.13(a). After the date hereof until the Closing, neither the Company Board nor
any committee thereof nor any officer of the Company shall take any action that
would cause any amount to become due or payable or
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to be paid under any Employee Arrangement as a result of the execution hereof,
the Purchase, the Redemption or the Merger or any other matter contemplated
hereby.
(b) Nothing in this Agreement (other than Section 5.10), express or
implied, shall create a third-party beneficiary relationship or otherwise confer
any benefit, entitlement, or right upon any person other than the parties
hereto, including any right to employment or continued employment for any
specified period, of any nature or kind whatsoever.
Section 5.10 D&O Insurance; INDEMNIFICATION. (a) From and after the
Closing, the Surviving Partnership and the Buyer shall, jointly and severally,
to the fullest extent permitted by Tennessee law for a period of six years from
the Closing, indemnify, hold harmless and provide advancement of expenses to,
each present and former director, trustee and officer of the Company or any of
its Subsidiaries and each person who becomes prior to the Effective Time a
director, trustee or officer of the Company or any of its Subsidiaries (each, an
"INDEMNIFIED PARTY" and, collectively, the "INDEMNIFIED PARTIES"), from, against
and with respect to any costs or expenses (including attorneys' fees),
judgments, fines, penalties, losses, claims, damages, liabilities or amounts
paid in settlement incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such, which acts or omissions
existed or occurred at or prior to the Effective Time, including any acts or
omissions related to this Agreement or the transactions contemplated hereby (an
"INDEMNIFIABLE ACTION"), whether asserted or claimed prior to, at or after the
Effective Time, to the maximum extent that the Company would then be obligated
to indemnify, hold harmless and advance expenses under the Company Charter or
the Company Bylaws if the same were then in effect.
(b) From and after the Closing, the Buyer shall control the defense of
any Indemnifiable Action with counsel selected by the Buyer, which counsel shall
be reasonably acceptable to the Indemnified Party; PROVIDED, HOWEVER, that the
Indemnified Party shall, at such party's expense, be permitted to participate in
such defense with counsel selected by the Indemnified Party, which counsel shall
be reasonably acceptable to the Buyer. Notwithstanding the foregoing, if there
is any conflict of interest between the Buyer and any Indemnified Party or there
are additional material defenses available to any Indemnified Party, such
Indemnified Party shall be permitted to participate in the defense of such
Indemnifiable Action with counsel selected by such Indemnified Party, which
counsel shall be reasonably acceptable to the Buyer, and the Buyer shall pay the
reasonable fees and expenses of such counsel, as accrued and in advance of the
final disposition of such Indemnifiable Action to the fullest extent permitted
by Tennessee law; PROVIDED, HOWEVER, that, notwithstanding any other provision
of this Section 5.10(b), the Buyer shall not be obligated to pay fees and
expenses of more than one such counsel (plus local counsel) for all Indemnified
Parties in any single Indemnifiable Action.
(c) For a period of six years after the Closing, the Buyer shall, or
shall cause one of its Affiliates to maintain (to the extent available in the
market) in effect a directors' and officers' liability insurance policy covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which has
been delivered or made available to the Buyer prior to the date of this
Agreement) with coverage in amount and scope at least as favorable to such
persons as the Company's existing coverage with respect to acts or failures to
act occurring prior to the Effective Time.
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(d) From and after the Effective Time, the Buyer and the Surviving
Partnership will, jointly and severally, fulfill and honor in all respects the
obligations of the Company pursuant to the indemnification agreements between
the Company and its directors and officers in effect immediately prior to the
date hereof and set forth on Schedule 5.10(d).
(e) If Buyer or the Surviving Partnership or any of their respective
successors or assigns (i) shall consolidate with or merge into any other person
and shall not be the continuing or surviving person of the consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any person, then in each such case, proper provisions shall be made so
that the successors and assigns of the Buyer or the Surviving Partnership shall
assume all of the obligations set forth in this Section 5.10.
(f) The provisions of this Section 5.10 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and
their heirs and representatives.
Section 5.11 REIT STATUS. From and after the date hereof until the
Closing, the Company will comply with all applicable laws, rules and regulations
of the Code relating to a REIT, and will not take any action or fail to take any
action which would reasonably be expected to, alone or in conjunction with any
other factors, result in the loss of its status as a REIT for federal income tax
purposes. For purposes of determining whether a dividend, other than a Permitted
Dividend, is required to be paid in order to comply with this covenant, the
parties agree that both the distribution of the Share Consideration in the
Merger and the Buyer Amount paid to the Buyer in redemption of its Company
Common Stock, to the extent that such transactions are scheduled to occur during
the applicable tax year, shall be treated as a distribution qualifying for a
dividends paid deduction under Sections 561 and 562 of the Code to the extent
provided therein.
Section 5.12 SHAREHOLDER LITIGATION. Until the earlier of the
termination of this Agreement in accordance with its terms or the Closing Date,
the Company shall afford the Buyer the opportunity to participate, at the
Buyer's expense and with separate counsel, in the defense or settlement of any
shareholder litigation against the Company or the Company Board relating to this
Agreement or any of the transactions contemplated hereby, it being understood
that the Company shall be entitled to settle any such litigation, but only with
the Buyer's prior written consent, which will not be unreasonably withheld or
delayed.
Section 5.13 PURCHASE PRICE ALLOCATION. The Purchase Price, the
Transferred Liabilities and any other capitalized item (including SUSA
liabilities treated as additional purchase price under Section 752) shall be
allocated among the SUSA Interest and the Other Assets in a manner consistent
with a schedule to be provided by the Buyer to the Company at or prior to the
Closing (the "PURCHASE PRICE ALLOCATION"). The Buyer and the Company shall each
file Form 8594 (Asset Acquisition Statement Under Section 1060) on a timely
basis reporting the allocation of the Purchase Price consistent with such
Purchase Price Allocation. Except as may be required by law, the Buyer and the
Company will (i) file, or cause to be filed, all Tax Returns in a manner
consistent with the Purchase Price Allocation, as adjusted as a result of a
substantial increase or decrease in the Purchase Price, if any, and (ii) may not
take any action inconsistent therewith.
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Section 5.14 SALE OF SHARES BY THE BUYER. The Buyer agrees that, until
the later of (i) termination hereof or (ii) the expiration of the Take-Along
Period, it shall not sell, transfer, pledge or otherwise dispose of any shares
of Company Common Stock (and it shall cause its Affiliates not to take any of
the foregoing actions) other than to its (or their) Affiliates or in accordance
with Section 5.2 of this Agreement. Each Affiliate of the Buyer that owns shares
of Company Common Stock shall, and the Buyer shall cause any such Affiliate to,
agree to be bound by the provisions of this Section 5.14.
ARTICLE 6
CONDITIONS TO CLOSINGS
Section 6.1 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of
the Buyer to effect the transactions contemplated by this Agreement are subject
to satisfaction on or prior to the Closing Date of each of the following
conditions precedent, any of which may be waived in writing exclusively by the
Buyer:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Sellers contained herein shall have been true and correct in all respects
on and as of the date hereof, and shall be true and correct in all respects on
and as of the Closing Date, with the same effect as though such representations
and warranties had been made on and as of the Closing Date (except, in any such
case, for representations and warranties that speak as of a specific date or
time, which need only be true and correct in all respects as of such date or
time), other than, in all such cases, for such failures to be true and/or
correct as would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect (without regard, for purposes of this
Section 6.1(a), to any materiality or Material Adverse Effect qualifications
contained in such representations and warranties). The Sellers shall have
delivered to the Buyer at the Closing certificates of appropriate officers dated
the Closing Date to such effect.
(b) COVENANTS. The covenants and agreements of the Sellers to be
performed on or before the Closing Date in accordance with this Agreement (other
than Section 5.8) shall have been duly performed in all material respects
(without regard, for purposes of this Section 6.1(b), to any materiality
qualifications contained in such covenants or agreements). The Sellers shall
have delivered to the Buyer at the Closing certificates of appropriate officers
dated the Closing Date to such effect.
(c) NO MATERIAL ADVERSE CHANGE. No condition to lending or funding,
under or in connection with the Buyer Financing, based upon or related to a
material disruption of, or material adverse change in, financial, banking or
capital market conditions shall have been invoked and be continuing after any
applicable cooling off or similar period, in each case, with the effect that all
or part of the Buyer Financing shall not be available to the Buyer.
(d) HSR ACT. Any waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action shall not have been withdrawn or terminated.
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(e) GOVERNMENTAL APPROVALS. Other than the filing of the Merger
Certificate, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Authority (other than under the HSR Act) in connection with the
Purchase, the Redemption, the Merger or the consummation of the other
transactions contemplated by this Agreement, the failure of which to file,
obtain or occur would, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect, shall have been filed, been obtained or
occurred.
(f) SHAREHOLDER APPROVAL. The Purchase, the Merger and the other
transactions contemplated hereby shall have been approved by the requisite vote
of the Company's shareholders under applicable law, the Company Charter and the
Company Bylaws at a duly called meeting of such shareholders at which a quorum
was present.
(g) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of any Government Authority of competent jurisdiction which enjoins
or prohibits consummation of any of the transactions contemplated hereby, and
there shall be no pending Actions brought by any Government Authority (including
a stop order or similar SEC proceeding with respect to the Proxy Statement)
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(h) TAX MATTERS. The Company shall not have terminated its election to
be taxed as a REIT, and shall be in compliance with all applicable laws, rules
and regulations, including the Code, necessary to permit it to be taxed as a
REIT. The Company shall not have taken any action or have failed to take any
action which would reasonably be expected to, alone or in conjunction with any
other factors, result in the loss of its status as a REIT for federal income tax
purposes.
(i) PARTNERSHIP MATTERS. All action necessary or appropriate to issue
the Additional Buyer Units and to admit the Buyer as the general partner and a
limited partner, as applicable, of SUSA and Holdings, as set forth on Schedule
3.22(a), in each case, effective as of the Closing, shall have been duly taken,
and the Company (including in its capacity as the sole general partner of SUSA
and Holdings) shall have taken (and caused its Subsidiaries to take) all action
necessary or appropriate to authorize the Purchase, the Redemption, the Merger,
the issuance of the Additional Buyer Units and the other transactions
contemplated hereby.
(j) SUSA MANAGEMENT PURCHASE AGREEMENT. The transactions contemplated
by the agreement (the "SUSA MANAGEMENT PURCHASE AGREEMENT"), between ▇▇▇▇
▇▇▇▇▇▇▇▇ and the Buyer, dated as of the date hereof, pursuant to which ▇▇▇▇
▇▇▇▇▇▇▇▇ will sell to the Buyer (or one or more of its Subsidiaries) and the
Buyer (or such Subsidiaries) will purchase from ▇▇▇▇ ▇▇▇▇▇▇▇▇, effective
immediately prior to the Purchase, all of the shares of capital stock of SUSA
Management, Inc. owned by ▇▇▇▇ ▇▇▇▇▇▇▇▇; shall have been consummated in
accordance with their terms.
(k) OTHER DELIVERIES. The Sellers shall have made the deliveries to be
made by the Sellers pursuant to Section 2.5(b)(ii) and (iii).
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Section 6.2 CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligation
of the Sellers to effect the transactions contemplated by this Agreement is
subject to satisfaction on or prior to the Closing Date of each of the following
conditions precedent, any of which may be waived in writing exclusively by the
Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Buyer contained herein shall have been true and correct in all respects
on and as of the date hereof, and shall be true and correct in all respects on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date (except, in any such
case, for representations and warranties that speak as of a specific date or
time, which need only be true and correct in all respects as of such date or
time), other than, in all such cases, for such failures to be true and/or
correct as would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the Buyer's ability to consummate the
transactions contemplated hereby (without regard, for purposes of this Section
6.2(a), to any materiality or material adverse effect qualifications contained
in such representations and warranties). The Buyer shall have delivered to the
Sellers at the Closing a certificate of appropriate officers dated the Closing
Date to such effect.
(b) COVENANTS. The covenants and agreements of the Buyer to be
performed on or before the Closing Date in accordance with this Agreement (other
than Section 5.8) shall have been duly performed in all material respects
(without regard, for purposes of this Section 6.2(b), to any materiality
qualifications contained in such covenants or agreements). The Buyer shall have
delivered to the Sellers at the Closing a certificate of appropriate officers
dated the Closing Date to such effect.
(c) HSR ACT. Any waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action shall not have been withdrawn or terminated.
(d) GOVERNMENTAL APPROVALS. Other than the filing of the Merger
Certificate, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Authority (other than under the HSR Act) in connection with the
Purchase, the Redemption, the Merger or the consummation of the other
transactions contemplated by this Agreement, the failure of which to file,
obtain or occur would, individually or in the aggregate, reasonably be expected
to result in a material adverse effect on the ability of the Buyer to consummate
the transactions contemplated hereby, shall have been filed, been obtained or
occurred.
(e) SHAREHOLDER APPROVAL. The Purchase, the Merger and the other
transactions contemplated hereby shall have been approved by the requisite vote
of the Company's shareholders under applicable law, the Company Charter and the
Company Bylaws at a duly called meeting of such shareholders at which a quorum
was present.
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(f) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of any Government Authority of competent jurisdiction which enjoins
or prohibits consummation of the transactions contemplated hereby.
(g) OTHER DELIVERIES. The Buyer shall have made the deliveries to be
made by the Buyer pursuant to Section 2.5(b)(ii).
ARTICLE 7
TERMINATION
Section 7.1 TERMINATION. This Agreement may be terminated at any time
(with respect to Sections 7.1(b) through 7.1(h), by written notice by the
terminating party to the other party) as follows:
(a) by mutual written consent of the Buyer and the Company; or
(b) by either the Buyer or the Company, if the Purchase, the
Redemption and the Merger shall not have been consummated by June 5, 2002 (the
"OUTSIDE DATE"); or
(c) by either the Buyer or the Company, if a Governmental Authority of
competent jurisdiction shall have issued a nonappealable final order, decree or
ruling or taken any other nonappealable final action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Purchase, the Redemption or the Merger (provided that the right to terminate
this Agreement under this Section 7.1(c) shall not be available to any party
whose material failure to fulfill any obligation under this Agreement, including
Section 5.1, has been the principal cause of or resulted in such order, decree
ruling or action); or
(d) by either the Buyer or the Company, if, at the meeting of Company
shareholders (including any adjournment or postponement thereof permitted by
this Agreement) at which a vote on the Purchase, the Merger and the other
transactions contemplated hereby is taken, the requisite vote of such
shareholders in favor of such transactions shall not have been obtained; or
(e) by the Buyer, if, after the Permitted Period (i) the Company Board
and the Special Committee shall have publicly withdrawn or modified in a manner
adverse to the Buyer their recommendation of the Purchase or the Merger or (ii)
the Company Board and the Special Committee fail to reconfirm their
recommendation of the Purchase or the Merger within five Business Days after the
Buyer so requests in writing (which five Business Day period will be extended
for an additional five Business Days if the Company certifies to the Buyer prior
to the expiration of the initial five Business Day period that the Company Board
and the Special Committee are in good faith seeking to obtain additional
information regarding their decision to reconfirm their recommendation of the
Purchase or the Merger, as applicable); or
(f) by the Company, if, prior to the meeting of the Company
shareholders at which a vote on the Purchase, the Merger and the other
transactions contemplated hereby is to be taken, the Company Board and the
Special Committee have entered into a Superior Transaction; PROVIDED that:
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(i) the Company shall have complied with Section 5.6 in all
material respects; and
(ii) the Company shall, concurrently with such termination, pay
the Buyer the termination fee required by Section 7.3(b); or
(g) by the Buyer, if there has been a breach of or failure to perform
any representation, warranty, covenant or agreement on the part of the Sellers
set forth in this Agreement, which breach or failure to perform (i) would cause
the conditions set forth in Section 6.1 not to be satisfied, and (ii) shall not
have been cured within 30 days following receipt by the Company of written
notice of such breach from the Buyer; or
(h) by the Company, if there has been a breach of or failure to
perform any representation, warranty, covenant or agreement on the part of the
Buyer set forth in this Agreement, which breach or failure to perform (i) would
cause the conditions set forth in Section 6.2 not to be satisfied, and (ii)
shall not have been cured within 30 days following receipt by the Buyer of
written notice of such breach from the Company.
Section 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and have no effect, all rights and obligations of any party hereto shall
cease and there shall be no liability or obligation on the part of the Buyer,
the Sellers or their respective officers, directors, shareholders or Affiliates;
PROVIDED that (i) any such termination shall not relieve any party hereto from
liability for any willful breach of this Agreement and (ii) the provisions of
Sections 5.2 and 5.4, this Section 7.2, Section 7.3 and Article 8 of this
Agreement shall remain in full force and effect and survive any termination of
this Agreement.
Section 7.3 FEES AND EXPENSES. (a) Except as set forth in this Section
7.3, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees
and expenses, whether or not the Purchase, the Redemption, the Merger and the
other transactions contemplated hereby are consummated; PROVIDED, HOWEVER, that
the Company and the Buyer shall share equally (i) the filing fee of the Buyer's
pre-merger notification report under the HSR Act and (ii) all fees and expenses,
other than accountants' and attorneys' fees, incurred with respect to the
printing, filing and mailing (as applicable) of the Proxy Statement, the
Information Statement and the Schedule 13E-3, including any related preliminary
materials and any amendments or supplements thereto. All fees and expenses
payable pursuant to this Section 7.3 shall be paid by wire transfer of same-day
funds.
(b) The Company shall pay the Buyer (in full satisfaction of the
Company's obligations hereunder) a termination fee of $22.5 million if this
Agreement is terminated pursuant to Section 7.1(e) or 7.1(f).
(c) Any fee due under Section 7.3(b) shall be paid by the Company, (i)
in the event of a termination pursuant to Section 7.1(e), within one Business
Day after the date of such termination, and (ii) in the event of a termination
pursuant to Section 7.1(f), concurrently with (x) such termination, and (y) if
requested in accordance with Section 5.2 prior to such termination, the
execution of the Support Agreement in accordance with such Section 5.2.
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(d) The Sellers acknowledge that the agreements contained in this
Section 7.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Buyer would not enter into
this Agreement. If the Company fails to promptly pay to the Buyer any fee due
under this Section 7.3, the Company shall pay the costs and expenses (including
reasonable legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee at the publicly announced prime
rate of The Chase Manhattan Bank, N.A. plus four percent per annum, compounded
quarterly, from the date such fee was required to be paid.
ARTICLE 8
MISCELLANEOUS
Section 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
respective representations and warranties of the Sellers and the Buyer contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall expire with, and be terminated and extinguished upon, the Closing Date.
This Section shall have no effect upon any other obligations of the parties
hereto, whether to be performed before or after consummation of the transactions
contemplated hereby.
Section 8.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 8.3 ENTIRE AGREEMENT. This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. Except as set
forth in Section 5.10(e), this Agreement is not intended to confer upon any
person not a party hereto (and their successors and assigns) any rights or
remedies hereunder.
Section 8.4 NOTICES. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by registered or certified mail, overnight delivery
service or, to the extent receipt is confirmed, via facsimile, telecopy or
telefax, to the appropriate address or number as set forth below.
Notices to the Company or the Trust shall be addressed to:
Storage USA, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Attention: General Counsel
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇ Procter LLP
Exchange Place
Boston, Massachusetts 02109-2881
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
Hunton & ▇▇▇▇▇▇▇▇
Riverfront Plaza, East Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to the Buyer shall be addressed to:
Security Capital Group Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Notices and other communications hereunder shall be deemed duly delivered (i)
four Business Days after being sent by registered or certified mail (return
receipt requested, postage prepaid), (ii) one Business Day after being sent for
next Business Day delivery, fees prepaid, via a reputable nationwide overnight
courier service or (iii) when actually received by the party for whom it is
intended in all other cases. Any party to this Agreement may change the address
to which notices and other communications hereunder are to be delivered by
giving the other parties hereto notice in the manner herein set forth.
Section 8.5 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement may be assigned or
delegated, in whole or in part, by operation of law or otherwise by any of the
parties hereto without the prior written consent of the other parties, and any
such assignment without such prior written consent shall be null and void,
except that the Buyer may substitute one or more of its wholly owned
Subsidiaries for itself without consent of the other parties hereto, provided
that the Buyer shall remain jointly and severally liable for all of its
obligations under this Agreement. Subject to the preceding sen-
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tence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns.
Section 8.6 AMENDMENTS AND WAIVERS. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought;
PROVIDED that, after approval of the shareholders of the Company has been
obtained as contemplated hereby, no amendment hereto shall be made which by law
requires further approval by such shareholders without such further approval.
Any party hereto may, only by an instrument in writing, waive compliance by any
other party with any term or provision hereof on the part of such other party
hereto to be performed or complied with. The failure of any party hereto to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights, and any waiver pursuant to this Section 8.6 by any
party hereto of a breach of any term or provision hereof shall not be construed
as a waiver of any subsequent breach.
Section 8.7 INTERPRETATION; ABSENCE OF PRESUMPTION. (a) For the
purposes hereof, (i) words in the singular shall be held to include the plural
and VICE VERSA and words of one gender shall be held to include the other gender
as the context requires, (ii) the terms "hereof," "herein," and "herewith" and
words of similar import shall, unless the context otherwise requires, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references shall be deemed to
the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement
unless otherwise specified, (iii) the word "including" and words of similar
import when used in this Agreement shall mean "including, without limitation,"
unless otherwise specified, (iv) Section, Article and other headings contained
in this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement, and (v) provisions shall
apply, when appropriate, to successive events and transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 8.8 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties hereto agree that the court making such
determination shall have the power to limit the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified. In the event
such court does not exercise the power granted to it in the prior sentence, the
parties hereto agree to replace such invalid or unenforceable term or provision
with a valid and enforceable term or provision that shall achieve, to the extent
possible, the economic, business and other purposes of such invalid or
unenforceable term.
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Section 8.9 FURTHER ASSURANCES. The parties hereto agree that, from
time to time, whether before, at or after the Closing Date, each of them will
execute and deliver such further instruments of conveyance and transfer and take
such other action as may be necessary to carry out the purposes and intents of
this Agreement.
Section 8.10 REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy shall not
preclude the exercise of any other remedy. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
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 of this Agreement, this being in
addition to any other remedy to which the parties are entitled at law or in
equity.
Section 8.11 SUBMISSION TO JURISDICTION. Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought exclusively in any federal or state court located in the
State of Maryland, and each of the parties hereby consents to the jurisdiction
of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient form. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 8.4 as to
giving notice hereunder shall be deemed effective service of process on such
party.
Section 8.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT.
Section 8.13 COUNTERPARTS AND SIGNATURE. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
hereto and delivered to the other parties, it being understood that all parties
need not sign the same counterpart. This Agreement may be executed and delivered
by facsimile transmission.
Section 8.14 POST-CLOSING TAX MATTERS. The Buyer shall use its
commercially reasonable best efforts to cause any dividends paid by the Company
during the Company's tax-
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able year ending with the Effective Time to be designated as "capital gain
dividends" within the meaning of Section 857(b)(3) of the Code to the extent
permitted under applicable law. The Buyer and SUSA will not take any action
following the Closing that is inconsistent with the Company's status as a REIT
for any period prior to the Closing.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties hereto as of the day first above written.
STORAGE USA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman, Chief Executive
Officer and President
STORAGE USA TRUST
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman, Chief Executive
Officer and President
SUSA PARTNERSHIP, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman, Chief Executive
Officer and President
SECURITY CAPITAL GROUP INCORPORATED
By: /s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice Chairman and
Chief Operating Officer
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