AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
▇▇▇▇▇▇ ACQUISITION, INC.
AND
▇▇▇▇▇▇▇▇ CORPORATION
OCTOBER 16, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I
THE OFFER............................................................1
Section 1.01. The Offer.............................................1
Section 1.02. Company Actions.......................................3
ARTICLE II
THE MERGER...........................................................5
Section 2.01. The Merger Closing....................................5
Section 2.02. The Merger............................................5
Section 2.03. Certain Effects of the Merger.........................5
Section 2.04. Corporate Organization................................5
Section 2.05. Conversion of Shares..................................6
Section 2.06. Dissenting Shares.....................................6
Section 2.07. Surrender and Payment.................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇...........................7
Section 3.01. Organization and Good Standing........................7
Section 3.02. Foreign Qualification.................................7
Section 3.03. Capitalization........................................8
Section 3.04. Authority of ▇▇▇▇▇▇▇▇.................................9
Section 3.05. No Conflict; Required Filings and Consents............9
Section 3.06. SEC Reports..........................................10
Section 3.07. Title to Property....................................10
Section 3.08. Compliance with Law..................................12
Section 3.09. Litigation...........................................12
Section 3.10. Taxes................................................13
Section 3.11. Insurance............................................14
Section 3.12. Contracts............................................14
Section 3.13. Employment Agreements................................16
Section 3.14. Intellectual Property................................16
Section 3.15. Employees and Related Agreements: ERISA..............16
Section 3.17. Finder's Fee.........................................22
Section 3.18. Section 912..........................................22
Section 3.19. Environmental Matters................................22
Section 3.20. Opinion of Financial Advisor.........................25
Section 3.21. Vote Required........................................25
Section 3.22. Employment Relations; Compliance.....................25
Section 3.23. Indemnification of Employees, Etc....................26
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Section 3.24. Labor Relations......................................26
Section 3.25. Tangible Property....................................26
Section 3.26. Board Recommendation.................................26
Section 3.27. Related Party Transactions...........................26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUISITION.......................27
Section 4.01. Organization and Good Standing.......................27
Section 4.02. Authority of Acquisition.............................27
Section 4.03. No Conflict; Required Filings and Consents...........28
Section 4.04. Finder's Fees........................................28
Section 4.05. Litigation...........................................28
Section 4.06. HUD..................................................28
Section 4.07. Financing............................................29
ARTICLE V
COVENANTS...........................................................29
Section 5.01. Acquisition Transactions.............................29
Section 5.02. Interim Operations...................................30
Section 5.03. Shareholder Approval.................................32
Section 5.04. Access by Acquisition................................34
Section 5.05. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Filing.............................35
Section 5.06. No Breach of Representations and Warranties..........35
Section 5.07. Consents; Notices....................................35
Section 5.08. Reasonable Efforts...................................36
Section 5.09. Indemnification; Officers' and Directors' Insurance..36
Section 5.10. Government Agency Cooperation........................37
Section 5.11. Directors............................................37
Section 5.12. Certain Agreements of Acquisition....................38
ARTICLE VI
CONDITIONS TO ACQUISITION'S OBLIGATIONS.............................39
Section 6.01. Injunctions..........................................39
Section 6.02. Shareholder Approval.................................39
ARTICLE VII
CONDITIONS TO ▇▇▇▇▇▇▇▇'▇ OBLIGATIONS................................39
Section 7.01. Injunctions..........................................39
Section 7.02. Shareholder Approval.................................40
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ARTICLE VIII
ESCROW DEPOSITS; TERMINATION.................................................40
Section 8.01. Escrow Deposits......................................40
Section 8.02. Termination..........................................40
Section 8.03. Effect of Termination................................41
ARTICLE IX
MISCELLANEOUS.......................................................43
Section 9.01. Amendment............................................43
Section 9.02. Extension: Waiver....................................43
Section 9.03. Non-Survival.........................................43
Section 9.04. Further Assurances...................................43
Section 9.05. Entire Agreement.....................................43
Section 9.06. Notices..............................................44
Section 9.07. Successors and Assigns...............................44
Section 9.08. Governing Law........................................45
Section 9.09. Gender and Person....................................45
Section 9.10. Captions.............................................45
Section 9.11. Confidentiality of Disclosures.......................45
Section 9.12. Publicity............................................45
Section 9.13. Fees and Expenses....................................45
Section 9.14. Third Parties........................................46
Section 9.15. Counterparts.........................................46
EXHIBIT A
Conditions of the Offer.............................................47
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AGREEMENT AND PLAN OF MERGER, dated October 16, 1997, between ▇▇▇▇▇▇
ACQUISITION, INC. ("Acquisition"), a New York corporation, and ▇▇▇▇▇▇▇▇
CORPORATION ("▇▇▇▇▇▇▇▇"), a New York corporation.
WHEREAS, the respective Boards of Directors of Acquisition and
▇▇▇▇▇▇▇▇ deem it to be desirable and in the best interests of their respective
companies and shareholders to consummate the business transaction provided for
herein;
WHEREAS, in the furtherance of such transaction, Acquisition shall
make a tender offer (as it may be amended from time to time only as permitted
hereunder, the "Offer") to purchase all the issued and outstanding shares of
Common Stock of ▇▇▇▇▇▇▇▇, at a price per share of $12.25, upon the terms and
subject to the conditions of this Agreement; and the Board of Directors of
▇▇▇▇▇▇▇▇ has adopted resolutions approving the Offer and Merger (as
hereinafter defined) and recommending that the Company's shareholders accept
the Offer; and
WHEREAS, the respective Boards of Directors of Acquisition and
▇▇▇▇▇▇▇▇ have approved the merger of Acquisition with and into ▇▇▇▇▇▇▇▇,
following consummation of the Offer as set forth below (the "Merger"), upon
the terms and subject to the conditions of this Agreement, whereby each issued
and outstanding share of Common Stock of ▇▇▇▇▇▇▇▇ not owned directly or
indirectly by Acquisition, except shares of Common Stock held by persons who
object to the Merger and comply with all the provisions of New York law
concerning the right of holders of Common Stock to dissent from the Merger and
require appraisal of their shares of Common Stock, will be converted into the
right to receive the per share consideration paid pursuant to the Offer;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the public announcement of the execution of this Agreement,
Acquisition shall commence the Offer. The obligation of Acquisition to
consummate the Offer and accept for payment, and pay for, any shares of Common
Stock of ▇▇▇▇▇▇▇▇, par value $1.00 per share (the "▇▇▇▇▇▇▇▇ Shares" and each
holder thereof, a "▇▇▇▇▇▇▇▇ Shareholder") tendered pursuant to the Offer shall
be subject solely to the conditions set forth in EXHIBIT A (any of which may
be waived by Acquisition in its sole discretion). Acquisition reserves the
right to modify the terms of the Offer, except that, without the consent of
▇▇▇▇▇▇▇▇, Acquisition shall not (i) reduce the number of ▇▇▇▇▇▇▇▇ Shares
subject to the Offer, (ii) reduce the price per ▇▇▇▇▇▇▇▇ Share to be paid
pursuant to the Offer, (iii) modify or add to the conditions set forth in
EXHIBIT A, (iv) except as provided in this Section 1.01(a) below, extend the
Offer, (v) change the form of consideration payable in the Offer, or (vi) make
any other change in the terms of the Offer adverse to the ▇▇▇▇▇▇▇▇
Shareholders. The initial
expiration date of the Offer shall be November 20, 1997. Acquisition may
extend the Offer in accordance with applicable law, but if the conditions set
forth in EXHIBIT A are satisfied as of the then scheduled expiration date of
the Offer, the Offer may be extended only with the prior written consent of
▇▇▇▇▇▇▇▇ or as required by law. If the conditions set forth in EXHIBIT A are
not satisfied or waived by Acquisition as of the scheduled expiration date,
Acquisition shall extend the Offer from time to time until the earlier of the
consummation of the Offer or December 31, 1997 (provided that Acquisition
shall not be obligated to make any such extension, if a reasonable,
well-informed person would conclude that any such condition is incapable of
being satisfied by December 31, 1997). Any individual extension of the Offer
shall be for a period of no more than 10 business days. Subject to the
conditions set forth in this Agreement, Acquisition shall pay for all ▇▇▇▇▇▇▇▇
Shares validly tendered and not withdrawn pursuant to the Offer immediately
after the expiration of the Offer.
(b) ▇▇▇▇▇▇▇▇ will not, nor will it permit any of its
Subsidiaries (as defined below) to, tender into the Offer any Shares
beneficially owned by it. For purposes of this Section 1.01 only,
"Subsidiaries" means, as to any Person (as defined below): (i) any corporation
of which at least a majority of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect a majority of the board of
directors of such corporation (other than stock having such voting power
solely by reason of the happening of any contingency) is at the time directly
or indirectly owned or controlled by such Person and/or one or more of its
Subsidiaries; (ii) any limited liability company, partnership or joint venture
in which such Person or Subsidiary of such Person is a managing member,
general partner or joint venturer or of which a majority of the partnership or
other ownership interests are at the time owned by such Person and/or one or
more of its Subsidiaries; or (iii) any entity which is controlled (as defined
below) by such Person or any of its Subsidiaries. For all other purposes of
this Agreement, "Subsidiaries" shall have the meaning therefor set forth in
Article III hereof. For purposes of this Agreement, (A) "Person" means any
individual, corporation, company, voluntary association, limited liability
company, partnership, joint venture, trust, unincorporated organization or
other entity and (B) "control" (including, with correlative meanings,
"controlled by" and "under common control with") means possession, directly or
indirectly, of power to direct or cause the direction of the management or
policies of a Person (whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise).
(c) On the date of commencement of the Offer, Acquisition
shall file with the Securities and Exchange Commission (the "SEC" or the
"Commission") a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
therein pursuant to which the Offer will be made, together with any
supplements or amendments thereof, the "Offer Documents"). The Offer Documents
shall be consistent with this Agreement, shall add no conditions to the
consummation of the Offer not set forth in EXHIBIT A and shall add no
provisions to the Offer adverse to the ▇▇▇▇▇▇▇▇ Shareholders. The Offer
Documents shall comply as to form in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act"), and on the date
filed with the Commission and on the date first
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published, sent or given to the ▇▇▇▇▇▇▇▇ Shareholders, shall not 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 were made, not
misleading, except that no representation is made by Acquisition with respect
to information supplied by ▇▇▇▇▇▇▇▇ for inclusion in the Offer Documents. Each
of Acquisition and ▇▇▇▇▇▇▇▇ agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
Acquisition further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the Commission and to be
disseminated to the ▇▇▇▇▇▇▇▇ Shareholders, in each case as and to the extent
required by applicable Federal securities laws. Acquisition shall afford
▇▇▇▇▇▇▇▇ and its counsel a reasonable opportunity to review and comment on the
Offer Documents prior to the filing of the respective Offer Documents with the
Commission. Acquisition agrees to provide ▇▇▇▇▇▇▇▇ and its counsel in writing
with any comments Acquisition or its counsel may receive from the Commission
or its staff with respect to the Offer Documents promptly after the receipt of
such comments.
(d) All amounts payable pursuant to the Offer and the Merger
may be paid net of amounts required to be deducted and withheld with respect
to the making of such payment under the Internal Revenue Code of 1986, as
amended (the "Code") or under any provision of state, local or foreign tax
law. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the
▇▇▇▇▇▇▇▇ Shareholder in respect of which such deduction and withholding was
made.
Section 1.02. Company Actions. (a) ▇▇▇▇▇▇▇▇ consents to the Offer and
represents that (i) the Board of Directors of ▇▇▇▇▇▇▇▇ (the "Board" or "Board
of Directors"), at a meeting duly called and held, has duly adopted
resolutions approving the execution, delivery and performance of this
Agreement, the Offer and the Merger, determining that the price and terms of
the Offer and Merger are fair to, adequate and in the best interests of,
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇'▇ shareholders and recommending that ▇▇▇▇▇▇▇▇'▇
shareholders accept the Offer and that ▇▇▇▇▇▇▇▇'▇ shareholders approve and
adopt this Agreement; and (ii) ▇▇▇▇▇▇▇ Sachs & Co. (the "Financial Advisor")
has delivered to the Board its opinion (the "Fairness Opinion") to the effect
that, as of the date of this Agreement and based upon and subject to the
matters set forth therein, the cash consideration to be received by the
▇▇▇▇▇▇▇▇ Shareholders in the Offer and the Merger is fair to such ▇▇▇▇▇▇▇▇
Shareholders from a financial point of view.
(b) As promptly as practicable after the commencement of the
Offer, ▇▇▇▇▇▇▇▇ shall file with the Commission a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
amended from time to time, the "Schedule 14D-9") containing the
recommendations described in paragraph (a) and shall mail the Schedule 14D-9
to the ▇▇▇▇▇▇▇▇ Shareholders. ▇▇▇▇▇▇▇▇ will use its reasonable efforts to
cause the Schedule 14D-9 to be filed on the same date as Acquisition's Tender
Offer Statement on Schedule 14D-1 is filed and mailed together with the Offer
Documents; provided that in any event the Schedule 14D-9 shall be filed and
mailed no later than 10 business days following the commencement of the Offer.
The Schedule 14D-9 shall comply as to form in all material
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respects with the requirements of the Exchange Act and, on the date filed with
the Commission and on the date first published, sent or given to the ▇▇▇▇▇▇▇▇
Shareholders, shall not 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 were made, not misleading, except that no representation is made by
▇▇▇▇▇▇▇▇ with respect to information supplied by Acquisition for inclusion in
the Schedule 14D-9. Each of ▇▇▇▇▇▇▇▇ and Acquisition agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading in any
material respect, and ▇▇▇▇▇▇▇▇ further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the Commission and
disseminated to the ▇▇▇▇▇▇▇▇ Shareholders, in each case as and to the extent
required by applicable Federal securities laws. ▇▇▇▇▇▇▇▇ shall afford
Acquisition and its counsel a reasonable opportunity to review and comment on
the Schedule 14D-9 prior to its filing with the SEC. ▇▇▇▇▇▇▇▇ agrees to
provide Acquisition and its counsel in writing with any comments ▇▇▇▇▇▇▇▇ or
its counsel may receive from the Commission or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments. Notwithstanding
anything to the contrary in this Agreement, the recommendations referred to in
this Section 1.02 and the Schedule 14D-9 may be withdrawn, modified or amended
if the Board of Directors of ▇▇▇▇▇▇▇▇ determines that it is required to do so
in the exercise of its fiduciary duties and other legal obligations after
consultation with outside counsel. If requested by Acquisition, the Schedule
14D-9 shall also incorporate the information required to be filed pursuant to
Rule 14F-1 under the Exchange Act, with respect to the designation of the
directors referred to in Section 5.11 hereof.
Section 1.03. Shareholder Lists. In connection with the Offer, at the
request of Acquisition, from time to time after the date hereof, ▇▇▇▇▇▇▇▇ will
promptly as practicable furnish Acquisition with mailing labels, security
position listings and any available listing or computer file maintained for or
by ▇▇▇▇▇▇▇▇ containing the names and addresses of the record holders of the
▇▇▇▇▇▇▇▇ Shares as of a recent date and shall furnish Acquisition with such
additional information reasonably available to ▇▇▇▇▇▇▇▇ and assistance as
Acquisition or its agents may reasonably request in communicating the Offer to
the record and beneficial holders of ▇▇▇▇▇▇▇▇ Shares. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to
consummate the Merger, Acquisition and its affiliates and associates shall
hold in confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will deliver to ▇▇▇▇▇▇▇▇
all copies of such information in their possession.
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ARTICLE II
THE MERGER
Section 2.01. The Merger Closing. Upon the terms and subject to the
conditions of this Agreement, the closing (the "Closing") of the Merger shall
take place at 10:00 A.M., on the third business day after the fulfillment of
the conditions specified in Sections 6.02 and 7.02 hereof, at the offices of
Squadron, Ellenoff, Plesent & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or at such other time, date and place as may be agreed upon in
writing by Acquisition and ▇▇▇▇▇▇▇▇. (Hereinafter, the date on which the
Closing shall take place is referred to as the "Closing Date" and the time on
the Closing Date when the Closing shall take place is referred to as the
"Closing Time".) ▇▇▇▇▇▇▇▇ and Acquisition shall use their respective best
efforts to cause the Merger to be consummated at the earliest practicable time
after consummation of the Offer.
Section 2.02. The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the Business Corporation
Law of the State of New York (the "BCL"), at the Effective Time, Acquisition
shall be merged with and into ▇▇▇▇▇▇▇▇ (the "Merger"). ▇▇▇▇▇▇▇▇ shall continue
its existence as the surviving corporation (the "Surviving Corporation") in
the Merger and the separate corporate existence of Acquisition shall terminate
at the Effective Time. The Merger shall become effective at such time as a
duly prepared and executed certificate of merger (the "Certificate of
Merger"), in form and substance reasonably satisfactory to Acquisition and
▇▇▇▇▇▇▇▇, providing for the merger of Acquisition with and into ▇▇▇▇▇▇▇▇, is
filed by the Secretary of State of the State of New York in accordance with
the relevant provisions of the BCL (the "Effective Time"). The Certificate of
Merger shall be filed as soon as practicable after the Closing Time.
Section 2.03. Certain Effects of the Merger. At the Effective Time,
the Surviving Corporation shall thereafter, consistently with its certificate
of incorporation as altered by the Merger, possess all the rights, privileges,
immunities, powers and purposes, and assume and be liable for all the
liabilities, obligations and penalties, of each of Acquisition and ▇▇▇▇▇▇▇▇
(sometimes hereinafter referred to as the "Constituent Corporations"); and all
property, real and personal, causes of action and every other asset of each of
the Constituent Corporations shall vest in the Surviving Corporation without
further act or deed. The directors and officers of Acquisition immediately
prior to the Effective Time shall, from and after the Effective Time, be the
initial directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-laws.
Section 2.04. Corporate Organization. The Certificate of
Incorporation and By-laws of ▇▇▇▇▇▇▇▇ at the Effective Time shall be the
Certificate of Incorporation and By-laws, respectively, of the Surviving
Corporation after the Effective Time; provided that such Certificate of
Incorporation and By-laws may be amended, subject to Section 5.09, in such
manner as Acquisition may, in its sole discretion, determine.
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Section 2.05. Conversion of Shares. (a) At the Effective Time, each
issued and outstanding share of Common Stock, par value $1.00 per share, of
▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇ Shares," and each holder thereof, a "▇▇▇▇▇▇▇▇
Shareholder"), immediately prior to the Effective Time (other than the
Dissenting Shares) shall, by reason of the Merger and without any action by
the holders thereof, be converted into the right to receive $12.25 per share
in cash (the "Merger Consideration"), without interest. Each ▇▇▇▇▇▇▇▇ Share
which is held in the treasury of ▇▇▇▇▇▇▇▇ immediately prior to the Effective
Time shall, by virtue of the Merger, cease to be outstanding and shall be
canceled and retired without payment of any consideration therefor. At the
Effective Time, the stock transfer books of ▇▇▇▇▇▇▇▇ shall be closed, and no
transfer of ▇▇▇▇▇▇▇▇ Shares shall thereafter be made. All such ▇▇▇▇▇▇▇▇
Shares, when converted as provided herein, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing such ▇▇▇▇▇▇▇▇ Shares shall thereafter
represent only the right to receive the Merger Consideration.
(b) Each share of the capital stock of Acquisition issued
and outstanding immediately prior to the Effective Time shall be converted
into one fully paid and nonassessable share of common stock, par value $1.00
per share, of the Surviving Corporation.
Section 2.06. Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, any ▇▇▇▇▇▇▇▇ Shares which are outstanding immediately prior to the
Effective Time and which are held by ▇▇▇▇▇▇▇▇ Shareholders who shall not have
voted such Shares in favor of the Merger or consented thereto in writing and
who shall have filed with ▇▇▇▇▇▇▇▇ a written objection to the Merger and a
demand for appraisal of such Shares in accordance with the BCL ("Dissenting
Shares") shall not be converted into the right to receive, or be exchangeable
for, the Merger Consideration, but, instead, such ▇▇▇▇▇▇▇▇ Shareholders shall
be entitled only to such rights as are granted by Section 910 of the BCL with
respect to Dissenting Shares held by them in accordance with the provisions of
the BCL, except that all Dissenting Shares held by ▇▇▇▇▇▇▇▇ Shareholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such Dissenting Shares under the BCL shall
thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 2.07, of the certificate or certificates that formerly
evidenced such shares.
(b) ▇▇▇▇▇▇▇▇ shall give Acquisition (i) prompt notice of any
demands for appraisal received by ▇▇▇▇▇▇▇▇, withdrawals of such demands and
any other instruments served pursuant to the BCL and received by ▇▇▇▇▇▇▇▇ and
(ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the BCL. ▇▇▇▇▇▇▇▇ shall not, except with the
prior written consent of Acquisition, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
Section 2.07. Surrender and Payment. (a) At the Effective Time,
Acquisition shall deposit or cause to be deposited with a federally insured
bank with assets of not less than
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$1,000,000,000 selected by Acquisition and reasonably satisfactory to ▇▇▇▇▇▇▇▇
(the "Exchange Agent"), cash in the amount sufficient to pay the Merger
Consideration.
(b) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented ▇▇▇▇▇▇▇▇ Shares (the
"Certificates"), a letter of transmittal and instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
Within two business days after surrender of a Certificate to the Exchange
Agent, together with such letter of transmittal, duly executed, the Exchange
Agent shall, pursuant to irrevocable instructions, remit to the holder of such
Certificate in cash the Merger Consideration for each ▇▇▇▇▇▇▇▇ Share formerly
represented by such Certificate, and the Certificate so surrendered shall
forthwith be canceled. Until surrendered as contemplated by this Section
2.07(b), from and after the Effective Time each Certificate shall be deemed to
represent only the right to receive the Merger Consideration for each ▇▇▇▇▇▇▇▇
Share formerly represented by such Certificate, and shall not evidence any
interest in, or any right to exercise the rights of a shareholder of, the
Surviving Corporation. If a cash payment is to be made to a person other than
the one in whose name the Certificate surrendered in exchange therefor is
registered, it shall be a condition to such issuance or payment that such
Certificate be properly endorsed (or accompanied by an appropriate instrument
or transfer) and accompanied by evidence that any applicable stock transfer
taxes have been paid or provided for.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ represents and warrants to Acquisition that:
Section 3.01. Organization and Good Standing. With immaterial
exceptions, each of ▇▇▇▇▇▇▇▇ and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and each has the corporate power and authority
to own, lease and operate all of the properties and assets owned or leased by
it and to carry on its business as it is now being conducted. ▇▇▇▇▇▇▇▇ has
heretofore made available to Acquisition true and complete copies of its
Certificate of Incorporation and By-laws and the Certificate of Incorporation
and By-laws (or comparable charter or organization documents) of each of the
Subsidiaries, each as currently in effect.
Section 3.02. Foreign Qualification. Each of ▇▇▇▇▇▇▇▇ and its
Subsidiaries is duly licensed or qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to become so
qualified or to be in good standing would not individually or in the aggregate
have a ▇▇▇▇▇▇▇▇ Material Adverse Effect. As used herein, "▇▇▇▇▇▇▇▇ Material
Adverse Effect" means any event, occurrence or condition which has or would be
reasonably likely to (i) have a material adverse effect on the business,
properties, assets, liabilities, results of operations or financial condition
of ▇▇▇▇▇▇▇▇ and its Subsidiaries taken
7
as a whole or (ii) materially impair the ability of ▇▇▇▇▇▇▇▇ to perform its
obligations under this Agreement or consummate the transactions contemplated
herein.
Section 3.03. Capitalization. (a) ▇▇▇▇▇▇▇▇ is authorized to issue (i)
18,000,000 ▇▇▇▇▇▇▇▇ Shares, 6,260,960 of which are issued and outstanding as
of the date hereof and 305,442 of which have been previously issued and
reacquired by ▇▇▇▇▇▇▇▇ and are held as treasury shares and (ii) 1,000,000
Preferred Shares, none of which are issued or outstanding as of the date
hereof. There are no other series or classes of capital stock of ▇▇▇▇▇▇▇▇
authorized to be issued, and there are no other shares of outstanding capital
stock of ▇▇▇▇▇▇▇▇.
(b) There are no issued or outstanding bonds, debentures,
notes or other indebtedness of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries which has
the right to vote (or which is convertible into or exchangeable for other
securities having the right to vote) on any matters on which ▇▇▇▇▇▇▇▇
Shareholders may vote ("Voting Debt"). Except as set forth in SCHEDULE 3.03,
neither ▇▇▇▇▇▇▇▇ nor any Subsidiary is a party to any outstanding or
authorized subscriptions, warrants, options, contracts, rights (preemptive or
otherwise), calls, commitments or demands of any character relating to any
authorized and issued or unissued shares of capital stock of ▇▇▇▇▇▇▇▇ or any
of the Subsidiaries, including, without limitation, ▇▇▇▇▇▇▇▇ Shares, or
outstanding securities, obligations, rights, Voting Debt or other instruments
convertible into or exchangeable for such stock, or which obligate ▇▇▇▇▇▇▇▇ to
seek authorization to issue additional shares of any class of stock or Voting
Debt (collectively "Options"), nor will any be created by virtue of this
Agreement or the transactions hereby contemplated.
(c) All of the outstanding ▇▇▇▇▇▇▇▇ Shares have been duly
authorized and validly issued, are fully paid and nonassessable, and have been
listed for trading on The American Stock Exchange. None of the ▇▇▇▇▇▇▇▇ Shares
is subject to or has been issued in violation of any preemptive rights nor
have any such Shares been issued in violation of the Securities Act or the
securities or "blue sky" laws of any state or territory of the United States
of America.
(d) Except as set forth in SCHEDULE 3.03, ▇▇▇▇▇▇▇▇ does not
own any shares of stock or any other securities of any corporation or have any
interest in any firm, partnership, association or other Person. Except as set
forth in SCHEDULE 3.03, all of the outstanding shares of capital stock or
ownership interest of each corporation, partnership or other organization,
whether incorporated or unincorporated, which is consolidated with ▇▇▇▇▇▇▇▇
for financial reporting purposes (a "Subsidiary") (i) have been duly
authorized and validly issued, (ii) in the case of each corporation, are fully
paid and nonassessable, (iii) are owned, directly or indirectly, by ▇▇▇▇▇▇▇▇,
free and clear of any mortgage, charge, pledge, lien, security interest,
claim, encumbrance or restriction, of any kind or nature, other than liens of
the nature described in Section 630 of the BCL (a "Lien"), and (iv) are not
subject to, nor have they been issued in violation of, any preemptive rights.
Except as set forth in SCHEDULE 3.03, there are no outstanding or authorized
subscriptions, warrants, options, contracts, rights (preemptive or otherwise),
calls, commitments or demands of any character to which ▇▇▇▇▇▇▇▇ or any
Subsidiary is a party that, directly or indirectly, (i) call for or relate to
the sale, pledge, transfer or other
8
disposition by ▇▇▇▇▇▇▇▇ or any Subsidiary of any shares of capital stock, any
partnership or other equity interests, or any Voting Debt of any Subsidiary or
(ii) relate to the voting or control of such capital stock, partnership or
other equity interests or Voting Debt. Except as set forth on SCHEDULE 3.03,
there are no stockholder agreements, voting trusts or other agreements or
understandings to which ▇▇▇▇▇▇▇▇ is a party or by which it is bound related to
the voting of or any other rights in or to, any shares of the capital stock of
▇▇▇▇▇▇▇▇ which will limit in any way the tender and purchase of the ▇▇▇▇▇▇▇▇
Shares pursuant to the Offer, or the solicitation of proxies by or on behalf
of ▇▇▇▇▇▇▇▇ from, or the casting of votes by, the ▇▇▇▇▇▇▇▇ Shareholders with
respect to the Merger. Except as set forth on SCHEDULE 3.03, there are no
restrictions on the right of ▇▇▇▇▇▇▇▇ to vote the stock of, or any other
equity interest in, any of its Subsidiaries.
Section 3.04. Authority of ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ has all requisite
corporate power and authority to execute and deliver this Agreement and all
other documents hereby contemplated, to consummate the transactions hereby and
thereby contemplated and to take all other actions required to be taken by it
pursuant to the provisions hereof and thereof. The execution, delivery and
performance of, and consummation of the transactions contemplated by, this
Agreement and all other documents hereby contemplated have been duly
authorized by ▇▇▇▇▇▇▇▇'▇ Board of Directors and, except for approval of this
Agreement and the transactions contemplated hereby by the holders of
outstanding ▇▇▇▇▇▇▇▇ Shares, no other corporate proceedings on the part of
▇▇▇▇▇▇▇▇ are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement constitutes and, on the Closing Date, the
Certificate of Merger and all other documents hereby contemplated to be
executed by ▇▇▇▇▇▇▇▇ will constitute, legal, valid and binding obligations of
▇▇▇▇▇▇▇▇, enforceable against it in accordance with their respective terms.
Section 3.05. No Conflict; Required Filings and Consents. (a) Except
as set forth on SCHEDULE 3.05, the execution and delivery of this Agreement by
▇▇▇▇▇▇▇▇ does not, and the consummation by ▇▇▇▇▇▇▇▇ of the transactions
contemplated hereby will not, (i) violate the Certificate of Incorporation or
By-laws of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries, (ii) subject to making the
filings and obtaining the approvals identified in Section 3.05(b), violate any
law, rule, regulation, order, judgment or decree applicable to ▇▇▇▇▇▇▇▇ or any
of its Subsidiaries or by which any property or asset of ▇▇▇▇▇▇▇▇ or any of
its Subsidiaries is bound or affected, or (iii) subject to making the filings
and obtaining the approvals identified in Section 3.05(b), result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a benefit
under, or give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or cancellation of,
or result in the creation of a Lien on any property or asset of ▇▇▇▇▇▇▇▇ or
any of the Subsidiaries pursuant to, any note, bond, mortgage, indenture,
Contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which ▇▇▇▇▇▇▇▇ or any of the Subsidiaries is a party or by which
▇▇▇▇▇▇▇▇ or any of the Subsidiaries or any property or asset of ▇▇▇▇▇▇▇▇ or
any of the Subsidiaries is bound or affected (any such conflict, violation,
breach, default or other occurrence, a "Violation"), except, in the case of
clauses (ii) and (iii), for any such Violations, which would not, individually
or in the aggregate, have a ▇▇▇▇▇▇▇▇ Material Adverse Effect.
9
(b) The execution and delivery of this Agreement by ▇▇▇▇▇▇▇▇
does not, and the performance of this Agreement and the consummation by
▇▇▇▇▇▇▇▇ of the transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency or commission or other governmental or
regulatory authority, domestic or foreign (each a "Governmental Authority"),
except as set forth in SCHEDULE 3.05 and except for (A) applicable
requirements, if any, of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (B) the pre-merger notification requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), and (C) filing and
recordation of appropriate merger and similar documents as required by New
York law.
Section 3.06. SEC Reports. ▇▇▇▇▇▇▇▇ has filed all SEC Reports
required to be filed by it with the Securities and Exchange Commission (the
"Commission") since December 31, 1993, all of which have complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act and the rules and
regulations promulgated thereunder. As of their respective dates of filing in
final or definitive form (or, if amended or superseded by a subsequent filing,
then on the date of such subsequent filing), none of the SEC Reports of
▇▇▇▇▇▇▇▇, including, without limitation, any financial statements or schedules
included therein, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in which they
were made, not misleading. The financial statements (including the related
notes) included in the SEC Reports of ▇▇▇▇▇▇▇▇ complied as to form in all
material respects with the published rules and regulations of the Commission
with respect thereto, were prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the
periods involved, except as otherwise noted therein or, in the case of the
unaudited financial statements, as permitted by the applicable rules and
regulations of the Commission and fairly presented in all material respects in
accordance with applicable requirements of GAAP (subject, in the case of the
unaudited statements, to year-end audit adjustments, as permitted by Rule
10-01, and any other adjustments described therein) the consolidated financial
position of ▇▇▇▇▇▇▇▇ and its consolidated Subsidiaries as of their respective
dates and the consolidated results of operations and the consolidated cash
flows of ▇▇▇▇▇▇▇▇ and its consolidated Subsidiaries for the periods presented
therein. Except as and to the extent set forth or disclosed in the SEC Reports
or as set forth on SCHEDULE 3.06, (i) at March 31, 1997, neither ▇▇▇▇▇▇▇▇ nor
any Subsidiary had any material liabilities, absolute, accrued or contingent,
required by GAAP to be reflected on a balance sheet of ▇▇▇▇▇▇▇▇ or the notes
thereto, and (ii) since March 31, 1997, ▇▇▇▇▇▇▇▇ has not incurred any
liabilities (absolute, accrued or contingent) which are required by GAAP, to
be reflected on a balance sheet of ▇▇▇▇▇▇▇▇ and which individually or in the
aggregate, would have a ▇▇▇▇▇▇▇▇ Material Adverse Effect, except liabilities
incurred in the ordinary course of business.
Section 3.07. Title to Property. (a) ▇▇▇▇▇▇▇▇ and/or the Subsidiaries
and/or limited or general partnerships in which ▇▇▇▇▇▇▇▇ or its Subsidiaries
have a general partnership interest and the joint ventures described in Note 4
to the 1996 10-K (as hereinafter defined) have good, valid, marketable and
insurable title to, all real property owned by such entities which is material
to the
10
business of ▇▇▇▇▇▇▇▇ and the Major Subsidiaries (as hereinafter defined) (the
"Owned Real Property"), free and clear of all Liens, except, (i) such as are
set forth on the balance sheet of ▇▇▇▇▇▇▇▇ as of December 31, 1996 (or the
notes thereto) included in the ▇▇▇▇▇▇▇▇ Annual Report on Form 10-K for the
year ended December 31, 1996 (the "1996 10-K") or on SCHEDULE 3.07, (ii)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business for amounts which are not yet due
or are being contested by appropriate proceedings which, individually or in
the aggregate, do not exceed $250,000, (iii) liens for Taxes that are not due
and payable or that may thereafter be paid without penalty, and (iv) other
imperfections of title, liens or encumbrances customary for projects of this
nature (other than liens in favor of lenders (i) given by ▇▇▇▇▇▇▇▇ or the
Subsidiaries or by joint ventures to which ▇▇▇▇▇▇ or a Subsidiary thereof are
parties and which are listed on SCHEDULE 3.07 or SCHEDULE 3.12 hereto or (ii)
given by limited or general partnerships in which ▇▇▇▇▇▇▇▇ or its Subsidiaries
(other than ▇▇▇▇▇▇ and its Subsidiaries) have a general partnership interest)
if any, that do not, individually or in the aggregate, materially impair the
continued use, value and operation of the properties to which they relate as
they are currently operated.
(b) ▇▇▇▇▇▇▇▇ and/or the Subsidiaries have good and valid
title to all personal property, tangible or intangible, material to the
business conducted by ▇▇▇▇▇▇▇▇ and the Subsidiaries reflected on the balance
sheet of ▇▇▇▇▇▇▇▇ as of December 31, 1996 included in the 1996 10-K or
acquired after such date excluding only those properties that have been
disposed of in the ordinary course of business after such date, free and clear
of all Liens, except (i) such as are set forth on SCHEDULE 3.07, (ii)
mechanics', carriers', workmen's, repairmen's or other like Liens arising or
incurred in the ordinary course of business, (iii) liens for Taxes that are
not due and payable or that may thereafter be paid without penalty, and (iv)
other imperfections of title or encumbrances, if any, that do not,
individually or in the aggregate, materially impair the continued use and
operation of the properties to which they relate.
(c) Each lease, sublease, material license or other material
agreement under which ▇▇▇▇▇▇▇▇ or any of its Subsidiaries uses or occupies or
has the right to use or occupy, now or in the future, any real property,
together with any and all amendments and modifications thereto and extensions
thereof, are herein referred to as the "Real Property Leases" (and SCHEDULE
3.07 attached hereto contains a true, complete and correct list of all Real
Property Leases). True, correct and complete copies of the Real Property
Leases have been made available to Acquisition. Except as set forth on
SCHEDULE 3.07, (a) ▇▇▇▇▇▇▇▇ and each of its Subsidiaries has exclusive use and
possession of, and the right to quiet enjoyment of, the real property leased
to it in accordance with the terms of the Real Property Leases, (b) each Real
Property Lease is valid, binding and in full force and effect, all material
amounts of rent, additional rent and other sums and charges payable by
▇▇▇▇▇▇▇▇ or any of its Subsidiaries thereunder are current in all material
respects and no material uncured default or event which, with the giving of
notice or passage of time or both could become a material default, exists
under the Real Property Leases.
(d) Except as set forth in SCHEDULE 3.07, neither ▇▇▇▇▇▇▇▇
nor any of its Subsidiaries has granted any rights, options or rights of first
refusal, or entered into any agreements of any kind that are currently in
effect or that have not been waived, to purchase or
11
otherwise acquire all or any portion of the Owned Real Property or ▇▇▇▇▇▇▇▇'▇
or the Subsidiaries' interests in the real property covered by Real Property
Leases, except the rights of Acquisition under this Agreement and except for
contracts of sale for individual housing units entered into in the ordinary
course of business and except for leases by ▇▇▇▇▇▇▇▇ or its Subsidiaries to
others. The number of housing units under contract and the dollar amounts of
the backlog of contracts for sale of individual housing units have not changed
materially adversely from that set forth in ▇▇▇▇▇▇▇▇'▇ quarterly report on
Form 10-Q for the quarterly period ended June 30, 1997.
Section 3.08. Compliance with Law. Except as set forth in SCHEDULE
3.08, each of ▇▇▇▇▇▇▇▇ and the Subsidiaries has complied with all laws, rules,
orders and regulations applicable to ▇▇▇▇▇▇▇▇ or any of the Subsidiaries or to
the Owned Real Property (or to real property leased pursuant to a Real
Property Lease that is a ground lease, a triple net lease, or a similar
lease), except where failure to do so would not have a ▇▇▇▇▇▇▇▇ Material
Adverse Effect. Each of ▇▇▇▇▇▇▇▇ and the Subsidiaries has maintained in full
force and effect and is in compliance with, all licenses, permits, variances,
exemptions, orders, franchises, approvals and consents for the lawful conduct
of its business, except where the failure to do so would not have a ▇▇▇▇▇▇▇▇
Material Adverse Effect. No material Violation exists (and no event has
occurred which, with notice or lapse of time or both would constitute a
Violation) of any term, condition or provision of the Certificate of
Incorporation or By-laws (or comparable charter or organizational documents)
of Grenadier Realty Corporation, HRH Construction Corporation, ▇▇▇▇▇▇
Corporation, or ▇▇▇▇▇▇ Homes Puerto Rico, Incorporated (the "Major
Subsidiaries") or ▇▇▇▇▇▇▇▇.
Section 3.09. Litigation. Except as set forth in SCHEDULE 3.09 or in
the SEC Reports:
(a) Except for claims, suits, actions, proceedings, audits
or investigations covered (subject to deductibles) by insurance, there is no
claim, suit, action, proceeding, audit or investigation pending or, to the
best of ▇▇▇▇▇▇▇▇'▇ knowledge, threatened against, involving or affecting
▇▇▇▇▇▇▇▇ or any of the Subsidiaries, the officers and directors of ▇▇▇▇▇▇▇▇ or
any of the Subsidiaries in such capacities or any of the properties or rights
of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries seeking equitable relief or claiming
damages in excess of $300,000, nor is there any judgment, decree, injunction,
rule or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries or the officers and directors of ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries in such capacities which seeks to or would likely (i) result in
the material modification or any termination or suspension of any material
contract to which ▇▇▇▇▇▇▇▇ or any of the Subsidiaries is a party; (ii)
materially adversely affect the manner in which ▇▇▇▇▇▇▇▇ and the Subsidiaries
conduct their business; or (iii) materially adversely affect the ability of
▇▇▇▇▇▇▇▇ or Acquisition to consummate the transactions contemplated hereby;
(b) neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries has been
charged with or, to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, threatened with a charge
of any Violation of, or, to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, is under
investigation with respect to a possible Violation of, any provision of any
federal, state or local law or administrative ruling or regulation relating to
its business which Violation would have a ▇▇▇▇▇▇▇▇ Material Adverse Effect;
12
(c) neither ▇▇▇▇▇▇▇▇ nor any of its Subsidiaries has
received any written notice of any pending or threatened action or proceeding,
in any court, before any arbitrator or arbitration tribunal or before or by
any Governmental Authority which if adversely determined would have a ▇▇▇▇▇▇▇▇
Material Adverse Effect, nor to the best knowledge of senior management of
▇▇▇▇▇▇▇▇ and the Major Subsidiaries, has any officer, director or employee of
▇▇▇▇▇▇▇▇ or any of the Subsidiaries been served, within the 12-month period
prior to the date hereof, with a subpoena to testify before a Governmental
Authority with regard to a governmental investigation or governmental
proceeding with respect to matters relating to the business, operations or
activities of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries; and
(d) neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries is in
default under or with respect to any judgment, writ, injunction, order or
decree of any court, any arbitrator or arbitration tribunal or any
Governmental Authority against ▇▇▇▇▇▇▇▇ or any of the Subsidiaries or any of
▇▇▇▇▇▇▇▇'▇ or any of the Subsidiaries' assets which default would have a
▇▇▇▇▇▇▇▇ Material Adverse Effect.
Section 3.10. Taxes. (a) Each of ▇▇▇▇▇▇▇▇ and the Subsidiaries has
timely and duly filed, or will timely or duly file (giving effect to
extensions duly taken), all federal, state, local or foreign income tax
returns or reports ("Tax Returns") and other material Tax Returns and reports
required to be filed by, or with respect to, ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries on or prior to the Closing Date. All such Tax Returns are, or
will be, correct and complete in all material respects. ▇▇▇▇▇▇▇▇'▇ federal
income tax returns were last audited more than 10 years ago.
(b) Each of ▇▇▇▇▇▇▇▇ and the Subsidiaries has paid or will
pay all taxes, charges, fees, levies or other assessments of any nature
whatsoever (including, without limitation, all federal, state, local and
foreign income taxes, alternative or add-on minimum taxes, withholding taxes,
estimated taxes, excise taxes, sales taxes, use taxes, transfer taxes, gross
receipt taxes, franchise taxes, employment and payroll related taxes, property
taxes and import duties, whether or not measured in whole or in part by net
income), together with any related penalties, interest and additions to taxes
(any of the foregoing being referred to herein as a "Tax") required to be paid
by it. All Taxes not yet due but incurred on or before the Closing Date (other
than Taxes, if any, arising out of the transactions hereby contemplated) are
adequately disclosed and fully provided for on the books and records and the
financial statements of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries. Each of ▇▇▇▇▇▇▇▇
and the Subsidiaries has fully collected, withheld and/or paid over all Taxes
required to be collected, withheld and/or paid over for material sales taxes,
wages or otherwise to a taxing authority.
(c) Except as set forth in SCHEDULE 3.10, neither ▇▇▇▇▇▇▇▇
nor any of the Subsidiaries is currently being audited by any taxing authority
with respect to the returns and reports and there are no claims or assessments
pending against ▇▇▇▇▇▇▇▇ or any of the Subsidiaries. Except as set forth in
SCHEDULE 3.10, neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries has agreed to
waive or extend the statute of limitations with respect to any Taxes or tax
returns and has filed any consent under Section 341(f) of the Internal Revenue
Code of 1986, as amended (the "Code"), (or any corresponding provision of
state, local or foreign tax law). Except as set forth
13
on SCHEDULE 3.10, neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries is liable for
the Taxes of any other Person or entity or is a party to any agreement
providing for the allocation or sharing of any Taxes and neither has a
contractual obligation to indemnify any other individual, firm, corporation,
partnership, limited liability company, trust, joint venture, Governmental
Authority or other Person with respect to any Taxes. No written claim has been
made in the last five years by a taxing authority in a jurisdiction in which
▇▇▇▇▇▇▇▇ or any of the Subsidiaries does not presently file Tax returns that
▇▇▇▇▇▇▇▇ or any of the Subsidiaries (other than inactive Subsidiaries) is or
may be subject to taxation by that jurisdiction. True and complete copies of
all tax returns and reports filed by ▇▇▇▇▇▇▇▇ or any of the Subsidiaries have
been made available to Acquisition. True and complete copies of any closing
agreements with respect to ▇▇▇▇▇▇▇▇ or any of the Subsidiaries which were
entered into with the Internal Revenue Service or any other taxing authority
in the last five years have heretofore been furnished to Acquisition.
(d) Except as set forth in Schedule 3.10, neither ▇▇▇▇▇▇▇▇
nor any of its Subsidiaries has agreed to make any material adjustment
pursuant to Section 481(a) of the Code (or any predecessor provision).
(e) Except as set forth in Schedule 3.10, neither ▇▇▇▇▇▇▇▇
nor any of its Subsidiaries has made any payment, is obligated to make any
payment, or is a party to an agreement that could obligate it to make any
payments that are subject to Code Section 280G or are not (or will not) be
deductible under Section 162 of the Code.
(f) Except as set forth in Schedule 3.10, neither ▇▇▇▇▇▇▇▇
nor any of its Subsidiaries has engaged in, or is a party to any transaction
that is characterized as, or subject to the deferred intercompany transactions
rules as set forth in Treas. Regs. Section 1.1502 et seq.
Section 3.11. Insurance. Each of ▇▇▇▇▇▇▇▇ and the Subsidiaries has
insurance coverage for the assets and operations of the business of ▇▇▇▇▇▇▇▇
and the Subsidiaries which it believes is adequate. All policies of insurance
carried by ▇▇▇▇▇▇▇▇ or any of the Subsidiaries or pursuant to which ▇▇▇▇▇▇▇▇
or any of the Subsidiaries is a named beneficiary or pursuant to which the
business or properties of ▇▇▇▇▇▇▇▇ and the Subsidiaries are insured are in
full force and effect; all premiums due and payable in respect of such
policies have been paid in full; and there exists no material default or other
circumstance which would create the substantial likelihood of the cancellation
or non-renewal of any such policy; provided, however, each such representation
with respect to policies maintained by others for ▇▇▇▇▇▇▇▇'▇ benefit is
limited to the best of ▇▇▇▇▇▇▇▇'▇ knowledge. ▇▇▇▇▇▇▇▇ or a Subsidiary has
notified such insurers of any material claim known to ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries which it believes is covered by any such insurance policy.
Section 3.12. Contracts. Except as set forth in SCHEDULE 3.07 or
SCHEDULE 3.12, neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries is a party to or
is bound by any contract, agreement, guarantee, commitment, instrument or
memorandum of understanding (a) to provide management services for real
property, (b) to provide construction management services for a fee in excess
of $100,000, or which is a guaranteed minimum price general construction
contract involving in excess of $100,000 or to lease real property as tenant,
(c) with respect to borrowed
14
money, (d) which are of a type that would be required to be filed as an
exhibit to a Form 10-K for a fiscal year ended on the date of this Agreement
or (e) which would not be included in clauses (a), (b), (c) or (d) and which
involve payments by ▇▇▇▇▇▇▇▇ or any of the Subsidiaries in each case for its
own account in excess of $300,000 annually (collectively, the "Contracts"). A
true and complete copy of each written Material Contract (as hereinafter
defined), and any and all amendments and modifications thereto, and a true and
complete summary of each oral Material Contract have been made available to
Acquisition. Except as set forth on Schedule 3.12, each of ▇▇▇▇▇▇▇▇ and the
Subsidiaries has performed in all material respects all of its obligations
required to be performed by it, has paid all amounts required to be paid by it
and is not in default in any material respects under (a) any Contract, (b) The
Second Amended and Restated Memorandum of Understanding, dated March 29, 1996
(the "Gateway MOU") by and among the City, its Department of Housing
Preservation and Development and Gateway Housing Associates and Gateway
Estates Housing Development Fund Company, Inc. with respect to the development
of the site known as Spring Creek in the Fresh Creek Urban Renewal Area of
Brooklyn, New York, (c) the Managing Agency Agreement, dated July 1, 1979,
between ▇▇▇▇▇▇▇▇ City, Inc., predecessor-in-interest to ▇▇▇▇▇▇▇▇ City
Associates L.P., and ▇▇▇▇▇▇ Management Company, predecessor-in-interest to
Grenadier Realty Corp. (as amended, the "▇▇▇▇▇▇▇▇ City Management Agreement"),
and (d) the ▇▇▇ ▇▇▇▇▇▇▇▇ Designation Letter (the "Designation Letter") ((a),
(b), (c) and (d) being referred to herein collectively as the "Material
Contracts") and no event has occurred thereunder in each case which
individually or in the aggregate, with the lapse of time or the giving of
notice or both, would constitute such a material default and, to the best of
▇▇▇▇▇▇▇▇'▇ knowledge, no other party to any Material Contract is in default in
any material respect thereunder. Each of the Material Contracts listed in
SCHEDULE 3.12 (other than the Gateway MOU and the Designation Letter which are
valid but which by their terms are not legally binding) constitutes a valid,
binding, enforceable and legal obligation of ▇▇▇▇▇▇▇▇ or the Subsidiaries and
the other parties thereto in accordance with its terms. Neither ▇▇▇▇▇▇▇▇ nor
any of the Subsidiaries has received notice that any other party to any of the
Material Contracts is in material default thereunder.
Except for the matters set forth in SCHEDULE 3.09, neither ▇▇▇▇▇▇▇▇
nor any Subsidiary is currently liable with respect to liquidated damages or
similar penalty payments under any Material Contracts and there are no
obligations thereunder to obtain letters of credit or similar security. In
addition, ▇▇▇▇▇▇▇▇ has made available to Acquisition true, correct and
complete copies of the documents set forth on SCHEDULE 3.12Z; the documents
pertaining to Ronkonkoma listed in paragraph 2 of SCHEDULE 3.12Z are in full
force and effect and there are no material defaults thereunder or events
which, with the giving of notice or passage of time, or both, would constitute
a material default thereunder. Further (A) except as provided in SCHEDULE
3.12, none of the Material Contracts are terminable in the event that certain
key personnel are no longer involved in the work under such Material Contracts
or no longer employed by ▇▇▇▇▇▇▇▇ or any of its Subsidiaries, and (B) the Long
Island Railroad ("LIRR") and the Metropolitan Transportation Authority ("MTA")
have confirmed that, with respect to the redevelopment of the Ronkonkoma, New
York train station, ▇▇▇▇▇▇▇▇ RDC Corporation ("▇▇▇▇▇▇▇▇ RDC") has achieved
substantial completion of the Phase IA as defined under the Development
Agreement, dated October 5, 1993, by and among the LIRR, MTA and ▇▇▇▇▇▇▇▇ RDC
and the Ground Lease of even date
15
therewith. Except as set forth on SCHEDULE 3.12, neither ▇▇▇▇▇▇▇▇ nor any of
its Subsidiaries has received notification that it is or may become obligated
to pay any amounts under any payment or performance bonds furnished by such
entity. The estimated amounts of backlogged construction, and management and
general contracting fees set forth on SCHEDULE 3.12 are substantially correct
as of September 30, 1997.
Section 3.13. Employment Agreements. SCHEDULE 3.13 contains a
complete list of each management, employment, consulting or other agreement,
contract or commitment, in each case, in writing, between ▇▇▇▇▇▇▇▇ or any of
its Subsidiaries and any employee, officer or director thereof (a) providing
for the employment of any person or providing for retention of management,
executive or consulting services and providing for an obligation to pay or
accrue compensation of $50,000 or more per annum, or (b) except for severance
agreements or arrangements with an employee or officer of only a Subsidiary of
▇▇▇▇▇▇▇▇ and which do not provide for any severance agreement or arrangement
in excess of $75,000, providing for the payment or accrual of any compensation
or severance upon (i) a change in control of ▇▇▇▇▇▇▇▇ or any of its
Subsidiaries or (ii) any termination of such management, employment,
consulting or other relationship.
Section 3.14. Intellectual Property. SCHEDULE 3.14 is a list of the
principal trademarks, trade names, patents, fictitious business names, service
marks and pending applications therefor that are owned by ▇▇▇▇▇▇▇▇ or the
Subsidiaries and a list of the principal trademarks, trade names, patents,
fictitious business names, service marks and pending applications therefor
that are used by ▇▇▇▇▇▇▇▇ or the Subsidiaries or which ▇▇▇▇▇▇▇▇ or the
Subsidiaries have the right to use. The trademarks, trade names, patents,
fictitious business names, service marks and pending applications appearing on
SCHEDULE 3.14, together with any other trademarks, trade names, patents,
fictitious business names and service marks owned or used by ▇▇▇▇▇▇▇▇ or the
Subsidiaries, are collectively herein referred to as the "Proprietary Rights".
Except as disclosed on SCHEDULE 3.14, to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, no
Proprietary Right owned or used by ▇▇▇▇▇▇▇▇ or any of the Subsidiaries
infringes or violates any statutory or common law or any other rights of any
third parties (including, without limitation, copyright, trademark and the
rights of privacy and publicity), which violation would have a ▇▇▇▇▇▇▇▇
Material Adverse Effect and, in the last five years, no written claim alleging
any such infringement or violation has been received by ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries.
Section 3.15. Employees and Related Agreements: ERISA. (a) SCHEDULE
3.15 sets forth each Plan which ▇▇▇▇▇▇▇▇ or any of the Subsidiaries or any
ERISA Affiliate maintains or contributes to, or has any obligation to
contribute to, or during the six year period ending on the date hereof,
maintained, contributed to, or had any obligation to contribute to, and each
Plan as to which ▇▇▇▇▇▇▇▇ or any of the Subsidiaries has any material
liability (including, without limitation, a liability arising out of an
indemnification, guarantee, hold harmless or similar agreement) or obligation.
Except as set forth in SCHEDULE 3.15, none of these Plans is a Single Employer
Defined Benefit Plan, a Multiemployer Plan or a severance pay plan.
16
(b) No event has occurred with respect to a Plan (other than
a Multiemployer Plan) in connection with which ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries or any Plan identified in SCHEDULE 3.15 or any "plan
administrator" (as defined in Section 3(16) of ERISA) thereof, directly or
indirectly, is or, to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, could be subject to
material liability, other than for routine claims for benefits, contingent or
otherwise, or any lien, whether or not perfected, under the terms of any Plan
or under ERISA, the Code or any other law, regulation or governmental order
applicable to any Plan at any time maintained or contributed to by ▇▇▇▇▇▇▇▇ or
any of the Subsidiaries or by any ERISA Affiliate or under any agreement,
instrument, statute, rule of law or regulation pursuant to or under which
▇▇▇▇▇▇▇▇ or any of the Subsidiaries has agreed to indemnify or is required to
indemnify any person against liability incurred under, or for a violation or
failure to satisfy the requirements of, any such statute, regulation or order.
(c) Except as set forth in SCHEDULE 3.15, all payments and
contributions due from ▇▇▇▇▇▇▇▇ or any of the Subsidiaries under each Plan
identified in said SCHEDULE 3.15 with respect to all prior periods have been
made or properly recorded on the books of ▇▇▇▇▇▇▇▇ or the Subsidiaries.
(d) Except as set forth in SCHEDULE 3.15, and except for any
Multiemployer Plan, no "employee welfare benefit plan" as defined in Section
3(1) of ERISA or "multiple employer welfare arrangement" as defined in Section
3(40) of ERISA provides benefits, including, without limitation, death or
medical benefits (whether or not insured) with respect to any current or
former employee of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries beyond his or her
retirement or other termination of service other than (1) coverage mandated by
applicable law or (2) disability benefits that have been fully provided for by
insurance or otherwise.
(e) Except as provided in SCHEDULE 3.15, the transactions
contemplated by this Agreement will not result in any payment or series of
payments by the Surviving Corporation under any Plan established by ▇▇▇▇▇▇▇▇
or any of the Subsidiaries to any person of a parachute payment within the
meaning of Section 280G of the Code.
(f) Except as provided in SCHEDULE 3.15, the consummation of
the transactions contemplated by this Agreement will not (1) entitle any
employee or former employee of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries to
severance pay, unemployment compensation or any other payment except as
expressly provided in this Agreement or (2) result in any prohibited
transaction described in Section 406 of ERISA or section 4975 of the Code for
which an exemption is not available.
(g) There has been delivered to Acquisition with respect to
each Plan identified in SCHEDULE 3.15 other than a Multiemployer Plan:
(1) A copy of the annual report (with accompanying
schedules and exhibits), if required under ERISA, which has
been filed with respect to such Plan for the two most
recently completed plan years. The information contained in
17
such report (including such schedules and exhibits) is true
and complete in all material respects.
(2) A copy of the most recent summary plan
description, together with each Summary of Material
Modifications with respect thereto, required under ERISA
with respect to such Plan, and a true and complete copy of
such Plan;
(3) If such Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other
funding vehicle and the latest financial statements thereof;
(4) The most recent determination letter received
from the Internal Revenue Service with respect to each Plan
that is intended to qualify under Section 401 of the Code;
(5) A copy of the actuarial report, if any, with
respect to each such Plan for the last two years. The
information contained therein, and the information furnished
by the administrator of such Plan or by ▇▇▇▇▇▇▇▇ or any of
its subsidiaries or by any ERISA Affiliate in connection
with the preparation thereof, is true and complete in all
material respects; and
(6) A copy of each Plan, including all amendments
thereto, or in the cases where there is no formal Plan
document, a description of each such Plan.
(h) Neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries nor any
ERISA Affiliate has made any agreement, understanding or promise, whether
written or oral, to create, establish, sponsor, maintain or contribute,
directly or indirectly, to or under any additional Plan for the benefit of
current or former employees of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries nor, except
as set forth in SCHEDULE 3.15, to amend or modify any existing Plan identified
in SCHEDULE 3.15 in any manner not reflected in the plan documents of such
Plan delivered to Acquisition.
(i) Except as set forth in SCHEDULE 3.15, neither ▇▇▇▇▇▇▇▇
nor any of the Subsidiaries is a party to any collective bargaining
agreements, whether or not expired. ▇▇▇▇▇▇▇▇ does not know of any activities
or proceedings of any labor organization (or representative thereof) to
organize any unorganized employees of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries. A
copy of each such collective bargaining agreement has been delivered to
Acquisition.
(j) Neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries has
violated any provision of federal or state law or any governmental rule or
regulation, or any order, ruling, decree, judgment or arbitration award of any
court, arbitrator or any government agency regarding the terms and conditions
of employment of employees or former employees or, without limitation, laws,
rules, regulations, orders, rulings, decrees, judgments and awards relating to
discrimination (including, without limitation, discrimination on the basis of
age, sex, race or religion), fair labor standards and occupational health and
safety, wrongful discharge or violation of the personal rights of
18
employees, former employees or prospective employees or state temporary
disability laws, rules or regulations which violation would have a ▇▇▇▇▇▇▇▇
Material Adverse Effect.
(k) There is and, for one year prior to the date hereof
there has been, no material unfair labor practice, charge or complaint pending
or, to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, threatened against ▇▇▇▇▇▇▇▇ or any of
the Subsidiaries before the National Labor Relations Board or any State Labor
Relations Board. There are and, for one year prior to the date hereof, there
have been no material claims of discrimination of any kind pending or, to the
best of ▇▇▇▇▇▇▇▇'▇ knowledge, threatened against ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries before any Governmental Body. Neither ▇▇▇▇▇▇▇▇ nor any of the
Subsidiaries has any liability to any or all of its employees under or arising
as a result of the Worker Adjustment and Retraining Act.
(l) Other than matters affecting generally the industries in
which ▇▇▇▇▇▇▇▇ or a Subsidiary is engaged, there is, and for one year prior to
the date hereof there has been, no labor strike, work stoppage or lockout, or
material dispute, slowdown, disturbance, grievance or claim pending or, to the
best of ▇▇▇▇▇▇▇▇'▇ knowledge, threatened against ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries.
(m) Other than with respect to a Multiemployer Plan, each
Plan to which ▇▇▇▇▇▇▇▇ or any of the Subsidiaries contributes or has any
obligation to contribute and which is intended to be qualified under section
401 of the Code, has received a favorable determination letter from the
Internal Revenue Service with respect to such qualification and with respect
to the exemption from tax of the trusts created thereunder under section
501(a) of the Code, and, to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, nothing has
occurred that has affected or is likely adversely to affect such qualification
or exemption since the date of such letter with respect to each Plan.
(n) Except as set forth in SCHEDULE 3.15, with respect to
each Plan other than a Multiemployer Plan, all reports and other information
required under ERISA or any other applicable law or regulation to be filed in
respect of any Plan by the administrator thereof or by ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries on or prior to the date hereof with the relevant governmental
authority and/or distributed or made available to any Plan participant and
beneficiary (including "alternate payees", as such term is defined in Section
206(d)(3)(K) of ERISA), as the case may be, have been filed, distributed or
made available in accordance with ERISA or such other applicable law or
regulation, as the case may be, and all such reports and other information are
true and complete in all material respects as of the date given or, to the
extent not filed, distributed or made available, such violation would not have
a ▇▇▇▇▇▇▇▇ Material Adverse Effect.
(o) Except as set forth in SCHEDULE 3.15, other than with
respect to a Multiemployer Plan, neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries
has entered into any agreement, written or otherwise, relating to any Plan
providing medical benefits obligating ▇▇▇▇▇▇▇▇ or any of the Subsidiaries or
its successor in interest to make any supplemental or retrospective premium
payments for the current or any prior contract period in the event of adverse
experience, termination of the minimum premium arrangement or termination of
an insurance contract
19
relating to such Plan. To the extent reasonably available to a ▇▇▇▇▇▇▇▇, a
disclosure of the attendant costs is set forth on SCHEDULE 3.15.
(p) With respect to each Multiemployer Plan identified in
SCHEDULE 3.15 which is subject to the provisions of Subtitle B of Title IV of
ERISA, (1) none of ▇▇▇▇▇▇▇▇, any of the Subsidiaries nor any ERISA Affiliate
has received any notice of any claim or demand for complete or partial
withdrawal liability under ERISA Sections 4201 et seq. except as attached to
SCHEDULE 3.15; (2) none of ▇▇▇▇▇▇▇▇, any of the Subsidiaries nor any ERISA
Affiliate has received any notice that such Multiemployer Plan is in
"reorganization" (within the meaning of Section 4241 of ERISA), that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of an excise tax, or that the Multiemployer Plan is or may become
"insolvent" (within the meaning of Section 4245 of ERISA) except as attached
to SCHEDULE 3.15; (3) except as set forth on SCHEDULE 3.15, to the best of
▇▇▇▇▇▇▇▇'▇ knowledge, none of ▇▇▇▇▇▇▇▇, any of the Subsidiaries nor any ERISA
Affiliate has incurred any withdrawal liability not set forth on SCHEDULE
3.15; and (4) ▇▇▇▇▇▇▇▇, the Subsidiaries and each ERISA Affiliate have timely
made all required contributions or payments to each Multiemployer Plan or such
contributions or payments will be made prior to the Closing.
(q) With respect to each Single Employer Defined Benefit
Plan identified in SCHEDULE 3.15, (1) except with respect to the transactions
contemplated by this Agreement, there has not occurred any "reportable event"
within the meaning of Section 4043(b) of ERISA or the regulations thereunder
with respect to which the 30 day notice requirement has not been waived under
applicable regulations, (2) there exists no ground upon which the PBGC could
demand termination of any Single Employer Defined Benefit Plan or appointment
of itself or its nominee as trustee thereunder, (3) there has been no notice
given of intent to terminate any Single Employer Defined Benefit Plan under
Section 4041 of ERISA, (4) there has not been any proceeding instituted under
Section 4042 of ERISA to terminate any Single Employer Defined Benefit Plan,
and (5) there has been no termination, or except as set forth in SCHEDULE
3.15, a partial termination of any Single Employer Defined Benefit Plan within
the meaning of Section 411(d)(3) of the Code. The PBGC has not instituted or,
to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, threatened a proceeding to terminate any
Single Employer Defined Benefit Plan. All PBGC premiums due on or before the
Closing with respect to each Single Employer Defined Benefit Plan have been,
or prior to the Closing will be, paid in full, including late fees, interest
and penalties, if and to the extent applicable.
(r) No funding waiver from the Internal Revenue Service has
been requested or received with respect to any Single Employer Defined Benefit
Plan identified in SCHEDULE 3.15, and no extension of the amortization period
within the meaning of Section 412 of the Code or Section 302 of ERISA has been
applied for.
(s) Neither ▇▇▇▇▇▇▇▇, the Subsidiaries nor any ERISA
Affiliate has engaged in any transaction described under Section 4069 of ERISA
nor has any lien been imposed with respect to an amount on any such persons or
their assets under Section 4068 of ERISA.
20
(t) With respect to any Single Employer Defined Benefit
Plan, any significant reduction in the rate of future benefit accrual was
preceded by an adequate and appropriate notice to the parties described in and
as required by Section 204(h) of ERISA.
(u) Concerning any Single Employer Defined Benefit Plan
maintained by ▇▇▇▇▇▇▇▇ or any ERISA Affiliate (A) since January 1, 1990, there
has been no cessation of operations at a facility so as to become subject to
the provisions of Sections 4062(e) of ERISA, (B) since January 1, 1990, there
has been no withdrawal of a substantial employer from any Single Employer
Defined Benefit Plan so as to become subject to the provisions of Section 4063
of ERISA.
(v) For the purposes of this Agreement:
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, any successor statute thereto and all
final or temporary regulations promulgated thereunder and generally applicable
published rulings entitled to precedential effect.
"ERISA Affiliate" means all members of a controlled group of
corporations and all trades and businesses (whether or not incorporated) under
common control and all other entities which, together with ▇▇▇▇▇▇▇▇, are
treated as a single employer under any or all of Sections 414(b) or (c) of the
Code on either the date of this Agreement or the Closing Date.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 3(37) or Section 4001(a)(3) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation or any
person succeeding to the functions thereof.
"Single Employer Defined Benefit Plan" means a plan subject
to Subtitle B of Title IV of ERISA which is not a Multiemployer Plan.
"Plan" means any plan, program, arrangement, agreement or
commitment which is a pension, profit sharing, savings, thrift or other
retirement plan, life, health, accident or disability insurance plan
(including without limitation any "employee welfare benefit plan as defined in
Section 3(3) of ERISA), deferred compensation, stock purchase, stock option,
performance share, bonus or other executive plan or severance pay plan, policy
or procedure, or vacation or other employee benefit plan, program arrangement,
agreement or commitment.
Section 3.16. Absence of Certain Changes or Events. Since June 30,
1997, except as disclosed in SCHEDULE 3.16, ▇▇▇▇▇▇▇▇ and the Subsidiaries have
conducted their business, in all material respects, in the ordinary course and
in a manner consistent with past practice (except in connection with the
negotiation and execution and delivery of this Agreement), and since June 30,
1997, except as disclosed in SCHEDULE 3.16, and except as permitted in this
Agreement, there has not been (i) any event or events (whether or not covered
by insurance), individually or in the
21
aggregate, having a ▇▇▇▇▇▇▇▇ Material Adverse Effect, (ii) any material change
by ▇▇▇▇▇▇▇▇ in its accounting methods, principles or practices, (iii) any
entry by ▇▇▇▇▇▇▇▇ or any Subsidiary into any commitment or transaction
material to ▇▇▇▇▇▇▇▇, except in the ordinary course of business and consistent
with past practice or except in connection with the negotiation and execution
and delivery of this Agreement, (iv) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of ▇▇▇▇▇▇▇▇ or
any redemption, purchases or other acquisition of any of ▇▇▇▇▇▇▇▇'▇ or its
Subsidiaries' securities (except for cash dividends paid to ▇▇▇▇▇▇▇▇ by its
wholly-owned Subsidiaries with regard to their capital stock, and the
declaration and payment to the holders of ▇▇▇▇▇▇▇▇ Shares regular quarterly
dividends to stockholders of record with such record dates and payment dates
as are consistent with past practice), (v) other than pursuant to the Plans or
as required by law, any increase in, amendment to, or establishment of any
bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option, stock purchase or other employee benefit plan
(other than a multiemployer plan), (vi) granted any general increase in
compensation, bonus or other benefits payable to the employees of ▇▇▇▇▇▇▇▇ or
its Subsidiaries, except for increases occurring in the ordinary course of
business in accordance with its customary practice, (vii) paid any bonus to
the employees of ▇▇▇▇▇▇▇▇ or its Subsidiaries except for bonuses accrued on
▇▇▇▇▇▇▇▇'▇ unaudited balance sheet for the quarter ending June 30, 1997,
(viii) any incurrence of indebtedness for borrowed money or assumption or
guarantee of indebtedness or borrowed money by ▇▇▇▇▇▇▇▇ or any of its
Subsidiaries (other than loans from ▇▇▇▇▇▇▇▇ to any wholly-owned Subsidiary or
from any wholly-owned Subsidiary to ▇▇▇▇▇▇▇▇ or any other wholly-owned
Subsidiary), or the grant of any lien on the material assets of ▇▇▇▇▇▇▇▇ or
its Subsidiaries to secure indebtedness for borrowed money except, in any such
case, any drawdowns by ▇▇▇▇▇▇▇▇ under its revolving credit facility consistent
with past practice, (ix) any sale or transfer of any material assets of
▇▇▇▇▇▇▇▇ or its Subsidiaries other than in the ordinary course of business and
consistent with past practice, or (x) any loan, advance or capital
contribution to or investment in any person in an aggregate amount in excess
of $100,000 by ▇▇▇▇▇▇▇▇ or any Subsidiary (excluding any loan, advance or
capital contribution to, or investment in, ▇▇▇▇▇▇▇▇ or any wholly-owned
Subsidiary and except for drawdowns by ▇▇▇▇▇▇▇▇ under its revolving credit
facility consistent with past practice).
Section 3.17. Finder's Fee. Except as set forth on SCHEDULE 3.17,
neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries has incurred any liability for
finder's or brokerage fees or commissions in connection with this Agreement or
the transactions hereby contemplated.
Section 3.18. Section 912. The approval of the Board of Directors of
▇▇▇▇▇▇▇▇ of this Agreement, the Merger , the Shareholders Agreement (as
hereinafter defined) and the letter dated October 8, 1997 between Arre Star
Acquisition, LLC and ▇▇▇▇▇▇▇▇ (the "October 8 Letter") is sufficient to render
inapplicable to this Agreement, the Offer, the Merger, the Shareholders
Agreement and the October 8 Letter the provisions of Section 912 of the BCL.
Section 3.19. Environmental Matters. (a) Except as set forth in
SCHEDULE 3.19 ▇▇▇▇▇▇▇▇ and the Subsidiaries have obtained or caused to be
obtained and continue to maintain and will continue to maintain up to the
Closing Date or cause the maintenance of permits, licenses, consents and
approvals necessary for conducting the business of ▇▇▇▇▇▇▇▇ and the
Subsidiaries
22
which are required under Environmental Laws (the "Environmental Approvals"),
and neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries has operated in violation of
any Environmental Law or the terms of any Environmental Approval, except for
such violations which would not have a ▇▇▇▇▇▇▇▇ Material Adverse Effect. The
operations of ▇▇▇▇▇▇▇▇ and each of its Subsidiaries, as of the Closing Date,
will be in compliance in all respects with all Environmental Laws except for
any such noncompliance which would not result in a ▇▇▇▇▇▇▇▇ Material Adverse
Effect.
(b) Except as set forth in SCHEDULE 3.19 and except as would
not have a ▇▇▇▇▇▇▇▇ Material Adverse Effect:
(1) neither ▇▇▇▇▇▇▇▇ nor any of the Subsidiaries
has used, stored, generated, discharged, emitted,
transported, disposed of or treated Hazardous Substances
except in a manner which complies with the applicable
Environmental Laws and Environmental Approvals and to the
best of knowledge of ▇▇▇▇▇▇▇▇ and each of its Subsidiaries,
there are no Hazardous Substances present in, on or under
any Owned Real Property owned by ▇▇▇▇▇▇▇▇ or any of its
Subsidiaries or any real property leased or managed by
▇▇▇▇▇▇▇▇ or any of its Subsidiaries, the nature, amount or
concentration of which would reasonably be expected to
result in any federal, state or local environmental
protection agency undertaking or requiring the removal or
Remediation of such Hazardous Substances if such agency were
aware of the presence of such Hazardous Substances.
(2) to the best of ▇▇▇▇▇▇▇▇'▇ knowledge, no prior
owner, occupant, tenant or user of any facility which is now
or has heretofore been owned or used by ▇▇▇▇▇▇▇▇ or any of
the Subsidiaries (a "Facility") has ever used, stored,
generated, discharged, emitted, transported, disposed of or
treated Hazardous Substances at, on or from any Facility
except in a manner which complies with all Environmental
Laws and Environmental Approvals;
(3) there is not, and there has not been, any
Environmental Condition (as defined herein) or release or
threat of release (as those terms are defined in Section 101
of the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. section 9601 et seq.)
("CERCLA")) of Hazardous Substances at, on or from any
Facility; and
(4) to the best knowledge of ▇▇▇▇▇▇▇▇ and each of
its Subsidiaries, there is not now nor has there ever been,
on or in any Owned Real Property or real property leased by
▇▇▇▇▇▇▇▇ or any of its Subsidiaries, any underground storage
tanks or surface impoundments containing Hazardous
Substances.
(c) Except as set forth on SCHEDULE 3.19, neither ▇▇▇▇▇▇▇▇
nor any of the Subsidiaries has received notice of any pending or threatened
investigation, claim, enforcement proceeding, cleanup order, citizen suit or
other action instituted by any private party, employee or Governmental Body
under any Environmental Laws arising out of the conduct or the
23
operations of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries or as a result of any
Environmental Condition at any Facility. Neither ▇▇▇▇▇▇▇▇ nor any of its
Subsidiaries is subject to any outstanding written orders from, or written
agreements with, any Governmental Entity respecting (A) violations or
liability pursuant to Environmental Laws, (B) Remedial Action or (C) any
Release or threatened Release of a Hazardous Substance. No judicial or
administrative proceedings or governmental investigations are pending, or to
the knowledge of ▇▇▇▇▇▇▇▇ or any of its Subsidiaries threatened against
▇▇▇▇▇▇▇▇ or any of its Subsidiaries alleging the violation of or seeking to
impose liability pursuant to any Environmental Law or as the result of the
Release or alleged Release of a Hazardous Substance, except for any such
proceedings or investigations that would not result in a ▇▇▇▇▇▇▇▇ Material
Adverse Effect, and neither ▇▇▇▇▇▇▇▇ nor any of its Subsidiaries has received
any notice of any pending or threatened investigation, claim, enforcement
proceeding or other action instituted by any governmental agency or private
party under any Environmental Laws arising out of the conduct or operations of
▇▇▇▇▇▇▇▇ or any of its Subsidiaries.
(d) For the purpose of this Agreement:
"Environment" means soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
"Environmental Condition" means any condition with respect
to the Environment, whether or not yet discovered, at any Facility, including
any condition resulting from the operation of the business of ▇▇▇▇▇▇▇▇ or any
of the Subsidiaries or the operation of the business of any subtenant or
occupant of any Facility, which is reasonably likely to or does result in any
losses which are reasonably likely to have a ▇▇▇▇▇▇▇▇ Material Adverse Effect.
"Environmental Laws" means all statutes, laws, treatises,
rules, codes, ordinances, regulations, permits, certificates or orders
(collectively, "Governmental Rules") of any Governmental Authority or any
judgment, decree, injunction, writ or order of any Governmental Authority
relating to injury to, or the protection of, human health or the Environment
that are in effect prior to the Closing Date, including, without limitation,
all valid and lawful requirements of courts and other Governmental Authorities
pertaining to reporting, licensing, permitting, investigating, remediation and
removal of, emissions, discharges, releases or threatened releases of
Hazardous Substances, chemical substances, pesticides, petroleum or petroleum
products, pollutants, contaminants or hazardous or toxic substances, materials
or wastes, whether solid, liquid or gaseous in nature, into the Environment,
or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature.
"Hazardous Substances" means any substance (a) the presence
of which requires notification, investigation or remediation under any
Environmental Law as in effect prior to the Closing Date; (b) which prior to
the Closing Date is or becomes defined under any Environmental Laws as
"hazardous waste", "hazardous material" or "hazardous substance", "extremely
hazardous waste", "restricted hazardous waste", "solid waste", "toxic waste",
"toxic
24
substance" or "pollutant" or "contaminant" and is regulated under any
Environmental Law, (c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
or become regulated by any Governmental Authority under Environmental Laws
prior to the Closing Date; (d) which contains gasoline, diesel fuel or other
petroleum hydrocarbons or volatile organic compounds regulated under
Environmental Laws prior to the Closing Date; (e) which contains
polychlorinated byphenyls (PCBs) or friable asbestos or urea formaldehyde foam
insulation; or (f) which contains or emits radioactive particles, waves or
materials, including radon gas.
"RCRA" means the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.
"Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching, or migration into the environment; and
"Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a Governmental Authority or
required under any Environmental Law, or voluntarily undertaken to (1) clean
up, treat, or in any other way ameliorate or address any Hazardous Materials
or other substance in the environment, (2) prevent the Release or threat of
Release, or minimize the further Release of any Hazardous Material so it does
not endanger or threaten to endanger the public health or welfare or the
environment; (3) perform pre-remedial studies and investigations or
post-remedial monitoring and care pertaining or relating to a Release; or (4)
bring the applicable party into compliance with any Environmental Law.
Section 3.20. Opinion of Financial Advisor. ▇▇▇▇▇▇▇▇ has received the
opinion of the Financial Advisor to the effect that, as of the date hereof,
the cash consideration to be received by the holders of ▇▇▇▇▇▇▇▇ in the Offer
and the Merger is fair from a financial point of view to such holders.
▇▇▇▇▇▇▇▇ has been authorized by the Financial Advisor to include the Fairness
Opinion in the Offer Documents and the Proxy Statement and such opinion has
not been withdrawn or modified. True and complete copies of all agreements and
understandings between ▇▇▇▇▇▇▇▇ or any of its Affiliates and the Financial
Advisor relating to the transactions contemplated by this Agreement are
attached hereto as SCHEDULE 3.20.
Section 3.21. Vote Required. The affirmative vote of the holders of
662/3% of the outstanding shares of the ▇▇▇▇▇▇▇▇ Common Stock is the only vote
of the holders of any class or series of ▇▇▇▇▇▇▇▇'▇ capital stock necessary
(under applicable law or otherwise) to approve the Merger.
Section 3.22. Employment Relations; Compliance. There are no
administrative proceedings, audits or investigations pending or, to the best
of ▇▇▇▇▇▇▇▇'▇ knowledge, threatened and no written or, to the best of
▇▇▇▇▇▇▇▇'▇ knowledge, oral or threatened complaints against ▇▇▇▇▇▇▇▇ or any of
its Subsidiaries concerning the employment or term of employment of any
employee of ▇▇▇▇▇▇▇▇ or any of its Subsidiaries, or any violation of any
federal, state or local law, executive order or regulation relating to
employment relations, collective bargaining,
25
employment discrimination, employee benefits, occupational safety and health,
wages and hours of employees, immigration, medical and family leave and the
collection and payment of withholding and/or social security taxes and any
similar tax (an "Employment Law") that, individually or in the aggregate,
would have a ▇▇▇▇▇▇▇▇ Material Adverse Effect. To the best knowledge of
▇▇▇▇▇▇▇▇, each of ▇▇▇▇▇▇▇▇ and its Subsidiaries is in compliance in all
material respects with all Employment Laws, except for such noncompliance
that, individually or in the aggregate, would not have a ▇▇▇▇▇▇▇▇ Material
Adverse Effect.
Section 3.23. Indemnification of Employees, Etc. Except in connection
with matters set forth on SCHEDULE 3.09 hereto, and except for matters covered
by insurance (subject to deductibles) as of the date hereof, there is no
proceeding, claim, suit, action or governmental investigation pending or, to
the best knowledge of ▇▇▇▇▇▇▇▇ or any of its Subsidiaries, threatened, with
respect to which any current or former director, officer, employee or agent of
▇▇▇▇▇▇▇▇ or any of its Subsidiaries is entitled, or has asserted he is
entitled, to claim indemnification from ▇▇▇▇▇▇▇▇ or any of its Subsidiaries
pursuant to the Certificate of Incorporation or By-Laws of ▇▇▇▇▇▇▇▇ or any
provisions of the comparable charter or organizational documents of any of its
Subsidiaries, as provided in any indemnification agreement to which ▇▇▇▇▇▇▇▇
or any Subsidiary of ▇▇▇▇▇▇▇▇ is a party, or pursuant to applicable law, that
has a ▇▇▇▇▇▇▇▇ Material Adverse Effect.
Section 3.24. Labor Relations. Except as set forth in SCHEDULE 3.24,
there are or were, at any time in the three (3) year period preceding the date
of this Agreement, no collective bargaining agreements, memoranda of
understanding, side letters, or other agreements with any labor union or
organization in effect to which ▇▇▇▇▇▇▇▇ or any of its Subsidiaries are or
were a party or otherwise bound and which materially affect ▇▇▇▇▇▇▇▇'▇
business (collectively, the "Labor Agreements"), including agreements referred
to or incorporated by reference into any of the Labor Agreements, and no
employees of ▇▇▇▇▇▇▇▇ or any of its Subsidiaries are represented by any labor
organization. There are no provisions in any of the Labor Agreements that
would materially interfere with ▇▇▇▇▇▇▇▇'▇ ability to consummate the Offer or
Merger hereunder.
Section 3.25. Tangible Property. All of the assets of ▇▇▇▇▇▇▇▇ and
its Subsidiaries have been maintained and repaired for their continued
operation and are in good operating condition, reasonable wear and tear
excepted, and usable in the ordinary course of business, except where the
failure to be in such repair or condition or so usable would not individually
or in the aggregate have a ▇▇▇▇▇▇▇▇ Material Adverse Effect.
Section 3.26. Board Recommendation. On or prior to the date hereof,
the Board of Directors of ▇▇▇▇▇▇▇▇, at a meeting duly called and held, has by
the vote of those directors present (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, taken
together, are fair and in the best interests of the stockholders of ▇▇▇▇▇▇▇▇
and has approved the same and (ii) resolved to recommend that the holders of
the ▇▇▇▇▇▇▇▇ Shares accept the Offer and approve the Merger.
Section 3.27. Related Party Transactions. Since January 1, 1997
except as set forth on SCHEDULE 3.27 and except for the Plans or as otherwise
disclosed hereunder, no director
26
hereunder, no director, officer, "affiliate" or "associate" (as such terms are
defined in Rule 12b-2 under the Exchange Act) of ▇▇▇▇▇▇▇▇ or any of its
Subsidiaries (i) has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to ▇▇▇▇▇▇▇▇ or any of its
Subsidiaries for indebtedness or similar obligations incurred in the ordinary
course of business or (ii) is otherwise a party to any contract, arrangement
or understanding with ▇▇▇▇▇▇▇▇ or any of its Subsidiaries of a nature that
would be required to be disclosed under Item 404 of Regulation S-K of the
Securities Act.
Section 3.28. Schedule 14D-9, Offer Documents and Schedule 14D-1. The
Schedule 14D-9 and any amendments and supplements thereto will, when filed
with the Commission and when published, sent or given to holders of ▇▇▇▇▇▇▇▇
Common Stock, comply as to form in all material respects with the Exchange Act
and will not 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 were
made, not misleading, except that no representation is made by ▇▇▇▇▇▇▇▇ with
respect to information supplied by Acquisition in writing for inclusion
therein. None of the information supplied by ▇▇▇▇▇▇▇▇ for inclusion in the
Offer Documents or the Schedule 14D-1, and any amendments thereof, or
supplements thereto, will, when such materials are filed with the Commission
and when published, sent or given to holders of ▇▇▇▇▇▇▇▇ Common Stock, 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
made therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition represents and warrants to ▇▇▇▇▇▇▇▇ that:
Section 4.01. Organization and Good Standing. Acquisition is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York and it has the corporate power and authority to
own or lease all of the properties and assets owned or leased by it and to
carry on its business as it is now being conducted.
Section 4.02. Authority of Acquisition. Acquisition has the corporate
power to execute and deliver this Agreement and all other documents hereby
contemplated, to consummate the transactions hereby contemplated and to take
all other actions required to be taken by it pursuant to the provisions
hereof. The execution, delivery and performance of, and consummation of the
transactions contemplated by, this Agreement and all other documents hereby
contemplated have been duly authorized by Acquisition's Board of Directors and
shareholders and no other corporate proceedings on the part of Acquisition are
necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement constitutes the legal, valid and binding obligation of
Acquisition enforceable against it in accordance with its terms.
27
Section 4.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Acquisition does not, and the
consummation by Acquisition of the transactions contemplated hereby will not,
(i) violate the Certificate of Incorporation or By-laws of Acquisition, or
(ii), subject to making the filings and obtaining the approvals identified in
Section 4.03(b), violate any law, rule, regulation, order, judgment or decree
applicable to Acquisition or by which any property or asset of Acquisition is
bound or affected, or (iii) subject to making the filings and obtaining the
approvals identified in SCHEDULE 4.04(A), result in any Violation pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Acquisition is a
party or by which Acquisition or any property or assets of Acquisition is
bound or affected, except, in the case of clause (ii) or (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or delay consummation of the Offer or Merger in any material respect,
or otherwise prevent Acquisition from performing its material obligations
under this Agreement, or would not, individually or in the aggregate, limit
Acquisition's ability to consummate the transactions hereby contemplated or
have a material adverse effect on the business, properties, assets,
liabilities, results of operations or financial condition of Acquisition (an
"Acquisition Material Adverse Effect").
(b) The execution and delivery of this Agreement by
Acquisition does not, and the performance of this Agreement and the
consummation by Acquisition of the transactions contemplated hereby will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except for (A) the pre-merger
notification requirements of the HSR Act, and (B) filing and recordation of
appropriate merger and similar documents as required by New York law.
Section 4.04. Finder's Fees. Except as set forth on SCHEDULE 4.04,
Acquisition has not incurred any liability for finder's, brokerage or similar
fees or commissions in connection with this Agreement or the transactions
hereby contemplated.
Section 4.05. Litigation. There is on the date hereof no claim, suit,
action, proceeding, audit or investigation pending or, to the best of
Acquisition's knowledge, threatened against, involving or affecting
Acquisition, which seeks to or would likely materially adversely affect the
ability of ▇▇▇▇▇▇▇▇ or Acquisition to consummate the transactions contemplated
hereby.
Section 4.06. HUD. Except as described or set forth in SCHEDULE 4.06,
neither Acquisition, nor any of its officers or directors nor any shareholder
having more than a 10% direct or indirect interest in Acquisition, nor any of
their affiliates, as defined in 24 CFR ss.200.215(a) (collectively referred to
as "Acquisition Principals"), have been convicted of a felony or are the
subject of a complaint or indictment charging a felony debarred, suspended or
received a full or limited denial of participation or otherwise disqualified
or sanctioned by the United States Department of Housing and Urban Development
("HUD") or by any other department or agency of the federal government or of
any state or local government, nor have any of the Acquisition Principals
served as an officer or director of, or been a shareholder, partner or member
of an entity having a 10% direct or indirect interest, or general partner
interest
28
(regardless of percentage) in, nor acted as sponsor, prime contractor, turnkey
developer, management agent, nursing home administrator or operator, packager
or consultant, or architect or attorney in or for, any federal, state or local
governmentally assisted development (other than as an architect or attorney
with an arm's-length fee arrangement for professional services) that has been
the subject of a mortgage foreclosure, mortgage default, or mortgage work-out
arrangement, or regulatory agreement default and neither Acquisition nor any
of the Acquisition Principals nor any entity controlled by them or real
property owned by them (collectively referred to as "Property") are delinquent
in the payment of New York State or New York City taxes nor are there
outstanding unsatisfied notices of violations issued against the Property.
Section 4.07. Financing. Acquisition has received the written
commitment for the debt portion of the financing for the consummation of the
Offer and the Merger annexed hereto as SCHEDULE 4.07. The financing provided
under such commitment, together with the $5 Million Deposit described below
and equity to be contributed by Acquisition's principals, are sufficient in
amount to provide sufficient funds to Acquisition for consummation of the
Offer and the Merger and all transactions contemplated by Acquisition to be
consummated in connection therewith, and all fees and expenses to be incurred
by Acquisition in connection with the foregoing. Such commitment is in full
force and effect in the form annexed hereto.
ARTICLE V
COVENANTS
Section 5.01. Acquisition Transactions. Prior to the date on which
designees of Acquisition constitute a majority of the directors of ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ agrees (a) that neither it nor any of the Subsidiaries shall, nor
shall it or any of the Subsidiaries permit their respective officers,
directors, executive employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or
any of the Subsidiaries) to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a merger, consolidation or other business
combination, sale of a material amount of assets outside of the ordinary
course of business or the issuance of Voting Debt or Options, sale of shares
of capital stock outside of the ordinary course of business or similar
transaction involving ▇▇▇▇▇▇▇▇ or any of the Subsidiaries (any such
transaction being hereinafter referred to as an "Acquisition Transaction") or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an
Acquisition Transaction (excluding the Offer and the Merger contemplated by
this Agreement and excluding any such matter described on SCHEDULE 5.02), or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Transaction; and (b) that it will notify Acquisition promptly with all
relevant details if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it, and if said inquiry or proposal
is in writing it will deliver to Acquisition a copy of such inquiry or
proposal as promptly as is practicable; provided, however, that nothing
contained in this Section 5.01 shall prohibit the Board of Directors or
29
officers of ▇▇▇▇▇▇▇▇ from furnishing information to or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited bona fide proposal relating to an Acquisition Transaction, if, and
only to the extent that, (A) the Board of Directors of ▇▇▇▇▇▇▇▇, based upon
advice of outside counsel, determines in good faith that such action is
required for the Board of Directors to comply with its fiduciary duties to
shareholders under applicable law, (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
▇▇▇▇▇▇▇▇ provides written notice to Acquisition to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity, which notice shall (to the extent consistent with the
fiduciary duties of the Board of Directors to shareholders under applicable
law) include the identity of the person or entity engaging in such discussions
or negotiations, requesting such information or making such proposal, and the
material terms and conditions of any proposed Acquisition Transaction, and (C)
▇▇▇▇▇▇▇▇ keeps Acquisition reasonably informed of the status and all material
information with respect to any such discussions or negotiations. Nothing in
this Section 5.01 shall (x) permit ▇▇▇▇▇▇▇▇ to terminate this Agreement
(except as provided in Section 8.02 hereof), (y) permit ▇▇▇▇▇▇▇▇ to enter into
any agreement with respect to an Acquisition Transaction for as long as this
Agreement remains in effect (it being agreed that for as long as this
Agreement remains in effect, ▇▇▇▇▇▇▇▇ shall not enter into any agreement with
any person that provides for, or in any way facilitates, an Acquisition
Transaction (other than a confidentiality agreement in customary form)), or
(z) affect any other obligation of ▇▇▇▇▇▇▇▇ under this Agreement. The Company
shall immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any
parties conducted heretofore by ▇▇▇▇▇▇▇▇ or any employee, agent or
representative of any kind with respect to any Acquisition Proposal existing
on the date hereof.
Section 5.02. Interim Operations. Subsequent to the date hereof and
prior to the date on which a majority of ▇▇▇▇▇▇▇▇'▇ directors are designees of
Acquisition, unless Acquisition has consented in writing thereto (which
consent shall not be unreasonably withheld), except as set forth on SCHEDULE
5.02, ▇▇▇▇▇▇▇▇ agrees that it:
(a) shall, and shall cause its Major Subsidiaries to,
conduct their operations in all material respects according to their
usual, regular and ordinary course in substantially the same manner
as heretofore conducted;
(b) shall use its reasonable efforts, and shall cause its
Subsidiaries other than inactive Subsidiaries to use its reasonable
efforts, to preserve intact their business organizations and
goodwill, keep available the services of their respective officers
and employees and maintain satisfactory relationships with those
persons having business relationships with them (Acquisition agreeing
to reasonably cooperate with ▇▇▇▇▇▇▇▇ in such efforts);
(c) shall promptly deliver to Acquisition true and correct
copies of any report, statement or schedule filed with the SEC or any
other state or federal Governmental Authority in connection with this
Agreement and the transactions contemplated hereby;
30
(d) shall not, and shall not permit any of the Subsidiaries
to, amend its Certificate of Incorporation or By-laws;
(e) shall not, and shall cause each of the Subsidiaries to
not, (w) issue, transfer, deliver or sell any shares of its capital
stock, effect any stock split or otherwise change its capitalization
as it existed on the date hereof, (x) grant, confer or award any
Option, Voting Debt, conversion right or other right not existing on
the date hereof to acquire any share of its capital stock, or amend
the terms of or reprice any outstanding option, warrant, or
conversion right, or grant, confer or award any bonuses or other
forms of cash incentives to any officer, director or employee except
consistent with past practice, (y) increase any compensation under
any employment agreement with any of its present or future officers,
directors or employees, except for normal increases consistent with
past practice, grant any severance or termination pay to, or, except
on a basis consistent with the letter of even date herewith from
Acquisition to ▇▇▇▇▇▇▇▇, enter into any employment or severance
agreement with, or extend any loan or advance to any officer,
director or employee or amend any such agreement in any material
respect other than severance arrangements which are consistent with
past practice with respect to employees terminated by ▇▇▇▇▇▇▇▇, or
(z) adopt any new employee benefit plan (including, without
limitation, any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock benefit or
stock purchase plan) or amend any existing employee benefit plan
(other than a multiemployer plan) in any material respect, without
Acquisition's written consent, not to be unreasonably withheld;
(f) shall not (i) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of
its capital stock or other ownership interests other than the regular
quarterly cash dividend of $0.0625 per share payable to shareholders
of record at September 30, 1997, or (ii) directly or indirectly
redeem, purchase or otherwise acquire any shares or its capital stock
or capital stock of any of the Subsidiaries, or make any commitment
for any such action;
(g) shall not, and shall not permit any of the Subsidiaries
to, acquire, sell, lease, encumber or otherwise dispose of any assets
for its own account (including, without limitation, capital stock of
or other equity interests in Subsidiaries or other entities) in the
aggregate for an amount exceeding $250,000 except in the ordinary
course of business or as set forth on SCHEDULE 5.02;
(h) shall not, and shall not permit any of the Subsidiaries
to, incur or assume any indebtedness for borrowed money, except in
the ordinary course of business consistent with past practice or as
set forth on SCHEDULE 5.02, or guarantee any such indebtedness or
make any loans, advances or capital contributions to, or investments
in, any other person other than wholly-owned subsidiary, except in
compliance with any partnership agreement or joint venture agreement
to which ▇▇▇▇▇▇▇▇ or a Subsidiary is a party, or otherwise or sell
any debt securities, in the aggregate exceeding $250,000;
31
(i) shall not, nor shall it permit any of its Subsidiaries
to, (i) merge or consolidate with, or acquire any equity interest in,
any corporation, partnership, association or other business
organization, or enter into an agreement with respect thereto or (ii)
acquire or agree to acquire any assets of any corporation,
partnership, association or other business organization or division
thereof, except for the purchase of inventory and supplies in the
ordinary course of business;
(j) shall not authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation or
dissolution of ▇▇▇▇▇▇▇▇ or any of its Subsidiaries;
(k) shall not, nor shall ▇▇▇▇▇▇▇▇ permit any of its
Subsidiaries to, (A) enter into any contracts involving in any
individual case, aggregate annual payments by ▇▇▇▇▇▇▇▇ or any of its
Subsidiaries in each case for its own account in excess of $250,000
or (B) modify, rescind, terminate, waive, release or otherwise amend
in any material respect any of the terms or provisions of any
material contract in any manner that is material and adverse to the
▇▇▇▇▇▇▇▇ or the respective Subsidiary of ▇▇▇▇▇▇▇▇ party thereto;
(l) not settle or compromise any claim for appraisal rights
in respect of the Merger without the prior written consent of
Acquisition;
(m) shall not, and shall not permit any of the Subsidiaries
to, authorize or make capital expenditures in excess of $250,000 in
the aggregate, except for, (1) in the case of ▇▇▇▇▇▇, the purchase
and development of land described on SCHEDULE 5.02 in the ordinary
course of business and (2) capital expenditures in an aggregate
amount not exceeding $2,000,000 in connection with moving ▇▇▇▇▇▇▇▇'▇
corporate offices;
(n) shall not and shall not permit any of the Subsidiaries
to, mortgage or otherwise encumber or subject to any Lien any
properties or assets except as would not materially adversely affect
the business of ▇▇▇▇▇▇▇▇ or any Major Subsidiary;
(o) shall not make any material change to its accounting
(including tax accounting) methods, principles or practices, except
as may be required by generally accepted accounting principles or by
applicable tax laws; and
(p) shall not, and shall not permit any of the Subsidiaries
to, do or agree to do any of the foregoing set forth in clauses (d),
(e), (f), (g), (h), (i), (j), (k), (l), (m), (n) and (o).
Section 5.03. Shareholder Approval. (a) To the extent shareholder
approval of this Agreement is required by law, ▇▇▇▇▇▇▇▇ will take (and
Acquisition shall use all reasonable efforts to cause ▇▇▇▇▇▇▇▇ to take) all
action necessary in accordance with New York law, ▇▇▇▇▇▇▇▇'▇ Certificate of
Incorporation, as amended, its By-laws and the requirements of the American
Stock Exchange, to convene a special meeting of the ▇▇▇▇▇▇▇▇ Shareholders (the
"▇▇▇▇▇▇▇▇
32
Shareholders Meeting") as promptly as practicable following the expiration of
the Offer to consider and vote upon the approval of the Merger, this Agreement
and the transactions contemplated hereby.
(b) ▇▇▇▇▇▇▇▇'▇ Board of Directors shall, subject to its good
faith judgment as to its fiduciary obligations to the ▇▇▇▇▇▇▇▇ Shareholders
imposed by law, recommend that the ▇▇▇▇▇▇▇▇ Shareholders vote in favor of the
Merger, this Agreement and the transactions hereby contemplated and cause
▇▇▇▇▇▇▇▇ to take all lawful actions to solicit from the ▇▇▇▇▇▇▇▇ Shareholders
proxies in favor of such approval.
(c) Notwithstanding the foregoing, if Acquisition and its
affiliates shall own at least 90% of the outstanding ▇▇▇▇▇▇▇▇ Shares, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a meeting of shareholders in accordance with Section 905 of the BCL.
(d) To the extent shareholder approval of this Agreement is
required by law, ▇▇▇▇▇▇▇▇ shall prepare (and Acquisition shall assist where
reasonable and appropriate), a proxy statement relating to the ▇▇▇▇▇▇▇▇
Shareholders Meeting (the "▇▇▇▇▇▇▇▇ Proxy Statement") and a form of proxy for
use at the ▇▇▇▇▇▇▇▇ Shareholders Meeting relating to the vote of the ▇▇▇▇▇▇▇▇
Shareholders with respect to the Merger, this Agreement and the transactions
hereby contemplated (together with any amendments or supplements thereto, in
each case in the form or forms mailed to the ▇▇▇▇▇▇▇▇ Shareholders). ▇▇▇▇▇▇▇▇
shall cause (and Acquisition shall use all reasonable efforts to cause) the
▇▇▇▇▇▇▇▇ Proxy Statement to be mailed to ▇▇▇▇▇▇▇▇ Shareholders at the earliest
practicable date following consummation of the Offer. Acquisition shall
promptly furnish to ▇▇▇▇▇▇▇▇ such information regarding each of Acquisition
and heir respective officers and directors as may be reasonably requested by
▇▇▇▇▇▇▇▇ for inclusion in the ▇▇▇▇▇▇▇▇ Proxy Statement as required by any law
or by the Commission.
(e) ▇▇▇▇▇▇▇▇ covenants that none of the information
supplied, or to be supplied, by ▇▇▇▇▇▇▇▇ specifically for inclusion or
incorporation by reference in the ▇▇▇▇▇▇▇▇ Proxy Statement, including, without
limitation, information concerning ▇▇▇▇▇▇▇▇ or any of its affiliates,
directors, officers, employees, agents or representatives in the ▇▇▇▇▇▇▇▇
Proxy Statement will, at the time of mailing of the ▇▇▇▇▇▇▇▇ Proxy Statement
or any amendment or supplement thereto to the ▇▇▇▇▇▇▇▇ Shareholders, contain
any untrue statement of any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If, at any time
prior to the date of the ▇▇▇▇▇▇▇▇ Shareholders' Meeting, any event with
respect to ▇▇▇▇▇▇▇▇ or any of its Subsidiaries, or with respect to other
information supplied by ▇▇▇▇▇▇▇▇ specifically for inclusion in the ▇▇▇▇▇▇▇▇
Proxy Statement, shall occur which is required to be described in an amendment
of, or a supplement to, the ▇▇▇▇▇▇▇▇ Proxy Statement, such event shall be so
described, and such amendment or supplement shall be promptly filed with the
Commission and, as required by law, disseminated to the ▇▇▇▇▇▇▇▇ Shareholders.
All documents that ▇▇▇▇▇▇▇▇ is responsible for filing with the Commission in
connection with the transactions contemplated herein, including the Schedule
14D-9 or the ▇▇▇▇▇▇▇▇ Proxy Statement, insofar as it relates to ▇▇▇▇▇▇▇▇ or
its Subsidiaries or other
33
information supplied by ▇▇▇▇▇▇▇▇ specifically for inclusion therein, will
comply as to form, in all material respects, with the provisions of the
Securities Act, the Exchange Act or the rules and regulations thereunder, and
each such document required to be filed with any Governmental Authority other
than the Commission will comply in all material respects with the provisions
of applicable law as to the information required to be contained therein,
except that no covenant is made by ▇▇▇▇▇▇▇▇ with respect to statements made
therein based on information supplied by Acquisition or any of their
affiliates, directors, officers, employees, agents or representatives in
writing for inclusion therein.
(f) Acquisition covenants that none of the information
supplied, or to be supplied, by Acquisition specifically for inclusion or
incorporation by reference in the ▇▇▇▇▇▇▇▇ Proxy Statement, including, without
limitation, information concerning Acquisition or any of its affiliates,
directors, officers, employees, agents or representatives supplied by
Acquisition in connection with ▇▇▇▇▇▇▇▇'▇ preparation of the ▇▇▇▇▇▇▇▇ Proxy
Statement will, at the time of mailing of the ▇▇▇▇▇▇▇▇ Proxy Statement or any
amendment or supplement thereto to the ▇▇▇▇▇▇▇▇ Shareholders, contain any
untrue statement of any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If, at any time
prior to the date of the ▇▇▇▇▇▇▇▇ Shareholders' Meeting, any event with
respect to Acquisition, or with respect to other information supplied by
Acquisition for inclusion in the ▇▇▇▇▇▇▇▇ Proxy Statement, shall occur which
is required to be described in an amendment of, or a supplement to, the
▇▇▇▇▇▇▇▇ Proxy Statement, such event shall be so described, and the
information required to be filed in such amendment or supplement shall be
promptly delivered to ▇▇▇▇▇▇▇▇ for filing with the Commission and, as required
by law, dissemination to the ▇▇▇▇▇▇▇▇ Shareholders. All documents that
Acquisition is responsible for filing with the Commission in connection with
the transactions contemplated herein, including the Schedule 14D-1, insofar as
it relates to Acquisition or other information supplied by Acquisition
specifically for inclusion therein, will comply as to form, in all material
respects, with the provisions of the Securities Act, Exchange Act or the rules
and regulations thereunder, and each such document required to be filed with
any Governmental Authority other than the Commission will comply in all
material respects with the provisions of applicable law as to the information
required to be contained therein, except that no covenant is made by
Acquisition with respect to statements made therein based on information
supplied by ▇▇▇▇▇▇▇▇ or any of the Subsidiaries or any of their respective
affiliates, directors, officers, employees, agents or representatives in
writing for inclusion therein.
(g) Acquisition agrees to cause all ▇▇▇▇▇▇▇▇ Shares
purchased pursuant to the Offer and all other ▇▇▇▇▇▇▇▇ Shares owned by
Acquisition or any affiliate of Acquisition to be voted in favor of the
approval and adoption of this Agreement.
Section 5.04. Access by Acquisition. The directors, officers,
employees, lenders, accountants, counsel and other representatives of
Acquisition (collectively, the "Representatives") shall be permitted
reasonable access, during usual business hours during the period prior to the
Closing Date to the properties, accounts, books, contracts, commitments, tax
returns and records of ▇▇▇▇▇▇▇▇ and the Subsidiaries, and such other
information relating to
34
▇▇▇▇▇▇▇▇ and the Subsidiaries as Acquisition shall reasonably request. The
Representatives shall be permitted to discuss the business affairs, finances
and accounts of ▇▇▇▇▇▇▇▇ and the Subsidiaries with the officers, directors,
executives, counsel, auditors and actuaries of ▇▇▇▇▇▇▇▇ and the Subsidiaries..
Section 5.05. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Filing. Each party hereto shall file
or cause to be filed with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") any
notification required to be filed by their respective "ultimate parent"
companies under the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. Such parties
will use all reasonable efforts to make such filings within five business days
after commencement of the Offer, and to respond on a timely basis to any
requests for additional information made by either of such agencies. Each of
the parties hereto agrees to furnish the other with copies of all
correspondence, filings and communications (and memoranda setting forth the
substance thereof) between it and its affiliates and their respective
representatives, on the one hand, and the FTC, the Antitrust Division or any
other Governmental Authority or members or their respective staffs, on the
other hand, with respect to this Agreement and the transactions contemplated
hereby, other than personal financial information filed therewith. Each party
hereto agrees to furnish the others with such necessary information and
reasonable assistance as such other parties and their respective affiliates
may reasonably request in connection with their preparation of necessary
filings, registrations or submissions of information to any Governmental
Authorities, including without limitation any filings necessary under the
provisions of the HSR Act.
Section 5.06. No Breach of Representations and Warranties. Each of
▇▇▇▇▇▇▇▇ and Acquisition shall not knowingly and ▇▇▇▇▇▇▇▇ shall not knowingly
permit any Subsidiary to take any action which would be reasonably likely to
cause or constitute a material breach, or knowingly take any action which, if
it had been taken prior to the date hereof, would have caused or constituted a
material breach of, any of its representations and warranties set forth in
Articles III and IV, respectively. Each of ▇▇▇▇▇▇▇▇ and Acquisition shall, in
the event of, or promptly after the occurrence of, or promptly after obtaining
knowledge of the occurrence of or the impending or threatened occurrence of,
any fact or event which would cause or constitute a breach of any of the
representations and warranties set forth in Articles III and IV, respectively,
as of the Closing Date, give detailed notice thereof to each other
non-breaching party; and each of ▇▇▇▇▇▇▇▇ and Acquisition shall use its
reasonable efforts to prevent or promptly to remedy such breach whether or not
caused by any action knowingly taken.
Section 5.07. Consents; Notices. Each of ▇▇▇▇▇▇▇▇ and Acquisition
shall use its reasonable efforts to obtain and deliver to each other party all
written consents, in form and substance satisfactory to each other party,
required in connection with this Agreement or the transactions hereby
contemplated. Each of ▇▇▇▇▇▇▇▇ and Acquisition shall also deliver all notices
to Governmental Authorities and third parties required to be delivered in
connection with the execution of this Agreement and the transactions hereby
contemplated.
35
Section 5.08. Reasonable Efforts. Subject to the fiduciary duties of
the Board of Directors of ▇▇▇▇▇▇▇▇ and on the terms and subject to the
conditions of this Agreement, each of ▇▇▇▇▇▇▇▇ and Acquisition shall use its
reasonable efforts to effectuate the transactions hereby contemplated and to
fulfill the conditions to the obligations of each under this Agreement,
including cooperating fully with the other party, including by provision of
information and making of all necessary filings in connection with, among
other things, approvals under the HSR Act. ▇▇▇▇▇▇▇▇ will use all reasonable
efforts to obtain any consent from third parties necessary to allow ▇▇▇▇▇▇▇▇
and its Subsidiaries to continue operating their business as presently
conducted as a result of the consummation of the transactions contemplated
hereby. In case at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement of to vest
the Surviving Corporation with full title to all properties, assets, rights,
approval, immunities and franchises of either of ▇▇▇▇▇▇▇▇ or Acquisition, the
proper officers and directors of each party to this Agreement shall take all
such necessary action.
Section 5.09. Indemnification; Officers' and Directors' Insurance.
(a) Acquisition agrees that all rights to indemnification
existing as of the date hereof in favor of the present or former directors,
officers, employees, fiduciaries and agents of ▇▇▇▇▇▇▇▇ or any of the
Subsidiaries as provided in ▇▇▇▇▇▇▇▇'▇ certificate of incorporation or by-laws
or pursuant to other agreements, arrangements or the certificate of
incorporation, by-laws or similar documents of any of the Subsidiaries as in
effect on the date hereof with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect pursuant to the terms thereof. The Surviving Corporation shall cause to
be maintained in effect for not less than six years from the Effective Time
the policies of directors' and officers' liability insurance and the ▇▇▇▇▇▇▇▇
employed lawyers liability insurance maintained by ▇▇▇▇▇▇▇▇ and its
Subsidiaries, each as in effect on the date hereof (provided that they may
substitute therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous), with respect to matters
occurring prior to the Effective Time.
(b) It is understood and agreed that ▇▇▇▇▇▇▇▇ shall, to the
fullest extent permitted under applicable law and regardless of whether the
Merger becomes effective, indemnify and hold harmless, and after the Effective
Time, the Surviving Corporation shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless, each present and former director,
officer and fiduciary of ▇▇▇▇▇▇▇▇ or any of the Subsidiaries (collectively,
the "Indemnified Parties") against any fees, costs or expenses (including
reasonable attorneys' fees) and judgments, fines, losses, damages, liabilities
and amounts paid in settlement (collectively, "Losses"), in connection with
any pending, threatened or completed claim, action, suit, proceeding or
investigation arising out of any actions or omissions occurring at or prior to
the Effective Time that are in whole or in part based on or arising out of the
fact that such person is or was a director, officer or fiduciary of ▇▇▇▇▇▇▇▇
or pertaining to any of the transactions contemplated hereby. In no event
shall ▇▇▇▇▇▇▇▇ or the Surviving Corporation be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld). Any Indemnified Party wishing to claim indemnification under this
Section 5.09(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify ▇▇▇▇▇▇▇▇ (or
36
after the Effective Time, the Surviving Corporation) (but the failure so to
notify shall not relieve a party from any liability which it may have under
this Section 5.09(b) except to the extent such failure prejudices such party's
position with respect to such claims) and shall deliver to ▇▇▇▇▇▇▇▇ (or after
the Effective Time, the Surviving Corporation) the undertaking contemplated by
Section 723(c) of the BCL. ▇▇▇▇▇▇▇▇ (or, after the Effective Time, the
Surviving Corporation) shall be entitled to assume and control the defense of
any such action or proceeding, including the employment of counsel reasonably
satisfactory to the Indemnified Party; provided, however, that any Indemnified
Party may at its own expense retain separate counsel to participate in such
defense. If ▇▇▇▇▇▇▇▇ or the Surviving Corporation does not elect to assume
such defense, then the Indemnified Parties may assume such defense with one
counsel (and, if required, one local counsel) of their own choosing reasonably
acceptable to ▇▇▇▇▇▇▇▇ or the Surviving Corporation.
(c) If any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is commenced,
whether before or after the Effective Time, ▇▇▇▇▇▇▇▇ and, after the Effective
Time, the Surviving Corporation, shall agree to use their commercially
reasonable efforts to defend against and respond thereto.
(d) This Section 5.09 shall survive for a period of six
years (and thereafter with respect to claims then pending) following the
Effective Time and is intended to benefit ▇▇▇▇▇▇▇▇, the Surviving Corporation
and the Indemnified Parties. In the event ▇▇▇▇▇▇▇▇ or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation of such consolidation or merger, or (ii) transfers all
or substantially all of its properties to any person, then, and in each case,
proper provision shall be made so that the successors and assigns of ▇▇▇▇▇▇▇▇
and the Surviving Corporation, as the case may be, shall assume the
obligations set forth in this Section 5.09.
Section 5.10. Government Agency Cooperation. Acquisition shall
provide, and shall cause the Acquisition Principals to provide, any and all
information that may be required by HUD, or any other federal, state or local
governmental entity in connection with the transactions contemplated by this
Agreement and in connection with any approval that may be required for the
transfer of interests in any governmentally assisted development in which
▇▇▇▇▇▇▇▇ or any of its Subsidiaries has had an interest, and shall pay all
reasonable fees and expenses (including the reasonable fees and expenses of
▇▇▇▇▇▇▇▇'▇ counsel) incurred in connection with obtaining any such approval.
Section 5.11. Directors. (a) Promptly upon the acceptance for payment
of, and payment by Acquisition for, all ▇▇▇▇▇▇▇▇ Shares tendered and not
withdrawn pursuant to the Offer, Acquisition shall be entitled to designate
such number of directors on the Board of Directors of ▇▇▇▇▇▇▇▇ as will give
Acquisition, subject to compliance with Section 14(f) of the Exchange Act,
representation on such Board of Directors equal to at least that number of
directors, rounded up to the next whole number (and in no event less than a
majority of the Board of Directors), which is the product of (a) the total
number of directors on such Board of Directors (giving effect to the directors
elected pursuant to this sentence) multiplied by (b) the percentage that (i)
such number
37
of ▇▇▇▇▇▇▇▇ Shares so accepted for payment and paid for by Acquisition or
otherwise owned by Acquisition and its affiliates bears to (ii) the number of
such ▇▇▇▇▇▇▇▇ Shares outstanding, and ▇▇▇▇▇▇▇▇ shall, at such time, cause
Acquisition's designees to be so elected; provided, however, that in the event
that Acquisition's designees are appointed or elected to the Board of
Directors of the Company, until the Effective Time of the Merger such Board of
Directors shall have at least two directors who are directors on the date
hereof or who are otherwise not officers, directors or affiliates of
Acquisition and are independent directors under the rules of the American
Stock Exchange (the "Independent Directors") and provided further that, in
such event, if the number of Independent Directors shall be reduced below two
for any reason whatsoever, any remaining Independent Directors (or Independent
Director, if there shall be only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Independent Directors
for purposes of this Agreement or, if no Independent Directors then remain,
the other directors shall designate two persons to fill such vacancies who
shall not be officers, stockholders or affiliates of Acquisition and who shall
be independent directors under the rules of the American Stock Exchange, and
such persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, ▇▇▇▇▇▇▇▇ shall take all action requested
by Acquisition necessary to effect any such election, including mailing to its
shareholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
▇▇▇▇▇▇▇▇ agrees to make such mailing with the mailing of the Schedule 14D-9
(provided that Acquisition shall have provided to ▇▇▇▇▇▇▇▇ on a timely basis
all information required to be included in the Information Statement with
respect to Acquisition's designees). In connection with the foregoing,
▇▇▇▇▇▇▇▇ will promptly, at the option of Acquisition, either increase the size
of ▇▇▇▇▇▇▇▇'▇ Board of Directors or obtain the resignation of such number of
its current directors as is necessary to enable Acquisition's designees to be
elected to ▇▇▇▇▇▇▇▇'▇ Board of Directors as provided above.
(b) Following the election or appointment of Acquisition's
designees pursuant to this Section 5.11 and prior to the Effective Time of the
Merger, if requested by a majority of the Independent Directors, Acquisition's
designees shall abstain from acting upon, and the approval of a majority of
the Independent Directors shall be required to authorize, any matter relating
to this Agreement or the Merger, including without limitation any termination
of this Agreement by ▇▇▇▇▇▇▇▇, any amendment of this Agreement requiring
action by the Board of Directors of ▇▇▇▇▇▇▇▇, any extension of time for the
performance of any obligation or any other act of Acquisition under this
Agreement and any waiver of compliance by Acquisition with any provision of
this Agreement for the benefit of ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Shareholders.
Section 5.12. Certain Agreements of Acquisition. If requested by
▇▇▇▇▇▇▇▇, unless other arrangements are entered into by Acquisition and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Acquisition shall provide ▇▇▇▇▇▇▇▇ prior to consummation of the
Offer with sufficient funds to pay the "Sale Payment" to ▇▇. ▇▇▇▇▇▇▇, as such
term is defined in the agreement between ▇▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ dated
November 7, 1996.
Section 5.13. Notification of Certain Matters. Each party shall give
prompt written notice to the other of (a) the failure of such party to comply
with or satisfy in any material
38
respect any covenant, condition or agreement to be complied with or satisfied
by it hereunder and (b) in the case of ▇▇▇▇▇▇▇▇, the occurrence of any threat
by any executive officer or senior management employee of ▇▇▇▇▇▇▇▇ or any of
its Major Subsidiaries to resign or otherwise terminate their employment
relationship with ▇▇▇▇▇▇▇▇ or any of its Major Subsidiaries.
ARTICLE VI
CONDITIONS TO ACQUISITION'S OBLIGATIONS
All obligations of Acquisition under this Agreement to effect the
Merger are subject solely to the fulfillment at or prior to the Closing Time
of each of the following conditions (any of which may be waived in writing by
Acquisition):
Section 6.01. Injunctions. No court, agency or other authority shall
have issued any order, decree or judgment to set aside, restrain, enjoin or
prevent the performance of any of Acquisition's material obligations under
Article II and no statute, rule, regulation, executive order, decree or
injunction shall have after the date of this Agreement been enacted, entered,
promulgated or enforced by any United States court or Governmental Authority
of competent jurisdiction which prohibits the consummation of the Merger;
provided, however, that Acquisition shall have used its commercially
reasonable best efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as possible any injunction or other order that
may be entered.
Section 6.02. Shareholder Approval. The Merger, this Agreement and
the transactions contemplated hereby shall have been approved in a manner
required by applicable law, and by the applicable regulations of any stock
exchange or other regulatory body, provided, that Acquisition and its
affiliates shall have voted all ▇▇▇▇▇▇▇▇ Shares owned by them in favor of this
Agreement and provided further, that each of Acquisition and ▇▇▇▇▇▇▇▇ shall
have used its commercially reasonable efforts to cause such approval to be
obtained.
Section 6.03. Consummation of the Offer. Acquisition shall have
accepted for purchase and paid for ▇▇▇▇▇▇▇▇ Shares tendered pursuant to the
Offer; provided, however, that this condition will be deemed satisfied with
respect to Acquisition if Acquisition shall have failed to purchase ▇▇▇▇▇▇▇▇
Shares pursuant to the Offer in violation of the terms of the Offer or this
Agreement.
ARTICLE VII
CONDITIONS TO ▇▇▇▇▇▇▇▇'▇ OBLIGATIONS
All obligations of ▇▇▇▇▇▇▇▇ under this Agreement to effect the Merger
are subject solely to the fulfillment, at the Closing Time, of each of the
following conditions (any of which may, subject to the provisions of Section
5.11, be waived in writing by ▇▇▇▇▇▇▇▇):
Section 7.01. Injunctions. No, court, agency or other authority shall
have issued any order, decree or judgment to set aside, retrain, enjoin or
prevent the performance of ▇▇▇▇▇▇▇▇'▇
39
obligations under Article II hereof. No statute, rule, regulation, executive
order, degree or injunction shall have after the date of this Agreement been
enacted, entered, promulgated or enforced by any United States court or
Governmental Body of competent jurisdiction which prohibits the consummation
of the Merger.
Section 7.02. Shareholder Approval. The Merger, this Agreement and
the transactions contemplated hereby shall have been approved in a manner
required by applicable law, and by the applicable regulations of any stock
exchange or other regulatory body.
ARTICLE VIII
ESCROW DEPOSITS; TERMINATION
Section 8.01. Escrow Deposits. Simultaneously with the execution and
delivery of this Agreement, Acquisition has deposited with Proskauer Rose LLP
(the "Escrow Agent") the cash sum of $5 million (the "$5 Million Deposit")
under an Escrow Agreement (the "Deposit Escrow Agreement") among the Escrow
Agent, Acquisition and ▇▇▇▇▇▇▇▇. The $5 Million Deposit shall be paid by the
Escrow Agent as prescribed under Section 8.03 below.
Section 8.02. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the Shareholders of
▇▇▇▇▇▇▇▇ or by Acquisition, subject, in the case of ▇▇▇▇▇▇▇▇, to the
provisions of Section 5.11:
(a) by the mutual consent of Acquisition and ▇▇▇▇▇▇▇▇;
(b) by Acquisition, if prior to consummation of the Offer
(i) the Board of Directors of ▇▇▇▇▇▇▇▇ fails to make, or withdraws or
materially modifies or changes in a manner adverse to Acquisition its
recommendation to the ▇▇▇▇▇▇▇▇ Shareholders to accept the Offer, the Merger or
this Agreement and the transactions contemplated hereby, or resolves to do the
foregoing or (ii) the Board of Directors of ▇▇▇▇▇▇▇▇ shall have recommended
that the ▇▇▇▇▇▇▇▇ Shareholders accept or approve an Acquisition Transaction
with a person other than Acquisition, or resolves to do the foregoing or (iii)
a tender or exchange offer for any of the outstanding shares of capital stock
of ▇▇▇▇▇▇▇▇ is commenced (other than by Acquisition or its affiliates) and the
Board of Directors of ▇▇▇▇▇▇▇▇ fails to timely recommend against ▇▇▇▇▇▇▇▇
Shareholders' tendering their shares into such tender or exchange offer;
(c) by ▇▇▇▇▇▇▇▇, if in the exercise of its judgment as to
its fiduciary duties to its shareholders, after consultation with outside
counsel, the Board of Directors of ▇▇▇▇▇▇▇▇ determines that such termination
is required by reason of a proposal relating to an Acquisition Transaction
being made;
(d) by ▇▇▇▇▇▇▇▇, if the Offer shall not have been
consummated on or before November 20, 1997 or such later expiration date for
the Offer as may be expressly permitted
40
under Section 1.01(a) (provided that the conditions to consummation of the
Offer set forth on EXHIBIT A have been satisfied on such date);
(e) by ▇▇▇▇▇▇▇▇, if there has been a violation or breach by
Acquisition of any representation, warranty or agreement contained in this
Agreement specifically qualified by materiality, or a material violation or
breach by Acquisition of any material representation, warranty or agreement
not so qualified contained in this Agreement (which violation or breach is not
cured by Acquisition within 30 days after written notice by ▇▇▇▇▇▇▇▇ to
Acquisition reasonably describing such breach);
(f) by Acquisition prior to consummation of the Offer, if
there has been a violation or breach by ▇▇▇▇▇▇▇▇ of any representation,
warranty or agreement contained in this Agreement as though such
representations, warranties and agreements were made without reference to a
▇▇▇▇▇▇▇▇ Material Adverse Effect (which violation or breach is not cured by
▇▇▇▇▇▇▇▇ within 30 days after written notice by Acquisition to ▇▇▇▇▇▇▇▇
reasonably describing such breach), except in all cases where the failure or
failures of such representations and warranties to be so true and correct or
such agreements to be performed or complied with would not have, singly or in
the aggregate, a ▇▇▇▇▇▇▇▇ Material Adverse Effect;
(g) by Acquisition or ▇▇▇▇▇▇▇▇, if the Offer shall not have
been consummated on or before December 31, 1997, or if prior to such day a
reasonable, well-informed person would conclude that any condition set forth
in EXHIBIT A shall be incapable of being satisfied by such date (except that a
party whose breach of covenant has caused such failure to consummate shall not
be entitled to so terminate this Agreement), or the Merger has not been
consummated by October 16, 1998; or
(h) by ▇▇▇▇▇▇▇▇ if ▇▇▇▇▇▇▇▇ is not in material breach of
this Agreement and if the Offer has not been timely commenced in accordance
with Section 1.01 hereof.
Section 8.03. Effect of Termination. (a) In the event of the
termination of this Agreement pursuant to Section 8.02, all obligations of the
parties hereto shall terminate, except obligations of the parties pursuant to
Sections 8.01, 9.03, 9.05, 9.06, 9.09, 9.10, 9.11 and this Section 8.03.
(b) If this Agreement is terminated pursuant to Section
8.02(d), Section 8.02(e), Section 8.02(g) (as a result of the breach of this
Agreement by Acquisition) or Section 8.02(h), the $5 Million Deposit shall be
forthwith paid to ▇▇▇▇▇▇▇▇ as liquidated damages, which remedy shall represent
the only damages that may be sought by ▇▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇▇ Shareholder
under this Agreement in the event of a termination of this Agreement as
aforesaid or any violation or breach of this Agreement which gave rise
thereto.
(c) If this Agreement is terminated prior to consummation of
the Offer pursuant to Section 8.02(b), Section 8.02(c) or (as a result of the
willful breach of covenant or agreement under this Agreement by ▇▇▇▇▇▇▇▇,
which breach is not cured by ▇▇▇▇▇▇▇▇ within 30 days
41
after written notice by Acquisition to ▇▇▇▇▇▇▇▇ reasonably describing such
breach) Section 8.02(f) or Section 8.02(g), ▇▇▇▇▇▇▇▇ shall pay to Acquisition
a fee (the "Fee") equal to $2,500,000 and shall reimburse Acquisition for its
reasonable out-of-pocket expenses up to a maximum amount of $500,000 incurred
in connection with the transactions contemplated by this Agreement, the
payment of such Fee to be made simultaneously with the termination of this
Agreement and the reimbursement of such expenses to be made promptly upon
presentation of invoices therefor. In addition, if a More Favorable
Transaction (as such term is defined below) is consummated within one year
after the effective date of the termination of this Agreement as described in
this Section 8.03(c) prior to consummation of the Offer, the Fee shall be
increased to an amount equal to the excess, if any, of (A) the (i) the
aggregate value of the consideration received by the ▇▇▇▇▇▇▇▇ Shareholders in
the More Favorable Transaction minus the amount of the Original Consideration
(as such term is defined below), multiplied by (ii) 25%, over (B) $2,500,000.
The Fee shall represent liquidated damages and the only damages that may be
sought by Acquisition in the event of a termination of this Agreement as
aforesaid or any violation or breach of this Agreement which gave rise
thereto. As used herein, (i) a "More Favorable Transaction" shall mean any
Acquisition Transaction under which the holders of more than 50% of the
▇▇▇▇▇▇▇▇ Shares receive consideration equal to a value in excess of $12.25 per
▇▇▇▇▇▇▇▇ Share, and (ii) the "Original Consideration" shall mean the product
of $12.25 multiplied by the number of ▇▇▇▇▇▇▇▇ Shares sold or otherwise
disposed of by ▇▇▇▇▇▇▇▇ Shareholders in the More Favorable Transaction and for
which the ▇▇▇▇▇▇▇▇ Shareholders receive consideration in such More Favorable
Transaction.
(d) If this Agreement is terminated prior to consummation of
the Offer pursuant to Section 8.02(f) (as a result of the non-willful breach
of representation, warranty, covenant or agreement under this Agreement by
▇▇▇▇▇▇▇▇, which breach is not cured by ▇▇▇▇▇▇▇▇ within 30 days after written
notice by Acquisition to ▇▇▇▇▇▇▇▇ reasonably describing such breach) ▇▇▇▇▇▇▇▇
shall reimburse Acquisition for its reasonable out-of-pocket expenses up to a
maximum amount of $1,000,000 incurred in connection with the transactions
contemplated by this Agreement, the reimbursement of such expenses to be made
promptly upon presentation of invoices therefor. Such expense reimbursement
shall represent liquidated damages and the only damages that may be sought by
Acquisition in the event of a termination of this Agreement as aforesaid or
any violation or breach of this Agreement which gave rise thereto.
(e) If this Agreement is terminated for any reason other
than as set forth in Section 8.03(b) the $5 Million Deposit shall be returned
to Acquisition and no party shall have any further liability under this
Agreement.
42
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval of the matters presented in
connection with the Merger by the ▇▇▇▇▇▇▇▇ Shareholders, subject in the case
of approval by ▇▇▇▇▇▇▇▇ to Section 5.11, but, after any such approval, no
amendment shall be made which by law requires further approval by the ▇▇▇▇▇▇▇▇
Shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.02. Extension: Waiver. At any time prior to the Effective
Time, Acquisition and ▇▇▇▇▇▇▇▇ may, subject in the case of approval by
▇▇▇▇▇▇▇▇ to Section 5.11, to the extent legally allowed (i) extend the time
for the performance of any of the obligations or other acts of the other party
hereto, (ii) waive any inaccuracies in the representation and warranties of
the other party contained herein or in any document delivered pursuant hereto
and (iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of Acquisition and ▇▇▇▇▇▇▇▇. The failure of any
party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
Section 9.03. Non-Survival. The representations, warranties,
covenants and agreements in this Agreement shall terminate at the Effective
Time, except that the agreements set forth in Article II, Section 5.09 and in
this Article IX, except for the first sentence of Section 9.05, and any other
covenant or agreement that contemplates performance after the Effective Date
shall survive the Effective Time, and no claim may be brought after the
Effective Time against any person alleging a breach of any representation or
warranty or a failure to comply with the terms and provisions of this
Agreement except those agreements set forth in Article II, Section 5.09 and in
this Article IX. No shareholder of ▇▇▇▇▇▇▇▇ nor any officer, director,
employee, agent or representative of ▇▇▇▇▇▇▇▇ or any ▇▇▇▇▇▇▇▇ Subsidiary shall
have personal liability for breach of any representation, warranty or
agreement of ▇▇▇▇▇▇▇▇ in this Agreement.
Section 9.04. Further Assurances. Each of the parties agrees and
covenants promptly to execute and deliver, or cause to be executed and
delivered, to the other party such documents or instruments, in addition to
those expressly required by this Agreement to be executed and delivered, as
the other party may reasonably deem necessary or desirable to carry out or
implement any provision of this Agreement and the transaction contemplated
hereby.
Section 9.05. Entire Agreement. All prior or contemporaneous
agreements, contracts, promises, representations and statements, if any,
between the parties hereto as to the subject matter hereof, are merged into
this Agreement. This Agreement, together with all agreements, Schedules,
documents and other instruments to be attached hereto or delivered hereunder
sets forth the entire understanding between the parties, and there are no
terms, conditions, representations, warranties or covenants other than those
contained herein and in such
43
agreements, Schedules, documents and other instruments to be attached hereto
or delivered hereunder.
Section 9.06. Notices. All notices, consents, demands or other
communications required or permitted to be given pursuant to the Agreement
shall be in writing and shall be deemed sufficiently given on (i) the day on
which delivered personally during a business day to the appropriate location
listed as the address below, (ii) three business days after the posting
thereof by United States registered or certified first class mail, return
receipt requested with postage and fees prepaid, or (iii) one business day
after deposit thereof for overnight delivery. Such notices, consents, demands
or other communications shall be addressed respectively:
As to ▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to: Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
As to Acquisition: ▇▇▇▇▇▇ Acquisition, Inc.
c/o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to: Squadron, Ellenoff, Plesent & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
or to any other address which such party may have subsequently communicated to
the other parties in writing.
Section 9.07. Successors and Assigns. Each and every representation,
warranty, covenant, agreement, indemnification, and provision of the Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto. Except as otherwise
expressly provided herein, this Agreement may not be assigned by either party
hereto without the prior written consent of the other party hereto. Any
purported assignment in violation of this Agreement shall be void.
44
Section 9.08. Governing Law. This Agreement and any other agreement
entered into in connection herewith shall be governed by, and construed under
and in accordance with, the laws of the State of New York applicable to
contracts made and wholly to be performed therein by residents thereof,
without giving effect to the conflict of law principles thereof.
Section 9.09. Gender and Person. Wherever the context so requires,
the masculine pronoun shall include the feminine and the neuter, and the
singular shall include the plural.
Section 9.10. Captions. The captions and the table of contents
appearing in this Agreement are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope or intent of
this Agreement or any of the provisions hereof.
Section 9.11. Confidentiality of Disclosures. Any corporate
information, records, documents, descriptions or other disclosures of
whatsoever nature or kind made or disclosed by either of the parties to the
other party, or to the authorized representatives thereof, or learned or
discovered by such other party or by any representatives thereof in connection
with the transactions contemplated by this Agreement (whether prior to or
after the date of the execution of this Agreement) and not known by or
available to the public at large, shall be received in confidence and neither
of the parties nor any such authorized representative shall disclose or make
use of such information or authorize anyone else to disclose or make use
thereof without the written consent of the other party hereto, except (a) as
necessary to consummate the transactions contemplated hereby or (b) as
compelled by judicial or administrative process or by other requirements of
applicable law including any disclosure under federal securities laws;
provided, however, that in the case of any disclosure contemplated pursuant to
this clause (b), the party seeking to disclose such information shall give the
other party reasonable prior written notice thereof in order to afford such
other party reasonable opportunity to seek a protective order or other
limitation under such disclosure.
Section 9.12. Publicity. Any communications and notices to third
parties and all other publicity concerning the transactions contemplated by
the Agreement (other than governmental or regulatory filings) shall be planned
and coordinated by and between the parties. Unless required by applicable law
or the rules of the American Stock Exchange, neither of the parties shall
disseminate or make public or cause to be disseminated or made public any
information regarding the transactions contemplated hereunder without the
prior approval of the other party, which approval shall not be unreasonably
withheld. Notwithstanding the foregoing, either party to this Agreement may,
without the prior approval of the other, make public statements that are not
inconsistent with public documents filed with the Commission in connection
therewith.
Section 9.13. Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses except as otherwise
provided in Section 5.10 and Section 8.03.
45
Section 9.14. Third Parties. Other than the parties hereto and as
provided in Section 5.09, no person shall have any right under or to enforce
any provision of this Agreement.
Section 9.15. Counterparts. The Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
taken together shall constitute a single agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
▇▇▇▇▇▇ ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman of the Board
46
EXHIBIT A
Conditions of the Offer
Reference is made to the Agreement and Plan of Merger, dated
as of October 16, 1997 (the "Agreement"), by and between Acquisition and
▇▇▇▇▇▇▇▇ Corporation ("▇▇▇▇▇▇▇▇"). Capitalized terms defined in the Agreement
and not otherwise defined herein are used herein with the meanings so defined.
Notwithstanding any other term of the Offer or this
Agreement, Acquisition shall not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule
14e-1(c) under the Exchange Act (relating to Acquisition's obligation to pay
for or return tendered ▇▇▇▇▇▇▇▇ Shares after the termination or withdrawal of
the Offer), to pay for any ▇▇▇▇▇▇▇▇ Shares tendered pursuant to the Offer
unless (x) there shall have been validly tendered and not withdrawn prior to
the expiration of the Offer a number of ▇▇▇▇▇▇▇▇ Shares which, when added to
any other ▇▇▇▇▇▇▇▇ Shares owned by Acquisition or its affiliates, shall equal
at least 66 2/3% of the number of ▇▇▇▇▇▇▇▇ Shares outstanding on a
fully-diluted basis immediately after the termination of the Offer (the
"Minimum Tender Condition") and (y) all waiting periods under the HSR Act
applicable to the purchase of ▇▇▇▇▇▇▇▇ Shares pursuant to the Offer shall have
expired or have been terminated. Furthermore, notwithstanding any other term
of the Offer or this Agreement, but subject to the provisions of Section
1.01(a), Acquisition shall not be required to accept for payment or, subject
as aforesaid, to pay for any ▇▇▇▇▇▇▇▇ Shares not theretofore accepted for
payment or paid for, and may, subject to Section 1.01, amend the Offer, if
upon the expiration date of the Offer, any of the following conditions exists
and shall be continuing:
(a) Representations and Warranties. The representations and
warranties contained in Article III shall not be true and correct in all
respects in each case at and as of such time as though such representations
and warranties were made at and as of such time without reference to a
▇▇▇▇▇▇▇▇ Material Adverse Effect, and except for those representations and
warranties which are expressly made as of a specified earlier date, in which
case such representations and warranties shall be true and correct as of such
specified date in all respects without reference to a ▇▇▇▇▇▇▇▇ Material
Adverse Effect, except in all cases where the failure or failures of such
representations and warranties to be so true and correct would not have,
singly or in the aggregate, a ▇▇▇▇▇▇▇▇ Material Adverse Effect.
(b) Covenants. ▇▇▇▇▇▇▇▇ shall have not performed and
complied with any agreement or condition on its part required by this
Agreement to be performed or complied with prior to or at such time, which
failure of performance or compliance, singly or in the aggregate, has a
▇▇▇▇▇▇▇▇ Material Adverse Effect.
(c) Absence of Changes. From the date of this Agreement
through such time, there shall have occurred any event or events, or change or
changes in the financial condition,
47
business or operations of ▇▇▇▇▇▇▇▇ that, singly or in the aggregate, has a
▇▇▇▇▇▇▇▇ Material Adverse Effect.
(d) Actions or Proceedings. There shall be any action or
proceeding by or before any Governmental Authority which has resulted in the
issuance of an injunction or order which (i) restrains, prohibits or
materially delays the consummation of the Offer or the Merger, (ii) makes the
purchase of, or payment for, some or all of the ▇▇▇▇▇▇▇▇ Shares pursuant to
the Offer or the Merger illegal, or results in a material delay in the ability
of Acquisition to accept for payment or pay for some or all of the ▇▇▇▇▇▇▇▇
Shares, (iii) compels Acquisition to dispose of or hold separately all or any
material portion of ▇▇▇▇▇▇▇▇'▇ and its Subsidiaries' business or assets, (iv)
makes illegal or otherwise directly or indirectly restrains or prohibits or
imposes material financial burdens, penalties or fines, or requires the
payment of material damages (other than financial burdens or damages resulting
from any claim, action, suit or proceeding arising from the agreements and
other documents set forth on Schedule D hereto or any circumstances relating
thereto) in connection with the making of, the Offer, the acceptance for
payment of, payment for, or ownership, directly or indirectly, of some of or
all the ▇▇▇▇▇▇▇▇ Shares by Acquisition, the consummation of the Offer or the
Merger, (v) otherwise prevents consummation of the Offer or the Merger, or
(vi) imposes material limitations on the ability of Acquisition effectively
(A) to acquire, hold or operate the business of ▇▇▇▇▇▇▇▇ and its Subsidiaries
taken as a whole or (B) to exercise full rights of ownership of the ▇▇▇▇▇▇▇▇
Shares acquired by it, including, but not limited to, the right to vote the
▇▇▇▇▇▇▇▇ Shares purchased by it on all matters properly presented to the
stockholders of ▇▇▇▇▇▇▇▇, which, in either case, would effect a material
diminution in the value of ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Shares.
(e) Injunctions. There shall have been any statute, rule,
regulation, order, decree or injunction enacted, promulgated or entered by any
Governmental Authority or any other action shall have been taken by any
Governmental Authority, in any such case on or after the date of the Offer,
that has resulted in any of the consequences referred to in clauses (i)
through (v) of the paragraph (d) above.
(f) Force Majeure. There shall have occurred and be
continuing (i) any general suspension of trading in, or general limitation on
prices for, securities on the New York Stock Exchange, Inc. or the American
Stock Exchange (other than suspensions of not more than one business day),
(ii) the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) the
commencement of a war, armed hostilities or other international or national
calamity involving the United States and having a ▇▇▇▇▇▇▇▇ Material Adverse
Effect, or (iv) any material limitation by any Governmental Authority that
materially adversely affects generally the extension of credit by banks or
other financial institutions.
(g) Consents. ▇▇▇▇▇▇▇▇ shall have failed to obtain the
consents of Chase and HUD set forth in Schedule 3.05.
48
(h) Shareholders Agreement. The Shareholders Agreement of
even date herewith, among Acquisition and Messrs. Milstein, Benach, ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ (the "Principal Shareholders") shall no longer be in full force and
effect, or any of the Principal Shareholders shall have breached any material
obligation thereunder.
(i) Gateway / ▇▇▇▇▇▇▇▇ City. Either the Gateway MOU or the
▇▇▇▇▇▇▇▇ City Management Agreement shall not be in full force and effect.
The foregoing conditions are for the sole benefit of
Acquisition and may be asserted by Acquisition regardless of the circumstances
giving rise to any such condition (other than a breach by Acquisition of the
Agreement) and may be waived by Acquisition, in whole or in part, at any time
and from time to time, in the sole discretion of Acquisition. The failure by
Acquisition at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right and each right will be deemed an ongoing right
which may be asserted at any time and from time to time.
49