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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of earliest event reported): August 1, 1997
Post Apartment Homes, L.P.
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(Exact name of Registrant as Specified in Charter)
Georgia 0-28226 58-2053632
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
3350 Cumberland Circle, Atlanta, Georgia 30339
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (770) 850-4400
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On August 4, 1997, Post Properties, Inc., the general partner of the Registrant
("Post"), announced that it has entered into a definitive agreement and plan of
merger with Columbus Realty Trust, a Texas real estate investment trust
("Columbus"), pursuant to which Columbus would be merged into a wholly owned
subsidiary of Post (the "Merger Agreement"). Columbus currently operates 24
completed communities containing 6,045 apartment units and has an additional
six communities under development that will contain 1,481 apartment units upon
completion located in Dallas and Houston, Texas and Jackson, Mississippi.
Pursuant to the Merger Agreement, each outstanding share of Columbus common
shares will be converted into .615 shares of common stock of Post, which will
result in the issuance of approximately 8.4 million shares of common stock of
Post. The merger, which will be accounted for as a purchase, is expected to be
completed in November l997, subject to the approval of the shareholders of Post
and Columbus and other customary conditions.
For further information concerning the merger and the Merger Agreement,
see Exhibits 2 and 99 hereto, which are incorporated herein by reference.
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 2 - Agreement and Plan of Merger, dated as of August 1,
1997, among Post Properties, Inc., Post LP Holdings,
Inc. and Columbus Realty Trust
Exhibit 99 - Press Release dated August 4, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
POST APARTMENT HOMES, L.P.
(Registrant)
By: POST PROPERTIES, INC.
as general partner
Date: August 6, 1997 By: /s/ John A. Williams
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John A. Williams
Chairman of the Board,
Chief Executive Officer
and Director
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INDEX TO EXHIBITS
Exhibit Number and Description
2 Agreement and Plan of Merger, dated as of August 1, 1997, among
Post Properties, Inc., Post LP Holdings, Inc. and Columbus Realty
Trust.
99 Press Release dated August 4, 1997.
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 1, 1997,
BY AND AMONG
POST PROPERTIES, INC.
POST LP HOLDINGS, INC.
AND
COLUMBUS REALTY TRUST
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TABLE OF CONTENTS
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ARTICLE I -- THE MERGER........................................................
SECTION 1.1 The Merger..................................................
SECTION 1.2 Closing.....................................................
SECTION 1.3 Effective Time..............................................
SECTION 1.4 Effects of the Merger.......................................
SECTION 1.5 Articles of Incorporation and Bylaws........................
SECTION 1.6 Board of Directors..........................................
SECTION 1.7 Officers....................................................
ARTICLE II -- EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES...........................
SECTION 2.1 Effect on Capitalization....................................
2.1.1 Cancellation of Treasury Stock..............................
2.1.2 Conversion of Common Shares.................................
2.1.3 Shares of Acquiror Common Stock.............................
2.1.4 Shares of Merger Sub........................................
SECTION 2.2 Exchange of Certificates....................................
2.2.1 Exchange Agent..............................................
2.2.2 Acquiror To Provide Merger Consideration....................
2.2.3 Exchange Procedure..........................................
2.2.4 Record Dates for Final Dividends; Distributions with Respect
to Unexchanged Shares.......................................
2.2.5 No Further Ownership Rights in Common Shares................
2.2.6 No Liability................................................
2.2.7 No Fractional Shares........................................
2.2.8 Withholding Rights..........................................
ARTICLE III -- REPRESENTATIONS AND WARRANTIES..................................
SECTION 3.1 Representations and Warranties of the Company...............
3.1.1 Organization, Standing and Power of the Company.............
3.1.2 Company Subsidiaries........................................
3.1.3 Capital Structure...........................................
3.1.4 Authority; Noncontravention; Consents.......................
3.1.5 SEC Documents; Financial Statements; Undisclosed
Liabilities.................................................
3.1.6 Absence of Certain Changes or Events........................
3.1.7 Litigation..................................................
3.1.8 Properties..................................................
3.1.9 Environmental Matters.......................................
3.1.10 Related Party Transactions..................................
3.1.11 Absence of Changes in Benefit Plans; ERISA Compliance.......
3.1.12 Taxes.......................................................
3.1.13 No Payments to Employees, Officers or Trust Managers........
3.1.14 Brokers; Schedule of Fees and Expenses......................
3.1.15 Compliance with Laws........................................
3.1.16 Contracts; Debt Instruments.................................
3.1.17 State Takeover Statutes.....................................
3.1.18 Registration Statement; Proxy Statement.....................
3.1.19 Hart-Scott-Rodino Antitrust Improvements Act of 1976........
3.1.20 Vote Required...............................................
3.1.21 Opinion of Financial Advisor................................
3.1.22 Investment Company Act of 1940..............................
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3.1.23 Insurance...................................................
3.1.24 The Company's Rights Agreement..............................
SECTION 3.2 Representations and Warranties of Acquiror..................
3.2.1 Organization, Standing and Corporate Power of Acquiror and
Merger Sub..................................................
3.2.2 Acquiror Subsidiaries.......................................
3.2.3 Capital Structure...........................................
3.2.4 Authority; Noncontravention; Consents.......................
3.2.5 SEC Documents; Financial Statements; Undisclosed
Liabilities.................................................
3.2.6 Absence of Certain Changes or Events........................
3.2.7 Litigation..................................................
3.2.8 Properties..................................................
3.2.9 Environmental Matters.......................................
3.2.10 Absence of Changes in Benefit Plans; ERISA Compliance.......
3.2.11 Taxes.......................................................
3.2.12 No Payments to Employees, Officers or Directors.............
3.2.13 Brokers; Schedule of Fees and Expenses......................
3.2.14 Compliance with Laws........................................
3.2.15 Contracts; Debt Instruments.................................
3.2.16 State Takeover Statutes.....................................
3.2.17 Registration Statement; Proxy Statement.....................
3.2.18 Hart-Scott-Rodino Antitrust Improvements Act of 1976........
3.2.19 Vote Required...............................................
3.2.20 Opinion of Financial Advisor................................
3.2.21 Investment Company Act of 1940..............................
3.2.22 Insurance...................................................
3.2.23 Interim Operations of Merger Sub............................
ARTICLE IV -- COVENANTS........................................................
SECTION 4.1 Conduct of Business by the Company..........................
SECTION 4.2 Conduct of Business by Acquiror.............................
SECTION 4.3 Other Actions...............................................
ARTICLE V -- ADDITIONAL COVENANTS..............................................
SECTION 5.1 Preparation of the Registration Statement and the Proxy
Statement; Company Shareholders Meeting and Acquiror
Shareholders Meeting........................................
SECTION 5.2 Access to Information: Confidentiality......................
SECTION 5.3 Commercially Reasonable Efforts; Notification...............
SECTION 5.4 Affiliates..................................................
SECTION 5.5 Tax Treatment...............................................
SECTION 5.6 Acquiror Board of Directors.................................
SECTION 5.7 No Solicitation of Transactions by the Company..............
SECTION 5.8 No Solicitation of Transactions by Acquiror.................
SECTION 5.9 Public Announcements........................................
SECTION 5.10 Listing.....................................................
SECTION 5.11 Letters of Accountants......................................
SECTION 5.12 Transfer and Gains Taxes....................................
SECTION 5.13 Benefit Plans and Other Employee Arrangements...............
5.13.1 Benefit Plans...............................................
5.13.2 Stock Incentive Plan........................................
5.13.3 Cooperation.................................................
SECTION 5.14 Indemnification; Directors' and Officers' Insurance.........
SECTION 5.15 The Company Rights Plan.....................................
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ARTICLE VI -- CONDITIONS PRECEDENT.............................................
SECTION 6.1 Conditions to Each Party's Obligation To Effect the
Merger......................................................
6.1.1 Shareholder Approvals.......................................
6.1.2 Listing of Shares...........................................
6.1.3 Registration Statement......................................
6.1.4 No Injunctions or Restraints................................
6.1.5 Related Transactions........................................
SECTION 6.2 Conditions to Obligations of Acquiror and Merger Sub........
6.2.1 Representations and Warranties..............................
6.2.2 Performance of Obligations of the Company...................
6.2.3 Material Adverse Change.....................................
6.2.4 Opinions Relating to REIT...................................
6.2.5 Other Tax Opinion...........................................
6.2.6 Consents....................................................
SECTION 6.3 Conditions to Obligations of the Company....................
6.3.1 Representations and Warranties..............................
6.3.2 Performance of Obligations of Acquiror......................
6.3.3 Material Adverse Change.....................................
6.3.4 Opinion Relating to REIT Status.............................
6.3.5 Other Tax Opinion...........................................
6.3.6 Consents....................................................
ARTICLE VII -- BOARD ACTIONS...................................................
SECTION 7.1 Company Board Actions.......................................
SECTION 7.2 Acquiror Board Actions......................................
ARTICLE VIII -- TERMINATION, AMENDMENT AND WAIVER..............................
SECTION 8.1 Termination.................................................
SECTION 8.2 Expenses....................................................
SECTION 8.3 Effect of Termination.......................................
SECTION 8.4 Amendment...................................................
SECTION 8.5 Extension; Waiver...........................................
ARTICLE IX -- DEFINITIONS AND CONSTRUCTION.....................................
SECTION 9.1 Certain Definitions.........................................
SECTION 9.2 Rules of Construction.......................................
ARTICLE X -- GENERAL PROVISIONS................................................
SECTION 10.1 Nonsurvival of Representations and Warranties...............
SECTION 10.2 Notices.....................................................
SECTION 10.3 Counterparts................................................
SECTION 10.4 Entire Agreement; No Third-Party Beneficiaries..............
SECTION 10.5 Governing Law...............................................
SECTION 10.6 Assignment..................................................
SECTION 10.7 Enforcement.................................................
SECTION 10.8 Severability................................................
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EXHIBITS:
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A Form of Affiliates Letter...................................
SCHEDULES TO DISCLOSURE LETTERS:
Schedule 3.1.2 Company Subsidiaries........................................
Schedule 3.1.3 Capital Structure...........................................
Schedule 3.1.4 Authority; Noncontravention; Consents.......................
Schedule 3.1.5 SEC Documents, Financial Statements; Undisclosed
Liabilities.................................................
Schedule 3.1.6 Certain Changes or Events...................................
Schedule 3.1.7 Litigation..................................................
Schedule 3.1.8 Company Properties..........................................
Schedule 3.1.9 Environmental Matters.......................................
Schedule 3.1.10 Company Related Party Transactions..........................
Schedule 3.1.11(i) Changes in Benefit Plans....................................
Schedule 3.1.11(ii) ERISA Compliance............................................
Schedule 3.1.11(iii) Change of Control Payments..................................
Schedule 3.1.12 Taxes.......................................................
Schedule 3.1.13 Payments to Employees, Officers or Trust Managers...........
Schedule 3.1.15 Compliance with Laws........................................
Schedule 3.1.16(i) Contracts...................................................
Schedule 3.1.16(ii) Debt Instruments............................................
Schedule 3.2.2 Acquiror Subsidiaries.......................................
Schedule 3.2.3 Acquiror Capital Structure..................................
Schedule 3.2.4 Authority; Noncontravention; Consents.......................
Schedule 3.2.5 Acquiror Liabilities........................................
Schedule 3.2.6 Certain Changes or Events...................................
Schedule 3.2.7 Litigation..................................................
Schedule 3.2.9 Environmental Matters.......................................
Schedule 3.2.10(i) Changes in Benefit Plans....................................
Schedule 3.2.10(ii) ERISA Compliance............................................
Schedule 3.2.11 Taxes.......................................................
Schedule 3.2.12 Payments to Employees, Officers or Directors................
Schedule 3.2.15 Contracts...................................................
Schedule 4.1 Conduct of Business by the Company (Exceptions to
Covenants)..................................................
Schedule 4.2 Conduct of Business by Acquiror (Exceptions to Covenants)...
Schedules 9.1 Persons with "Knowledge" of the Company or Acquiror.........
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 1,
1997 is made and entered into by and among Post Properties, Inc., a Georgia
corporation ("Acquiror"), Post LP Holdings, Inc., a Georgia corporation and a
direct wholly owned subsidiary of Acquiror ("Merger Sub"), and Columbus Realty
Trust, a Texas real estate investment trust (the "Company").
R E C I T A L S
A. Certain capitalized terms used herein shall have the meanings assigned
to them in SECTION 9.1.
B. The respective Boards of Directors of Acquiror and Merger Sub and the
Board of Trust Managers of the Company have approved the merger of the Company
with and into Merger Sub, Acquiror's direct wholly owned subsidiary, as set
forth below (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding common share of
beneficial interest, par value $.01 per share, of the Company (the "Common
Shares") will be converted into the right to receive the Merger Consideration.
C. Acquiror, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
D. For federal income tax purposes it is intended that the Merger qualify
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
E. Simultaneously with the execution of this Agreement, Armada Homes, Inc.,
a subsidiary of the Company ("Armada"), Robert L. Shaw ("Shaw"), Will Cureton
("Cureton"), John A. Williams ("Williams") and John T. Glover ("Glover") have
entered into a Stock Purchase Agreement (the "Armada Stock Purchase Agreement")
providing for the sale by Shaw and Cureton of all the issued and outstanding
voting stock of Armada owned by Shaw and Cureton to Williams and Glover.
F. Simultaneously with the execution of this Agreement, Addison Circle
Access, Inc., a subsidiary of the Company ("Addison"), Shaw, Cureton, Williams
and Glover have entered into a Stock Purchase Agreement (the "Addison Stock
Purchase Agreement") and together with the Armada Stock Purchase Agreement, the
"Stock Purchase Agreements") providing for the sale by Shaw and Cureton of all
the issued and outstanding voting stock of Addison owned by Shaw and Cureton to
Williams and Glover.
G. The transactions contemplated by this Agreement, the Stock Purchase
Agreements and the other agreements and documents contemplated hereby,
including, without limitation, the Merger, shall be referred to collectively in
this Agreement as the "Transactions."
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Texas Real Estate Investment
Trust Act and the Georgia Business Corporation Code (collectively, the
"Governing Laws"), the Company shall be merged with and into Merger Sub at the
Effective Time. Following the Merger, the separate corporate existence of the
Company shall cease and Merger Sub shall continue as the surviving entity (the
"Surviving Company") and shall succeed to and assume all the rights and
obligations of the Company in accordance with the Governing Laws. At the
election of Acquiror, any other direct subsidiary of Acquiror acceptable to the
Company in its reasonable judgment may be substituted for Merger Sub as a
constituent corporation in the Merger. In such event, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect such
substitution.
SECTION 1.2 CLOSING. The closing of the Merger will take place at 10:00
a.m., local time, on a date to be specified by the parties, which (subject to
satisfaction or waiver of the conditions set forth in SECTIONS 6.2
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and 6.3) shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in ARTICLE VI (the "Closing Date"), at the
offices of King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, unless
another date or place is agreed to by the parties hereto.
SECTION 1.3 EFFECTIVE TIME. As soon as practicable following the
satisfaction or waiver of the conditions set forth in ARTICLE VI, the parties
shall file the articles of merger or other appropriate documents (the "Articles
of Merger") executed in accordance with the Governing Laws and shall make all
other filings or recordings required under the Governing Laws. The Merger shall
become effective upon the filing of the Articles of Merger with the office of
the County Clerk of Dallas County, Texas and the office of the Secretary of
State of the State of Georgia (the "Applicable Bodies"), or at such later time
which Acquiror, Merger Sub and the Company have agreed upon and designated in
such filings in accordance with the Governing Laws (the time the Merger becomes
effective being the "Effective Time"), it being understood that the parties
shall cause the Effective Time to occur on the Closing Date.
SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the Governing Laws.
SECTION 1.5 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Company, until
duly amended in accordance with applicable law. The Bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Company, until duly amended in accordance with applicable law.
SECTION 1.6 BOARD OF DIRECTORS. The Board of Directors of Merger Sub
immediately prior to the Effective Time shall be the Board of Directors of the
Surviving Company until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may be.
SECTION 1.7 OFFICERS. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Company until the earlier
of their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITALIZATION. By virtue of the Merger and without
any action on the part of the holder of any shares of Common Shares or the
holder of any shares of capital stock of Acquiror:
2.1.1 CANCELLATION OF TREASURY STOCK. As of the Effective Time, any
shares of capital stock of the Company that are owned by the Company or any
Company Subsidiary shall automatically be canceled and retired and all
rights with respect thereto shall cease to exist, and no consideration
shall be delivered in exchange therefor.
2.1.2 CONVERSION OF COMMON SHARES. Upon the Effective Time, each
issued and outstanding share of Common Shares (other than any shares to be
canceled in accordance with SECTION 2.1.1) shall be converted into the
right to receive from Acquiror .615 (six hundred fifteen one-thousandths)
of a fully paid and nonassessable share of Acquiror Common Stock (the
"Exchange Ratio"). As of the Effective Time, all Common Shares shall no
longer be outstanding and shall automatically be canceled and retired and
all rights with respect thereto shall cease to exist, and each holder of a
certificate representing any such Common Shares shall cease to have any
rights with respect thereto, except the right to receive, upon surrender of
such certificate in accordance with SECTION 2.2.3, certificates
representing the shares of Acquiror Common Stock required to be delivered
under this SECTION 2.1.2 and any cash in lieu of fractional shares of
Acquiror Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate (the "Merger Consideration") as set forth in
SECTION 2.2.7, and any dividends or other distributions to which such
holder is entitled pursuant to SECTION 2.2.4, in each case without interest
and less any required withholding taxes. The Exchange Ratio shall be
adjusted to reflect fully the effect of any
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stock split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Acquiror Common Stock or Common
Shares), reorganization, recapitalization or other like change with respect
to Acquiror Common Stock or Common Shares occurring after the date hereof
and prior to the Effective Time.
2.1.3 SHARES OF ACQUIROR COMMON STOCK. Upon the Effective Time, each
share of Acquiror Common Stock outstanding immediately prior to the
Effective Time shall remain outstanding and shall represent one share of
validly issued, fully paid and nonassessable Acquiror Common Stock.
2.1.4 SHARES OF MERGER SUB. Upon the Effective Time, each share of
common stock, par value $.01 per share, of Merger Sub outstanding
immediately prior to the Effective Time shall remain outstanding and shall
represent one share of common stock, par value $.01 per share, of the
Surviving Company.
SECTION 2.2 EXCHANGE OF CERTIFICATES.
2.2.1 EXCHANGE AGENT. Prior to the Effective Time, Acquiror shall
appoint, or shall cause to be appointed, Wachovia Bank of North Carolina or
another bank or trust company reasonably acceptable to the Company to act
as exchange agent (the "Exchange Agent") for the exchange of the Merger
Consideration upon surrender of certificates representing issued and
outstanding Common Shares.
2.2.2 ACQUIROR TO PROVIDE MERGER CONSIDERATION. Acquiror shall
provide, or shall cause to be provided, to the Exchange Agent on or before
the Effective Time, for the benefit of the holders of Common Shares, shares
of Acquiror Common Stock issuable (the "Exchange Fund") in exchange for the
issued and outstanding shares of Common Shares pursuant to SECTION 2.1.2
and the cash payable in respect of fractional shares pursuant to SECTION
2.2.7.
2.2.3 EXCHANGE PROCEDURE. As soon as reasonably practicable 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 outstanding shares of Common Shares (the "Certificates")
whose shares were converted into the right to receive the Merger
Consideration pursuant to SECTION 2.1.2 (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in a form and have such other provisions as
Acquiror may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by Acquiror, together
with such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration into which the shares of Common Shares theretofore
represented by such Certificate shall have been converted pursuant to
SECTION 2.1.2 and any dividends or other distributions to which such holder
is entitled pursuant to SECTION 2.2.4, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of
Common Shares which is not registered in the transfer records of the
Company, payment may be made to a Person other than the Person in whose
name the Certificate so surrendered is registered if such Certificate shall
be properly endorsed or otherwise be in proper form for transfer and the
Person requesting such payment either shall pay any transfer or other taxes
required by reason of such payment being made to a Person other than the
registered holder of such Certificate or establish to the satisfaction of
Acquiror that such tax or taxes have been paid or are not applicable. Until
surrendered as contemplated by this SECTION 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, without interest,
into which the shares of Common Shares theretofore represented by such
Certificate shall have been converted pursuant to SECTION 2.1.2, and any
dividends or other distributions to which such holder is entitled pursuant
to SECTION 2.2.4. No interest will be paid or will accrue on the Merger
Consideration upon the surrender of any Certificate or on any cash payable
pursuant to SECTION 2.2.4 or SECTION 2.2.7.
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2.2.4 RECORD DATES FOR FINAL DIVIDENDS; DISTRIBUTIONS WITH RESPECT TO
UNEXCHANGED SHARES.
(i) To the extent necessary to satisfy the requirements of SECTION
857(A)(1) of the Code for the taxable year of the Company ending at the
Effective Time, the Company shall declare a dividend (the "Final Company
Dividend") to holders of Common Shares, the record date for which shall
be close of business on the last business day prior to the Effective
Time, in an amount equal to the minimum dividend sufficient to permit
the Company to satisfy such requirements. If the Company determines it
necessary to declare the Final Company Dividend, it shall notify
Acquiror at least ten (10) days prior to the date for the Company
Shareholders Meeting, and Acquiror shall declare a dividend per share to
holders of Acquiror Common Stock, the record date for which shall be the
close of business on the last business day prior to the Effective Time,
in an amount per share equal to the quotient obtained by dividing (x)
the Final Company Dividend per share of Common Shares paid by the
Company by (y) the Exchange Ratio. The dividends payable hereunder to
holders of Common Shares shall be paid upon presentation of the
certificates of Common Shares for exchange in accordance with this
ARTICLE II, and shall be payable solely from the separate funds of the
Company, which shall be provided to the Exchange Agent on or before the
Effective Time for this purpose.
(ii) No dividends or other distributions with respect to Acquiror
Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the
shares of Acquiror Common Stock represented thereby, and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant
to SECTION 2.2.7, in each case, until the surrender of such Certificate
in accordance with this ARTICLE II. Subject to the effect of applicable
escheat laws, following surrender of any such Certificate there shall be
paid to the holder of such Certificate, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of any
fractional share of Acquiror Common Stock to which such holder is
entitled pursuant to SECTION 2.2.7 and (ii) if such Certificate is
exchangeable for one or more whole shares of Acquiror Common Stock, (x)
at the time of such surrender the amount of dividends or other
distributions with a record date after the Effective Time theretofore
paid with respect to such whole shares of Acquiror Common Stock and (y)
at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Acquiror Common Stock.
2.2.5 NO FURTHER OWNERSHIP RIGHTS IN COMMON SHARES. All Merger
Consideration paid upon the surrender of Certificates in accordance with
the terms of this ARTICLE II (and any cash paid pursuant to SECTION 2.2.7)
shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Common Shares theretofore represented by such
Certificates; provided, however, that the Company shall transfer to the
Exchange Agent cash sufficient to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by the Company on such Common Shares in accordance
with the terms of this Agreement or prior to the date of this Agreement and
which remain unpaid at the Effective Time and have not been paid prior to
such surrender, and there shall be no further registration of transfers on
the stock transfer books of the Company of the Common Shares which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Company or
Acquiror for any reason, they shall be canceled and exchanged as provided
in this ARTICLE II.
2.2.6 NO LIABILITY. None of Acquiror, Merger Sub, the Company or the
Exchange Agent shall be liable to any Person in respect of any Merger
Consideration or dividends delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. Any portion of the
Exchange Fund delivered to the Exchange Agent pursuant to this Agreement
that remains unclaimed for six months after the Effective Time shall be
redelivered by the Exchange Agent to Acquiror, upon demand, and any holders
of Certificates who have not theretofore complied with SECTION 2.2.3 shall
thereafter look only to Acquiror for delivery of the Merger Consideration
and any unpaid dividends, subject to applicable escheat and other similar
laws.
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2.2.7 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Acquiror Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote, to receive dividends or to any
other rights of a shareholder of Acquiror. Notwithstanding any other
provision of this Agreement, each holder of shares of Common Shares
exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of Acquiror Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, upon
surrender of such holder's Certificates in accordance with SECTION 2.2.3, a
cash payment in lieu of such fractional shares of Acquiror Common Stock
equal to the fractional proportion of the arithmetic mean of the closing
sales price of a share of Acquiror Common Stock on the NYSE over the ten
(10) trading days immediately preceding the Closing Date.
2.2.8 WITHHOLDING RIGHTS. Acquiror or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of Common Shares such
amounts as Acquiror or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that such
amounts are so withheld by Acquiror or the Exchange Agent, such withheld
amount shall be treated for all purposes of this Agreement as having been
paid to the holder of the Common Shares in respect of which such deduction
and withholding was made by Acquiror or the Exchange Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Acquiror and Merger Sub as follows:
3.1.1 ORGANIZATION, STANDING AND POWER OF THE COMPANY. The Company
is a real estate investment trust duly organized and validly existing under
the laws of Texas and has the requisite power and authority to carry on its
business as now being conducted. The Company is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not have a material adverse effect on the business,
properties, assets, financial condition or results of operations of the
Company and the Company Subsidiaries, taken as a whole (a "Material Adverse
Effect"). The Company has delivered to Acquiror complete and correct copies
of its Amended and Restated Declaration of Trust, as amended (the
"Company's Charter") and Amended and Restated Bylaws, as amended to the
date of this Agreement (the "Company's Bylaws").
3.1.2 COMPANY SUBSIDIARIES. SCHEDULE 3.1.2 to the Company Disclosure
Letter sets forth each Company Subsidiary and the ownership interest
therein of the Company. Except as set forth on SCHEDULE 3.1.2 to the
Company Disclosure Letter, (A) all the outstanding shares of capital stock
of each Company Subsidiary that is a corporation have been validly issued
and are fully paid and nonassessable, are owned by the Company or by
another Company Subsidiary free and clear of all Liens, other restrictions
and limitations on voting rights and (B) all equity interests in each
Company Subsidiary that is a partnership, joint venture, limited liability
company or trust are owned by the Company, by another Company Subsidiary,
or by the Company and another Company Subsidiary, or by two or more Company
Subsidiaries free and clear of all Liens, other restrictions and
limitations on voting rights. Except for the capital stock of or other
equity or ownership interests in the Company Subsidiaries, and except as
set forth on SCHEDULE 3.1.2 to the Company Disclosure Letter, the Company
does not own, directly or indirectly, any capital stock or other equity or
ownership interest in any Person. Each Company Subsidiary that is a
corporation is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted, and each Company
Subsidiary that is a partnership, limited liability company or trust is
duly organized and validly existing under the laws of its jurisdiction of
organization and has the requisite power
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and authority to carry on its business as now being conducted. Each Company
Subsidiary is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed, individually or in the aggregate, would not
have a Material Adverse Effect. Copies of the Articles of Incorporation,
Bylaws, organization documents and partnership and joint venture agreements
of each Company Subsidiary, as amended to the date of this Agreement, have
been previously delivered to Acquiror.
3.1.3 CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Shares and 10,000,000 shares of
Preferred Shares, of which 500,000 shares have been classified as Series A
Junior Participating Preferred Stock and the remaining 9,500,000 shares
remain unclassified. On the date hereof, (i) 13,409,642 shares of Common
Shares and no shares of Preferred Shares were issued and outstanding, (ii)
900 shares of Common Shares were held by the Company in its treasury, (iii)
260,000 shares of Common Shares were issuable under the Company's employee
benefit or incentive plans pursuant to awards granted by the Company (the
"Company Employee Stock Plans"), (iv) 1,940,000 shares of Common Shares
were issuable upon exercise of outstanding options (the "Company Options")
to purchase Common Shares, (v) 937,496 shares of Common Shares were
reserved for issuance pursuant to the Company's Amended and Restated
Dividend Reinvestment Share Purchase Plan and (vi) 83,898 shares of Common
Shares were reserved for issuance pursuant to the Company's Employee Share
Purchase Plan. On the date of this Agreement, except as set forth in this
SECTION 3.1.3 or in SCHEDULE 3.1.3 to the Company Disclosure Letter, no
shares of beneficial interest or other voting securities of the Company
were issued, reserved for issuance or outstanding. The Company has no
outstanding stock appreciation rights relating to the beneficial shares of
interest of the Company. All outstanding beneficial shares of interest of
the Company are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which shareholders of the Company may vote.
Except (A) as set forth above in this SECTION 3.1.3, (B) as set forth in
SCHEDULE 3.1.3 to the Company Disclosure Letter or (C) as otherwise
permitted under SECTION 4.1, as of the date of this Agreement there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company
or any Company Subsidiary is a party or by which such entity is bound,
obligating the Company or any Company Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital
stock, voting securities or other ownership interests of the Company or any
Company Subsidiary or obligating the Company or any Company Subsidiary to
issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking (other than
to the Company or a Company Subsidiary). Except as set forth on SCHEDULE
3.1.3 to the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any beneficial shares of interest
of the Company or any capital stock, voting securities or other ownership
interests in any Company Subsidiary or make any investment (in the form of
a loan, capital contribution or otherwise) in any Person (other than a
Company Subsidiary).
3.1.4 AUTHORITY; NONCONTRAVENTION; CONSENTS. The Company has the
requisite power and authority to enter into this Agreement and, subject to
approval of this Agreement by the vote of the holders of the Common Shares
required to approve this Agreement and the Transactions (the "Company
Shareholder Approvals"), to consummate the Transactions to which the
Company is a party. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the Transactions to which
the Company is a party have been duly authorized by all necessary action on
the part of the Company and no other action or proceedings on the part of
the Company are necessary to authorize this Agreement or the consummation
of the Transactions, subject to approval of this Agreement pursuant to the
Company Shareholder Approvals. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.
Except as set forth in SCHEDULE 3.1.4 to the Company Disclosure Letter, the
execution and delivery of this Agreement by the Company do not,
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and the consummation of the Transactions to which the Company is a party
and compliance by the Company with the provisions of this Agreement will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit or alteration of rights or obligations under, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any Company Subsidiary under, (i) the Company's Charter and the Company's
Bylaws, or the comparable charter or organizational documents or
partnership or similar agreement (as the case may be) of any Company
Subsidiary, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement,
instrument, permit, concession, contract, franchise or license applicable
to the Company or any Company Subsidiary or their respective properties or
assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any Laws applicable to the Company
or any Company Subsidiary, or their respective properties or assets, other
than, in the case of clause (ii) or (iii), any such conflicts, violations,
defaults, rights or Liens that either individually or in the aggregate
would not (x) have a Material Adverse Effect or (y) materially delay or
prevent the consummation of the Transactions. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to the Company or any
Company Subsidiary in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
Transactions, except for (i) the filing with the SEC of (x) a joint proxy
statement relating to the Company Shareholder Approvals and the Acquiror
Shareholder Approvals of the Transactions (as amended or supplemented from
time to time, the "Proxy Statement") and (y) such reports under Section
13(a) of the Exchange Act, as may be required in connection with this
Agreement and the Transactions, (ii) the filing of the Articles of Merger
with the Applicable Bodies, (iii) such filings as may be required in
connection with the payment of any Transfer and Gains Taxes and (iv) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings (A) as are set forth in SCHEDULE 3.1.4 to the
Company Disclosure Letter, (B) as may be required under (x) federal, state
or local environmental laws or (y) the "blue sky" laws of various states or
(C) which, if not obtained or made, would not prevent or delay in any
material respect the consummation of any of the Transactions or otherwise
prevent the Company from performing its obligations under this Agreement in
any material respect or have, individually or in the aggregate, a Material
Adverse Effect.
3.1.5 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed with the SEC (the
"Company SEC Documents"). All of the Company SEC Documents (other than
preliminary material or material which was subsequently amended), as of
their respective filing dates, complied, or will comply, as the case may
be, in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and, in each case, the rules and
regulations promulgated thereunder applicable to such Company SEC
Documents. None of the Company SEC Documents at the time of filing and
effectiveness contained, or will contain, as the case may be, any untrue
statement of a material fact or omitted, or will omit, as the case may be,
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 to the extent such statements
have been amended, modified or superseded by later Company SEC Documents.
The consolidated financial statements of the Company included in the
Company SEC Documents complied, or will comply, as the case may be, as to
form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have
been prepared, or will be prepared, as the case may be, in accordance with
GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q promulgated under the Exchange Act) applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto) and fairly presented, or will present, as the case may be, in
accordance with the applicable requirements of GAAP, the consolidated
financial position of the Company as of the dates thereof and the
consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal and
recurring year-end audit adjustments which were not or are not expected to
be material in amount). The audited financial statements of the
unconsolidated
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Company Subsidiaries previously delivered to Acquiror (the "Unconsolidated
Company Financial Statements") have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented, in accordance with
the applicable requirements of GAAP, the financial position of such Company
Subsidiaries, taken as a whole, as of the dates thereof, and the results of
their respective operations and cash flows for the periods then ended.
Except as set forth in the Company SEC Documents filed with the SEC prior
to the date hereof, in the Unconsolidated Company Financial Statements, or
in SCHEDULE 3.1.5 to the Company Disclosure Letter, and except for
liabilities and obligations incurred since the Financial Statement Date in
the ordinary course of business and consistent with past practice, neither
the Company nor any Company Subsidiary has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) required
by GAAP to be set forth on a consolidated balance sheet of the Company or
of any unconsolidated Company Subsidiary or in the notes thereto and which,
individually or in the aggregate, would have a Material Adverse Effect.
3.1.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Company SEC Documents filed with the SEC prior to the date hereof or in
SCHEDULE 3.1.6 to the Company Disclosure Letter, since the date of the most
recent financial statements included in the Company SEC Documents (the
"Financial Statement Date") to the date of this Agreement, the Company and
the Company Subsidiaries have conducted their business only in the ordinary
course and there has not been (i) any change that would have a Material
Adverse Effect (a "Material Adverse Change"), nor has there been any
occurrence or circumstance that with the passage of time would reasonably
be expected to result in a Material Adverse Change, (ii) except for (x)
regular quarterly dividends not in excess of $.395 per share of Common
Shares with customary record and payment dates and (y) the payment of a
preferred share purchase right dividend pursuant to the Rights Agreement
between the Company and BankBoston, N.A., dated May 23, 1997 (the "Rights
Agreement"), any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
of the Company's beneficial interests, other than any dividend required to
be paid pursuant to SECTION 2.2.4, (iii) any split, combination or
reclassification of any of the Company's capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for, or giving the right to acquire by exchange
or exercise, shares of its capital stock or any issuance of an ownership
interest in, any Company Subsidiary except as permitted by SECTION 4.1
after the date hereof, (iv) any damage, destruction or loss, whether or not
covered by insurance, that has or would have or is reasonably likely to
have a Material Adverse Effect or (v) any change in accounting methods,
principles or practices by the Company or any Company Subsidiary, except
insofar as required by a change in GAAP.
3.1.7 LITIGATION. Except as disclosed in the Company SEC Documents
filed with the SEC prior to the date hereof or in SCHEDULE 3.1.7 to the
Company Disclosure Letter, there is no suit, action or proceeding pending,
threatened in writing or to the Knowledge of the Company otherwise
threatened against or affecting the Company or any Company Subsidiary or
any of their respective properties or assets that, individually or in the
aggregate, could reasonably be expected to (A) have a Material Adverse
Effect or (B) prevent the consummation of any of the Transactions, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any Company
Subsidiary or any of their respective properties or assets having, or
which, insofar as reasonably can be foreseen, in the future would have, any
such effect.
3.1.8 PROPERTIES.
(i) The Company or one of the Company Subsidiaries owns fee simple
title (or where indicated, leasehold estate) to each of the real
properties identified in SCHEDULE 3.1.8 to the Company Disclosure Letter
(the "Company Properties"), except as listed on SCHEDULE 3.1.8 to the
Company Disclosure Letter, which are all of the real estate properties
owned by them, in each case (except as provided below) free and clear of
Liens, mortgages or deeds of trust, claims against title, charges which
are liens, security interests or other encumbrances on title
("Encumbrances"). The Company Properties are not subject to any rights
of way, written agreements, laws, ordinances and regulations affecting
building use or occupancy (collectively, "Property Restrictions"),
except for
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(A) Encumbrances and Property Restrictions set forth in SCHEDULE 3.1.8
to the Company Disclosure Letter, (B) Property Restrictions imposed or
promulgated by law or any governmental body or authority with respect to
real property, including zoning regulations, provided that they do not
materially adversely affect the currently intended use of any Company
Property, (C) Encumbrances and Property Restrictions disclosed on
existing title reports or existing surveys (in either case copies of
which title reports and surveys have been delivered or made available to
Acquiror and listed in the Company Disclosure Letter), and (D)
mechanics', carriers', workmens', repairmens' and materialmens' liens
and other Encumbrances, Property Restrictions and other limitations of
any kind, if any, which, individually or in the aggregate, are not
substantial in amount, do not materially detract from the value of or
materially interfere with the present use of any of the Company
Properties subject thereto or affected thereby, and do not otherwise
have a Material Adverse Effect. Except as provided in SCHEDULE 3.1.8 to
the Company Disclosure Letter, valid policies of title insurance have
been issued insuring the Company's or the applicable Company
Subsidiaries' fee simple title or leasehold estate to the Company
Properties in amounts at least equal to the value of such Company
Properties at the time of the issuance of such policy, subject only to
the matters disclosed above and on the Company Disclosure Letter, and
such policies are, at the date hereof, in full force and effect and no
material claim has been made against any such policy. Except as provided
in SCHEDULE 3.1.8 to the Company Disclosure Letter, (A) the Company has
no Knowledge that any material certificate, permit or license, from any
Governmental Entity having jurisdiction over any of the Company
Properties or any agreement, easement or other right which is necessary
to permit the lawful use and operation of the buildings and improvements
on any of the Company Properties or which is necessary to permit the
lawful access to and from any of the Company Properties has not been
obtained and is not in full force and effect, or of any pending threat
of modification or cancellation of any such certificate, permit or
license and (B) none of the Company or the Company Subsidiaries has
received written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement materially
affecting any portion of any of the Company Properties issued by any
Governmental Entity. Except as provided in SCHEDULE 3.1.8 to the Company
Disclosure Letter, neither the Company nor any of the Company
Subsidiaries has received any notice to the effect that (A) any
condemnation or rezoning proceedings are pending or threatened with
respect to any of the Company Properties or (B) any zoning, building or
similar law, code, ordinance, order or regulation is or will be violated
by the continued maintenance, operation or use of any buildings or other
improvements on any of the Company Properties or by the continued
maintenance, operation or use of the parking areas. Except as provided
in SCHEDULE 3.1.8 to the Company Disclosure Letter, all work to be
performed, payments to be made and actions to be taken by the Company or
the Company Subsidiaries prior to the date hereof pursuant to any
agreement entered into with a Governmental Entity in connection with a
site approval, zoning reclassification or other similar action relating
to the Company Properties (e.g. local improvement district, road
improvement district, environmental mitigation) has been performed, paid
or taken, as the case may be, and the Company has no Knowledge of any
planned or proposed work, payments or actions that may be required after
the date hereof pursuant to such agreements.
(ii) All properties currently under development or construction by
the Company or the Company Subsidiaries (the "Development Properties")
and all properties currently proposed for acquisition, development or
commencement of construction prior to the Effective Time by the Company
and the Company Subsidiaries (the "Future Development Properties") are
listed as such on SCHEDULE 3.1.8 to the Company Disclosure Letter. All
executory agreements entered into by the Company or any Company
Subsidiary relating to the development or construction of multifamily
residential or other real estate properties (other than agreements for
architectural, engineering, planning, accounting, legal or other
professional services, or construction agreements for material or labor)
are listed on SCHEDULE 3.1.8 to the Company Disclosure Letter. Copies of
such agreements, all of which have previously been delivered or made
available to Acquiror are listed on the Company Disclosure Letter and
are true and correct.
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3.1.9 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.1.9
to the Company Disclosure Letter or except as to matters previously
remediated in accordance with applicable Law, none of the Company, or any
Company Subsidiaries or, to the Company's Knowledge, any other Person has
caused or permitted (a) the presence of any Hazardous Materials at, in, on,
or under any of the Company Properties in any amount, form, or location
that would be unlawful, require investigation, notification of Government
Entities, or remedial action, or otherwise result in potential material
liabilities under any applicable local, state, or federal environmental
Laws, or (b) any spills, releases, discharges or disposal of Hazardous
Materials to have occurred or be presently occurring on or from the Company
Properties or at any other location as a result of any construction on or
operation and use of such properties, which presence or occurrence would,
individually or in the aggregate, have or is reasonably likely to have a
Material Adverse Effect; and in connection with the construction on or
operation and use of the Company Properties, the Company and the Company
Subsidiaries have not failed to comply in any material respect with all
applicable local, state and federal environmental Laws, regulations,
ordinances and administrative and judicial orders relating to the
generation, use, recycling, reuse, sale, storage, handling, transport and
disposal of any Hazardous Materials.
3.1.10 RELATED PARTY TRANSACTIONS. Set forth in SCHEDULE 3.1.10 to
the Company Disclosure Letter or in the Company's definitive proxy
statements for the Annual Meeting of Shareholders held May 23, 1997, May
20, 1996, and May 18, 1995, is a list of all arrangements, agreements and
contracts entered into by the Company or any of the Company Subsidiaries
with any Person who (i) is an executive officer, director or Affiliate of
the Company or any of the Company Subsidiaries, or any entity of which any
of the foregoing is an Affiliate which would be required to be disclosed
under Item 404 of Regulation S-K or (ii) acquired Common Shares in a
private placement. Such documents, copies of all of which have been
previously delivered or made available to Acquiror, are listed in SCHEDULE
3.1.10 to the Company Disclosure Letter or in the Company's definitive
proxy statements for the Annual Meeting of Shareholders held May 23, 1997,
May 20, 1996, and May 18, 1995.
3.1.11 ABSENCE OF CHANGES IN BENEFIT PLANS; ERISA COMPLIANCE.
(i) Except as disclosed in the Company SEC Documents filed with the
SEC prior to the date hereof or in SCHEDULE 3.1.11(I) to the Company
Disclosure Letter, since the date of the most recent audited financial
statements included in the Company SEC Documents filed with the SEC
prior to the date hereof, there has not been any adoption or amendment
by the Company, any Company Subsidiary or any Person affiliated with the
Company under Section 414(b), (c), (m) or (o) of the Code (each, an
"ERISA Affiliate of the Company") of any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other employee
benefit plan, arrangement or understanding (whether or not legally
binding, or oral or in writing) providing benefits to any current or
former employee, officer or director of the Company, any Company
Subsidiary, or any ERISA Affiliate of the Company (collectively,
"Company Benefit Plans"). No Company Benefit Plan is, or has been
subject to Title IV of ERISA or to Section 412 of the Code or Section
302 of ERISA or provides post-retirement health benefits other than the
health benefits required under Section 4980B of the Code or Part 6 of
Title I of ERISA.
Each Company Benefit Plan is listed in SCHEDULE 3.1.11(I) to the
Company Disclosure Letter, including, with respect to terminated Company
Benefit Plans, the date of termination. True and correct copies of each
of the following have been made available to Acquiror: (i) the most
recent annual report (Form 5500), if any, relating to each such Company
Benefit Plan filed with the IRS, (ii) each such Company Benefit Plan,
(iii) the trust agreement, if any, relating to each such Company Benefit
Plan, (iv) the most recent summary plan description for each such
Company Benefit Plan for which a summary plan description is required by
ERISA, and (v) the most recent determination letter, if any, issued by
the IRS with respect to any such Company Benefit Plan qualified under
Section 401 of the Code.
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Except as set forth in SCHEDULE 3.1.11(I) to the Company Disclosure
Letter, as to any such Company Benefit Plan intended to be qualified
under Section 401 of the Code, such Company Benefit Plan satisfies in
form the requirements of such Section and there has been no termination
or partial termination of such Company Benefit Plan within the meaning
of Section 411(d)(3) of the Code.
As to any such terminated Company Benefit Plan intended to have
been qualified under Section 401 of the Code, such terminated Company
Benefit Plan received a favorable determination letter from the IRS with
respect to its termination.
Except as set forth in SCHEDULE 3.1.11(I) to the Company Disclosure
Letter either the Company, a Company Subsidiary or an ERISA Affiliate of
the Company has the right, either individually or in the aggregate,
unilaterally to terminate any, and each, of the Company Benefit Plans
without incurring any additional expense to fund or pay any benefits
upon such termination.
There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the Knowledge of the Company, threatened
against, or with respect to, any of such Company Benefit Plans or their
assets that could reasonably be expected to have a Material Adverse
Effect.
To the Knowledge of the Company, there is no matter pending before
the IRS, the United States Department of Labor or the PBGC with respect
to any of such Company Benefit Plans.
All contributions required to be made to such Company Benefit Plans
pursuant to their terms and provisions have been timely made.
Except as set forth in SCHEDULE 3.1.11(I) to the Company Disclosure
Letter, neither the Company nor any Company Subsidiary is a party to or
is bound by any severance agreement, program or policy. True and correct
copies of all employment agreements with officers of the Company and the
Company Subsidiaries, and all vacation, overtime and other compensation
policies of the Company and the Company Subsidiaries relating to their
employees have been made available to Acquiror.
(ii) Except as described in the Company SEC Documents or in
SCHEDULE 3.1.11(II) to the Company Disclosure Letter or as would not
have a Material Adverse Effect, (A) all Company Benefit Plans, including
any such plan that is an "employee benefit plan" as defined in Section
3(3) of ERISA, are in compliance with all applicable requirements of
law, including ERISA and the Code, and (B) other than claims for
benefits and contributions in the normal course of business, neither the
Company, any Company Subsidiary nor any ERISA Affiliate of the Company
has any liabilities or obligations with respect to any such Company
Benefit Plan, whether accrued, contingent or otherwise, nor to the
Knowledge of the Company are any such liabilities or obligations
expected to be incurred. Except as set forth in SCHEDULE 3.1.11(II) to
the Company Disclosure Letter, or as permitted by SECTION 5.13.2 the
execution of, and performance of the Transactions will not (either alone
or upon the occurrence of any additional or subsequent events)
constitute an event under any Company Benefit Plan, policy, arrangement
or agreement or any trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any employee or director of the
Company, any Company Subsidiary, or any ERISA Affiliate of the Company.
(iii) Except as set forth in SCHEDULE 3.1.11(III) to the Company
Disclosure Letter, neither the Company nor any Company Subsidiary has
any plans, programs or agreements to which they are parties, or to which
they are subject, pursuant to which payments (or acceleration of
benefits) may be required upon, or may become payable directly or
indirectly as a result of, a change of control of the Company.
(iv) No agreements have been made with any Person by, or on behalf
of, the Company or any Company Subsidiary with respect to any
interpretation of, or the amount or calculation of any benefits payable
under, any plans, programs or agreements described in SECTION
3.1.11(III) or in
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SCHEDULE 3.1.11(III) to the Company Disclosure Letter, which agreement
is binding on the Company or any Company Subsidiary or would be binding
on Acquiror.
3.1.12 TAXES.
(i) Except as set forth in SCHEDULE 3.1.12 to the Company
Disclosure Letter, each of the Company and each Company Subsidiary has
(A) filed all Tax returns and reports required to be filed by it (after
giving effect to any filing extension properly granted by a Governmental
Entity having authority to do so) and all such returns and reports are
accurate and complete in all material respects; and (B) paid (or the
Company has paid on its behalf) all Taxes shown on such returns and
reports as required to be paid by it, and the most recent financial
statements contained in the Company SEC Documents reflect an adequate
reserve for all material Taxes payable by the Company (and by those
Company Subsidiaries whose financial statements are contained therein)
for all taxable periods and portions thereof through the date of such
financial statements. True, correct and complete copies of all federal,
state and local Tax returns and reports for the Company and each Company
Subsidiary, and all written communications relating thereto, have been
delivered or made available to representatives of Acquiror. Except as
set forth on SCHEDULE 3.1.12 to the Company Disclosure Letter, to the
Knowledge of the Company, no deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or any of the Company
Subsidiaries, and no requests for waivers of the time to assess any such
Taxes are pending.
(ii) The Company (A) for all taxable years commencing with the
taxable year ended December 31, 1993 through the most recent December
31, has been organized in conformity with the requirements for
qualification as a real estate investment trust (a "REIT") (within the
meaning of the Code) under the Code and has been subject to taxation as
a REIT and has satisfied all requirements to qualify as a REIT for such
years, (B) has operated, and intends to continue to operate, in such a
manner as to qualify as a REIT for the taxable year ending on the
Closing Date, and (C) has not taken or omitted to take any action which
would reasonably be expected to result in a challenge to its status as a
REIT, and to the Company's Knowledge, no such challenge is pending or
threatened. Each Company Subsidiary which is a partnership, joint
venture or limited liability company has been treated during and since
its formation and continues to be treated for federal income tax
purposes as a partnership and not as a corporation or an association
taxable as a corporation. Each Company Subsidiary which is a corporation
for federal income tax purposes and with respect to which all of the
outstanding capital stock is owned solely by the Company (or solely by a
Company Subsidiary that is a corporation wholly owned by the Company) is
a "qualified REIT subsidiary," as defined in Section 856(i) of the Code.
Except as provided in SCHEDULE 3.1.12 to the Company Disclosure Letter,
neither the Company nor any Company Subsidiary holds any asset (x) the
disposition of which would be subject to rules similar to Section 1374
of the Code as a result of an election under IRS Notice 88-19 or (y)
that is subject to a consent filed pursuant to Section 341(f) of the
Code and the regulations thereunder.
3.1.13 NO PAYMENTS TO EMPLOYEES, OFFICERS OR TRUST MANAGERS. Except
as set forth on SCHEDULE 3.1.13 to the Company Disclosure Letter, there is
no employment or severance contract, or other agreement requiring payments
to be made or increasing any amounts payable thereunder on a change of
control or otherwise as a result of the consummation of any of the
Transactions, with respect to any employee, officer, trust manager or
director of the Company or any Company Subsidiary.
3.1.14 BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker, investment
banker, financial advisor or other Person, other than Prudential Securities
Incorporated ("Prudential"), the fees and expenses of which have previously
been disclosed to Acquiror and will be paid by the Company, is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made
by or on behalf of the Company or any Company Subsidiary. The Company has
provided to Acquiror a good faith estimate and description of the expenses
of the Company and the Company Subsidiaries which the Company and the
Company Subsidiaries expect to incur, or have incurred, in connection with
the Transactions.
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3.1.15 COMPLIANCE WITH LAWS. Except as disclosed in the Company SEC
Documents filed with the SEC prior to the date hereof or as set forth in
SCHEDULE 3.1.15 to the Company Disclosure Letter, neither the Company nor
any Company Subsidiary has violated or failed to comply with any statute,
law, ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations,
except for violations and failures to comply that would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.
3.1.16 CONTRACTS; DEBT INSTRUMENTS.
(i) To the Knowledge of the Company, neither the Company nor any
Company Subsidiary is in violation of or in default under (nor does
there exist any condition which upon the passage of time or the giving
of notice or both would cause such a violation of or default under) any
loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other material contract,
agreement, arrangement or understanding, to which it is a party or by
which it or any of its properties or assets is bound, except as set
forth in SCHEDULE 3.1.16(I) to the Company Disclosure Letter and except
for violations or defaults that would not, individually or in the
aggregate, result in a Material Adverse Effect.
(ii) Except for any of the following expressly identified in the
Company SEC Documents filed with the SEC prior to the date hereof and
except as permitted by SECTION 4.1 after the date hereof, SCHEDULE
3.1.16(II) to the Company Disclosure Letter sets forth (x) a list of all
loan or credit agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any indebtedness of the
Company or any of the Company Subsidiaries, other than indebtedness
payable to the Company or a Company Subsidiary or to any third-party
partner or joint venturer in any Company Subsidiary, in an aggregate
principal amount in excess of $100,000 per item is outstanding or may be
incurred and (y) the respective principal amounts outstanding thereunder
on June 30, 1997, For purposes of this SECTION 3.1.16(II),
"Indebtedness" shall mean, with respect to any Person, without
duplication, (A) all indebtedness of such Person for borrowed money,
whether secured or unsecured, (B) all obligations of such Person under
conditional sale or other title retention agreements relating to
property purchased by such Person, (C) all capitalized lease obligations
of such Person, (D) all obligations of such Person under interest rate
or currency hedging transactions (valued at the termination value
thereof) and (E) all guarantees of such Person of any such indebtedness
of any other Person.
3.1.17 STATE TAKEOVER STATUTES. The Company has taken all action
necessary, if any, to exempt transactions between Acquiror and the Company
and its Affiliates from the operation of any "fair price," "moratorium,"
"control share acquisition" or any other anti-takeover statute or similar
statute enacted under any state laws or the federal laws of the United
States, or any similar statute or regulation (a "Takeover Statute").
3.1.18 REGISTRATION STATEMENT; PROXY STATEMENT. The information
supplied by the Company for inclusion or incorporation by reference in the
Registration Statement shall not at the time the Registration Statement
(including any amendments and supplements thereto) is declared effective by
the SEC 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 not misleading. The information supplied by the
Company for inclusion or incorporation by reference in the Proxy Statement
will not, on the date the Proxy Statement is first mailed to the
shareholders, at the time of the Shareholders Meetings, or at the Effective
Time, contain any untrue statement of any material fact, or omit to state
any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not false or
misleading. If at any time prior to the Effective Time any event relating
to the Company or any of its respective Affiliates, officers or Trust
Managers should be discovered by the Company which should be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement, the Company shall promptly inform Acquiror. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to
any information supplied
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by Acquiror or Merger Sub which is contained or incorporated by reference
in any of the foregoing documents.
3.1.19 HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976. For
purposes of determining compliance with the HSR, the Company confirms that
the conduct of its business consists solely of investing in, owning and
operating real estate for the benefit of its shareholders.
3.1.20 VOTE REQUIRED. The affirmative vote of at least two-thirds of
the outstanding shares of Common Shares is the only vote of the holders of
any class or series of the Company's shares of beneficial interest
necessary (under applicable law or otherwise) to approve this Agreement and
the Transactions.
3.1.21 OPINION OF FINANCIAL ADVISOR. The Board of Trust Managers of
the Company has received the opinion of Prudential, satisfactory to the
Company, a copy of which has been provided to Acquiror, to the effect that,
as of the date of such opinion, consideration to be received in the Merger
is fair to the shareholders of the Company from a financial point of view.
3.1.22 INVESTMENT COMPANY ACT OF 1940. Neither the Company nor any
Company Subsidiary is, or at the Effective Time will be, required to be
registered under the 1940 Act.
3.1.23 INSURANCE. The Company maintains fire and casualty, general
liability, business interruption, product liability, professional liability
and sprinkler and water damage insurance policies with reputable insurance
carriers, which the Company reasonably believes provide full and adequate
coverage for all normal risks incident to the business of the Company and
the Company Subsidiaries and their respective properties and assets.
3.1.24 THE COMPANY'S RIGHTS AGREEMENT. Neither the execution or
delivery of this Agreement nor the consummation of the Transactions will
cause Acquiror or any of its Affiliates to be within the definition of
"Acquiring Person" as defined in the Rights Agreement. Neither the
"Distribution Date" (as defined in the Rights Agreement) nor a "Shares
Acquisition Date" (as defined in the Rights Agreement) has occurred under
the Rights Agreement, and, to the Knowledge of the Company, neither
Acquiror nor Merger Sub nor any Affiliate or Associate of Acquiror or
Merger Sub has taken any action which would cause such Person to be deemed
an Acquiring Person or which would cause a Distribution Date or a Shares
Acquisition Date to occur under the Rights Agreement.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror
represents and warrants to the Company as follows:
3.2.1 ORGANIZATION, STANDING AND CORPORATE POWER OF ACQUIROR AND
MERGER SUB. Each of Acquiror and Merger Sub is a Georgia corporation and
each is duly organized and validly existing under the laws of Georgia and
has the requisite power and authority to carry on its business as now being
conducted. Each of Acquiror and Merger Sub is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not have a material adverse effect on the business,
properties, assets, financial condition or results of operations of
Acquiror and the Acquiror Subsidiaries, taken as a whole (an "Acquiror
Material Adverse Effect"). Each of Acquiror and Merger Sub has delivered to
the Company complete and correct copies of its Articles of Incorporation
and Bylaws, as amended or supplemented to the date of this Agreement.
3.2.2 ACQUIROR SUBSIDIARIES. SCHEDULE 3.2.2 to the Acquiror
Disclosure Letter sets forth each Acquiror Subsidiary and the ownership
interest therein of Acquiror. Except as set forth in SCHEDULE 3.2.2 to the
Acquiror Disclosure Letter, (A) all the outstanding shares of capital stock
of each Acquiror Subsidiary that is a corporation have been validly issued
and are fully paid and nonassessable and are owned by Acquiror, by another
Acquiror Subsidiary or by Acquiror and another Acquiror Subsidiary, free
and clear of all Liens, other restrictions and limitations on voting rights
and (B) all equity interests in each Acquiror Subsidiary that is a
partnership, joint venture, limited liability company or trust are owned by
Acquiror, by another Acquiror Subsidiary or by Acquiror and another
Acquiror Subsidiary free and
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<PAGE> 20
clear of all Liens, other restrictions and limitations on voting rights.
Except for the capital stock of or other equity or ownership interests in
the Acquiror Subsidiaries, and except as set forth in SCHEDULE 3.2.2 to the
Acquiror Disclosure Letter, Acquiror does not own, directly or indirectly,
any capital stock or other equity or ownership interest in any Person. Each
Acquiror Subsidiary (other than Merger Sub) that is a corporation is duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry
on its business as now being conducted, and each Acquiror Subsidiary that
is a partnership, limited liability company or trust is duly organized and
validly existing under the laws of its jurisdiction of organization and has
the requisite power and authority to carry on its business as now being
conducted. Each Acquiror Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not have an Acquiror Material Adverse Effect. Copies of
the Articles of Incorporation, Bylaws, organization documents and
partnership and joint venture agreements of each Acquiror Subsidiary, as
amended to the date of this Agreement, have been previously delivered to
the Company.
3.2.3 CAPITAL STRUCTURE. The authorized capital stock of Acquiror
consists of 100,000,000 shares of Acquiror Common Stock and 20,000,000
shares of Acquiror Preferred Stock, of which 1,000,000 shares have been
classified as 8 1/2% Series A Cumulative Redeemable Preferred Stock and the
remaining 19,000,000 shares remain unclassified. On the date hereof, (i)
22,124,410 shares of Acquiror Common Stock and 1,000,000 shares of Acquiror
Preferred Stock were issued and outstanding, (ii) no shares of Acquiror
Stock or Acquiror Preferred Stock were held by Acquiror in its treasury,
(iii) 98,248 shares of Acquiror Common Stock were reserved for issuance
pursuant to options and shares of restricted stock not yet granted under
Acquiror's employee benefit or incentive plans ("Acquiror Employee Stock
Plans"), (iv) 1,030,440 shares of Acquiror Common Stock were issuable upon
exercise of outstanding options under the Acquiror Employee Stock Plans
(the "Acquiror Options") to purchase shares of Acquiror Common Stock; (v)
145,972 shares were reserved for issuance pursuant to Acquiror's Dividend
Reinvestment and Stock Purchase Plan, (vi) 26,308 shares were reserved for
issuance pursuant to Acquiror's Employee Stock Purchase Plan and (vii)
27,260,770 shares were reserved for issuance upon the exchange of
outstanding limited partnership interests ("Units") in the Operating
Partnership. On the date of this Agreement, except as set forth in this
SECTION 3.2.3, no shares of capital stock or other voting securities of
Acquiror were issued, reserved for issuance or outstanding. There are no
outstanding stock appreciation rights relating to the capital stock of
Acquiror. All outstanding shares of capital stock of Acquiror are, and all
shares which may be issued pursuant to this Agreement will be, when issued,
duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except as set forth on SCHEDULE 3.2.3 to the
Acquiror Disclosure Letter, there are no bonds, debentures, notes or other
indebtedness of Acquiror having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which shareholders of Acquiror may vote. Except (A) as set above in this
SECTION 3.2.3, (B) as set forth in SCHEDULE 3.2.3 to the Acquiror
Disclosure Letter or (C) as otherwise permitted under SECTION 4.2, as of
the date of this Agreement there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Acquiror or any Acquiror Subsidiary is a
party or by which such entity is bound, obligating Acquiror or any Acquiror
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock, voting securities or other
ownership interests of Acquiror or of any Acquiror Subsidiary or obligating
Acquiror or any Acquiror Subsidiary to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking (other than to Acquiror or an Acquiror
Subsidiary). Except as set forth on SCHEDULE 3.2.3 to the Acquiror
Disclosure Letter, there are no outstanding contractual obligations of
Acquiror or any Acquiror Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock or other ownership interests in any
Acquiror Subsidiary or make any investment (in the form of a loan, capital
contribution or otherwise) in any Person (other than an Acquiror
Subsidiary).
3.2.4 AUTHORITY; NONCONTRAVENTION; CONSENTS. Each of Acquiror and
Merger Sub has the requisite corporate power and authority to enter into
this Agreement and, subject to approval of this
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<PAGE> 21
Agreement by the vote of the holders of the Acquiror Common Stock required
to approve this Agreement and the Transactions (including, without
limitation, the issuance of Acquiror Common Stock in connection with the
Merger) (the "Acquiror Shareholder Approvals" and, together with the
Company Shareholder Approvals, the "Shareholder Approvals"), to consummate
the Transactions to which Acquiror or Merger Sub (as the case may be) is a
party. The execution and delivery of this Agreement by each of Acquiror and
Merger Sub and the consummation by each of Acquiror and Merger Sub of the
Transactions to which Acquiror or Merger Sub (as the case may be) is a
party have been duly authorized by all necessary corporate action on the
part of each of Acquiror and Merger Sub and no other action or proceedings
on the part of Acquiror or Merger Sub are necessary to authorize this
Agreement or the consummation of the Transactions, subject to approval of
this Agreement and the issuance of Acquiror Common Stock in connection with
the Merger pursuant to the Acquiror Shareholder Approvals. This Agreement
has been duly executed and delivered by each of Acquiror and Merger Sub and
constitutes a valid and binding obligation of each of Acquiror and Merger
Sub, enforceable against each of Acquiror and Merger Sub in accordance with
its terms. Except as set forth in SCHEDULE 3.2.4 to the Acquiror Disclosure
Letter, the execution and delivery of this Agreement by each of Acquiror
and Merger Sub do not, and the consummation of the Transactions to which
Acquiror or Merger Sub (as the case may be) is a party and compliance by
each of Acquiror and Merger Sub with the provisions of this Agreement will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit or alteration of rights or obligations under, or result in the
creation of any Lien upon any of the properties or assets of Acquiror,
Merger Sub, or any other Acquiror Subsidiary under, (i) the Articles of
Incorporation or Bylaws of Acquiror and Merger Sub or the comparable
charter or organizational documents or partnership or similar agreement (as
the case may be) of any other Acquiror Subsidiary each as amended or
supplemented to the date of this Agreement, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, reciprocal easement agreement,
lease or other agreement, instrument, permit, concession, franchise or
license applicable to Acquiror, Merger Sub or any other Acquiror Subsidiary
or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, any Laws applicable to Acquiror, Merger Sub or any other Acquiror
Subsidiary or their respective properties or assets, other than, in the
case of clause (ii) or (iii), any such conflicts, violations, defaults,
rights or Liens that either individually or in the aggregate would not (x)
have an Acquiror Material Adverse Effect or (y) materially delay or prevent
the consummation of the Transactions. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Acquiror, Merger Sub
or any Acquiror Subsidiary in connection with the execution and delivery of
this Agreement or the consummation by Acquiror or Merger Sub, as the case
may be, of any of the Transactions, except for (i) the filing with the SEC
of (x) the Proxy Statement and a registration statement on Form S-4 (or
other appropriate form) in connection with the registration of the Acquiror
Common Stock constituting the Merger Consideration (the "Registration
Statement") and (y) such reports under Section 13(a) of the Exchange Act as
may be required in connection with this Agreement and the Transactions,
(ii) the filing of the Listing Application with the NYSE with respect to
the shares of Acquiror Common Stock to be issued as part of the Merger
consideration, (iii) the filing of the Articles of Merger with the
Applicable Bodies, (iv) such filings as may be required in connection with
the payment of any Transfer and Gains Taxes and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings
(A) as are set forth in SCHEDULE 3.2.4 to the Acquiror Disclosure Letter,
(B) as may be required under (x) federal, state or local environmental laws
or (y) the "blue sky" laws of various states or (C) which, if not obtained
or made, would not prevent or delay in any material respect the
consummation of any of the Transactions or otherwise prevent Acquiror or
Merger Sub from performing their respective obligations under this
Agreement in any material respect or have, individually or in the
aggregate, an Acquiror Material Adverse Effect.
3.2.5 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES. Acquiror has filed all reports, schedules, forms, statements
and other documents required to be filed with the SEC (the "Acquiror SEC
Documents"). All of the Acquiror SEC Documents (other than preliminary
material or
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material which was subsequently amended), as of their respective filing
dates, complied, or will comply, as the case may be, in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act and, in each case, the rules and regulations promulgated
thereunder applicable to such Acquiror SEC Documents. None of the Acquiror
SEC Documents at the time of filing and effectiveness contained, or will
contain, as the case may be, any untrue statement of a material fact or
omitted, or will omit, as the case may be, 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 to the extent such statements have been amended,
modified or superseded by later Acquiror SEC Documents. The consolidated
financial statements of Acquiror included in the Acquiror SEC Documents
complied, or will comply, as the case may be, as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared, or
will be prepared, as the case may be, in accordance with GAAP (except, in
the case of unaudited statements, as permitted by Form 10-Q promulgated
under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
presented, or will present, as the case may be, in accordance with the
applicable requirements of GAAP, the consolidated financial position of
Acquiror and the Acquiror Subsidiaries, taken as a whole, as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
and recurring year-end audit adjustments which were not or are not expected
to be material in amount). Except as set forth in the Acquiror SEC
Documents filed with the SEC prior to the date hereof, or in SCHEDULE 3.2.5
to the Acquiror Disclosure Letter, and except for liabilities and
obligations incurred since the Acquiror Financial Statement Date in the
ordinary course of business and consistent with past practice, neither
Acquiror nor any Acquiror Subsidiary has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by
GAAP to be set forth on a consolidated balance sheet of Acquiror or of any
unconsolidated Acquiror Subsidiary or in the notes thereto and which,
individually or in the aggregate, would have an Acquiror Material Adverse
Effect.
3.2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Acquiror SEC Documents filed with the SEC prior to the date hereof or
in SCHEDULE 3.2.6 to the Acquiror Disclosure Letter, since the date of the
most recent financial statements included in the Acquiror SEC Documents
(the "Acquiror Financial Statement Date") to the date of this Agreement,
Acquiror and the Acquiror Subsidiaries have conducted their business only
in the ordinary course and there has not been (i) any change that would
have an Acquiror Material Adverse Effect (a "Acquiror Material Adverse
Change"), nor has there been any occurrence or circumstance that with the
passage of time would reasonably be expected to result in an Acquiror
Material Adverse Change, (ii) except for regular quarterly dividends not in
excess of $.595 per share of Acquiror Common Stock any declaration, setting
aside or payment of any dividend or distribution (whether in cash, stock or
property) with respect to any of Acquiror's capital stock, other than any
dividend required to be paid pursuant to SECTION 2.2.4, (iii) any split,
combination or reclassification of any of Acquiror's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for, or giving the right to
acquire by exchange or exercise, shares of its capital stock or any
issuance of an ownership interest in any Acquiror Subsidiary except as
permitted by SECTION 4.2 after the date hereof (iv) any damage, destruction
or loss, whether or not covered by insurance, that has or would have or is
reasonably likely to have an Acquiror Material Adverse Effect or (v) any
change in accounting methods, principles or practices by Acquiror or any
Acquiror Subsidiary, except insofar as required by a change in GAAP.
3.2.7 LITIGATION. Except as disclosed in the Acquiror SEC Documents
filed with the SEC prior to the date hereof or in SCHEDULE 3.2.7 to the
Acquiror Disclosure Letter, there is no suit, action or proceeding pending,
threatened in writing or to the Knowledge of Acquiror otherwise threatened
against or affecting Acquiror or any Acquiror Subsidiary or any of their
respective properties or assets that, individually or in the aggregate,
could reasonably be expected to (A) have an Acquiror Material Adverse
Effect or (B) prevent the consummation of any of the Transactions, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Acquiror or any
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<PAGE> 23
Acquiror Subsidiary or any of their respective properties or assets having,
or which, insofar as reasonably can be foreseen, in the future would have
any such effect.
3.2.8 PROPERTIES.
(i) Acquiror or one of the Acquiror Subsidiaries owns fee simple
title (or where indicated leasehold estates) to each of the real
properties identified in the Acquiror SEC Documents (the "Acquiror
Properties"), in each case (except as provided below) free and clear of
Encumbrances, except for (A) Encumbrances and Property Restrictions set
forth in the Acquiror SEC Documents, (B) Property Restrictions imposed
or promulgated by law or any governmental body or authority with respect
to real property, including zoning regulations, (C) Encumbrances and
Property Restrictions disclosed on existing title reports or existing
surveys (in either case copies of which title reports and surveys have
been delivered or made available to the Company), and (D) mechanics',
carriers', workmens', repairmens' and materialmens' liens and other
Encumbrances, Property Restrictions and other limitations of any kind,
if any, which, individually or in the aggregate, do not otherwise have
an Acquiror Material Adverse Effect (such matters described in clauses
(A) through (D) being hereinafter collectively referred to as the
"Permitted Acquiror Liens"). Except as provided in SCHEDULE 3.2.8 to the
Acquiror Disclosure Letter, policies of title insurance have been
obtained insuring Acquiror's or the applicable Acquiror Subsidiaries'
fee simple title or leasehold estate to the Acquiror Properties in
amounts at least equal to the value of such Acquiror Properties at the
time of issuance of such policy, subject only to the Permitted Acquiror
Liens, and, to the Knowledge of Acquiror, such policies are, at the date
hereof, in full force and effect and no material claim has been made
against any such policy. Acquiror has not received written notice of any
violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any of the Acquiror
Properties issued by any Governmental Entity, which remains uncured and
which if not cured would be expected to have an Acquiror Material
Adverse Effect. Neither Acquiror nor any of the Acquiror Subsidiaries
has received any notice to the effect that (A) any condemnation or
rezoning proceedings are pending or threatened with respect to any of
the Acquiror Properties or (B) any zoning, building or similar law,
code, ordinance, order or regulation is or will be violated by the
continued maintenance, operation or use of any buildings or other
improvements on any of the Acquiror Properties or by the continued
maintenance, operation or use of the parking areas, in either case which
remains uncured and which if not cured would be expected to have an
Acquiror Material Adverse Effect.
(ii) Acquiror has made available to the Company for review all
executory agreements entered into by Acquiror or any Acquiror Subsidiary
relating to the development or construction of residential or other real
estate properties other than the Acquiror Properties (other than
agreements for architectural, engineering, planning, accounting, legal
or other professional services or construction agreements for material
or labor) and which would be expected to have, individually or in the
aggregate, an Acquiror Material Adverse Effect.
3.2.9 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 3.2.9 to
the Acquiror Disclosure Letter or except as to matters previously
remediated in accordance with applicable Law, none of Acquiror, or any
Acquiror Subsidiary or, to Acquiror's Knowledge any other Person has caused
or permitted (a) the presence of any Hazardous Materials at, in, on or
under any of the Acquiror Properties in any amount, form, or location that
would be unlawful, require investigation, notification of Governmental
Entities, or remedial action, or otherwise result in potential material
liabilities under any applicable local, state, or federal environmental
Laws, or (b) any spills, releases, discharges or disposal of Hazardous
Materials to have occurred or be presently occurring on or from the
Acquiror Properties or at any other location as a result of any
construction on or operation and use of such properties, which presence or
occurrence would, individually or in the aggregate, have or is reasonably
likely to have an Acquiror Material Adverse Effect; and in connection with
the construction on or operation and use of the Acquiror Properties,
Acquiror and the Acquiror Subsidiaries have not failed to comply in any
material respect with all applicable local, state and federal environmental
Laws, regulations, ordinances and
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administrative and judicial orders relating to the generation, use,
recycling, reuse, sale, storage, handling, transport and disposal of any
Hazardous Materials.
3.2.10 ABSENCE OF CHANGES IN BENEFIT PLANS; ERISA COMPLIANCE.
(i) Except as disclosed in the Acquiror SEC Documents filed with
the SEC prior to the date hereof or in SCHEDULE 3.2.10(I) to the
Acquiror Disclosure Letter and except as permitted by Section 4.2 (for
the purpose of this sentence, as if SECTION 4.2 had been in effect since
December 31, 1996), since the date of the most recent audited financial
statements included in the Acquiror SEC Documents filed with the SEC
prior to the date hereof, there has not been any adoption or amendment
by Acquiror or any Acquiror Subsidiary, or any Person affiliated with
Acquiror under Section 414 (b), (c), (m) or (o) of the Code (each, an
"ERISA Affiliate of the Acquiror") of any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other
employee benefit plan, arrangement or understanding (whether or not
legally binding or oral or in writing) providing benefits to any current
or former employee, officer or director of Acquiror, any Acquiror
Subsidiary, or any ERISA Affiliate of the Acquiror (collectively,
"Acquiror Benefit Plans"). No Acquiror Benefit Plan is subject to Title
IV of ERISA or to Section 412 of the Code or Section 302 of ERISA.
True and correct copies of each of the following have been made
available to the Company: (i) the most recent annual report (Form 5500),
if any, relating to each Acquiror Benefit Plan filed with the IRS, (ii)
each Acquiror Benefit Plan, (iii) the trust agreement, if any, relating
to each Acquiror Benefit Plan, (iv) the most recent summary plan
description for each Acquiror Benefit Plan for which a summary plan
description is required by ERISA and (v) the most recent determination
letter, if any, issued by the IRS with respect to any Acquiror Benefit
Plan qualified under Section 401 of the Code.
As to any Acquiror Benefit Plan intended to be qualified under
Section 401 of the Code, such Acquiror Benefit Plan satisfies in form
the requirements of such Section and there has been no termination or
partial termination of such Acquiror Benefit Plan within the meaning of
Section 411(d)(3) of the Code.
As to any such terminated Acquiror Benefit Plan intended to have
been qualified under Section 401 of the Code, such terminated Acquiror
Benefit Plan received a favorable determination letter from the IRS with
respect to its termination.
There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the Knowledge of Acquiror, threatened
against, or with respect to, any of the Acquiror Benefit Plans or their
assets that could reasonably be expected to have a Material Adverse
Effect.
To the Knowledge of Acquiror, there is no matter pending before the
IRS, the United States Department of Labor or the PBGC with respect to
any of the Acquiror Benefit Plans.
All contributions required to be made to such Acquiror Benefit
Plans pursuant to their terms and provisions have been timely made.
Except as set forth in SCHEDULE 3.2.10(I) to the Acquiror
Disclosure Letter, neither Acquiror nor any Acquiror Subsidiary is a
party to or is bound by any severance agreement, program or policy. True
and correct copies of all employment agreements with officers of
Acquiror and the Acquiror Subsidiaries, and all vacation, overtime and
other compensation policies of Acquiror and the Acquiror Subsidiaries
relating to their employees have been made available to the Company.
(ii) Except as described in the Acquiror SEC Documents or in
SCHEDULE 3.2.10(II) to the Acquiror Disclosure Letter or as would not
have an Acquiror Material Adverse Effect, (A) all Acquiror Benefit
Plans, including any such plan that is an "employee benefit plan" as
defined in Section 3(3) of ERISA, are in compliance with all applicable
requirements of law, including ERISA and the Code, and (B) other than
claims for benefits in the normal course of business,
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neither Acquiror, any Acquiror Subsidiary nor any ERISA Affiliate of the
Acquiror has any liabilities or obligations with respect to any Acquiror
Benefit Plans, whether accrued, contingent or otherwise, nor to the
Knowledge of Acquiror are any such liabilities or obligations expected
to be incurred. Except as set forth in SCHEDULE 3.2.10(II) to the
Acquiror Disclosure Letter, the execution of, and performance of the
Transactions will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Acquiror
Benefit Plan, policy, arrangement or agreement or any trust or loan that
will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director of Acquiror, any Acquiror
Subsidiary, or any ERISA Affiliate of the Acquiror.
3.2.11 TAXES.
(i) Each of Acquiror and each Acquiror Subsidiary has (A) filed all
Tax returns and reports required to be filed by it (after giving effect
to any filing extension properly granted by a Governmental Entity having
authority to do so) and all such returns and reports are accurate and
complete in all material respects; and (B) paid (or Acquiror has paid on
its behalf) all Taxes shown on such returns and reports as required to
be paid by it, and the most recent financial statements contained in the
Acquiror SEC Documents reflect an adequate reserve for all material
Taxes payable by Acquiror (and by those Acquiror Subsidiaries whose
financial statements are contained therein) for all taxable periods and
portions thereof through the date of such financial statements. True,
correct and complete copies of all federal, state and local Tax returns
and reports for Acquiror and each Acquiror Subsidiary, and all written
communications relating thereto, have been delivered or made available
to representatives of the Company. Except as set forth on SCHEDULE
3.2.11 to the Acquiror Disclosure Letter, to the Knowledge of Acquiror,
no deficiencies for any Taxes have been proposed, asserted or assessed
against Acquiror or any of the Acquiror Subsidiaries, and no requests
for waivers of the time to assess any such Taxes are pending.
(ii) Acquiror (A) for all taxable years commencing with the taxable
year ended December 31, 1993 through the most recent December 31, has
been organized in conformity with the qualifications as a REIT (within
the meaning of the Code) under the Code and has been subject to taxation
as a REIT and has satisfied all requirements to qualify as a REIT for
such years, (B) has operated, and intends to continue to operate, in
such a manner as to qualify as a REIT for the tax year ending December
31, 1997, and (C) has not taken or omitted to take any action which
would reasonably be expected to result in a challenge to its status as a
REIT, and to Acquiror's Knowledge, no such challenge is pending or
threatened. Each Acquiror Subsidiary which is a partnership, joint
venture or limited liability company has been treated during and since
its formation and continues to be treated for federal income tax
purposes as a partnership and not as a corporation or as an association
taxable as a corporation. Each Acquiror Subsidiary which is a
corporation for federal income tax purposes and with respect to which
all of the outstanding capital stock is owned solely by Acquiror (or
solely by an Acquiror Subsidiary that is a corporation wholly owned by
Acquiror) is a "qualified REIT subsidiary" as defined in Section 856(i)
of the Code. Neither Acquiror nor any Acquiror Subsidiary holds any
asset (x) the disposition of which would be subject to rules similar to
Section 1374 of the Code as a result of an election under IRS Notice
88-19 or (y) that is subject to a consent filed pursuant to Section
341(f) of the Code and the regulations thereunder.
3.2.12 NO PAYMENTS TO EMPLOYEES, OFFICERS OR DIRECTORS. Except as
set forth in SCHEDULE 3.2.12 to the Acquiror Disclosure Letter, there is no
employment or severance contract, or other agreement requiring payments to
be made or increasing any amounts payable thereunder on a change of control
or otherwise as a result of the consummation of any of the Transactions,
with respect to any employee, officer, trust manager or director of
Acquiror or any Acquiror Subsidiary.
3.2.13 BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker, investment
banker, financial advisor or other Person, other than Merrill, Lynch & Co.
("Acquiror Financial Advisor"), the fees and expenses of which have
previously been disclosed to the Company and will be paid by Acquiror, is
entitled to any
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broker's, finder's, financial advisor's or other similar fee or commission
in connection with the Transactions based upon arrangements made by or on
behalf of Acquiror or any Acquiror Subsidiary.
3.2.14 COMPLIANCE WITH LAWS. Except as disclosed in the Acquiror SEC
Documents filed with the SEC prior to the date hereof, neither Acquiror nor
any Acquiror Subsidiary has violated or failed to comply with any statute,
law, ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations,
except for violations and failures to comply that would not, individually
or in the aggregate, reasonably be expected to result in an Acquiror
Material Adverse Effect.
3.2.15 CONTRACTS; DEBT INSTRUMENTS. To the Knowledge of Acquiror,
neither Acquiror nor any Acquiror Subsidiary is in violation of or in
default under (nor does there exist any condition which upon the passage of
time or the giving of notice or both would cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage,
indenture, lease, permit, concession, franchise, license or any other
material contract, agreement, arrangement or understanding, to which it is
a party or by which it or any of its properties or assets is bound, except
as set forth in SCHEDULE 3.2.15 to the Acquiror Disclosure Letter and
except for violations or defaults that would not, individually or in the
aggregate, result in an Acquiror Material Adverse Effect.
3.2.16 STATE TAKEOVER STATUTES. Acquiror has taken all action
necessary, if any, to exempt transactions between the Company and its
Affiliates and Acquiror from the operation of any Takeover Statute.
3.2.17 REGISTRATION STATEMENT; PROXY STATEMENT. The Registration
Statement will conform in all material respects to the requirements of the
Securities Act and the rules and regulations of the SEC thereunder and
shall not at any time the Registration Statement (including any amendments
and supplements thereto) is declared effective by the SEC 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 not misleading. The information supplied by Acquiror for inclusion
or incorporation by reference in the Proxy Statement will not, on the date
of the Proxy Statement is first mailed to the shareholders, at the time of
the Shareholders Meetings, or at the Effective Time, contain any untrue
statement of any material fact, or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not false or misleading. If at
any time prior to the Effective Time any event relating to the Acquiror or
any of its respective Affiliates, officers or directors should be
discovered by the Acquiror which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, the Acquiror
shall promptly inform the Company. Notwithstanding the foregoing, Acquiror
makes no representation or warranty with respect to any information
supplied by the Company which is contained or incorporated by reference in
any of the foregoing documents.
3.2.18 HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976. For
purposes of determining compliance with the HSR, the Acquiror confirms that
the conduct of its business consists solely of investing in, owning and
operating real estate for the benefit of its shareholders.
3.2.19 VOTE REQUIRED. The affirmative vote of a majority of the
shares of Acquiror Common Stock present in Person or by proxy at the
Acquiror Shareholders Meeting is the only vote of the holders of any class
or series of Acquiror's capital stock necessary (under applicable law or
otherwise) to approve this Agreement and the Transactions.
3.2.20 OPINION OF FINANCIAL ADVISOR. The Directors of Acquiror have
received the opinion of Acquiror Financial Advisor, satisfactory to
Acquiror, a copy of which has been provided to the Company, to the effect
that, as of the date of such opinion, the Exchange Ratio is fair to
Acquiror from a financial point of view.
3.2.21 INVESTMENT COMPANY ACT OF 1940. Neither Acquiror nor any
Acquiror Subsidiary is, or at the Effective Time will be, required to be
registered under the 1940 Act.
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3.2.22 INSURANCE. Acquiror maintains fire and casualty and general
liability policies with reputable insurance carriers, which Acquiror
reasonably believes provide full and adequate coverage for all normal risks
incident to the business of Acquiror and Acquiror Subsidiaries and their
respective properties and assets.
3.2.23 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed
solely for the purpose of engaging in the Transactions and has not engaged
in any business activities or conducted any operations other than in
connection with the Transactions.
ARTICLE IV
COVENANTS
SECTION 4.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from
the date of this Agreement to the Effective Time, the Company shall, and shall
cause the Company Subsidiaries each to, carry on its businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and use commercially reasonable efforts to preserve intact its current
business organization, goodwill and ongoing businesses, to keep available the
services of the present officers, employees and consultants of the Company and
the Company Subsidiaries and to preserve the present relationships of the
Company and the Company Subsidiaries with tenants, landlords, customers,
suppliers and other persons with which the Company or any of the Company
Subsidiaries has significant business relationships. Without limiting the
generality of the foregoing, the following additional restrictions shall apply:
during the period from the date of this Agreement to the earlier of the (i)
termination of this Agreement or (ii) Effective Time, except as set forth in
SCHEDULE 4.1 to the Company Disclosure Letter, the Company shall not and shall
cause the Company Subsidiaries not to (and not to authorize or commit or agree
to) without the prior written consent of Acquiror (which such consent shall not
be unreasonably delayed):
4.1.1 (i) except for its regular quarterly dividends not in excess of
$.395 per share of Common Shares per quarter, with customary record and
payment dates, declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property or any combination
thereof) in respect of any of the Company's shares of beneficial interest
or other than the dividend required to be paid pursuant to SECTION
2.2.4(I), (ii) split, combine or reclassify any shares of beneficial
interest or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of such shares of
beneficial interest or (iii) except in connection with the use of Common
Shares to pay the exercise price or tax withholding in connection with the
Company's Employee Stock Plans or as otherwise contemplated by or required
by this Agreement, purchase, redeem or otherwise acquire any shares of
beneficial interests of the Company or any options, warrants or rights to
acquire, or security convertible into, shares of such beneficial interests;
4.1.2 except as contemplated under or required pursuant to SECTIONS
4.1.5 and 5.13.2, the Company's Amended and Restated Dividend Reinvestment
Share Purchase Plan and Employee Share Purchase Plan and the exercise of
share options or issuance of shares pursuant to stock rights, restricted
share or performance share awards or warrants outstanding on the date of
this Agreement, issue, deliver or sell, or grant any option or other right
in respect of, any shares of beneficial interest, any other voting
securities of the Company or any Company Subsidiary or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities; provided, however,
that with respect to such Dividend Reinvestment Share Purchase Plan, such
shares may only be issued, with respect to any dividend payment date after
the date of this Agreement, in an amount equal to the dividend payments and
not with respect to any optional cash payments;
4.1.3 amend the charter, articles or certificate of incorporation,
declaration of trust, bylaws, partnership agreement or other comparable
charter or organizational documents of the Company or any Company
Subsidiary or enter into, assume or amend any material contract, agreement
or commitment, except in the ordinary course of business and consistent
with past practice;
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4.1.4 in the case of the Company or any other Company Subsidiary,
merge or consolidate with any Person;
4.1.5 in any transaction or series of related transactions involving
capital, securities or other assets (including cash) or indebtedness of the
Company, a Company Subsidiary, or any combination thereof in excess of
$100,000 individually or $500,000 in the aggregate: (i) acquire or agree to
acquire by merging or consolidating with, or by purchasing all or a
substantial portion of the equity securities or all or substantially all of
the assets of, or by any other manner, any business or any corporation,
partnership, limited liability company, joint venture, association, real
estate investment trust, business trust or other business organization or
division thereof or interest therein; (ii) sell, lease or otherwise dispose
of any of the Company Properties or any assets (other than sales of the
Company's or any Company Subsidiary's "for sale" housing units and
condominiums sold or developed for sale in the ordinary course of business)
or, except for any Development Properties or Future Development Properties,
assign or encumber the right to receive income, dividends, distributions
and the like, or otherwise subject any of the Company's properties or
assets to any Encumbrance or Lien; (iii) make or agree to make any
development or capital expenditures, except (A) in accordance with capital
expenditure budgets previously delivered to and approved in writing by
Acquiror or in accordance with construction and development budgets
pertaining to the Development Properties (the "Development Budgets"), that
have been previously delivered to and approved in writing by Acquiror,
provided that within any Development Budget for a Development Property, the
Company may allocate and reallocate the development and capital
expenditures as it determines, or (B) in connection with pre-development,
investigation and due diligence activities related to the Future
Development Properties, which amounts shall not exceed $100,000 with
respect to any Future Development Properties or $500,000 in the aggregate
for all Future Development Properties; or (C) in connection with
acquisition, development, pre-development, investigation and due diligence
activities related to the Future Development Properties, which are
disclosed in SCHEDULE 4.1 to the Company Disclosure Letter or (iv) incur
any indebtedness for borrowed money or guarantee any such indebtedness of
another Person (except as contemplated by subparagraph (iii) above), issue
or sell any debt securities or warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary, guarantee any debt
securities of another Person, enter into any "keep well" or other agreement
to maintain any financial statement condition of another Person or enter
into any arrangement having the economic effect of any of the foregoing,
prepay or refinance any indebtedness or make any loans, advances or capital
contributions to, or investments in, any other Person;
4.1.6 INTENTIONALLY OMITTED
4.1.7 make any tax election (unless required by law or necessary to
preserve the Company's status as a REIT or of any Company Subsidiary as a
partnership for federal income tax purposes);
4.1.8 (i) change in any manner any of its methods, principles or
practices of accounting in effect at the Financial Statement Date, or (ii)
make or rescind any express or deemed election relating to taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to taxes, except in the case
of settlements or compromises relating to taxes on real property or sales
taxes in an amount not to exceed, individually or in the aggregate,
$100,000, or change any of its methods of reporting income or deductions
for federal income tax purposes from those employed in the preparation of
its federal income tax return for the most recently completed taxable year
except, in the case of clause (i), as may be required by the SEC,
applicable law or GAAP;
4.1.9 except as specifically agreed to by Acquiror in connection with
the execution of this Agreement, increase the compensation payable or to
become payable to its officers or employees, except for increases in salary
or wages of employees of the Company or the Company Subsidiaries who are
not officers of the Company in the ordinary course of business in
accordance with past practice; grant any severance or termination pay to,
or enter into any employment or severance agreement with any director,
trust manager, officer or other employee of the Company or any of the
Company Subsidiaries, or amend or modify in any respect any existing
employment or severance agreement; adopt any new employee
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benefit plan, incentive plan, severance plan, stock option or similar plan,
grant new stock appreciation rights or amend any existing plan or rights,
except such changes as are required by law;
4.1.10 pay, discharge, settle or satisfy any claims, liabilities or
objections (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Company SEC Documents filed
prior to the date of this Agreement or incurred in the ordinary course of
business consistent with past practice; settle any shareholder derivative
or class action claims arising out of or in connection with any of the
Transactions; and
4.1.11 enter into or amend or otherwise modify any agreement or
arrangement with Persons that are Affiliates or, as of the date hereof, are
executive officers, trust managers or directors of the Company or any
Company Subsidiary.
SECTION 4.2 CONDUCT OF BUSINESS BY ACQUIROR. During the period from the
date of this Agreement to the Effective Time, Acquiror shall, and shall cause
(or, in the case of Acquiror Subsidiaries that Acquiror does not control, shall
use commercially reasonable efforts to cause) the Acquiror Subsidiaries each to
carry on its businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use commercially
reasonable efforts to preserve intact its current business organization,
goodwill and ongoing businesses, to keep available the services of the present
officers, employees and consultants of Acquiror and the Acquiror Subsidiaries
and to preserve the present relationships of Acquiror and the Acquiror
Subsidiaries with tenants, landlords, customers, suppliers and other persons
with which Acquiror or any of the Acquiror Subsidiaries has significant business
relationships. Without limiting the generality of the foregoing, the following
additional restrictions shall apply: during the period from the date of this
Agreement to the Effective Time, except as set forth in SCHEDULE 4.2 to the
Acquiror Disclosure Letter, Acquiror shall not and shall cause (or, in the case
of Acquiror Subsidiaries which Acquiror does not control, shall use commercially
reasonable efforts to cause) the Acquiror Subsidiaries not to (and not to
authorize or commit or agree to) without the prior written consent of the
Company (which such consent shall not be unreasonably delayed):
4.2.1 (i) except for regular quarterly dividends not in excess of
$.595 per share of Acquiror Common Stock, with customary record and payment
dates, declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property or any combination
thereof) in respect of, any of Acquiror capital stock or partnership
interests or stock in any Acquiror Subsidiary that is not directly or
indirectly wholly owned by Acquiror, other than the dividend required to be
paid pursuant to SECTION 2.2.4(I), (ii) except in connection with the
Transactions, split, combine or reclassify any capital stock or partnership
interests or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of such capital stock
or partnership interests or (iii) except in connection with the use of
Acquiror Common Stock to pay the exercise price or tax withholding in
connection with the Acquiror's Employee Stock Plans purchase, redeem or
otherwise acquire any shares of capital stock of Acquiror or any options,
warrants or rights to acquire, or security convertible into, shares of
capital stock of Acquiror;
4.2.2 except as contemplated under or required pursuant to this
Agreement (including without limitation SECTION 4.2.5), Acquiror's dividend
reinvestment and stock purchase plan, Acquiror's employee stock purchase
plan and Acquiror Employee Stock Plans, and the exercise of stock options
or warrants outstanding on the date hereof, issue, deliver or sell, or
grant any option or other right in respect of, any shares of capital stock,
any other voting securities of Acquiror or any Acquiror Subsidiary or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible securities except to
Acquiror or an Acquiror Subsidiary;
4.2.3 except as otherwise contemplated by this Agreement, amend the
charter, articles or certificate of incorporation, bylaws, code of
regulations, partnership agreement or other comparable charter or
organizational documents of Acquiror or any Acquiror Subsidiary;
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4.2.4 in the case of Acquiror or the Operating Partnership merge or
consolidate with any Person;
4.2.5 in any transaction or series of related transactions involving
capital, securities, other assets (including cash) or indebtedness of
Acquiror or an Acquiror Subsidiary or any combination thereof acquire or
agree to acquire by merging or consolidating with, or by purchasing all or
a substantial portion of the equity securities or all or substantially all
assets of, or by any other manner, any business or any corporation,
partnership, limited liability company, joint venture, association, real
estate investment trust, business trust or other business organization or
division thereof or interest therein if such acquisition would result in
such acquired entity being a "Significant Subsidiary" within the meaning of
Rule 1-02(w) of Regulation S-X, substituting 20% for 10% in the tests used
therein to determine a Significant Subsidiary (or, in connection with an
asset acquisition, would have resulted in the entity acquiring such assets
being a "Significant Subsidiary" (substituting 20% for 10% in the tests
used therein to determine a Significant Subsidiary) if such acquisition
would have been made by a newly created subsidiary with no other assets);
4.2.6 make or rescind any tax election (unless required by law or
necessary to preserve Acquiror's status as a REIT or the status of any
Acquiror Subsidiary as a partnership for federal income tax purposes);
4.2.7 change in any material manner any of its methods, principles or
practices of accounting in effect at the Acquiror Financial Statement Date,
except as may be required by the SEC, applicable law or GAAP;
SECTION 4.3 OTHER ACTIONS. Each of Company, on the one hand, and Acquiror
and Merger Sub, on the other hand, shall not and shall use commercially
reasonable efforts to cause its respective subsidiaries and joint ventures not
to take any action that would result in (i) any of the representations and
warranties of such party (without giving effect to any "Knowledge"
qualification) set forth in this Agreement becoming untrue, or (ii) except as
contemplated by SECTIONS 7.1 and 7.2, any of the conditions to the Merger set
forth in ARTICLE VI not being satisfied.
ARTICLE V
ADDITIONAL COVENANTS
SECTION 5.1 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT; COMPANY SHAREHOLDERS MEETING AND ACQUIROR SHAREHOLDERS MEETING.
5.1.1 As soon as practicable following the date of this Agreement,
the Company and Acquiror shall prepare and file with the SEC a preliminary
Proxy Statement in form and substance satisfactory to each of Acquiror and
the Company, and Acquiror shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Acquiror shall use commercially
reasonable efforts to (i) respond to any comments of the SEC and (ii) have
the Registration Statement declared effective under the Securities Act and
the rules and regulations promulgated thereunder as promptly as practicable
after such filing and to keep the Registration Statement effective as long
as is reasonably necessary to consummate the Merger. Each of the Company
and Acquiror will use commercially reasonable efforts to cause the Proxy
Statement to be mailed to the Company's shareholders or Acquiror's
shareholders, respectively, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act. It
shall be a condition precedent to the Company's obligation to mail the
Proxy Statement that the opinion of Prudential referred to in SECTION
3.1.21 not have been withdrawn. It shall be a condition precedent to
Acquiror's obligation to mail the Proxy Statement that the opinion of
Acquiror Financial Advisor referred to in SECTION 3.2.20 not have been
withdrawn. Each party will notify the other promptly of the receipt of any
comments from the SEC and of any request by the SEC for amendments or
supplements to the Registration Statement or the Proxy Statement or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives and the
SEC, with respect to the Registration Statement or the Proxy Statement. The
Registration Statement and the Proxy
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Statement shall comply in all material respects with all applicable
requirements of law. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Registration Statement or the
Proxy Statement, Acquiror or the Company, as the case may be, shall
promptly inform the other of such occurrences and cooperate in filing with
the SEC and/or mailing to the shareholders of Acquiror and the shareholders
of the Company such amendment or supplement. The Proxy Statement shall
include the recommendations of the Board of Directors of Acquiror in favor
of the issuance of Acquiror Common Stock and of the Board of Trust Managers
of the Company in favor of the Merger, provided that (i) the recommendation
of the Board of Trust Managers of the Company may not be included or may be
withdrawn if the Board of Trust Managers of the Company has accepted a
proposal for a Superior Competing Transaction in accordance with the terms
of SECTION 7.1; and (ii) the recommendation of the Board of Directors of
Acquiror may not be included or may be withdrawn if the Board of Directors
of the Acquiror has accepted a proposal for an Alternative Transaction in
accordance with the terms of SECTION 7.2. Acquiror also shall take any
action required to be taken under any applicable state securities or "blue
sky" laws in connection with the issuance of Acquiror Stock pursuant to the
Merger and will pay or cause an Acquiror Subsidiary to pay all expenses
incident thereto. In connection with the preparation of the Proxy Statement
and the Registration Statement, Acquiror shall use reasonable efforts to
cause to be delivered to the Company prior to the mailing of the Proxy
Statement to Acquiror's shareholders and the Company's shareholders, the
opinion of King & Spalding, dated the date of the Proxy Statement, that (i)
for its taxable year ended December 31, 1993 and for all subsequent taxable
years ending on or before the Closing Date, Acquiror was organized and has
operated in conformity with the requirements for qualification as a REIT
under the Code and (ii) each Acquiror Subsidiary that is a partnership,
joint venture or limited liability company has been during and since
formation, and continues to be, treated as of such date, for federal income
tax purposes, as a partnership and not as a corporation or an association
taxable as a corporation. In connection with the preparation of the Proxy
Statement and the Registration Statement, the Company shall use reasonable
efforts to cause to be delivered to Acquiror and Merger Sub prior to the
mailing of the Proxy Statement to the Company's shareholders and Acquiror's
shareholders, the opinion of Winstead Sechrest & Minick P.C., dated the
date of the Proxy Statement, that (i) for its taxable year ended December
31, 1993 and for all subsequent taxable years ending on or before the
Closing Date, the Company was organized and has operated in conformity with
the requirements for qualification as a REIT under the Code and (ii) each
Company Subsidiary that is a partnership, joint venture or limited
liability company has been during and since formation, and continues to be,
treated as of such date, for federal income tax purposes, as a partnership
and not as a corporation or an association taxable as a corporation.
5.1.2 The Company will, as soon as practicable following the date of
this Agreement (but in no event sooner than 20 business days following the
date the Proxy Statement is mailed to the shareholders of the Company),
convene and hold a meeting of its shareholders (the "Company Shareholders
Meeting") for the purpose of obtaining the Company Shareholder Approvals.
The Company will, through its Board of Trust Managers, recommend to its
shareholders approval of this Agreement and the Transactions and use all
reasonable efforts to solicit from its shareholders proxies in favor of
approval of this Agreement and the Transactions and take all other action
necessary or advisable to secure the vote of shareholders to obtain such
approvals; provided that the recommendation of the Board of Trust Managers
of the Company may be withdrawn if the Board of Trust Managers of the
Company has accepted a proposal for a Superior Competing Transaction in
accordance with the terms of SECTION 7.1.4.
5.1.3 Acquiror will, as soon as practicable following the date of
this Agreement (but in no event sooner than 20 business days following the
date the Proxy Statement is mailed to the shareholders of Acquiror),
convene and hold a meeting of its shareholders (the "Acquiror Shareholders
Meeting") for the purpose of obtaining the Acquiror Shareholder Approvals.
Acquiror will, through its Board of Directors, recommend to its
shareholders approval of this Agreement and the Transactions and use all
reasonable efforts to solicit from its shareholders proxies in favor of the
Acquiror Shareholder Approvals and take all other action necessary or
advisable to secure the vote of shareholders to obtain such approvals;
provided that the recommendation of the Board of Directors of Acquiror may
be withdrawn if
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the Board of Directors of Acquiror has accepted a proposal for an
Alternative Transaction in accordance with the terms of SECTION 7.2.4.
SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY. Each of the Company
and Acquiror shall, and shall cause each of its respective subsidiaries
(including all Company Subsidiaries and all Acquiror Subsidiaries) and joint
ventures to, afford to the other party and to the officers, employees,
accountants, counsel, financial advisors and other representatives of such other
party, reasonable access during normal business hours during the period prior to
the Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, each of the Company
and Acquiror shall, and shall cause each of its respective subsidiaries
(including all Company Subsidiaries and all Acquiror Subsidiaries) to, furnish
promptly to the other party (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Each of the Company and Acquiror will hold, and will use
commercially reasonable efforts to cause its and its respective subsidiaries
(including all Company Subsidiaries and all Acquiror Subsidiaries) and joint
ventures' officers, employees, accountants, counsel, financial advisors and
other representatives and Affiliates to hold, any nonpublic information in
confidence to the extent required by, and in accordance with, and will comply
with the provisions of the letter agreement dated as of June 4, 1997 between the
Company and Acquiror (the "Confidentiality Agreement").
SECTION 5.3 COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.
5.3.1 Subject to the terms and conditions herein provided, the
Company and Acquiror shall: (a) use commercially reasonable efforts to
cooperate with one another in (i) determining which filings are required to
be made prior to the Effective Time with, and which consents, approvals,
permits or authorizations are required to be obtained prior to the
Effective Time from, governmental or regulatory authorities of the United
States, the several states and foreign jurisdictions and any third parties
in connection with the execution and delivery of this Agreement, and the
consummation of the Transactions and (ii) timely making all such filings
and timely seeking all such consents, approvals, permits and
authorizations, (b) use commercially reasonable efforts to obtain in
writing any consents required from third parties to effectuate the Merger,
such consents to be in reasonably satisfactory form to the Company and
Acquiror; and (c) use commercially reasonable efforts to take, or cause to
be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
Transactions. If, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purpose of this Agreement, the
proper officers and directors of the Company and Acquiror shall take all
such necessary action. From the date hereof through the Effective Time, the
Company shall timely file with the SEC all Company SEC Documents required
to be so filed. From the date hereof through the Effective Time, the
Acquiror shall timely file with the SEC all Acquiror SEC Documents required
to be so filed.
5.3.2 The Company shall give prompt notice to Acquiror, and Acquiror
or Merger Sub shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.3.3 COORDINATION OF DIVIDENDS. Each of Acquiror and the Company
shall coordinate with the other regarding the declaration and payment of
dividends in respect of the Acquiror Common Stock and the Common Shares and
the record dates and payment dates relating thereto, it being the intention
of Acquiror and the Company that any holder of Common Shares shall not
receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to its shares of Common Shares and/or
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any shares of Acquiror Common Stock any such holder receives in exchange
therefor pursuant to the Merger.
SECTION 5.4 AFFILIATES. Prior to the Closing Date, the Company shall
deliver to Acquiror a letter identifying all Persons who are, at the time this
Agreement is submitted for approval to the shareholders of the Company,
"Affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use commercially reasonable efforts to cause each such Person
to deliver to Acquiror on or prior to the Closing Date a written agreement
substantially in the form attached as EXHIBIT A to this Agreement.
SECTION 5.5 TAX TREATMENT. Each of Acquiror and the Company shall use
commercially reasonable efforts to cause the Merger to qualify as a
reorganization under the provisions of Sections 368(a) of the Code and to obtain
the opinions of counsel referred to in SECTIONS 6.2.4, 6.2.5, 6.3.4 and 6.3.5.
SECTION 5.6 ACQUIROR BOARD OF DIRECTORS. Acquiror shall take all steps
necessary to cause the appointment as of the Effective Time of Robert L. Shaw to
the Board of Directors of Acquiror, or such other person as shall be selected
prior to the Effective Time by the Company Board of Trust Managers and as shall
be acceptable to Acquiror.
SECTION 5.7 NO SOLICITATION OF TRANSACTIONS BY THE COMPANY. (a) Subject
to SECTION 7.1, the Company shall not directly or indirectly, through any
officer, trust manager, employee, agent, investment banker, financial advisor,
attorney, accountant, broker, finder or other representative retained by the
Company, initiate, solicit or encourage (including by way of furnishing
non-public information or assistance) any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, trust managers, employees or agents of
the Company or any investment banker, financial advisor, attorney, accountant,
broker, finder or other representative retained by the Company to take any such
action, (b) the Company shall immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Competing Transaction and will take the steps
necessary to inform such parties of the obligations undertaken in this SECTION
5.7 and (c) the Company shall notify Acquiror in writing (as promptly as
practicable) if it receives any inquiries, proposals or requests for information
relating to such matters. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following with respect to the Company or any
Company Subsidiary (other than the Transactions or a transaction with Acquiror
or an Acquiror Subsidiary): (i) with respect only to the Company or any group of
Company Subsidiaries (acting in a single transaction or series of related
transactions) holding 20% or more of the assets of the Company and the Company
Subsidiaries taken as a whole, any merger, consolidation, share exchange,
business combination, or similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets or
equity securities of the Company and the Company Subsidiaries taken as a whole,
in a single transaction or series of related transactions, excluding any bona
fide financing transactions which do not, individually or in the aggregate, have
as a purpose or effect the sale or transfer of control of such assets; (iii) any
tender offer or exchange offer for 20% or more of the outstanding shares of
beneficial interest of the Company; (iv) any transaction resulting in the
issuance of shares representing 20% or more of the outstanding shares of
beneficial interest of the Company, or the filing of a registration statement
under the Securities Act in connection therewith; or (v) any public
announcements of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
SECTION 5.8 NO SOLICITATION OF TRANSACTIONS BY ACQUIROR. (a) Subject to
SECTION 7.2, Acquiror shall not directly or indirectly, through any officer,
director, employee, agent, investment banker, financial advisor, attorney,
accountant, broker, finder or other representative retained by Acquiror,
initiate, solicit or encourage (including by way of furnishing non-public
information or assistance) any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Alternative
Transaction, or enter into or maintain or continue discussions or negotiate with
any Person in furtherance of such inquiries or to obtain an Alternative
Transaction, or agree to or endorse any Alternative Transaction, or authorize or
permit any of the officers, directors, employees or agents of Acquiror or any
investment banker, financial
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advisor, attorney, accountant, broker, finder or other representative retained
by Acquiror to take any such action, (b) Acquiror shall immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Alternative Transaction and
will take the steps necessary to inform such parties of the obligations
undertaken in this SECTION 5.8 and (c) Acquiror shall notify the Company in
writing (as promptly as practicable) if it receives any inquiries, proposals or
requests for information relating to such matters. For purposes of this
Agreement, "Alternative Transaction" shall mean any of the following with
respect to Acquiror or any Acquiror Subsidiary (other than the Transactions or a
transaction with the Company or a Company Subsidiary): (i) with respect only to
Acquiror or any group of Acquiror Subsidiaries (acting in a single transaction
or series of related transactions) holding 20% or more of the assets of Acquiror
and the Acquiror Subsidiaries taken as a whole, any merger, consolidation, share
exchange, business combination, or similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets or equity securities of Acquiror and the Acquiror Subsidiaries taken as a
whole, in a single transaction or series of related transactions, excluding any
bona fide financing transactions which do not, individually or in the aggregate,
have as a purpose or effect the sale or transfer of control of such assets;
(iii) any tender offer or exchange offer for 20% or more of the outstanding
shares of capital stock of Acquiror; (iv) any transaction resulting in the
issuance of shares representing 20% or more of the outstanding shares of capital
stock of Acquiror, or the filing of a registration statement under the
Securities Act in connection therewith; or (v) any public announcements of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
SECTION 5.9 PUBLIC ANNOUNCEMENTS. Acquiror and Merger Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Transactions,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the Transactions will be in
the form agreed to by the parties hereto prior to the execution of this
Agreement.
SECTION 5.10 LISTING. Acquiror will promptly prepare and submit to the
NYSE a supplemental listing application covering Acquiror Common Stock issuable
in the Merger. Prior to the Effective Time, Acquiror shall use commercially
reasonable efforts to have the NYSE approve for listing, upon official notice of
issuance, the Acquiror Common Stock to be issued in the Merger.
SECTION 5.11 LETTERS OF ACCOUNTANTS.
5.11.1 The Company shall use commercially reasonable efforts to cause
to be delivered to Acquiror "comfort" letters of Ernst & Young L.L.P., the
Company's independent public accountants, dated and delivered on the date
on which the Registration Statement shall become effective and as of the
Effective Time, and addressed to Acquiror, in form and substance reasonably
satisfactory to Acquiror and reasonably customary in scope and substance
for letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
5.11.2 Acquiror shall use commercially reasonable efforts to cause to
be delivered to the Company "comfort" letters of Price Waterhouse LLP,
Acquiror's independent public accountants, dated and delivered on the date
on which the Registration Statement shall become effective and as of the
Effective Time, and addressed to the Company, in form and substance
reasonably satisfactory to the Company and reasonably customary in scope
and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
SECTION 5.12 TRANSFER AND GAINS TAXES. Acquiror and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added stock transfer and stamp
taxes, any transfer, recording, registration and other fees and any similar
taxes which become payable in connection with the Transactions (together with
any related interests, penalties or additions to tax, "Transfer and Gains
Taxes"). From and after the Effective Time, Acquiror shall cause the Surviving
Company to pay, without deduction or
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withholding from any amounts payable to the holders of the Common Shares, all
Transfer and Gains Taxes (other than any such taxes that are solely the
liability of the holders of the Common Shares under applicable state law).
SECTION 5.13 BENEFIT PLANS AND OTHER EMPLOYEE ARRANGEMENTS.
5.13.1 BENEFIT PLANS. After the Effective Time, Acquiror shall
provide benefits to employees of the Company and the Company Subsidiaries
that are not less favorable to such employees than those provided to
similarly situated employees of Acquiror and the Acquiror Subsidiaries.
With respect to any Acquiror Benefit Plan which is an "employee benefit
plan" as defined in Section 3(3) of ERISA, solely for purposes of
satisfying the service requirements, if any, to participate in such plans
and to vest in benefits payable under such plans (but not for purposes of
computing the amount of the benefits, or the existence of a benefit, under
such plans), service with the Company or any Company Subsidiary shall be
treated as service with Acquiror or the Acquiror Subsidiaries (as
applicable); provided, however, that such service shall not be recognized
to the extent that such recognition would result in a duplication of
benefits (or is not otherwise recognized for such purposes under the
Acquiror Benefit Plans).
5.13.2 STOCK INCENTIVE PLAN. Prior to or as of the Effective Time
(a) in accordance with the terms of the restricted stock awards, 161,300
Common Shares held by certain senior executive officers and independent
Trust Managers shall become fully vested and no longer subject to
forfeiture and (b) in accordance with the terms of the performance based
stock and dividend equivalent awards, 260,000 Common Shares shall be issued
to certain senior executive officers. Prior to or as of the Effective Time
and solely with respect to individuals employed by the Company or a Company
Subsidiary immediately prior to that date, the 1,940,000 shares of Common
Shares subject to Stock Options granted under the Company's Share Option
Plan, Long-Term Management Incentive Plan and Long-Term Employee Incentive
Plan (collectively, the "Stock Incentive Plans") shall be converted and
exchanged, without any action on the part of the holder thereof, into (i)
an option to acquire, upon payment of the exercise price (which shall equal
the exercise price per share for the option immediately prior to the
Merger, divided by the Exchange Ratio multiplied by the number of shares to
which the option relates), the number of shares of Acquiror Common Stock
the option holder would have received pursuant to the Merger if the holder
had exercised his or her option immediately prior thereto, rounded to the
next lowest whole number and (ii) cash in lieu of the portion of any option
that would have related to any fractional shares of Acquiror Common Stock
absent the rounding required by the previous clause; provided, however,
that in respect of any stock option which is an "incentive stock option"
within the meaning of Section 422 of the Code, the conversion hereinabove
provided for shall comply with the requirements of Section 424(a) of the
Code, including the requirement that such converted options shall not give
to the holder thereof any benefits additional to those which such holder
had prior to such conversion under the option as originally granted.
5.13.3 COOPERATION. The Company and Acquiror shall cooperate in good
faith with respect to the effectuation of the covenants described in
SECTION 5.13.2.
SECTION 5.14 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
5.14.1 The Company shall, and from and after the Effective Time,
Acquiror shall (collectively, the "Indemnifying Parties"), indemnify,
defend and hold harmless each Person who is now or has been at any time
prior to the date hereof or who becomes prior to the Effective Time, an
officer, trust manager or director of the Company or any Company Subsidiary
(the "Indemnified Parties") against all losses, claims, damages, costs,
expenses (including attorneys' fees and expenses), liabilities or judgments
or amounts that are paid in settlement of, with the approval of the
Indemnifying Party (which approval shall not be unreasonably withheld or
delayed), or otherwise in connection with any threatened or actual claim,
action, suit, proceeding or investigation based on or arising out of the
fact that such Person is or was an officer, trust manager or director of
the Company or any Company Subsidiary at or prior to the Effective Time,
whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities"), including all Indemnified Liabilities based
on, or arising out of, or pertaining to this Agreement or the Transactions,
in each case to the full extent a corporation or Texas real estate
investment trust is
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permitted under the applicable Governing Laws to indemnify its own
directors or officers as the case may be (and Acquiror shall pay expenses
in advance of the final disposition of any such action or proceeding to
each Indemnified Party to the full extent permitted by law subject to the
limitations set forth in the fourth sentence of this SECTION 5.14.1). Any
Indemnified Parties proposing to assert the right to be indemnified under
this SECTION 5.14 shall, promptly after receipt of notice of commencement
of any action against such Indemnified Parties in respect of which a claim
is to be made under this SECTION 5.14 against the Company, and from and
after the Effective Time, Acquiror notify the Indemnifying Parties of the
commencement of such action, enclosing a copy of all papers served. If any
such action is brought against any of the Indemnified Parties and such
Indemnified Parties notify the Indemnifying Parties of its commencement,
the Indemnifying Parties will be entitled to participate in and, to the
extent that they elect by delivering written notice to such Indemnified
Parties promptly after receiving notice of the commencement of the action
from the Indemnified Parties, to assume the defense of the action and after
notice from the Indemnifying Parties to the Indemnified Parties of their
election to assume the defense, the Indemnifying Parties will not be liable
to the Indemnified Parties for any legal or other expenses except as
provided below. If the Indemnifying Parties assume the defense, the
Indemnifying Parties shall have the right to settle such action without the
consent of the Indemnified Parties; provided, however, that the
Indemnifying Parties shall be required to obtain such consent (which
consent shall not be unreasonably withheld) if the settlement includes any
admission or wrongdoing on the part of the Indemnified Parties or any
decree or restriction on the Indemnified Parties or their officers or
directors; provided, further, that no Indemnifying Parties, in the defense
of any such action shall, except with the consent of the Indemnified
Parties (which consent shall not be unreasonably withheld), consent to
entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Parties of a release from all liability with respect to
such action. The Indemnified Parties will have the right to employ their
own counsel in any such action, and the fees, expenses and other charges of
such counsel will be at the expense of the Indemnified Parties unless (i)
the employment of counsel by the Indemnified Parties has been authorized in
writing by the Indemnifying Parties, (ii) the Indemnified Parties have
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to them that are different from or in addition to those
available to the Indemnifying Parties (iii) a conflict or potential
conflict exists (based on advice of counsel to the Indemnified Parties)
between the Indemnified Parties and the Indemnifying Parties) (in which
case the Indemnifying Parties will not have the right to direct the defense
of such action on behalf of the Indemnified Parties) or (iv) the
Indemnifying Parties have not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
Indemnifying Parties. It is understood that the Indemnifying Parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm admitted to practice in such
jurisdiction at any one time from all such Indemnified Parties unless (a)
the employment of more than one counsel has been authorized in writing by
the Indemnifying Parties, (b) any of the Indemnified Parties have
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to them that are different from or in addition to those
available to other Indemnified Parties or (c) a conflict or potential
conflict exists (based on advice of counsel to the Indemnified Parties)
between any of the Indemnified Parties and the other Indemnified Parties,
in each case of which the Indemnifying Parties shall be obligated to pay
the reasonable and appropriate fees and expenses of such additional counsel
or counsels. The Indemnifying Parties will not be liable for any settlement
of any action or claim effected without their written consent (which
consent shall not be unreasonably withheld).
5.14.2 The provisions of this SECTION 5.14 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of Acquiror and the Company.
5.14.3 Acquiror shall either (i) extend the Company's existing
directors and officers liability insurance policy as of the date hereof (or
a policy providing coverage on the same or better terms and conditions) for
acts or omissions occurring prior to the Effective Time by Persons who are
currently
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covered by such insurance policy maintained by the Company for a period of
six (6) years following the Effective Time, or (ii) add such Persons to the
existing directors and officers liability insurance policy of Acquiror,
provided, however, that for purposes of this subparagraph (ii), such
insurance shall provide officers and trust managers of the Company the same
coverage as similarly situated officers and directors of Acquiror and such
insurance shall be maintained by Acquiror for a period of six years
following the Effective Time. Notwithstanding the preceding sentence, in no
event shall Acquiror or the Surviving Company be required to expend on
average over such six year period in excess of 125% of the annual premium
currently paid by the Company for such coverage and if the premium for such
coverage on average over such six year period exceeds such amount, Acquiror
or the Surviving Company shall purchase a policy with the greatest coverage
available for such 125% of the annual premium.
5.14.4 In the event that Acquiror or any of its respective successors
or assigns (i) consolidates with or merges into any other Person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case the
successors and assigns of such entity shall assume the obligations set
forth in this SECTION 5.14, which obligations are expressly intended to be
for the irreversible benefit of, and shall be enforceable by, each trust
manager and officer covered hereby.
SECTION 5.15 THE COMPANY RIGHTS PLAN. The Company shall either (i)
redeem, effective immediately prior to the Effective Time, all the then
outstanding Rights (as defined in the Rights Agreement) for cash pursuant to and
in compliance with SECTION 23 of the Rights Agreement or (ii) take such other
action to terminate the Rights Agreement as of that time, as the Company and
Acquiror may mutually agree. The Company shall not redeem the Rights issued
under the Rights Agreement, or terminate the Rights Agreement, prior to the
Effective Time (other than in accordance with the preceding sentence) unless
required to do so by a court of competent jurisdiction; provided, however, that
the Company may take any of the foregoing actions if the Board of Trust Managers
of the Company shall have accepted a proposal for a Superior Competing
Transaction in accordance with the terms of SECTION 7.1.4.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger and to
consummate the other Transactions contemplated to occur on the Closing Date is
subject to the satisfaction or waiver on or prior to the Effective Time of the
following conditions:
6.1.1 SHAREHOLDER APPROVALS. This Agreement shall have been approved
and adopted by the Shareholder Approvals.
6.1.2 LISTING OF SHARES. The NYSE shall have approved for listing
the Acquiror Common Stock to be issued in the Merger.
6.1.3 REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of
any stop order or proceedings by the SEC seeking a stop order.
6.1.4 NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other Transactions shall be in
effect.
6.1.5 RELATED TRANSACTIONS. The transactions contemplated by the
Stock Purchase Agreements shall have been consummated in accordance with
the terms of such agreements.
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SECTION 6.2 CONDITIONS TO OBLIGATIONS OF ACQUIROR AND MERGER SUB. The
obligations of Acquiror and Merger Sub to effect the Merger and to consummate
the other Transactions contemplated to occur on the Closing Date are further
subject to the following conditions, any one or more of which may be waived by
both Acquiror and Merger Sub:
6.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly
limited by its terms to another date, and Acquiror shall have received a
certificate (which certificate may be qualified by Knowledge to the same
extent as such representations and warranties are so qualified) signed on
behalf of the Company by the chief executive officer or the chief financial
officer of the Company to such effect. This condition shall be deemed
satisfied unless all breaches of the Company's representations and
warranties in this Agreement (without giving effect to any materiality
qualification or limitation) are in the aggregate reasonably expected to
have a Material Adverse Effect.
6.2.2 PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and
Acquiror shall have received a certificate signed on behalf of the Company
by the chief executive officer or the chief financial officer of the
Company to such effect.
6.2.3 MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no Material Adverse Change and Acquiror shall have
received a certificate of the chief executive officer or chief financial
officer of the Company certifying to such effect.
6.2.4 OPINIONS RELATING TO REIT. Acquiror shall have received an
opinion of Counsel to the Company, dated as of the Closing Date, reasonably
satisfactory to Acquiror that, for its taxable year ended December 31, 1993
and all subsequent taxable years ending on or before the Closing Date, the
Company was organized and has operated in conformity with the requirements
for qualification as a REIT under the Code.
6.2.5 OTHER TAX OPINION. Acquiror shall have received either (i) a
ruling from the IRS or (ii) an opinion dated as of the Closing Date from
Counsel to Acquiror to the effect that the Merger should qualify as a
reorganization under the provisions of Section 368(a) of the Code and that
the Surviving Company will constitute a "qualified REIT subsidiary" under
Section 856(i) of the Code.
6.2.6 CONSENTS. All consents and waivers (including, without
limitation, waivers of rights of first refusal) from third parties
necessary in connection with the consummation of the Transactions shall
have been obtained, other than such consents and waivers from third
parties, which, if not obtained, would not result, individually or in the
aggregate, in an Acquiror Material Adverse Effect or a Material Adverse
Effect.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligation of the Company to effect the Merger and to consummate the
other Transactions contemplated to occur on the Closing Date is further subject
to the following conditions, any one or more of which may be waived by the
Company:
6.3.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Acquiror set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date, as
though made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another
date, and the Company shall have received a certificate (which certificate
may be qualified by Knowledge to the same extent as the representations and
warranties of Acquiror contained herein are so qualified) signed on behalf
of Acquiror by the chief executive officer or the chief financial officer
of Acquiror to such effect. This condition shall be deemed satisfied unless
all breaches of Acquiror's representations and warranties in this Agreement
(without giving effect to any materiality qualification or limitation) are
in the aggregate reasonably expected to have an Acquiror Material Adverse
Effect.
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6.3.2 PERFORMANCE OF OBLIGATIONS OF ACQUIROR. Acquiror shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and the
Company shall have received a certificate of Acquiror signed on behalf of
Acquiror by the chief executive officer or the chief financial officer of
Acquiror to such effect.
6.3.3 MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no Acquiror Material Adverse Change and the Company
shall have received a certificate of the chief executive officer or chief
financial officer of Acquiror certifying to such effect.
6.3.4 OPINION RELATING TO REIT STATUS. The Company shall have
received an opinion of Counsel to Acquiror dated as of the Closing Date,
reasonably satisfactory to the Company that, for its taxable year ended
December 31, 1993 and all subsequent taxable years ending on or before the
Closing Date, Acquiror was organized and has operated in conformity with
the requirements for qualification as a REIT under the Code and that, after
giving effect to the Merger, Acquiror's proposed method of operation will
enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Code (with customary exceptions, assumptions
and qualifications and based upon customary representations).
6.3.5 OTHER TAX OPINION. The Company shall have received either (i)
a ruling from the IRS or (ii) an opinion dated as of the Closing Date from
Counsel to the Company, to the effect that the Merger should qualify as a
reorganization under the provisions of Section 368(a) of the Code and that
the Surviving Company will constitute a "qualified REIT subsidiary" under
Section 856(i).
6.3.6 CONSENTS. All consents and waivers (including, without
limitation, waivers or rights of first refusal) from third parties
necessary in connection with the consummation of the Transactions shall
have been obtained, other than such consents and waivers from third
parties, which, if not obtained, would not result, individually or in the
aggregate, in an Acquiror Material Adverse Effect or a Material Adverse
Effect.
ARTICLE VII
BOARD ACTIONS
SECTION 7.1 COMPANY BOARD ACTIONS. Notwithstanding SECTION 5.7 or any
other provision of this Agreement to the contrary, to the extent, and only to
the extent, that the Board of Trust Managers of the Company, after consultation
with outside legal counsel, determines in good faith that such action is
required for the Board of Trust Managers of the Company to comply with its
fiduciary duties to shareholders imposed by applicable law, the Company may:
7.1.1 disclose to the shareholders of the Company any information
that, in the opinion of the Board of Trust Managers of the Company after
consultation with outside legal counsel, is required to be disclosed under
applicable law;
7.1.2 to the extent applicable, comply with Rule 14e-2(a) promulgated
under the Exchange Act with respect to a Competing Transaction;
7.1.3 in response to an unsolicited request therefor, participate in
discussions or negotiations with or furnish information with respect to the
Company pursuant to a confidentiality agreement not materially less
favorable to the Company than the Confidentiality Agreement (as determined
by the Company's outside counsel), or otherwise respond to or deal with any
Person in connection with a bona fide Competing Transaction proposed by
such Person in writing, provided that the Company shall have notified
Acquiror of such unsolicited requests or its participation in discussions
or negotiations in accordance with SECTION 5.7.(C); and
7.1.4 approve or recommend (and in connection therewith withdraw or
modify its approval or recommendation of this Agreement or the Merger) a
Superior Competing Transaction and enter into an agreement with respect to
such Superior Competing Transaction (for purposes of this Agreement,
"Superior Competing Transaction" means a bona fide proposal of a Competing
Transaction made by a
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third party which has not been solicited or initiated by the Company in
violation of SECTION 5.7 and which a majority of the members of Board of
Trust Managers of the Company determines in good faith (A) to be more
favorable to the Company's shareholders than the Merger and (B) is
reasonably capable of being consummated.
SECTION 7.2 ACQUIROR BOARD ACTIONS. Notwithstanding SECTION 5.8 or any
other provision of this Agreement to the contrary, to the extent, and only to
the extent, that the Board of Directors of Acquiror, after consultation with
outside legal counsel, determines in good faith that such action is required for
the Board of Directors of Acquiror to comply with its fiduciary duties to
shareholders imposed by applicable law, Acquiror may:
7.2.1 disclose to the shareholders of Acquiror any information that,
in the opinion of the Board of Directors of Acquiror after consultation
with outside legal counsel, is required to be disclosed under applicable
law;
7.2.2 to the extent applicable, comply with Rule 14e-2(a) promulgated
under the Exchange Act with respect to an Alternative Transaction;
7.2.3 in response to an unsolicited request therefor, participate in
discussions or negotiations with or furnish information with respect to
Acquiror pursuant to a confidentiality agreement not materially less
favorable to Acquiror than the Company's obligations under the
Confidentiality Agreement (as determined by Acquiror's outside counsel), or
otherwise respond to or deal with any Person in connection with a bona fide
Alternative Transaction proposed by such Person in writing, provided that
Acquiror shall have notified the Company of such unsolicited requests or
its participation in discussions or negotiations in accordance with SECTION
5.8(C); and
7.2.4 approve or recommend (and in connection therewith withdraw or
modify its approval or recommendation of this Agreement or the Merger) an
Alternative Transaction and enter into an agreement with respect to such an
Alternative Transaction.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after either of the Shareholder
Approvals are obtained:
8.1.1 by mutual written consent duly authorized by the Board of
Directors of Acquiror and the Board of Trust Managers of the Company;
8.1.2 by Acquiror, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
become untrue, in either case such that the conditions set forth in SECTION
6.2.1 or SECTION 6.2.2, as the case may be, would be incapable of being
satisfied by January 31, 1998 (or as otherwise extended);
8.1.3 by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Acquiror set forth in this Agreement,
or if any representation or warranty of Acquiror shall have become untrue,
in either case such that the conditions set forth in SECTION 6.3.1 or
SECTION 6.3.2, as the case may be, would be incapable of being satisfied by
January 31, 1998 (or as otherwise extended);
8.1.4 by either Acquiror or the Company, if any judgment, injunction,
order, decree or action by any Governmental Entity of competent authority
preventing the consummation of the Merger or requiring actions as a
condition precedent to the Merger which would result in a Material Adverse
Change shall have become final and nonappealable;
8.1.5 by either Acquiror or the Company, if the Merger shall not have
been consummated before January 31, 1998; provided, however, that the right
to terminate this Agreement under this SECTION 8.1.5 shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of or has resulted in the failure of the Merger to occur
on or before such date;
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8.1.6 by either Acquiror or the Company (unless the Company is in
breach of its obligations under SECTION 5.1.2) if, upon a vote at a duly
held Company Shareholders Meeting or any adjournment thereof, the Company
Shareholder Approvals shall not have been obtained as contemplated by
SECTION 5.1;
8.1.7 by either Acquiror (unless Acquiror is in breach of its
obligations under SECTION 5.1.3) or the Company if, upon a vote at a duly
held Acquiror Shareholders Meeting or any adjournment thereof, the Acquiror
Shareholder Approvals shall not have been obtained as contemplated by
SECTION 5.1;
8.1.8 by the Company, if prior to the Company Shareholders Meeting,
the Board of Trust Managers of the Company shall have withdrawn or modified
in any manner adverse to Acquiror its approval or recommendation of the
Merger or this Agreement in connection with, or approved or recommended, a
Superior Competing Transaction; provided, however, that such termination
shall not be effective prior to the payment of the Break-Up Fee to the
extent required by SECTION 8.2.2 hereof;
8.1.9 by the Acquiror, if prior to the Acquiror Shareholders Meeting,
the Board of Directors of Acquiror shall have withdrawn or modified in any
manner adverse to the Company its approval or recommendation of the Merger
or this Agreement in connection with, or approved or recommended, an
Alternative Transaction; provided, however, that such termination shall not
be effective prior to the payment of the Termination Fee to the extent
required by SECTION 8.2.3 hereof;
8.1.10 by Acquiror, if (i) prior to the Company Shareholders Meeting,
the Board of Trust Managers of the Company shall have withdrawn or modified
in any manner adverse to Acquiror its approval or recommendation of the
Merger or this Agreement in connection with, or approved or recommended,
any Superior Competing Transaction or (ii) the Company shall have entered
into a definitive agreement with respect to any Competing Transaction;
provided, however, that such termination shall not be effective prior to
the payment of the Break-Up Fee to the extent required by SECTION 8.2.2
hereof; and
8.1.11 by the Company, if (i) prior to the Acquiror Shareholders
Meeting, the Board of Directors of Acquiror shall have withdrawn or
modified in any manner adverse to the Company its approval or
recommendation of the Merger or this Agreement in connection with, or
approved or recommended, any Alternative Transaction or (ii) Acquiror shall
have entered into a definitive agreement with respect to any Alternative
Transaction; provided, however, that such termination shall not be
effective prior to the payment of the Termination Fee to the extent
required by SECTION 8.2.3 hereof.
SECTION 8.2 EXPENSES.
8.2.1 Except as otherwise specified in this SECTION 8.2 or agreed in
writing by the parties, all out-of-pocket costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such cost or expense.
8.2.2 The Company agrees that if this Agreement shall be terminated
(i) pursuant to SECTION 8.1.2, 8.1.6, 8.1.8 or 8.1.10 and, in the case of
SECTION 8.1.2 or 8.1.6, following the date of this Agreement and prior to
termination, the Company shall have received a proposal constituting a
Competing Transaction and within 12 months following termination the
Company shall enter into a definitive agreement providing for a Competing
Transaction, then the Company will pay as directed by Acquiror a fee in an
amount equal to the Break-Up Fee (provided that Acquiror was not in
material breach of any of its representations, warranties, covenants or
agreements hereunder at the time of termination); and (ii) pursuant to
SECTION 8.1.2 or 8.1.6, then the Company will pay an amount equal to the
Break-Up Expenses. Payment of any of such amounts shall be made, as
directed by Acquiror, by wire transfer of immediately available funds
promptly, but in no event later than two business days after such
termination. The payment of the Break-Up Fee shall be compensation and
liquidated damages for the loss suffered by Acquiror as the result of the
failure of the Merger to be consummated and to avoid the difficulty of
determining damages under the circumstances and neither party shall have
any other liability to the other, other than the payment of the Break-Up
Fee. The "Break-Up Fee" shall be an amount equal to the lesser of (i)
$10,000,000 (the "Base Amount") and (ii) the sum of (A) the maximum amount
that can be paid to Acquiror in the year in which this Agreement is
terminated (the "Termination Year")
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and in all relevant taxable years thereafter without causing it to fail to
meet the requirements of Sections 856(c)(2) and (3) of the Code (the "REIT
Requirements") for such year, determined as if the payment of such amount
did not constitute income described in Sections 856(c)(2)(A)-(H) and
856(c)(3)(A)-(I) of the Code ("Qualifying Income"), as determined by
independent accountants to Acquiror, and (B) in the event Acquiror receives
a ruling from the IRS (a "Break-Up Fee Ruling") holding that Acquiror's
receipt of the Base Amount would either constitute Qualifying Income or
would be excluded from gross income within the meaning of the REIT
Requirements, the Base Amount less the amount payable under clause (A)
above. If the amount payable for the Termination Year under the preceding
sentence is less than the Base Amount, the Company shall place the
remaining portion of the Base Amount in escrow and shall not release any
portion thereof to Acquiror unless and until the Company receives either of
the following: (i) a letter from Acquiror independent accountants
indicating the maximum amount that can be paid at that time to Acquiror
without causing Acquiror to fail to meet the REIT Requirements for any
relevant taxable year, together with either an IRS ruling issued to
Acquiror or an opinion of Acquiror's tax counsel to the effect that such
payment would not be treated as includable in the income of Acquiror for
any prior taxable year, in which event Company shall pay to Acquiror such
maximum amount, or (ii) a Break-Up Fee Ruling, in which event the Company
shall pay to Acquiror the unpaid Base Amount. The Break-Up Fee shall be
reduced by any amounts previously paid in respect of Break-Up Expenses. The
Company's obligation to pay any unpaid portion of the Break-Up Fee shall
terminate five years from the date of this Agreement and the Company shall
have no obligation to make any further payments notwithstanding that the
entire Base Amount has not been paid as of such date. The "Break-Up
Expenses" shall be an amount equal to the lesser of (i) Acquiror's out-
of-pocket expenses incurred in connection with this Agreement and the
Transactions (including, without limitation, all attorneys', accountants'
and investment bankers' fees and expenses) but in no event in an amount
greater than $1,500,000 (the "Expense Fee Base Amount") and (ii) the sum of
(A) the maximum amount that can be paid to Acquiror in the Termination Year
and in all relevant taxable years thereafter without causing it to fail to
meet the REIT Requirements for such year, determined as if the payment of
such amount did not constitute Qualifying Income, as determined by
independent accountants to Acquiror and (B) in the event Acquiror receives
a ruling from the IRS (an "Expense Fee Ruling") holding that Acquiror's
receipt of the Expense Fee Base Amount would either constitute Qualifying
Income or would be excluded from gross income within the meaning of the
REIT Requirements, the Expense Fee Base Amount less the amount payable
under clause (A) above. The Company's obligation to pay any unpaid portion
of the Break-Up Expenses shall terminate five years from the date of this
Agreement and the Company shall have no obligation to make any further
payments notwithstanding that the entire amount of Break-Up Expenses has
not been paid as of such date. If the amount payable for the Termination
Year (as determined above) is less than the Expense Fee Base Amount, the
Company shall place the remaining portion of the Expense Fee Base Amount in
escrow and shall not release any portion thereof to Acquiror unless and
until the Company receives either of the following: (i) a letter from
Acquiror's independent accountants indicating the maximum amount that can
be paid at that time to Acquiror without causing Acquiror to fail to meet
the REIT Requirements for any relevant taxable year, together with either
an IRS ruling issued to Acquiror or an opinion of Acquiror's tax counsel to
the effect that such payment would not be treated as includable in the
income of Acquiror for any prior taxable year, in which event Company shall
pay to Acquiror such maximum amount or (ii) an Expense Fee Ruling, in which
event the Company shall pay to Acquiror the unpaid Expense Fee Base Amount.
8.2.3 Acquiror agrees that if this Agreement shall be terminated (i)
pursuant to SECTION 8.1.3, 8.1.7, 8.1.9 or 8.1.11 and, in the case of
SECTION 8.1.3 or 8.1.7, following the date of this Agreement and prior to
termination, Acquiror shall have received a proposal constituting an
Alternative Transaction and within 12 months following termination Acquiror
shall enter into a definitive agreement providing for an Alternative
Transaction, then Acquiror will pay as directed by the Company a fee in an
amount equal to the Termination Fee (provided that the Company was not in
material breach of any of its representations,
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warranties, covenants or agreements hereunder at the time of termination);
and (ii) pursuant to SECTION 8.1.3 or 8.1.7, then Acquiror will pay an
amount equal to the Termination Expenses. Payment of any of such amounts
shall be made, as directed by the Company, by wire transfer of immediately
available funds promptly, but in no event later than two business days
after such termination. The payment of the Termination Fee shall be
compensation and liquidated damages for the loss suffered by the Company as
the result of the failure of the Merger to be consummated and to avoid the
difficulty of determining damages under the circumstances and neither party
shall have any other liability to the other, other than the payment of the
Termination Fee. The "Termination Fee" shall be an amount equal to the
lesser of (i) $10,000,000 (the "Termination Base Amount") and (ii) the sum
of (A) the maximum amount that can be paid to the Company in the
Termination Year and in all relevant taxable years thereafter without
causing it to fail to meet the REIT Requirements for such year, determined
as if the payment of such amount did not constitute Qualifying Income, as
determined by independent accountants to the Company, and (B) in the event
the Company receives a ruling from the IRS (a "Termination Fee Ruling")
holding that the Company's receipt of the Termination Base Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of the REIT Requirements, the Termination Base Amount
less the amount payable under clause (A) above. If the amount payable for
the Termination Year under the preceding sentence is less than the
Termination Base Amount, Acquiror shall place the remaining portion of the
Termination Base Amount in escrow and shall not release any portion thereof
to the Company unless and until Acquiror receives any one or combination of
the following: (i) a letter from the Company's independent accountants
indicating the maximum amount that can be paid at that time to the Company
without causing the Company to fail to meet the REIT Requirements for any
relevant taxable year, together with either an IRS ruling issued to the
Company or an opinion of the Company's tax counsel to the effect that such
payment would not be treated as includable in the income of the Company for
any prior taxable year, in which event Acquiror shall pay to the Company
such maximum amount, or (ii) a Termination Fee Ruling, in which event
Acquiror shall pay to the Company the unpaid Termination Base Amount. The
Termination Fee shall be reduced by any amounts previously paid in respect
of Termination Expenses. Acquiror's obligation to pay any unpaid portion of
the Termination Fee shall terminate five years from the date of this
Agreement and Acquiror shall have no obligation to make any further
payments notwithstanding that the entire Termination Base Amount has not
been paid as of such date. The "Termination Expenses" shall be an amount
equal to the lesser of (i) the Company's out-of-pocket expenses incurred in
connection with this Agreement and the Transactions (including, without
limitation, all attorneys', accountants' and investment bankers' fees and
expenses) but in no event in an amount greater than $1,500,000 (the
"Termination Expense Base Amount") and (ii) the sum of (A) the maximum
amount that can be paid to the Company in the Termination Year and in all
relevant taxable years thereafter without causing the Company to fail to
meet the REIT Requirements for such year, determined as if the payment of
such amount did not constitute Qualifying Income, as determined by
independent accountants to the Company and (B) in the event the Company
receives a ruling from the IRS (a "Termination Expense Ruling") holding
that the Company's receipt of the Termination Expense Base Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of the REIT Requirements, the Termination Expense Base
Amount less the amount payable under clause (A) above. Acquiror's
obligation to pay any unpaid portion of the Termination Expenses shall
terminate five years from the date of this Agreement and Acquiror shall
have no obligation to make any further payments notwithstanding that the
entire amount of Termination Expense Base Amount has not been paid as of
such date. If the amount payable for the Termination Year (as determined
above) is less than the Termination Expense Base Amount, Acquiror shall
place the remaining portion of the Termination Expense Base Amount in
escrow and shall not release any portion thereof to the Company unless and
until Acquiror receives either of the following: (i) a letter from the
Company's independent accountants indicating the maximum amount that can be
paid at that time to the Company without causing the Company to fail to
meet the REIT Requirements for any relevant taxable year, together with
either an IRS ruling issued to the Company or an opinion of the Company's
tax counsel to the effect that such payment would not be treated as
includable in the income of the Company for any prior taxable year, in
which event Acquiror shall pay to the Company such maximum amount, or (ii)
a Termination Expense
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Ruling, in which event Acquiror shall pay to the Company the unpaid
Termination Expense Base Amount.
SECTION 8.3 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Acquiror as provided in SECTION 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Acquiror, or the Company, other than the last
sentence of SECTION 5.2, SECTION 8.2, this SECTION 8.3, ARTICLE IX and ARTICLE X
and except to the extent that such termination results from a material breach by
a party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 8.4 AMENDMENT. This Agreement may be amended by the parties in
writing by action of their respective Boards of Directors or Board of Trust
Managers, as the case may be, at any time before or after any Shareholder
Approvals are obtained and prior to the filing of the Articles of Merger with
the office of the County Clerk of Dallas County, Texas and the office of the
Secretary of State of the State of Georgia, provided, however, that, after the
Shareholder Approvals are obtained, no such amendment, modification or
supplement shall alter the amount or change the form of the consideration to be
delivered to the Company's shareholders or alter or change any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the Company's shareholders or Acquiror's shareholders.
SECTION 8.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement or (c) subject to the
proviso of SECTION 8.4, waive compliance with any of the agreements or
conditions of the other party contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. Any waivers pursuant
to clause (c) of the second preceding sentence (i) of the provisions of SECTION
4.1.5 may be given in writing on behalf of Acquiror by a duly authorized officer
of Acquiror and (ii) of the provisions of SECTION 4.2.5 may be given in writing
by or on behalf of the Company by a duly authorized officer of the Company. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE IX
DEFINITIONS AND CONSTRUCTION
SECTION 9.1 CERTAIN DEFINITIONS. For purposes of this Agreement:
"1940 Act" means the Investment Company Act of 1940, as amended.
"Acquiror" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"Acquiror Benefit Plans" has the meaning ascribed to it in SECTION
3.2.10(I).
"Acquiror Common Stock" means common stock, par value $.01 per share,
of Acquiror.
"Acquiror Disclosure Letter" means the letter previously delivered to
the Company by Acquiror disclosing certain information in connection with
this Agreement.
"Acquiror Employee Stock Plans" has the meaning ascribed to it in
SECTION 3.2.3.
"Acquiror Financial Advisor" has the meaning ascribed to it in SECTION
3.2.13.
"Acquiror Financial Statement Date" has the meaning ascribed to it in
SECTION 3.2.6.
"Acquiror Material Adverse Change" has the meaning ascribed to it in
SECTION 3.2.6.
"Acquiror Material Adverse Effect" has the meaning ascribed to it in
SECTION 3.2.1.
"Acquiror Options" has the meaning ascribed to it in SECTION 3.2.3.
"Acquiror Preferred Stock" means preferred stock, par value $.01 per
share, of Acquiror.
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<PAGE> 45
"Acquiror Properties" has the meaning ascribed to it in SECTION 3.2.8.
"Acquiror SEC Documents" has the meaning ascribed to it in SECTION
3.2.5.
"Acquiror Shareholder Approvals" has the meaning ascribed to it in
SECTION 3.2.4.
"Acquiror Shareholders Meeting" has the meaning ascribed to it in
SECTION 5.1.3.
"Acquiror Subsidiary" means Merger Sub, any Subsidiary of the
aforementioned entities and any other entity of which Acquiror is the
direct or indirect general partner or as to which the Company has the right
or power to elect a majority of the board of directors or other governing
body.
"Addison" has the meaning ascribed to it in the Recitals of the
Agreement.
"Addison Stock Purchase Agreement" has the meaning ascribed to it in
the Recitals of the Agreement.
An "Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first Person.
"Agreement" means this instrument as originally executed, including
the Annexes, Exhibits and Schedules to the Acquiror Disclosure Letter and
the Company Disclosure Letter, or as it may be from time to time
supplemented or amended by one or more supplements or amendments hereto
entered pursuant to the applicable provisions hereof.
"Alternative Transaction" has the meaning ascribed to it in SECTION
5.8.
"Armada" has the meaning ascribed to it in the Recitals of the
Agreement.
"Armada Stock Purchase Agreement" has the meaning ascribed to it in
the Recitals of the Agreement.
"Applicable Bodies" has the meaning ascribed to it in SECTION 1.3.
"Articles of Merger" has the meaning ascribed to it in SECTION 1.3.
"Base Amount" has the meaning ascribed to it in SECTION 8.2.2.
"Break-Up Expenses" has the meaning ascribed to it in SECTION 8.2.2.
"Break-Up Fee" has the meaning ascribed to it in SECTION 8.2.2.
"Break-Up Fee Ruling" has the meaning ascribed to it in SECTION 8.2.2.
"Certificates" has the meaning ascribed to it in SECTION 2.2.3.
"Closing Date" has the meaning ascribed to it in SECTION 1.2.
"Code" has the meaning ascribed to it in the Recitals of the
Agreement.
"Common Shares" has the meaning ascribed to it in the Recitals of the
Agreement.
"Company" has the meaning ascribed to it in the introductory paragraph
of this Agreement.
"Company Benefit Plans" has the meaning ascribed to it in SECTION
3.1.11(I).
"Company's Bylaws" has the meaning ascribed to it in SECTION 3.1.1.
"Company's Charter" has the meaning ascribed to it in SECTION 3.1.1.
"Company Disclosure Letter" means the letter previously delivered to
Acquiror by the Company disclosing certain information in connection with
this Agreement.
"Company Employee Stock Plans" has the meaning ascribed to it in
SECTION 3.1.3.
"Company Interests" means, collectively, the Company Subsidiaries and
all direct or indirect interests of the Company or any Company Subsidiary.
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"Company Options" has the meaning ascribed to it in SECTION 3.1.3.
"Company Properties" has the meaning ascribed to it in SECTION 3.1.8.
"Company SEC Documents" has the meaning ascribed to it in SECTION
3.1.5.
"Company Shareholder Approvals" has the meaning ascribed to it in
SECTION 3.1.4.
"Company Shareholders Meeting" has the meaning ascribed to it in
SECTION 5.1.2.
"Company Subsidiaries" means, collectively, those companies set forth
in Section A of SCHEDULE 3.1.2 to the Company Disclosure Letter, any
subsidiary of any of the aforementioned entities and any other entity of
which the Company is the direct or indirect general partner or as to which
the Company has the right or power to elect a majority of the board of
directors or other governing body.
"Competing Transaction" has the meaning ascribed to it in SECTION 5.7.
"Confidentiality Agreement" has the meaning ascribed to it in SECTION
5.2.
"Cureton" has the meaning ascribed to it in the Recitals of this
Agreement.
"Development Budgets" has the meaning ascribed to it in SECTION 4.1.5.
"Development Properties" has the meaning ascribed to it in SECTION
3.1.8.
"Effective Time" has the meaning ascribed to it in SECTION 1.3.
"Encumbrances" has the meaning ascribed to it in SECTION 3.1.8.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate of the Acquiror" has the meaning ascribed to it in
SECTION 3.2.10(I).
"ERISA Affiliate of the Company" has the meaning ascribed to it in
SECTION 3.1.11(I).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" has the meaning ascribed to it in SECTION 2.2.1.
"Exchange Fund" has the meaning ascribed to it in SECTION 2.2.2.
"Exchange Ratio" has the meaning ascribed to it in SECTION 2.1.2.
"Expense Fee Base Amount" has the meaning ascribed to it in SECTION
8.2.2.
"Expense Fee Ruling" has the meaning ascribed to it in SECTION 8.2.2.
"Final Company Dividend" has the meaning ascribed to it in SECTION
2.2.4(I).
"Financial Statement Date" has the meaning ascribed to it in SECTION
3.1.6.
"Future Development Properties" has the meaning ascribed to it in
SECTION 3.1.8.
"GAAP" means generally accepted accounting principles.
"Glover" has the meaning ascribed to it in the Recitals of this
Agreement.
"Governing Laws" has the meaning ascribed to it in SECTION 1.1.
"Governmental Entity" means any federal, state or local government or
any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign.
"Hazardous Materials" means those substances, materials, and items, in
any form, whether solid, liquid, gaseous, semisolid, or any combination
thereof, whether waste materials, raw materials, chemicals, finished
products, byproducts, or any other material or article, which are regulated
by or form the basis of liability under federal, state or local
environmental, health, and safety statutes or regulations including,
without limitation, hazardous wastes, hazardous substances, pollutants,
contaminants, asbestos,
41
<PAGE> 47
polychlorinated biphenyls, petroleum (including, but not limited to, crude
oil, petroleum-derived substances, waste, or breakdown or decomposition
products thereof or any fraction thereof), and radioactive substances.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indebtedness" has the meaning ascribed to it in SECTION 3.1.16(II).
"Indemnified Liabilities" has the meaning ascribed to it in SECTION
5.14.1.
"Indemnified Parties" has the meaning ascribed to it in SECTION
5.14.1.
"Indemnifying Parties" has the meaning ascribed to it in SECTION
5.14.1.
"IRS" means the United States Internal Revenue Service.
"Knowledge" where used herein with respect to the Company shall mean
the actual knowledge of the Persons named in SCHEDULE 9.1 to the Company
Disclosure Letter and where used with respect to Acquiror shall mean the
actual knowledge of the Persons named in SCHEDULE 9.1 to the Acquiror
Disclosure Letter.
"Laws" mean any judgment, order, decree, statute, law, ordinance, rule
or regulation.
"Liens" mean any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"Material Adverse Change" has the meaning ascribed to it in SECTION
3.1.6.
"Material Adverse Effect" has the meaning ascribed to it in SECTION
3.1.1.
"Merger" has the meaning ascribed to it in the Recitals of this
Agreement.
"Merger Consideration" has the meaning ascribed to it in SECTION
2.1.2.
"Merger Sub" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"NYSE" means the New York Stock Exchange.
"Operating Partnership" means Post Apartment Homes, L.P., a Georgia
limited partnership.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Acquiror Liens" has the meaning ascribed to it in SECTION
3.2.8.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Preferred Shares" means the preferred shares of beneficial interest,
par value $.01 per share, of the Company.
"Property Restrictions" has the meaning ascribed to it in SECTION
3.1.8.
"Proxy Statement" has the meaning ascribed to it in SECTION 3.1.4.
"Prudential" has the meaning ascribed to it in SECTION 3.1.14.
"Qualifying Income" has the meaning ascribed to it in SECTION 8.2.2.
"Registration Statement" has the meaning ascribed to it in SECTION
3.2.4.
"Regulation S-K" means Regulation S-K promulgated under the Securities
Act the and Exchange Act.
"Regulation S-X" means Regulator S-X promulgated under the Securities
Act the and Exchange Act.
"REIT" has the meaning ascribed to it in SECTION 3.1.12(II).
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<PAGE> 48
"REIT Requirements" has the meaning ascribed to it in SECTION 8.2.2.
"Rights Agreement" has the meaning ascribed to it in SECTION 3.1.6.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder Approvals" has the meaning ascribed to it in SECTION
3.2.4.
"Shareholders Meetings" means collectively the Acquiror Shareholders
Meeting and the Company Shareholders Meeting.
"Shaw" has the meaning ascribed to it in the Recitals of this
Agreement.
"Stock Incentive Plans" has the meaning ascribed to it in SECTION
5.13.2.
"Stock Purchase Agreements" has the meaning ascribed to it in the
Recitals of this Agreement.
"Subsidiary" of any Person means any corporation, partnership, limited
liability company, joint venture or other legal entity of which such Person
(either directly or through or together with another Subsidiary of such
Person) owns 20% or more of the capital stock or other equity interests of
such corporation, partnership, limited liability company, joint venture or
other legal entity.
"Superior Competing Transaction" has the meaning ascribed to it in
SECTION 7.1.4.
"Surviving Company" has the meaning ascribed to it in SECTION 1.1.
"Takeover Statute" has the meaning ascribed to it in SECTION 3.1.17.
"Taxes" mean and shall include all federal, state, local and foreign
income, property, sales, excise and other taxes, tariffs or governmental
charges of any nature whatsoever, together with penalties, interest or
additions to Tax with respect thereto.
"Termination Base Amount" has the meaning ascribed to it in SECTION
8.2.3.
"Termination Expense Base Amount" has the meaning ascribed to it in
SECTION 8.2.3.
"Termination Expense Ruling" has the meaning ascribed to it in SECTION
8.2.3.
"Termination Expenses" has the meaning ascribed to it in SECTION
8.2.3.
"Termination Fee" has the meaning ascribed to it in SECTION 8.2.3.
"Termination Fee Ruling" has the meaning ascribed to it in SECTION
8.2.3.
"Termination Year" has the meaning ascribed to it in SECTION 8.2.2.
"Transactions" has the meaning ascribed to it in the Recitals of this
Agreement.
"Transfer and Gains Tax" has the meaning ascribed to it in SECTION
5.12.
"Unconsolidated Company Financial Statements" has the meaning ascribed
to it in SECTION 3.1.5.
"Units" has the meaning ascribed to it in SECTION 3.2.3.
"Williams" has the meaning ascribed to it in the Recitals of this
Agreement.
SECTION 9.2 RULES OF CONSTRUCTION.
(i) "This Agreement" means this instrument as originally executed,
including the Annexes, Exhibits and Schedules hereto, or as it may be from
time to time supplemented or amended by one or more supplements or
amendments hereto entered pursuant to the applicable provisions hereof;
(ii) "includes" and "including" are not limiting, and, in each case,
shall be construed as if followed by the words "without limitation," "but
not limited to" or words of similar import;
43
<PAGE> 49
(iii) "may not" is prohibitive, and not permissive;
(iv) "shall" is mandatory, and not permissive;
(v) "or" is not exclusive (i.e., if a party "may do (a), (b) or (c),"
then the party may do all of, any one of, or any combination of, (a), (b)
or (c)) unless the context expressly provides otherwise;
(vi) all references in this instrument to designated Articles,
Sections, Exhibits, and Schedules are to the designated Articles, Sections,
Annexes, Exhibits, and Schedules of this instrument as originally executed;
(vii) all references herein to constitutions, treaties, statutes,
laws, rules, regulations, ordinances, codes or orders include any successor
thereto or replacement thereof, and mean references to any of them as
amended, modified or supplemented from time to time;
(viii) the words "herein," "hereof," "hereto" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(ix) all terms used herein which are defined in the Securities Act,
the Exchange Act or the rules and regulations promulgated thereunder have
the meanings assigned to them therein unless otherwise defined herein; and
(x) all accounting terms not otherwise defined herein have the meaning
assigned to them in accordance with GAAP.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This SECTION 10.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 10.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, sent by overnight courier (providing proof of
delivery) to the parties or sent by telecopy (providing confirmation of
transmission) at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):
10.2.1 if to Acquiror, to:
Post Properties, Inc.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339
Attention: John T. Glover
Telecopy: (770) 850-4400
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: John J. Kelley III
Telecopy: (404) 572-5100
44
<PAGE> 50
10.2.2 if to the Company, to:
Columbus Realty Trust
15851 Dallas Parkway
Suite 855
Dallas, Texas 75248
Attention: Robert L. Shaw
Telecopy: (972) 770-5109
with a copy to:
Winstead Sechrest & Minick, P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Attention: Michelle P. Goolsby
Telecopy: (214) 745-5390
and:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: J. Gregory Milmoe
Telecopy: (212) 735-3594
SECTION 10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 10.4 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, the Confidentiality Agreement and the other agreements entered into
in connection with the Transactions (a) constitute the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Agreement and,
(b) except for the provisions of ARTICLE II, SECTION 5.13.2 and SECTION 5.14,
are not intended to confer upon any Person other than the parties hereto any
rights or remedies.
SECTION 10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS THEREOF, EXCEPT TO THE EXTENT THAT THE MERGER OR OTHER TRANSACTIONS
CONTEMPLATED HEREBY ARE REQUIRED TO BE GOVERNED BY THE GOVERNING LAW.
SECTION 10.6 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 10.7 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself (without making such submission exclusive) to the
personal jurisdiction of any federal court located in the
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<PAGE> 51
State of Georgia in the event any dispute arises out of this Agreement or any of
the transactions contemplated by this Agreement and (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court.
SECTION 10.8 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any current or future law, and if the
rights or obligations of the parties under this Agreement would not be
materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance therefrom. In lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement, a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible, and the parties hereto
request the court or any arbitrator to whom disputes relating to this Agreement
are submitted to reform the otherwise illegal, invalid or unenforceable
provision in accordance with this SECTION 10.8.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 52
SIGNATURE PAGE TO
AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, Acquiror, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
ACQUIROR:
POST PROPERTIES, INC.
By: /s/ JOHN T. GLOVER
------------------------------------
John T. Glover
President
MERGER SUB:
POST LP HOLDINGS, INC.
By: /s/ JOHN T. GLOVER
------------------------------------
John T. Glover
President
COMPANY:
COLUMBUS REALTY TRUST
By: /s/ ROBERT L. SHAW
------------------------------------
Robert L. Shaw
Chief Executive Officer
47
<PAGE> 53
EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
, 1997
Post Properties, Inc.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339
Ladies and Gentlemen:
I have been advised that as of the date of this letter, I may be deemed to
be an "affiliate" of Columbus Realty Trust, a Texas real estate investment trust
(the "Company"), as the term affiliate is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the terms
of the Agreement and Plan of Merger, dated as of August , 1997 (the "Merger
Agreement"), by and among Post Properties, Inc., a Georgia corporation ("Post"),
Post LP Holdings, Inc., a Georgia corporation ("Merger Sub"), and the Company,
the Company will be merged with and into Merger Sub (the "Merger").
As a result of the Merger, I may receive shares of common stock, par value
$.01 per share, of Post (the "Post Securities"). I would receive such shares in
exchange for shares owned by me of beneficial interest, par value $.01 per
share, of the Company.
I represent, warrant and covenant to Post that in the event I receive any
Post Securities as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Post Securities in violation of the Securities Act or the Rules and
Regulations.
B. I have carefully read this letter and the Agreement and discussed
the requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of the Post Securities to
the extent I felt necessary with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Post Securities to me
pursuant to the Merger will be registered with the Commission under the
Securities Act on a Registration Statement on Form S-4. However, I have
also been advised that, since at the time the Merger is to be submitted for
a vote of the shareholders of the Company, I may be deemed to have been an
affiliate of the Company and the distribution by me of the Post Securities
has not been registered under the Securities Act, I may not sell, transfer
or otherwise dispose of the Post Securities issued to me pursuant to the
Merger unless (i) such sale, transfer or other disposition is registered
under the Securities Act, (ii) such sale, transfer or other disposition is
made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Securities Act or (iii) such sale,
transfer or other disposition is otherwise exempt from registration under
the Securities Act.
D. I understand that Post is under no obligation to register the sale,
transfer or other disposition of the Post Securities by me or on my behalf
under the Securities Act. By its execution hereof, Post agrees that it
will, as long as I own any Post Securities, take all reasonable efforts to
make timely filings with the Commission of all reports required to be filed
by it pursuant to the Securities Exchange Act of 1934, as
<PAGE> 54
amended, and will promptly furnish upon my written request a written
statement confirming that such reports have been so timely filed.
E. I also understand and agree that stop transfer instructions will be
given to Post's transfer agent with respect to the Post Securities and that
there will be placed on the certificates for the Post Securities issued to
me, or any substitutions therefor, a legend to the effect of the above
restrictions. It is understood and agreed that such legend shall be removed
upon surrender of certificates bearing such legend by delivery of
substitute certificates without such legend if (i) one year shall have
elapsed from the date I acquired the Post Securities and the provisions of
Rule 145(d)(2) are then available to me, (ii) two years shall have elapsed
from the date the undersigned acquired the Post Securities and the
provisions of Rule 145(d)(3) are then applicable to me or (iii) Post has
received either an opinion of counsel, in form and substance reasonably
satisfactory to Post, or a "no action" letter obtained by me from the staff
of the Commission, to the effect that the restrictions imposed by Rule 145
under the Securities Act no longer apply to me.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of the Company as described in the first paragraph of
this letter, or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement.
Very truly yours,
--------------------------------------
Name:
Accepted this day of
, 1997 by
POST PROPERTIES, INC.
By:
--------------------------------------------------------
Name:
Title:
2
<PAGE> 1
EXHIBIT 99
[POST PROPERTIES LOGO]
NEWS
POST PROPERTIES, INC.
3350 Cumberland Circle, N.W. Suite 2200 Atlanta, Georgia 30339-3363
(404)850-4400
For Immediate Release: Atlanta, Georgia
August 4, 1997
POST PROPERTIES and COLUMBUS REALTY TRUST
ANNOUNCE MERGER
Post Properties, Inc. (NYSE: PPS) and Columbus Realty Trust (NYSE:
CLB) today announced that they have entered into a definitive agreement and
plan of merger pursuant to which Columbus would be merged into Post.
The merger, which was unanimously approved by both companies' Boards
of Directors, will combine Columbus' 7,526 apartment homes (including its
development portfolio), 83% of which are in Dallas, with Post Properties' 21,673
(including its development portfolio) apartment homes throughout the Southeast.
Following the merger, Post Properties will be the largest multi-family real
estate investment trust (REIT) concentrating on the development of upscale
multi-family apartment homes in the major metropolitan markets of the Southeast
and Southwest, with a total market capitalization of approximately $2.2 billion.
The combined companies will operate under the Post Properties name, with
headquarters in Atlanta.
The merger has been structured as a tax-free merger transaction and
will be treated as a purchase for accounting purposes. Under the terms of the
merger agreement, each share of Columbus will be exchanged for .615 shares of
Post Properties. Based upon the closing stock price of Post Properties on
August 1, 1997, the transaction values Columbus at approximately $600 million,
including debt and other liabilities. The merger is subject to approval of
shareholders of both companies and other customary dosing conditions, and is
expected to be completed in November 1997. Upon completion of the merger,
Robert L. Shaw, Vice Chairman and CEO of Columbus, will become a member of the
senior management team of Post Properties and will join the Board of Directors
of Post Properties.
John A. Williams, Chairman of the Board and Chief Executive Officer
of Post Properties, Inc. said, "We consider Dallas as one of the few major
metropolitan markets in the country with the long-term appeal of our home base,
Atlanta, and we had therefore targeted Dallas as the next major market in which
to introduce our Post Apartment Homes (R). This merger will immediately provide
Post with a critical mass of outstanding upscale apartment communities in
Dallas and a wonderful base for continued expansion in that market, and in
Houston and Denver, where Columbus is also active. We are impressed with the
exceptionally high quality of the Columbus portfolio, which is in large measure
comparable to our own, and we are delighted to be joining forces with the
outstanding team which Robert Shaw has assembled at Columbus. Columbus has a
proven track record of building successful upscale apartment communities in
niche and infill locations and will fit right in line with Post's commitment to
"Setting the Standard" for the apartment industry."
Post (R) is a registered service mark of Post Apartment Homes, L.P.
<PAGE> 2
Press Release -2- August 4, 1997
John T. Glover, President of Post Properties, Inc., commented, "The
presence of a substantial base of operations in Dallas will obviously
complement and diversify our Atlanta base, and the merger offers an
attractive, accretive, opportunity for Post to enter Dallas, Houston and
Denver, while maintaining the integrity of our longstanding development
strategy. Our balance sheet strength will allow us to reissue virtually all of
Columbus' currently outstanding debt with the obvious benefit of significantly
reduced interest expense. With these savings, coupled with the expense savings
resulting from the combination of the two companies, we expect the transaction
to be immediately accretive on the order of approximately $0.10 per share for
1998. All in all, the transaction is one that we believe is favorable for the
shareholders of both companies."
Robert L. Shaw, Vice Chairman and Chief Executive Officer of
Columbus, stated, "For twenty-five years, Post Properties has truly set the
standard by which all other multi-family companies are measured. Our Columbus
associates - and I personally - are flattered and excited to be joining this
exceptional team of dedicated professionals."
Shaw added, "Our board is confident that the merger will accelerate
our growth and lower our cost of capital and are pleased that we will have
created immediate geographic diversity for the Columbus shareholder."
Merrill Lynch & Co. acted as exclusive financial advisor to Post
Properties and Prudential Securities acted as exclusive financial advisor to
Columbus Realty Trust.
Certain matters discussed in this press release are forward-looking
statements within the meaning of the federal securities laws. Although the
Companies believe that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, they can give no assurance
that such expectations, including the expectation with respect to potential
accretion, will be achieved. Factors that could cause the actual results to
differ materially from the Companies' current expectations include general
economic conditions, local real estate conditions, the timely development and
lease-up of communities and the other risks detailed from time to time in the
Companies' SEC reports, including the annual reports on Form 10-K for the year
ended December 31, 1996.
Post Properties is one of the largest developers and operators of
upscale multi-family apartment communities in the southeastern United States.
Post operates as a self-administered and self-managed equity Real Estate
Investment Trust whose primary business consists of developing and managing
Post(R) brand name apartment communities for its own account.
For additional information contact:
POST PROPERTIES, INC.
Timothy A. Peterson
Karen E. Misuraca
770-850-4400
COLUMBUS REALTY TRUST
J. Michael Lewis
972-770-5182
