SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) April 13, 1997
SANTA ANITA REALTY SANTA ANITA OPERATING
ENTERPRISES, INC. COMPANY
(Exact name of registrant as (Exact name of registrant
as
specified in its charter) specified in its charter)
Delaware Delaware
(State or other jurisdiction (State or other
jurisdiction
of incorporation) of incorporation)
95-3520818 95-3419438
(IRS Employer Identification No.) (IRS Employer Identification
No.)
0-9109 0-9110
(Commission File Number) (Commission File Number)
301 West Huntington Drive, Suite 405 285 West Huntington
Drive
Arcadia, CA 91007 Arcadia, CA 91007
(Address of principal executive offices (Address of principal
executive offices
including zip code) including zip code)
(818) 574-5550 (818) 574-7223
(Registrant's telephone number (Registrant's telephone
number
including area code) including area code)
(Former name or former address, (Former name or former
address,
if changed since last report) if changed since last
report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
2. Amended and Restated Agreement and Plan of Merger,
dated as of April 13, 1997, by and among Santa Anita
Realty Enterprises, Inc., Santa Anita Operating
Company, Meditrust and Meditrust Acquisition
Corporation IV.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned, thereunto duly
authorized.
SANTA ANITA REALTY ENTERPRISES, INC. SANTA ANITA OPERATING
COMPANY
By: /s/ BRIAN L. FLEMING By: /s/ KATHRYN J.
MCMAHON
Brian L. Fleming Kathryn J. McMahon
Acting President and Chief General Counsel and
Executive Officer Secretary
Date: April 29, 1997 Date: April 29, 1997
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 13, 1997
BY AND AMONG
SANTA ANITA REALTY ENTERPRISES, INC.,
SANTA ANITA OPERATING COMPANY
MEDITRUST
AND
MEDITRUST ACQUISITION CORPORATION IV
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<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
RECITALS
AGREEMENT
ARTICLE I
THE REORGANIZATION; CLOSING; EFFECTIVE TIME......
2
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Section 1.1: MT Operating Company; the
Distribution........ 2
1.1.1 MT Operating
Company.......................... 2
1.1.2
Distribution.................................. 2
1.1.3
Pairing....................................... 2
Section 1.2: Delivery of
Note.............................. 2
Section 1.3: The
Mergers................................... 2
Section 1.4: Effective
Time................................ 3
Section 1.5:
Closing....................................... 3
Section 1.6: Sale of Santa Anita Shares to
MT.............. 3
Section 1.7: Sale of Santa Anita Shares to Designee of
MT.. 4
Section 1.8: Payment of Cash by
MT......................... 4
</TABLE>
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS; CORPORATE
NAME. 5
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Section 2.1: Realty Certificate of
Incorporation........... 5
Section 2.2: Realty
By-laws................................ 5
Section 2.4: Operating
By-laws............................. 5
</TABLE>
ARTICLE III
DIRECTORS AND
OFFICERS.................. 5
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Section 3.1: Realty
Directors................................ 5
Section 3.2: Operating
Directors............................. 6
</TABLE>
ARTICLE IV
MERGER CONSIDERATION; ASSIGNMENT CONSIDERATION;
CONVERSION OR CANCELLATION OF SHARES IN THE
MERGERS... 6
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Section 4.1: Realty Merger Consideration; Conversion or
Cancellation of MT
Shares...................... 6
Section 4.2: Operating Merger Consideration; Conversion
or Cancellation of MOC
Shares.................. 6
Section 4.3: Exchange
Ratio.................................. 6
Section 4.4: Pairing of Realty and Operating
Shares.......... 7
Section 4.5: Exchange of Old Certificates for
New
Certificates............................... 7
4.5.1 Effect on MT Shares and MOC
Shares.............. 7
4.5.2 Appointment of Exchange
Agent................... 8
4.5.3 Exchange
Procedures............................. 8
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<PAGE>
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4.5.4 Fractional
Shares.............................. 9
4.5.5 Distributions with Respect to Unexchanged
Shares........................................
9
4.5.6
Transfers...................................... 10
4.5.7 No
Liability................................... 10
4.5.8 Withholding
Rights............................. 10
4.5.9 Transfer
Taxes................................. 10
4.5.10 Stock
Options.................................. 11
</TABLE>
ARTICLE V
REPRESENTATIONS AND
WARRANTIES............. 12
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Section 5.1: Representations and Warranties of MT..........
12
5.1.1 Organization of MT............................
12
5.1.3 Capitalization................................
13
5.1.4 Authority.....................................
13
5.1.5 Litigation....................................
15
5.1.6 Financial Statements..........................
15
5.1.7 Absence of Changes............................
15
5.1.8 No Undisclosed Liabilities....................
15
5.1.9 MT SEC Documents..............................
15
5.1.10 Certain Matters...............................
16
5.1.11 Environmental Matters.........................
16
5.1.12 Compliance with Laws and Orders...............
16
5.1.13 Real Property.................................
16
5.1.14 Indebtedness..................................
17
5.1.15 No Finder.....................................
17
5.1.16 Tax Matters...................................
17
5.1.17 Benefit Plans.................................
18
Section 5.2: Representations and Warranties of Realty......
19
5.2.1 Organization of Realty........................
19
5.2.2 Capitalization................................
19
5.2.3 Authority.....................................
20
5.2.4 Litigation....................................
21
5.2.5 Financial Statements..........................
21
5.2.6 Absence of Changes............................
21
5.2.7 No Undisclosed Liabilities....................
21
5.2.8 Santa Anita SEC Documents.....................
21
5.2.9 Certain Matters...............................
22
5.2.10 Environmental Matters.........................
22
5.2.11 Compliance with Laws and Orders...............
22
5.2.12 Real Property.................................
22
5.2.13 Indebtedness..................................
23
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5.2.14 No Finder.....................................
23
5.2.15 Former Agreement..............................
23
5.2.16 Tax Matters...................................
23
5.2.17 Benefit Plans.................................
25
5.2.18 Hahn Agreement................................
25
Section 5.3 Representations and Warranties of Operating...
26
5.3.1 Organization of Operating.....................
26
5.3.2 Operating Subsidiaries........................
26
5.3.3 Capitalization................................
27
5.3.4 Authority.....................................
27
5.3.5 Litigation....................................
28
5.3.6 Financial Statements..........................
28
5.3.7 Absence of Changes............................
29
5.3.8 No Undisclosed Liabilities....................
29
5.3.9 Santa Anita SEC Documents.....................
29
5.3.10 Certain Matters...............................
29
5.3.11 Environmental Matters.........................
29
5.3.12 Compliance with Laws and Orders...............
30
5.3.13 Real Property.................................
30
5.3.14 Indebtedness..................................
30
5.3.15 No Finder.....................................
30
5.3.16 Former Agreement..............................
31
5.3.17 Tax Matters...................................
31
5.3.18 Benefit Plans.................................
31
</TABLE>
ARTICLE VI
COVENANTS.................. 32
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Section 6.1: Conduct Pending the Closing...................
32
Section 6.2: Acquisition Proposals.........................
34
Section 6.3: Information Supplied..........................
35
Section 6.4: Shareholder Approvals; Registration Statement.
36
6.4.1 Registration Statement........................
36
6.4.2 Shareholder Meetings..........................
36
Section 6.5: Other Actions.................................
37
Section 6.6: Access........................................
38
Section 6.7: Notification of Certain Matters...............
39
Section 6.8: Publicity.....................................
40
Section 6.9: Indemnification of Directors and Officers.....
40
Section 6.10: Colony Termination Fee........................
40
</TABLE>
<PAGE>
ARTICLE VII
CONDITIONS....................
41
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Section 7.1: Conditions to Each Party's Obligation........
41
7.1.1 Shareholder Approval.........................
41
7.1.2 Governmental and Regulatory Consents.........
41
7.1.3 Third-Party Consents.........................
41
7.1.4 Litigation...................................
42
7.1.5 Opinions.....................................
42
7.1.6 Registration Statement.......................
42
Section 7.2: Conditions to Obligation of MT...............
43
7.2.1 Representations and Warranties...............
43
7.2.2 Performance of Obligations...................
43
7.2.3 No Material Adverse Effect...................
43
7.2.4 Rights.......................................
43
7.2.5 Resignation of Directors.....................
43
7.2.6 The Exchange Approval........................
43
Section 7.3: Conditions to Obligation of Realty
and Operating...............................
43
7.3.1 Representations and Warranties...............
43
7.3.2 Performance of Obligations...................
44
7.3.3 No Material Adverse Effect...................
44
</TABLE>
ARTICLE VIII
TERMINATION....................
44
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Section 8.1: Termination by Mutual Consent...............
44
Section 8.2: Termination by any Party Hereto..... ....... 44
Section 8.3: Termination by MT...........................
44
Section 8.4: Termination by Either of Realty or
Operating.45
Section 8.5: Effect of Termination and Abandonment.......
45
Section 8.6: Payment of Expenses and Termination Fee.....
45
</TABLE>
ARTICLE IX
MISCELLANEOUS AND GENERAL.......... 46
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Section 9.1: Survival....................................
46
Section 9.2: Modification or Amendment...................
46
Section 9.3: Waiver of Conditions........................
46
Section 9.4: Counterparts................................
46
Section 9.5: Governing Law...............................
46
Section 9.6: Notices.....................................
46
Section 9.7: Entire Agreement, Etc.......................
47
Section 9.8: Captions....................................
48
Section 9.9: Severability................................
48
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Section 9.10: No Third-Party Beneficiaries................
48
Section 9.11: Specific Performance........................
48
Section 9.12: Trust.......................................
48
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<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER,
dated as of April 13, 1997 (this "Agreement"), by and among SANTA
ANITA REALTY ENTERPRISES, INC., a Delaware corporation
("Realty"), SANTA ANITA OPERATING COMPANY, a Delaware corporation
("Operating" and together with Realty, the "Companies"),
MEDITRUST, a Massachusetts business trust ("MT"), and MEDITRUST
ACQUISITION CORPORATION IV, a Delaware corporation ("MOC").
R E C I T A L S
A. Spin-off. Prior to the record dates for the
shareholder meetings of MT and MOC referred to in Section 6.4.2,
MT intends to transfer to MOC, a wholly owned subsidiary of MT, a
promissory note due and payable on the day prior to the Effective
Time in the principal amount equal to the MOC Amount and with an
interest rate of 7% per annum (the "MT Note"), and to distribute
beneficial ownership of shares of MOC to its shareholders,
although share certificates therefor will be held in escrow by an
escrow agent (the "Escrow Agent") pending the Mergers described
below.
B. Note. Prior to the Effective Time, Operating
intends to deliver to Realty a promissory note or cash in the
amount of the Distribution Amount.
C. The Mergers. At the Effective Time, the parties
intend to effect a merger of MT with and into Realty, with Realty
being the surviving corporation (the "Realty Merger"), and a
merger of MOC with and into Operating, with Operating being the
surviving corporation (the "Operating Merger").
D. Intention of the Parties. It is the intention of
the parties to this Agree ment that for United States federal
income tax purposes the Realty Merger and the Operating Merger
(the "Mergers") shall qualify as "reorganizations" within the
meaning of Section 368(a) of the Code.
E. Approvals. The respective Board of Directors or
Board of Trustees of each party hereto has determined that this
Agreement is in the best interests of such party and its
shareholders and has duly approved this Agreement and the
consummation of the transactions contemplated hereby and
authorized its execution and delivery.
F. Defined Terms. Defined terms used herein shall
have the meanings set forth herein and in Annex A hereto.
<PAGE>
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and
of the represen tations, warranties, covenants and agreements set
forth herein, the parties hereto hereby agree as follows:
ARTICLE I
THE REORGANIZATION; CLOSING; EFFECTIVE TIME
SECTION 1.1: MT OPERATING COMPANY; THE DISTRIBUTION.
1.1.1 MT Operating Company. Prior to the record dates
for the shareholder meetings of MT and MOC referred to in Section
6.4.2, MT will transfer to MOC the MT Note, and will cause MOC to
issue an amount of its common stock to MT equal to the number of
MT Shares then outstanding and to take all necessary corporate
and other actions required in connection therewith.
1.1.2 Distribution. Prior to the record dates for the
shareholder meetings of MT and MOC referred to in Section 6.4.2,
MT will effect the distribution of the beneficial ownership of
all the outstanding MOC Shares to its shareholders by delivering
the MOC Shares to the Escrow Agent, to be held for the benefit of
the MOC shareholders, pending the Mergers. MT will take all
necessary corporate and other action required in connection with
such distribution.
1.1.3 Pairing. The transferee of any MT Shares shall
also receive a beneficial interest in an equal number of MOC
Shares held by the Escrow Agent.
SECTION 1.2: DELIVERY OF NOTE. Prior to the Effective
Time, Operating will deliver to Realty a promissory note or cash,
in whole or in part, in the amount of the Distribution Amount.
SECTION 1.3: THE MERGERS.
1.3.1 Realty Merger. Subject to the terms and
conditions of this
Agreement, at the Effective Time, Realty and MT will
consummate the Realty
Merger in which MT will be merged with and into Realty and
the separate
legal existence of MT will thereupon cease. Realty will be
the surviving
corporation of the Realty Merger (sometimes hereinafter
referred to as the
"Realty Surviving Corporation") and will continue to be a
corporation
governed by the laws of the State of Delaware.
1.3.2 Operating Merger. Subject to the terms and
conditions of this
Agreement, at the Effective Time, Operating and MOC will
consummate the
Operating Merger in which MOC will be merged with and into
Operating and
the separate legal existence of MOC will thereupon cease.
Operating will
be the surviving corporation of the Operating Merger
(sometimes hereinafter
referred to as
<PAGE>
the "Operating Surviving Corporation") and will continue to
be a
corporation governed by the laws of the State of Delaware.
SECTION 1.4: EFFECTIVE TIME. Realty and MT will cause a
certificate of
merger to be executed and delivered to the Secretary of State of
the State of
Delaware in accordance with the DGCL (the "Realty Merger
Certificate") and MT
will cause a certificate of termination to be executed and
delivered to the
Secretary of State of the Commonwealth of Massachusetts. The
Realty Merger will
become effective at such time as the Realty Merger Certificate
has been filed
with the Secretary of State of the State of Delaware in
accordance with the
provisions of the DGCL or at such other time as may be agreed
upon by the
parties and specified in the Realty Merger Certificate in
accordance with
applicable law. Operating and MOC will cause a certificate of
merger to be
executed and delivered to the Secretary of State of the State of
Delaware as
provided in the DGCL (the "Operating Merger Certificate"). The
Operating Merger
will become effective at such time as the Operating Merger
Certificate has been
filed with the Secretary of State of the State of Delaware in
accordance with
the provisions of the DGCL or at such other time as may be agreed
upon by the
parties and specified in the Operating Merger Certificate in
accordance with
applicable law. It is the intention of the parties that the
Mergers shall
become effective at the same time, and that the Realty Merger
Certificate and
the Operating Merger Certificate shall so provide. The date and
time when the
Mergers become effective is referred to herein as the "Effective
Time."
SECTION 1.5: CLOSING. The closing of the Reorganization
(the "Closing")
will take place at the offices of O'Melveny & Myers LLP, Los
Angeles, California
at 10:00 A.M. on the first business day on which all the
conditions set forth in
Article VII can be fulfilled or are waived, or at such other
place or time as
the parties hereto may agree. The date upon which the Closing
occurs is herein
called the "Closing Date".
SECTION 1.6: SALE OF SANTA ANITA SHARES TO MT. Realty and
Operating will
notify MT at least seven days in advance of the record dates for
the Realty and
Operating shareholder meetings provided for in Section 6.4.2.
Prior to such
record dates, MT shall purchase from Realty and Operating newly
issued, fully
paid and nonassessable Santa Anita Shares at a purchase price of
$31.00 per
Santa Anita Share (the "Acquired Shares"). With respect to any
such purchase,
MT shall for all purposes be deemed to have become the holder of
record of the
number of Santa Anita Shares to be purchased immediately upon
delivery to Realty
and Operating of written notice from MT of its intention to make
such purchase
and payment of the aggregate purchase price as provided in clause
(ii) below and
delivery of the certificate in clause (iii) below. The Santa
Anita Share
Certificates issued pursuant to this Section 1.6 shall have
impressed on,
printed on, written on or otherwise attached to them the legend
set forth in
Section 3(c) of the Rights Agreement and MT shall have all the
rights to which a
holder of Rights as of the Rights Record Date (as defined in the
Rights
Agreement) is entitled. The number of Acquired Shares purchased
by MT shall be
equal to 9.8% of the issued and outstanding Santa Anita Shares
immediately after
the issuance and sale of the Acquired Shares. To consummate the
purchase of the
Acquired Shares and as a condition to their issuance, (i) Realty
and Operating
will have delivered to MT certificates representing the Acquired
<PAGE>
Shares, (ii) MT will have paid to Realty and Operating the
aggregate purchase
price for the Acquired Shares in immediately available funds,
(iii) MT shall
have delivered to Realty and Operating a certificate in the form
attached hereto
as Annex B, (iv) the Acquired Shares will have been approved for
listing on the
Exchange upon official notice of issuance, and (v) O'Melveny &
Myers LLP will
have delivered to MT an opinion to the effect that the Acquired
Shares have been
duly authorized by all necessary corporate action on the part of
the issuer and
that the Acquired Shares are validly issued, fully paid and
nonassessable. In
the event that this Agreement is terminated pursuant to Article
VIII, MT shall
be entitled to the benefit of the registration rights set forth
in Annex D
hereto with respect to the Acquired Shares.
SECTION 1.7: SALE OF SANTA ANITA SHARES TO DESIGNEE OF MT.
Prior to the
record date for the Realty and Operating shareholder meetings
provided for in
Section 6.4.2, MT may designate one or more Unaffiliated Persons
who may, prior
to such record date, purchase from Realty and Operating newly
issued, fully paid
and nonassessable Santa Anita Shares at a purchase price of
$31.00 per Santa
Anita Share (the "Unaffiliated Acquired Shares"). With respect
to any such
purchase, the designated Unaffiliated Person or Unaffiliated
Persons shall for
all purposes be deemed to have become the holder or holders of
record of the
number of Santa Anita Shares to be purchased immediately upon
delivery to Realty
and Operating of written notice from MT of such purchaser's or
purchasers'
intention to make such purchase and payment of the aggregate
purchase price as
provided in clause (ii) below and delivery of the certificate in
clause (iii)
below. The Santa Anita Share Certificates issued pursuant to this
Section 1.6
shall have impressed on, printed on, written on or otherwise
attached to them
the legend set forth in Section 3(c) of the Rights Agreement and
the holder or
holders of such shares shall have all the rights to which a
holder of Rights as
of the Rights Record Date (as defined in the Rights Agreement) is
entitled. The
aggregate number of Unaffiliated Acquired Shares which may be
purchased pursuant
to this Section 1.7 is up to (i) 19.6% of the issued and
outstanding Santa Anita
Shares immediately prior to the issuance and sale of the Acquired
Shares to MT
pursuant to Section 1.6 less (ii) the number of Acquired Shares
to be issued to
MT pursuant to Section 1.6. To consummate the purchase of the
Unaffiliated
Acquired Shares and as a condition to their issuance, (i) Realty
and Operating
will have delivered to the purchasers certificates representing
the Unaffiliated
Acquired Shares, (ii) such purchasers will have paid to Realty
and Operating the
purchase price for the Unaffiliated Acquired Shares in
immediately available
funds, (iii) such purchasers will have delivered to Realty and
Operating a
certificate in the form attached hereto as Annex C, (iv) the
Unaffiliated
Acquired Shares will have been approved for listing on the
Exchange upon
official notice of issuance, and (v) O'Melveny & Myers LLP will
have delivered
to such purchasers an opinion to the effect that such
Unaffiliated Acquired
Shares have been duly authorized by all necessary corporate
action on the part
of the issuer and that such Acquired Shares are validly issued,
fully paid and
nonassessable. In the event that this Agreement is terminated
pursuant to
Article VIII, such purchasers shall be entitled to the benefit of
the
registration rights set forth in Annex D hereto with respect to
the Unaffiliated
Acquired Shares.
SECTION 1.8: PAYMENT OF CASH BY MT. At the option of the
Realty Board
and the Operating Board, subject to and concurrent with the
consummation of the
Mergers, MT and
<PAGE>
MOC will provide in the aggregate $100 million in cash to Realty
and Operating,
in the ratio of $98,900,000 provided by MT and $1,100,000
provided by MOC, to
fund a self-tender or cash election for Santa Anita Shares
outstanding prior to
the Mergers at $31.00 per Santa Anita Share; provided that the
sum of the
amounts provided by MT and MOC shall be reduced by the purchase
price paid by MT
for the Acquired Shares pursuant to Section 1.6. Such amount
shall be loaned to
Realty and Operating on an unsecured basis in immediately
available funds after
the delivery by Operating to Realty of the promissory note
referred to in
Section 1.1.2 and immediately prior to the consummation of the
Mergers and after
the satisfaction or waiver of all conditions set forth in Section
7 hereof,
including approval of the Mergers by the shareholders of the
respective parties
to this Agreement.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS; CORPORATE
NAME
SECTION 2.1: REALTY CERTIFICATE OF INCORPORATION. At the
Effective Time,
the Certificate of Incorporation of Realty shall be amended to
reflect that the
name of Realty Surviving Corporation shall be Meditrust
Corporation, and that
the authorized number of Realty Common Shares of Realty Surviving
Corporation
shall be 250,000,000, and as so amended, will be the certificate
of
incorporation of Realty Surviving Corporation, until duly amended
in accordance
with the terms thereof and the DGCL.
SECTION 2.2: REALTY BY-LAWS. The By-laws of Realty will
be the By-laws
of the Realty Surviving Corporation, until duly amended in
accordance with the
terms thereof, the Realty Certificate and the DGCL.
SECTION 2.3: OPERATING CERTIFICATE OF INCORPORATION. At
the Effective
Time, the Certificate of Incorporation of Operating shall be
amended to reflect
that the name of Operating Surviving Corporation shall be
Meditrust Operating
Company, and that the authorized number of Operating Common
Shares of Operating
Surviving Corporation shall be 250,000,000, and as so amended,
will be the
certificate of incorporation of the Operating Surviving
Corporation, until duly
amended in accordance with the terms thereof and the DGCL.
SECTION 2.4: OPERATING BY-LAWS. The By-laws of Operating,
as in effect
at the Effective Time, will be the By-laws of Operating Surviving
Corporation,
until duly amended in accordance with the terms thereof, the
Operating
Certificate and the DGCL.
ARTICLE III
DIRECTORS AND OFFICERS
SECTION 3.1: REALTY DIRECTORS. Immediately after the
Effective Time, the
Board of Directors of Realty Surviving Corporation will consist
of up to 12
directors and will be comprised of up to 10 individuals to be
designated by MT
and two current members of the
<PAGE>
Realty Board to be designated by MT after consultation with
Realty. The
designation of such directors will occur prior to the initial
filing of the
Registration Statement with the SEC. The new directors of Realty
Surviving
Corporation will be appointed to different classes as designated
by the MT
Board, and they will commence to serve at the Effective Time and
will remain
directors until their successors have been duly elected and
qualified.
SECTION 3.2: OPERATING DIRECTORS. Immediately after the
Effective Time,
the Board of Directors of Operating Surviving Corporation will
consist of up to
12 directors and will be comprised of up to 10 individuals to be
designated by
MT and two current members of the Operating Board to be
designated by MT after
consultation with Operating. The designation of such directors
will occur prior
to the initial filing of the Registration Statement with the SEC.
The new
directors of Operating Surviving Corporation will be appointed to
different
classes as designated by the MT Board, and they will commence to
serve at the
Effective Time and will remain directors until their successors
have been duly
elected and qualified.
ARTICLE IV
MERGER CONSIDERATION; ASSIGNMENT CONSIDERATION;
CONVERSION OR CANCELLATION OF SHARES IN THE MERGERS
SECTION 4.1: REALTY MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF
MT SHARES. At the Effective Time, by virtue of the Realty Merger
and without
any action on the part of the holder of any capital stock of MT,
subject to
Sections 4.4 and 4.5, each MT Share issued and outstanding
immediately prior to
the Effective Time (other than any MT Share held in MT's treasury
(which shall
be cancelled)) will be converted into the right to receive such
number of fully
paid and nonassessable Realty Common Shares as may be calculated
in accordance
with the Exchange Ratio. Realty Shares outstanding immediately
prior to the
Effective Time shall remain outstanding after the Effective Time
and shall not
be converted or exchanged in the Realty Merger, except that any
Realty Shares
held by MT shall be cancelled.
SECTION 4.2: OPERATING MERGER CONSIDERATION; CONVERSION OR
CANCELLATION
OF MOC SHARES. At the Effective Time, by virtue of the Operating
Merger and
without any action on the part of the holder of any capital stock
of MOC,
subject to Sections 4.4 and 4.5, each MOC Share issued and
outstanding
immediately prior to the Effective Time (other than any MOC Share
held in MOC's
or MT's treasury (which shall be cancelled)) will be converted
into the right to
receive such number of fully paid and nonassessable Operating
Shares as may be
calculated in accordance with the Exchange Ratio. Operating
Shares outstanding
immediately prior to the Effective Time shall remain outstanding
after the
Effective Time and shall not be converted or exchanged in the
Operating Merger,
except that any Operating Shares held by MT shall be cancelled.
SECTION 4.3: EXCHANGE RATIO. The number of Realty Common
Shares into
which each MT Share will be converted, as provided in Section
4.1, and the
number of Operating Common Shares into which each MOC Share will
be converted,
as provided in Section 4.2,
<PAGE>
will be equal to the number obtained by dividing (i) $37.25, by
(ii) the sum of
(x) $31.00 and (y) if the Closing Date occurs after December 31,
1997, as a
result of acquisitions and other business combinations proposed
to be entered
into by MT or MOC (and provided that there are no other
conditions to closing
within Realty's or Operating's control or for which they are
responsible that
have not yet been satisfied), a number equal to the per share
amount of any
dividends of MT, if any, accrued with respect to periods after
such date and
prior to the Closing Date divided by 1.2016 less the per share
amount of any
dividends of Realty accrued with respect to periods after such
date and prior to
the Closing Date (the "Exchange Ratio").
SECTION 4.4: PAIRING OF REALTY AND OPERATING SHARES.
Pursuant to the
Pairing Agreement, each and every Realty Share issued in
connection with the
Realty Merger will be paired with an Operating Share issued in
connection with
the Operating Merger, with the effect that each MT shareholder
will receive
paired shares of common stock of Realty Surviving Corporation and
Operating
Surviving Corporation.
SECTION 4.5: EXCHANGE OF OLD CERTIFICATES FOR NEW
CERTIFICATES.
4.5.1 Effect on MT Shares and MOC Shares.
(a)At the Effective Time, all MT Shares and MOC
Shares will cease
to be outstanding, will be cancelled and retired and will
cease to exist,
and each holder of an Old MT Certificate or an Old MOC
Certificate will
thereafter cease to have any rights with respect to such Old
MT
Certificates or Old MOC Certificates, except the right to
receive, without
interest, upon exchange of such Old MT Certificates and Old
MOC
Certificates in accordance with this Section 4.5, the Santa
Anita Share
Certificates and payments to which such holder is entitled
pursuant to this
Article IV. A holder of an Old MT Certificate or an Old MOC
Certificate
shall have no rights as a shareholder of Realty or Operating
until the Old
MT Certificate and the Old MOC Certificate have been
exchanged for Santa
Anita Share Certificates and cash as provided herein.
(b) Notwithstanding anything contained in this
Agreement to the
contrary, in order for Realty Surviving Corporation to
continue to meet the
REIT Requirements, no person or entity shall own, or be
deemed to own by
virtue of the attribution provisions of Section 544 (as
modified by Section
856(h)(1)(B)) or Section 318 (as modified by Section
856(d)(5)) of the
Code, more than 9.8% of the outstanding Santa Anita Shares
(the "Ownership
Limit") at or after the Effective Time. Therefore, if any
holder of MT
Shares or MOC Shares would receive in connection with the
Mergers a number
of Santa Anita Shares such that any person or entity would
own, or be
deemed to own under the applicable attribution rules of the
Code referred
to above, Santa Anita Shares in excess of the Ownership
Limit, then such
holder shall acquire no right or interest in such number of
Santa Anita
Shares which would cause such person or entity to exceed the
Ownership
Limit, but such holder shall, in lieu of receiving those
Santa Anita Shares
which would cause the
<PAGE>
Ownership Limit to be exceeded (the "Limited Shares"), have
the right to be
paid by Realty Surviving Corporation an amount in cash for
such Limited
Shares equal to the product of the Fair Market Value (as
hereinafter
defined) per Limited Share multiplied by the number of such
Limited Shares.
"Fair Market Value" shall be equal to the average closing
price of the
Santa Anita Shares on the Exchange on the five (5) trading
days immediately
preceding the Effective Time.
4.5.2 Appointment of Exchange Agent. From and after
the Effective
Time until the end of the six-month period following the
Effective Time,
the Surviving Corporations will make available or cause to
be made
available to an exchange agent appointed by MT and
reasonably acceptable to
Realty and Operating (the "Exchange Agent"), certificates
for (a) paired
Realty and Operating Common Shares (the "Santa Anita Share
Certificates"),
and (b) cash in amounts sufficient to allow the Exchange
Agent to make all
deliveries of Santa Anita Share Certificates and payments
that may be
required in exchange for Old MT Certificates and Old MOC
Certificates
pursuant to this Article IV.
4.5.3 Exchange Procedures. Immediately after the
Effective Time, the
Escrow Agent shall deliver to the Exchange Agent all of the
Old MOC
Certificates. Promptly after the Effective Time, the
Surviving
Corporations will cause the Exchange Agent to mail or
deliver to each
person who was, at the Effective Time, a holder of record of
MT Shares a
form (the terms of which will be mutually agreed upon by the
parties hereto
prior to the Effective Time) of letter of transmittal
containing
instructions for use in effecting the surrender of the Old
MT Certificates
in exchange for Santa Anita Share Certificates and payments
pursuant to
this Article IV. Upon surrender to the Exchange Agent of an
Old MT
Certificate for cancellation together with such letter of
transmittal, duly
executed and completed in accordance with the instructions
thereto, the
holder of such Old MT Certificate will be entitled to
receive in exchange
therefor a Santa Anita Share Certificate representing paired
shares of the
Surviving Corporations, to which such holder is entitled
pursuant to this
Article IV, and the Old MT Certificate and related Old MOC
Certificate
shall be cancelled. No interest will be paid or will accrue
on the amount
payable upon surrender of Old MT Certificates and Old MOC
Certificates. If
any Santa Anita Share Certificate is to be issued in a name
other than that
in which the Old MT Certificate and Old MOC Certificate
surrendered in
exchange therefor is registered, it will be a condition of
such exchange
that the person requesting such exchange will pay any
transfer or other
taxes required by reason of the issuance of such Santa Anita
Share
Certificate in a name other than that of the registered
holder of the Old
MT Certificate and Old MOC Certificate surrendered, or will
establish to
the satisfaction of the Surviving Corporations that any such
taxes have
been paid or are not applicable. Six months after the
Effective Time, the
Surviving Corporations will be entitled to cause the
Exchange Agent to
deliver to them any applicable Santa Anita Share
Certificates, or cash
(including any interest thereon) made available to the
Exchange Agent that
are unclaimed by the former shareholders of MT and MOC. Any
such former
shareholders who have not theretofore exchanged their Old MT
Certificates
(and been
<PAGE>
deemed to have exchanged their related Old MOC Certificates)
for Santa
Anita Share Certificates and cash pursuant to this Article
IV will
thereafter be entitled to look exclusively to the Surviving
Corporations
and only as general creditors thereof for the Santa Anita
Shares and cash
to which they become entitled upon exchange of their Old MT
Certificates
(and deemed exchange of Old MOC Certificates) pursuant to
this Article IV.
Each Surviving Corporation will pay all applicable charges
and expenses,
including its applicable share of those of the Exchange
Agent, in
connection with the exchange of Santa Anita Share
Certificates and cash as
contemplated hereby.
4.5.4 Fractional Shares. No fractional Santa Anita
Shares will be
issued in the Reorganization. In lieu of any such
fractional shares, each
person who would otherwise have been entitled to a fraction
of a Santa
Anita Share upon surrender of an Old MT Certificate (and
deemed exchange of
the related Old MOC Certificate) pursuant to this Article IV
will be paid
an amount in cash (without interest) equal to such holder's
proportionate
interest in the net proceeds from the sale or sales in the
open market by
the Exchange Agent, on behalf of all such holders, of the
aggregate
fractional Santa Anita Shares which would otherwise be
issued pursuant to
this Article IV. As soon as practicable following the
Effective Time, the
Exchange Agent will determine the excess of (i) the number
of full Santa
Anita Shares delivered to the Exchange Agent over (ii) the
aggregate number
of full Santa Anita Shares to be distributed in respect of
MT Shares and
MOC Shares (such excess being herein called the "Excess
Shares"), and the
Exchange Agent, as agent for the former holders of such
shares, will sell
the Excess Shares at the prevailing prices on the open
market. The sale of
the Excess Shares by the Exchange Agent will be executed on
the Exchange
through one or more firms and will be executed in round lots
to the extent
practicable. All commissions, transfer taxes and other
out-of-pocket
transaction costs, including the expenses and compensation
of the Exchange
Agent, incurred in connection with such sale of Excess
Shares, will be
deducted from the proceeds from the sale of the Excess
Shares. Until the
earlier of six months following the Effective Time and the
date the net
proceeds of such sale or sales have been distributed, the
Exchange Agent
will hold such proceeds in trust for such former
shareholders. As soon as
practicable after the determination of the amount of cash to
be paid in
lieu of any fractional interests, the Exchange Agent will
make available in
accordance with this Agreement such amounts to such former
shareholders.
4.5.5 Distributions with Respect to Unexchanged
Shares.
Notwithstanding any other provisions of this Agreement, as
provided in
Section 4.5.1, no holder of an Old MT Certificate or an Old
MOC Certificate
shall have rights as a shareholder of Realty or Operating
until such holder
has exchanged its Old MT Certificate (and been deemed to
have exchanged the
related Old MOC Certificate) for a Santa Anita Share
Certificate;
therefore, no dividends will be paid to any person holding
an Old MT
Certificate until such Old MT Certificate is surrendered for
exchange as
provided herein (it being understood that such dividends
will be paid to
the Exchange Agent to be held for distribution upon the
exchange for Old MT
Certificates and deemed exchange of the Old MOC
Certificates) as herein
provided). Subject to the effect of
<PAGE>
applicable laws, following surrender of any such Old MT
Certificate (and
deemed exchange of the related Old MOC Certificate) by any
holder thereof,
there will be paid to the holder of the Santa Anita Share
Certificate
issued in exchange therefor, without interest, (i) at the
time of such
surrender, the amount of dividends or other distributions
with a record
date after the Effective Time theretofore payable with
respect to the Santa
Anita Shares represented thereby and not paid, less the
amount of any
withholding taxes which may be required thereon, and (ii) at
the
appropriate payment date, the amount of dividends or other
distributions
with a record date after the Effective Time but prior to the
time of such
surrender and a payment date subsequent to the time of such
surrender
payable with respect to the Santa Anita Shares represented
thereby, less
the amount of any withholding taxes which may be required
thereon.
4.5.6 Transfers. At or after the Effective Time,
there will be no
transfers on the stock transfer books of either Surviving
Corporation of MT
Shares or MOC Shares which were outstanding immediately
prior to the
Effective Time.
4.5.7 No Liability. In the event that any Old MT
Certificate is
lost, stolen or destroyed, upon the making of an affidavit
of that fact by
the person claiming such Old MT Certificate to be lost,
stolen or destroyed
and, if required by the Surviving Corporations, the posting
by such person
of a bond in such reasonable amount as the Surviving
Corporations may
direct as indemnity against any claim that may be made
against it with
respect to such Old MT Certificate, the Surviving
Corporations will, in
exchange for such lost, stolen or destroyed Old MT
Certificates (and deemed
exchange of the related Old MOC Certificates), issue or
cause to be issued
the Santa Anita Shares and pay or cause to be paid the
amounts deliverable
in respect thereof pursuant to this Article IV. None of any
party hereto,
the Exchange Agent or either Surviving Corporation will be
liable to any
holder of MT Shares or MOC Shares for any cash, Santa Anita
Shares or other
property from the payment fund delivered to a public
official pursuant to
any applicable abandoned property, escheat or similar law.
4.5.8 Withholding Rights. The Surviving Corporations
will be
entitled to deduct and withhold from the consideration
otherwise payable
pursuant to this Agreement to any holder of MT Shares or MOC
Shares such
amounts as may be required to be deducted and withheld with
respect to the
making of such payment under the Code, or under any
provision of state or
local tax law. To the extent that amounts are so withheld
and paid over to
the appropriate taxing authority, such withheld amounts will
be treated for
all purposes of this Agreement as having been paid to the
holder of the MT
Shares in respect of which such deduction and withholding
was made.
4.5.9 Transfer Taxes. Except as provided above, the
Surviving
Corporations will pay or cause to be paid any transfer or
gains tax
(including, without limitation, any real property gains or
transfer tax)
imposed in connection with or as a result of the Mergers,
including any
such tax that is imposed on a shareholder of MT.
<PAGE>
4.5.10 Stock Options.
(a) As soon as practicable following the date of this
Agreement, the
MT Board (or, if appropriate, any committee administering
the Stock Plans
(as defined below)) shall adopt such resolutions or take
other actions as
may be required to effect the following:
(i) adjust the terms of all outstanding employee
stock options to
purchase MT Shares ("Employee Stock Options") granted
under MT's
equity incentive plans (collectively, the "Stock
Plans"), to provide
that, at the Effective Time, each Employee Stock Option
outstanding
immediately prior to the Effective Time shall be deemed
to constitute
an option to acquire, on the same terms and conditions
as were
applicable under such Employee Stock Option, the same
number of Realty
Shares as the holder of such Employee Stock Option
would have been
entitled to receive pursuant to the Realty Merger had
such holder
exercised such Employee Stock Option in full
immediately prior to the
Effective Time at a price per share equal to (y) the
aggregate
exercise price for the MT Shares otherwise purchasable
pursuant to
such Employee Stock Option divided by (z) the number of
Realty Common
Shares deemed purchasable pursuant to such Employee
Stock Option;
provided, however, that in the case of any option to
which Section 421
-------- -------
of the Code applies by reason of its qualification
under any of
Sections 422-424 of the Code ("qualified stock
options"), the option
price, the number of Realty Shares purchasable pursuant
to such option
and the terms and conditions of exercise of such option
shall be
determined in order to comply with Section 425(a) of
the Code; and
(ii) make such other changes to the Stock Plans as
it deems
appropriate to give effect to the Mergers (subject to
the approval of
Realty and Operating, which shall not be unreasonably
withheld).
No Employee Stock Options will be issued for Operating
Common Shares.
No Employee Stock Options granted pursuant to the Stock
Plans shall be
exercisable unless the holder submits evidence satisfactory
to Realty that,
at the then fair market value of an unpaired share of
Operating Common
Share as determined pursuant to the Pairing Agreement, a
number of
Operating Common Shares equal to the number of Realty Common
Shares to be
received upon exercise of all or a portion of the Employee
Stock Option
will, and are able to be, purchased by the holder, such that
upon exercise
the holder will acquire an equal number of Realty Common
Shares and
Operating Common Shares.
(b) As soon as practicable after the Effective
Time, Realty shall
deliver to the holders of Employee Stock Options appropriate
notices
setting forth such holders' rights pursuant to the
respective Stock Plans
and the agreements evidencing the grants of such Employee
Stock Options
shall continue in effect on the
<PAGE>
same terms and conditions (subject to the adjustments
required by this
Section 4.5.10 after giving effect to the Mergers). Realty
shall comply
with the terms of the Stock Plans and ensure, to the extent
required by,
and subject to the provisions of, such Stock Plans, that the
Employee Stock
Options which qualified as qualified stock options prior to
the Effective
Time continue to qualify as qualified stock options after
the Effective
Time.
(c) Realty and Operating shall take all corporate
action
necessary to reserve for issuance a sufficient number of
Realty Common
Shares for delivery upon exercise of the Employee Stock
Options and
Operating Common Shares for delivery upon purchase as
provided in clause
(a) above assumed in accordance with this Section 4.5.10.
The Surviving
Corporations shall use their reasonable best efforts to have
declared
effective as soon as practicable following the Effective
Time, a
registration statement on Form S-8 (or any successor or
other appropriate
form) with respect to the Santa Anita Shares subject to such
Employee Stock
Options and shall use their reasonable best efforts to
maintain the
effectiveness of such registration statement or registration
statements
(and maintain the current status of the prospectus or
prospectuses
contained therein) for so long as such Employee Stock
Options remain
outstanding. With respect to those individuals who
subsequent to the
Mergers will be subject to the reporting requirements under
Section 16(a)
of the Exchange Act, where applicable, the Surviving
Corporations shall
administer the Stock Plans assumed pursuant to this Section
4.5.10 in a
manner that complies with Rule 16b-3 promulgated under the
Exchange Act to
the extent the applicable Stock Plan complied with such rule
prior to the
Mergers.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1: REPRESENTATIONS AND WARRANTIES OF MT.
As an inducement to Realty and Operating to enter into this
Agreement and
to consummate the transactions contemplated hereby, MT represents
and warrants
to Realty and Operating and agrees as follows:
5.1.1 Organization of MT. MT is a business trust duly
organized,
validly existing and in good standing under the laws of the
Commonwealth of
Massachusetts. MT is duly qualified to transact business
and is in good
standing in each of the jurisdictions in which the ownership
or leasing of
the properties used in its business or the conduct of its
business requires
such qualification (each of which is listed in the MT
Disclosure Schedule),
other than in such jurisdictions where the failure to be so
qualified and
in good standing would not, individually or in the
aggregate, have a
Material Adverse Effect on MT. MT has all requisite power
and authority to
own or lease and operate its properties and to carry on its
business as now
conducted. MT has delivered to Realty and Operating
complete and correct
copies of the Restated
<PAGE>
Declaration of Trust and By-laws of MT (the "MT Charter") as
amended and in
effect on the date hereof. MT has no subsidiaries other
than as set forth
in the MT Disclosure Schedule.
5.1.2 Operating Subsidiaries and MOC. The MT
Disclosure Schedule
accurately and completely sets forth as to (a) each
subsidiary of MT which
is a corporation, its name, the jurisdiction of its
incorporation, the
number of shares of its capital stock of each class
outstanding and the
number of such outstanding shares owned by MT and its other
subsidiaries
and (b) as to each subsidiary of MT which is not a
corporation, its name,
the jurisdiction of its organization or formation and a
detailed
description of its capital structure which indicates the
direct or indirect
interest of MT in such subsidiary. Each of the subsidiaries
of MT and MOC
is a trust, corporation, limited liability company or
partnership duly
organized, validly existing and in good standing under the
laws of the
jurisdiction of its formation and has all requisite power
and authority to
own or lease and operate its properties, and to carry on its
business as
now conducted. All of the issued and outstanding shares of
capital stock
or other equity interests in each subsidiary of MT are
validly issued,
fully paid and nonassessable and owned beneficially by MT,
free and clear
of any liens or other encumbrances, and there are no
options, warrants or
other rights to acquire, or agreements or commitments
pursuant to which any
such subsidiary is obligated to issue, sell, purchase or
redeem shares of
capital stock or other equity interests in such subsidiary.
Immediately
prior to the Effective Time, all of the issued and
outstanding MOC Shares
will be validly issued, fully paid and nonassessable.
5.1.3 Capitalization. As of March 31, 1997, the
authorized capital
of MT consists of an unlimited number of shares of
beneficial interest
without par value (the "MT Shares"), of which 61,495,104 MT
Shares are
validly issued and outstanding and are fully paid and
nonassessable. As of
the date of this Agreement, MT has outstanding options to
purchase an
aggregate of 893,832 MT Shares (the "MT Options") pursuant
to option plans
of MT, and has made grants pursuant to which it is committed
to issue
36,103 MT Shares under its MT 1992 Equity Incentive Plan
(the "Stock Grant
Shares"). Except for the MT Options, the Stock Grant Shares
and the
convertible debt referred to in the audited balance sheet of
MT as of
December 31, 1996 referenced in Section 5.1.6 hereof, as of
the date of
this Agreement, there are no options, warrants or other
rights to acquire,
or agreements or commitments pursuant to which MT is
obligated to issue,
sell, purchase or redeem shares of capital stock of MT.
Immediately prior
to the Effective Time, the issued and outstanding capital of
MOC shall be
the same as MT.
5.1.4 Authority.
(a) Each of MT and MOC has full power and
authority to enter
into this Agreement and, subject to the approval by the
shareholders
of MT of the
<PAGE>
MT Shareholder Matters and of MOC of the MOC
Shareholder Matters, to
consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by
each of MT and
MOC of this Agreement and the consummation by each of
MT and MOC of
the transactions contemplated hereby have been duly
authorized by all
necessary action on the part of MT or MOC, as the case
may be, subject
to the approval by the shareholders of MT of the MT
Shareholder
Matters and by the shareholders of MOC of the MOC
Shareholder Matters.
This Agreement is the legal, valid and binding
agreement of each of MT
and MOC, enforceable against MT and MOC, respectively,
in accordance
with its terms.
(c) The execution or delivery by each of MT and
MOC of this
Agreement, and consummation of the transactions
contemplated hereby or
compliance with or fulfillment of the terms and
provisions hereof by
each of MT and MOC, will not (i) conflict with, result
in a breach of
the terms, conditions or provisions of, or constitute a
default, an
event of default or an event creating rights of
acceleration,
termination or cancellation or a loss of rights, or
result in the
creation or imposition of any encumbrance upon any of
the assets of
MT, MOC or any other subsidiary of MT, under the MT
Charter, the
Certificate of Incorporation or By-Laws of MOC (the
"MOC Charter") or
the charter documents of any of the other subsidiaries
of MT, or any
other instrument or agreement to which MT, MOC or any
other subsidiary
of MT is a party or any of its properties is subject or
by which it is
bound or any statute, other law or regulatory provision
affecting it,
(ii) require the approval, consent or authorization of,
or the making
of any declaration, filing or registration with, any
third party or
any foreign, federal, state or local court,
governmental authority or
regulatory body, by or on behalf of MT, MOC or any
other subsidiary of
MT, or (iii) adversely affect the qualification of MT
as a REIT,
except for (A) the filing of appropriate documents with
the SEC and
pursuant to the HSR Act, (B) approval by the
shareholders of MT of the
MT Shareholder Matters and by the shareholders of MOC
of the MOC
Shareholder Matters, (C) those matters set forth in the
MT Disclosure
Schedule, (D) filings with the Secretary of State of
the States of
Delaware and Massachusetts and (E) such conflicts,
breaches, defaults,
events, creations, impositions, approvals, consents,
declarations,
filings or authorizations which would not reasonably be
expected to
either (x) have a Material Adverse Effect on MT or (y)
prevent or
hinder the consummation of the transactions
contemplated hereby.
(d) At all times since 1985, MT has been and will
continue to be
organized and operated in conformity with the REIT
Requirements, and
its proposed method of operation, until the Realty
Merger occurs, will
enable it to continue to meet the REIT Requirements.
<PAGE>
5.1.5 Litigation. Except as disclosed in the MT
Disclosure Schedule
or in the MT SEC Documents, there are no actions, suits or
proceedings or
court orders or decrees pending, or, to the knowledge of MT,
threatened to
which MT, MOC or any subsidiary of MT is a party or any of
their respective
properties is subject or by which any of them is bound
before or by any
court or governmental agency, which if determined adversely
to the
interests of MT, MOC or any subsidiary of MT, would
reasonably be expected
to either (x) have a Material Adverse Effect on MT or (y)
prevent or hinder
the consummation of the transactions contemplated hereby.
5.1.6 Financial Statements. Prior to the execution of
this
Agreement, MT has delivered to Realty and Operating true and
complete
copies of the audited balance sheets of MT as of December
31, 1996, 1995
and 1994, and the related audited statements of operations,
shareholders'
equity and cash flows for each of the fiscal years then
ended, together
with a true and correct copy of the report on such audited
information by
Coopers & Lybrand L.L.P., and all letters from such
accountants with
respect to the results of such audits. Except as set forth
in the notes
thereto, all such financial statements were prepared in
accordance with
GAAP and fairly present the financial condition and results
of operations
of MT as of the respective dates thereof and for the
respective periods
covered thereby.
5.1.7 Absence of Changes. Except for the execution
and delivery of
this Agreement and the transactions to take place pursuant
hereto on the
Closing Date, since December 31, 1996, except as disclosed
in the MT
Disclosure Schedule, there has not been any material adverse
change, or any
event or development which, individually or together with
other such
events, could reasonably be expected to result in a Material
Adverse Effect
on MT.
5.1.8 No Undisclosed Liabilities. Except as reflected
or reserved
against in the balance sheet included in MT's audited
financial statements
for the year ended December 31, 1996 or in the notes thereto
or as
disclosed in the MT Disclosure Schedule, there are no
liabilities against,
relating to or affecting MT, MOC or any subsidiary of MT or
any of their
respective assets and properties, known, unknown, fixed or
contingent,
other than liabilities incurred in the ordinary course of
business
consistent with past practice and such other liabilities
which in the
aggregate would not reasonably be expected to result in a
Material Adverse
Effect on MT.
5.1.9 MT SEC Documents. MT has previously delivered
or made
available to Realty and Operating complete and correct
copies of all MT SEC
Documents. As of their respective dates, none of the MT SEC
Documents
contained any untrue statement of a material fact or omitted
to state a
material fact required to be stated therein or necessary to
make the
statements therein not misleading. MT has timely made all
filings required
under the Securities Act and the Exchange Act and, as of
their respective
dates, all such filings complied, in all material respects,
with the
requirements of the Securities Act and the Exchange Act, as
applicable.
<PAGE>
5.1.10 Certain Matters. Except as disclosed in the MT
Disclosure
Schedule, the MT SEC Documents, or in reports of consultants
or title
companies delivered to Realty and Operating prior to the
date of this
Agreement, there are no structural, mechanical, HVAC, zoning
or title
conditions relating to the real property of MT, MOC or any
subsidiary of MT
that would reasonably be expected, individually or in the
aggregate, to
have a Material Adverse Effect on MT.
5.1.11 Environmental Matters. Each of MT, MOC and
each subsidiary of
MT has obtained all licenses which are required in respect
of its business,
operations, assets and properties under applicable
environmental laws,
other than those which the failure to obtain would not
reasonably be
expected, individually or in the aggregate, to have a
Material Adverse
Effect on MT. Each of MT, MOC and each subsidiary of MT is
in compliance
with the terms and conditions of all such licenses and with
any applicable
environmental law, except those where the failure to be in
compliance would
not reasonably be expected, individually or in the
aggregate, to have a
Material Adverse Effect on MT.
5.1.12 Compliance with Laws and Orders. Except as
disclosed in the
MT Disclosure Schedule, none of MT, MOC or any of the
subsidiaries of MT is
in violation of or in default under any law or order
applicable to MT, MOC
or any subsidiary of MT or any of their respective assets
and properties,
which violation or default would reasonably be expected,
individually or in
the aggregate, to have a Material Adverse Effect on MT or
MOC.
5.1.13 Real Property. (a) As to the real property
which is owned by
MT, MOC, or to the best of MT's knowledge, any of the
subsidiaries of MT,
such entity has good and marketable title to such real
property, free and
clear of any liens or other encumbrances, except the liens
and encumbrances
disclosed in the MT Disclosure Schedule or which would not,
individually or
in the aggregate, have a Material Adverse Effect on MT.
(b) As to real property in which any of MT, MOC or
any of the
subsidiaries of MT has a leasehold interest, MT has a valid,
binding and
enforceable leasehold interest, free and clear of all liens
and
encumbrances, except for any liens or encumbrances disclosed
in the MT
Disclosure Schedule or which would not, individually or in
the aggregate,
have a Material Adverse Effect on MT.
(c) As to real property which is owned indirectly
by MT through
MT's interest in a joint venture, partnership or similar
ownership venture,
(i) MT has a good and valid interest in such joint venture,
partnership or
other entity, free and clear of all liens and encumbrances,
except for any
liens or encumbrances disclosed in the MT Disclosure
Schedule or which
would not, individually or in the aggregate, have a Material
Adverse Effect
on MT; and (ii) to the knowledge of MT, such joint venture,
partnership or
other entity has good and marketable title to such real
property, in the
case of owned real property, or a valid, binding and
enforceable
<PAGE>
leasehold interest in such real property, in the case of
leased real
property, in each case free and clear of all liens and
encumbrances, except
for any liens or encumbrances disclosed in the MT Disclosure
Schedule or
which would not, individually or in the aggregate, have a
Material Adverse
Effect on MT.
5.1.14 Indebtedness. Neither MT, MOC nor any of the
subsidiaries of
MT is in default or breach under any indebtedness of MT, MOC
or any of the
subsidiaries of MT, except where such default or breach,
individually or in
the aggregate, would not have a Material Adverse Effect on
MT or MOC.
5.1.15 No Finder. Neither MT nor any party acting on
behalf of MT
has paid or become obligated to pay any fee or commission to
any broker,
finder or intermediary for or on account of the transactions
contemplated
by this Agreement other than to Lazard Freres & Co. LLC
pursuant to a
letter agreement dated as of February 1, 1997.
5.1.16 Tax Matters.
(a) At all times since the initial public
offering of MT, MT has
been and will continue to be organized and operated in
conformity with
the REIT Requirements, and its proposed method of
operation will
enable it to continue to meet the REIT Requirements.
(b) The execution or delivery by MT of this
Agreement and the
consummation by MT of the transactions contemplated
hereby or
compliance with or fulfillment of the terms and
provisions hereof by
MT, will not adversely affect the qualification of MT
as a REIT, for
each taxable year ending on or after the date of this
Agreement.
(c) Each of MT, MOC and each subsidiary of MT has
timely,
completely and correctly filed all Federal, state and
local tax
returns and reports required to be filed by them, and
have timely paid
or made adequate provision for the payment of all
taxes, if any,
required to be paid with respect thereto, except where
the failure to
file or pay is not reasonably expected to have a
Material Adverse
Effect on MT. Except as set forth in the MT Disclosure
Schedule,
neither MT, MOC nor any of the subsidiaries of MT have
been audited or
examined by the IRS or any state or local taxing
authority and no
notice of any such audit has been received by MT, MOC
or any of the
subsidiaries of MT, nor have MT, MOC or any of the
subsidiaries of MT
extended any applicable statute of limitations for the
assessment or
collections of tax. No liens for taxes exist with
respect to any
assets or properties of MT, MOC or any of the
subsidiaries of MT,
except for statutory liens for taxes not yet due.
<PAGE>
(d) Each of MT, MOC and each subsidiary of MT has
complied with
all applicable laws, rules and regulations relating to
the payment and
withholding of taxes (including, without limitations,
withholding of
taxes pursuant to Sections 1441, 1442, 3121 and 3402 of
the Code or
similar provisions under any foreign federal laws or
any state or
local laws, domestic or foreign) and has, within the
time and the
manner prescribed by law, withheld from and paid over
to the proper
governmental authorities all amounts required to be so
withheld and
paid over under applicable laws, except where the
failure to pay or
withhold is not reasonably expected to have a Material
Adverse Effect
on MT.
5.1.17 Benefit Plans.
(a) Each "employee pension benefit plan" (as
defined in Section
3(2) of the Employee Retirement Income Security Act of
1974, as
amended ("ERISA")) (hereinafter a "Pension Plan"),
"employee welfare
benefit plan" (as defined in Section 3(1) of ERISA)
(hereinafter a
"Welfare Plan"), and other plan, arrangement or policy
(written or
oral) relating to stock options, stock purchases,
compensation,
deferred compensation, severance, fringe benefits or
other employee
benefits, in each case maintained or contributed to, or
required to be
maintained or contributed to, by MT, MOC or the
subsidiaries of MT for
the benefit of any present or former employee, officer
or director
(each of the foregoing, a "Benefit Plan") has been
administered in all
material respects in accordance with its terms. Each
of MT, MOC and
each subsidiary of MT and all their Benefit Plans are
in compliance
with the applicable provisions of ERISA, all other
applicable laws and
all applicable collective bargaining agreements, except
where the
failure to comply would not reasonably be expected to
have a Material
Adverse Effect on MT.
(b) None of MT or any Commonly Controlled Entity
has incurred any
liability to a Pension Plan under Title IV of ERISA
(other than for
contributions or liabilities under Section 412 of the
Code not yet
due) or to the Pension Benefit Guaranty Corporation
(other than for
payment of premiums not yet due) that, when aggregated
with other such
liabilities, would result in a material liability of
MT, which
liability has not been fully paid.
(c) No Commonly Controlled Entity has withdrawn
from any
"multiemployer plan" (as defined in Section 4001(a)(3)
of ERISA) where
such withdrawal has resulted or would result in any
material
"withdrawal liability" (within the meaning of Section
4201 of ERISA)
that has not been fully paid.
(d) Each Benefit Plan that is a Welfare Plan may
be amended or
terminated at any time after the Effective Time without
any material
increase in liability to the Surviving Corporations.
<PAGE>
(e) No employee of MT, MOC or any of the
subsidiaries of MT will
be entitled to any additional benefits or any
acceleration of the time
of payment or vesting of any benefits under any Benefit
Plan as a
result of the transactions contemplated by this
Agreement.
(f) Each such Benefit Plan intended to be
qualified under Section
401(a) of the Code has received a favorable
determination letter from
the IRS that covers the Tax Reform Act of 1986.
SECTION 5.2: REPRESENTATIONS AND WARRANTIES OF REALTY.
As an inducement to MT and MOC to enter into this Agreement
and to
consummate the transactions contemplated hereby, Realty
represents and warrants
to MT and MOC and agrees as follows:
5.2.1 Organization of Realty. Realty is a corporation
duly
organized, validly existing and in good standing under the
laws of the
State of Delaware. Realty is duly qualified to transact
business and is in
good standing in each of the jurisdictions in which the
ownership or
leasing of the properties used in its business or the
conduct of its
business requires such qualification (each of which is
listed in the Realty
Disclosure Schedule), other than in such jurisdictions where
the failure to
be so qualified and in good standing would not, individually
or in the
aggregate, have a Material Adverse Effect on Realty. Realty
has all
requisite corporate power and authority to own or lease and
operate its
properties and to carry on its business as now conducted.
Realty has
delivered to MT complete and correct copies of the
Certificate of
Incorporation (the "Realty Certificate") and by-laws (the
"Realty By-laws")
of Realty, in each case as amended and in effect on the date
hereof.
Realty has no subsidiaries, other than Santa Anita Realty
LLC, which has
not conducted, and conducts no business.
5.2.2 Capitalization. On the date hereof, the
authorized capital of
Realty consists of 6,000,000 shares of preferred stock, $.10
par value (the
"Realty Preferred Shares"), and 19,000,000 shares of common
stock, $.10 par
value (the "Realty Common Shares" and together with the
Realty Preferred
Shares, the "Realty Shares"), of which 867,343 Realty
Preferred Shares and
11,586,925 Realty Common Shares are validly issued and
outstanding and are
fully paid and nonassessable and of which none is reserved
for any purpose,
except those Realty Shares issuable upon exercise of the
Realty Options (as
defined below) and the Rights. As of the date of this
Agreement, Realty
has granted options to purchase an aggregate of 315,675
Realty Common
Shares (the "Realty Options") pursuant to option plans of
Realty. Except
for the Realty Options and the Rights, and except as
contemplated by this
Agreement or as disclosed in the Realty Disclosure Schedule,
as of the date
of this Agreement, there are no options, warrants or other
rights to
acquire, or agreements or commitments pursuant to which
Realty is obligated
to issue, sell, purchase or redeem shares of capital stock
of Realty.
59,291 restricted Realty Common Shares and options to
<PAGE>
purchase 470,000 Realty Common Shares have been issued
pursuant to
Operating's option plans. No restricted Santa Anita Shares
have been
issued pursuant to Realty's 1995 Share Award Plan. The
Acquired Shares and
the Unaffiliated Acquired Shares have been duly authorized
and, when issued
and paid for in accordance with the terms of this Agreement,
will be fully
paid and nonassessable Santa Anita Shares, not subject to
any preemptive
right.
5.2.3 Authority.
(a) Realty has full corporate power and authority
to enter into
this Agreement and, subject to the approval by the
shareholders of
Realty of the Realty Shareholder Matters, to consummate
the
transactions contemplated hereby.
(b) The execution, delivery and performance by
Realty of this
Agreement and the consummation by Realty of the
transactions
contemplated hereby have been duly authorized by all
necessary
corporate action on the part of Realty, subject to the
approval by the
shareholders of Realty of the Realty Shareholder
Matters. This
Agreement is the legal, valid and binding agreement of
Realty,
enforceable against Realty in accordance with its
terms.
(c) The execution or delivery by Realty of this
Agreement and
consummation of the transactions contemplated hereby or
compliance
with or fulfillment of the terms and provisions hereof
by Realty, will
not (i) conflict with, result in a breach of the terms,
conditions or
provisions of, or constitute a default, an event of
default or an
event creating rights of acceleration, termination or
cancellation or
a loss of rights, or result in the creation or
imposition of any
encumbrance upon any of the assets of Realty, under the
Realty
Certificate, the Realty By-laws, the Pairing Agreement
dated December
20, 1979 (the "Pairing Agreement") between Realty and
Operating, or
any other instrument or agreement to which Realty is a
party or any of
its properties is subject or by which it is bound or
any statute,
other law or regulatory provision affecting it, or (ii)
require the
approval, consent or authorization of, or the making of
any
declaration, filing or registration with, any third
party or any
foreign, federal, state or local court, governmental
authority or
regulatory body, by or on behalf of Realty, except, in
the case of
clauses (i) and (ii) above, for (A) the filing of
appropriate
documents with the SEC and pursuant to the HSR Act, (B)
approval by
the shareholders of Realty of the Realty Shareholder
Matters, (C)
those matters set forth in the Realty Disclosure
Schedule, (D) filings
with the Secretary of State of the State of Delaware
and (E) such
conflicts, breaches, defaults, events, creations,
impositions,
approvals, consents, declarations, filings or
authorizations which
would not reasonably be expected to either (x) have a
Material Adverse
Effect on Realty or (y) prevent or hinder the
consummation of the
transactions contemplated hereby.
<PAGE>
(d) The Board of Directors of Realty has taken all action
to exempt the
transactions contemplated by this Agreement from
Section 203 of the
DGCL, the Rights Agreement and Article Ninth of the
Realty
Certificate.
5.2.4 Litigation. Except as disclosed in the Realty
Disclosure
Schedule or in the Santa Anita SEC Documents, there are no
actions, suits
or proceedings or court orders, or decrees pending or, to
the knowledge of
Realty, threatened to which Realty is a party or any of its
properties is
subject or by which it is bound before or by any court or
governmental
agency, which if determined adversely to the interests of
Realty, would
reasonably be expected to either (x) have a Material Adverse
Effect on
Realty or (y) prevent or hinder the consummation of the
transactions
contemplated hereby.
5.2.5 Financial Statements. Except as referenced in
the Realty
Disclosure Schedule, (i) prior to the execution of this
Agreement, Realty
has delivered to MT true and complete copies of the audited
balance sheets
of Realty as of December 31, 1996, 1995 and 1994, and the
related audited
statements of operations, shareholders' equity and cash
flows for each of
the fiscal years then ended, together with a true and
correct copy of the
report on such audited information by Kenneth Leventhal & Co
(for the 1994
fiscal year) and Ernst & Young LLP (for the 1995 and 1996
fiscal years),
and all letters from such accountants with respect to the
results of such
audits; and (ii) except as set forth in the notes thereto,
all such
financial statements were prepared in accordance with GAAP
and fairly
present the financial condition and results of operations of
Realty as of
the respective dates thereof and for the respective periods
covered
thereby.
5.2.6 Absence of Changes. Except for the execution
and delivery of
this Agreement and the transactions to take place pursuant
hereto on the
Closing Date, since December 31, 1996, except as disclosed
in the Realty
Disclosure Schedule, there has not been any material adverse
change, or any
event or development which, individually or together with
other such
events, could reasonably be expected to result in a Material
Adverse Effect
on Realty.
5.2.7 No Undisclosed Liabilities. Except as reflected
or reserved
against in the balance sheet included in Realty's audited
financial
statements for the year ended December 31, 1996 or in the
notes thereto or
as disclosed in the Realty Disclosure Schedule, there are no
liabilities
against, relating to or affecting Realty or any of its
assets and
properties, known, unknown, fixed or contingent, other than
liabilities
incurred in the ordinary course of business consistent with
past practice
and such other liabilities which in the aggregate would not
reasonably be
expected to result in a Material Adverse Effect on Realty.
5.2.8 Santa Anita SEC Documents. Except as referenced
in the Realty
Disclosure Schedule, (i) Realty has previously delivered or
made available
to MT complete and correct copies of all Santa Anita SEC
Documents; (ii) as
of their
<PAGE>
respective dates, none of the Santa Anita SEC Documents
contained any
untrue statement of a material fact or omitted to state a
material fact
required to be stated therein or necessary to make the
statements therein
not misleading; and (iii) Realty has timely made all filings
required under
the Securities Act and the Exchange Act and, as of their
respective dates,
all such filings complied, in all material respects, with
the requirements
of the Securities Act and the Exchange Act, as applicable.
5.2.9 Certain Matters. Except as disclosed in the
Realty Disclosure
Schedule, the Santa Anita SEC Documents, or in reports of
consultants or
title companies delivered to MT prior to the date of this
Agreement, there
are no structural, mechanical, HVAC, zoning or title
conditions relating to
Realty's real property that would reasonably be expected,
individually or
in the aggregate, to have a Material Adverse Effect on
Realty.
5.2.10 Environmental Matters. Realty has obtained all
licenses which
are required in respect of its business, operations, assets
and properties
under applicable environmental laws other than those which
the failure to
obtain would not reasonably be expected, individually or in
the aggregate,
to have a Material Adverse Effect on Realty. Except as
disclosed in the
Realty Disclosure Schedule, Realty is in compliance with the
terms and
conditions of all such licenses and with any applicable
environmental law,
except those where the failure to be in compliance would not
reasonably be
expected, individually or in the aggregate, to have a
Material Adverse
Effect on Realty.
5.2.11 Compliance with Laws and Orders. Except as
disclosed in the
Realty Disclosure Schedule, Realty is not, nor has Realty at
any time
within the last five years been, in violation of or in
default under any
law or order applicable to Realty or any of its assets and
properties,
which violation or default would reasonably be expected,
individually or in
the aggregate, to have a Material Adverse Effect on Realty.
5.2.12 Real Property.
(a) As to real property which is owned by Realty,
Realty has good
and marketable title to such real property, free and
clear of any
liens or other encumbrances, except the liens and
encumbrances
disclosed in the Realty Disclosure Schedule or which
would not,
individually or in the aggregate, have a Material
Adverse Effect on
Realty.
(b) As to real property in which Realty has a
leasehold interest,
MT has a valid, binding and enforceable leasehold
interest, free and
clear of all liens and encumbrances, except for any
liens or
encumbrances disclosed in the Realty Disclosure
Schedule or which
would not, individually or in the aggregate, have a
Material Adverse
Effect on Realty.
<PAGE>
(c) As to real property which is owned indirectly
by Realty
through Realty's interest in a joint venture,
partnership or similar
ownership venture, (i) Realty has a good and valid
interest in such
joint venture, partnership or other entity, free and
clear of all
liens and encumbrances, except for any liens or
encumbrances disclosed
in the Realty Disclosure Schedule or which would not,
individually or
in the aggregate, have a Material Adverse Effect on
Realty; and (ii),
to the knowledge of Realty, such joint venture,
partnership or other
entity has good and marketable title to such real
property, in the
case of owned real property, or a valid, binding and
enforceable
leasehold interest in such real property, in the case
of leased real
property, free and clear of all liens and encumbrances,
except for any
liens or encumbrances disclosed in the Realty
Disclosure Schedule or
which would not, individually or in the aggregate, have
a Material
Adverse Effect on Realty.
5.2.13 Indebtedness. Except as disclosed in the
Realty Disclosure
Schedule, Realty is not in default or breach under any
indebtedness of
Realty, except where such default or breach, individually or
in the
aggregate, would not have a Material Adverse Effect on
Realty.
5.2.14 No Finder. Neither Realty nor any party acting
on behalf of
Realty has paid or become obligated to pay any fee or
commission to any
broker, finder or intermediary for or on account of the
transactions
contemplated by this Agreement other than to Morgan Stanley
& Co.
Incorporated pursuant to a letter agreement dated August 1,
1996.
5.2.15 Former Agreement. The Amended and Restated
Formation
Agreement, dated as of October 24, 1996, as amended as of
January 7, 1997,
among Operating, Realty and Colony Investors II, L.P.
("Colony") has been
terminated in accordance with its terms and Realty and
Operating have no
liabilities or obligations, contingent or otherwise, under
or arising out
of such agreement or the transactions contemplated thereby,
except for
obligations under the confidentiality provisions of such
agreement, certain
registration rights, certain limited rights of
indemnification and as
disclosed in the Realty Disclosure Schedule.
5.2.16 Tax Matters.
(a) At all times since January 1, 1980, Realty
has been and will
continue to be organized and operated in conformity
with the REIT
Requirements, and its proposed method of operation will
enable it to
continue to meet the REIT Requirements and to otherwise
preserve the
federal income tax status of its paired share status.
The Pairing
Agreement was duly and validly authorized and is a
valid and binding
agreement, enforceable against Realty in accordance
with its terms.
The Realty Shares are paired with the Operating Shares
pursuant to the
Pairing Agreement and such pairing is
<PAGE>
grandfathered from the application of Section
269B(a)(3) of the Code
pursuant to Section 136(c)(3) of the Deficit Reduction
Act of 1984.
(b) The execution or delivery by Realty of this
Agreement and the
consummation by Realty of the transactions contemplated
hereby or
compliance with or fulfillment of the terms and
provisions hereof by
Realty, will not (i) conflict with the private letter
rulings issued
by the IRS to Realty dated October 16, 1979 and January
11, 1980 (the
"Private Letter Rulings") or (ii) adversely affect the
qualification
of Realty as a REIT, for each taxable year ending on or
after the date
of this Agreement or adversely affect the ability of
Realty to retain
its status as grandfathered from the application of
Section 269B(a)(3)
of the Code pursuant to Section 136(c)(3) of the
Deficit Reduction Act
of 1984.
(c) Since January 1, 1980, Realty and Operating
have operated
consistent with the Private Letter Rulings and the IRS
has not revoked
or threatened to revoke the Private Letter Rulings.
(d) Except as disclosed in the Realty Disclosure
Schedule, Realty
has timely, completely and correctly filed all Federal,
state and
local tax returns and reports required to be filed by
them, and has
timely, paid or made adequate provision for the payment
of all taxes,
if any, required to be paid with respect thereto,
except where the
failure to file or pay is not reasonably expected to
have a Material
Adverse Effect on Realty. Except as set forth in the
Realty
Disclosure Schedule, neither Realty nor any of its
subsidiaries have
been audited or examined by the IRS or any state or
local taxing
authority and no notice of any such audit has been
received by Realty,
nor has Realty extended any applicable statute of
limitations for the
assessment or collections of tax. Except as disclosed
in the Realty
Disclosure Schedule, no liens for taxes exist with
respect to any
assets or properties of Realty or any of its
subsidiaries, except for
statutory liens for taxes not yet due.
(e) Realty has complied with all applicable laws,
rules and
regulations relating to the payment and withholding of
taxes
(including without limitations, withholding of taxes
pursuant to
Sections 1441, 1442, 3121 and 3402 of the Code or
similar provisions
under any foreign federal laws or any state or local
laws, domestic or
foreign) and has, within the time and the manner
prescribed by law,
withheld from and paid over to the proper governmental
authorities all
amounts required to be so withheld and paid over under
applicable
laws, except where the failure to pay or withhold is
not reasonably
expected to have a Material Adverse Effect on Realty.
<PAGE>
5.2.17 Benefit Plans.
(a) Each Pension Plan, Welfare Plan and other
plan, arrangement
or policy (written or oral) relating to stock options,
stock
purchases, compensation, deferred compensation,
severance, fringe
benefits or other employee benefits, in each case
maintained or
contributed to, or required to be maintained or
contributed to, by
Realty for the benefit of any present or former
employee, officer or
director (each of the foregoing, a "Benefit Plan") has
been
administered in all material respects in accordance
with its terms.
Realty and all their Benefit Plans are in compliance
with the
applicable provisions of ERISA, all other applicable
laws and all
applicable collective bargaining agreements, except
where the failure
to comply would not reasonably be expected to have a
Material Adverse
Effect on Realty.
(b) None of Realty or any Commonly Controlled
Entity has incurred
any liability to a Pension Plan under Title IV of ERISA
(other than
for contributions or liabilities under Section 412 of
the Code not yet
due) or to the Pension Benefit Guaranty Corporation
(other than for
payment of premiums not yet due) that, when aggregated
with other such
liabilities, would result in a material liability of
Realty, which
liability has not been fully paid.
(c) No Commonly Controlled Entity has withdrawn
from any
"multiemployer plan" (as defined in Section 4001(a)(3)
of ERISA) where
such withdrawal has resulted or would result in any
material
"withdrawal liability" (within the meaning of Section
4201 of ERISA)
that has not been fully paid.
(d) Each Benefit Plan that is a Welfare Plan may
be amended or
terminated at any time after the Effective Time without
any material
increase in liability to the Surviving Corporations.
(e) Except as set forth in the Realty Disclosure
Schedule, no
employee of Realty or any of its subsidiaries will be
entitled to any
additional benefits or any acceleration of the time of
payment or
vesting of any benefits under any Benefit Plan as a
result of the
transactions contemplated by this Agreement.
(f) Each such Benefit Plan intended to qualify
under Section
401(a) of the Code has received a favorable
determination letter from
the IRS that covers the Tax Reform Act of 1986.
5.2.18 Hahn Agreement. Realty has entered into a
Memorandum of
Agreement, dated as of January 27, 1997 (the "Memorandum"),
with TrizecHahn
Centers, Inc. ("Hahn"), pursuant to which Realty and Hahn
have agreed (i)
to cooperate to obtain the agreement of The Mitsubishi Bank,
Limited to
release Realty from the Santa Anita Repayment Guaranty (as
defined in the
Memorandum) and (iii)
<PAGE>
that Hahn will, subject to the full and faithful performance
by Realty of
its obligations under the Memorandum, defend, indemnify and
hold Realty
harmless from and against any and all claims, demands,
damages, losses,
liabilities, costs and expenses, including reasonable
attorneys' and
consultant fees, arising out of or in connection with any
liability under
the Santa Anita Repayment Guaranty). To the knowledge of
Realty, Hahn has
a net worth in excess of $500 million.
SECTION 5.3 REPRESENTATIONS AND WARRANTIES OF OPERATING.
As an inducement to MT and MOC to enter into this Agreement
and to
consummate the transactions contemplated hereby, Operating
represents and
warrants to MT and MOC and agrees as follows:
5.3.1 Organization of Operating. Operating is a
corporation duly
incorporated, validly existing and in good standing under
the laws of the
State of Delaware. Operating and its subsidiaries are each
duly qualified
to transact business and are each in good standing in each
of the
jurisdictions in which the ownership or leasing of the
properties used in
its business or the conduct of its business requires such
qualification
(each of which is listed in the Operating Disclosure
Schedule), other than
in such jurisdictions where the failure to be so qualified
and in good
standing would not, individually or in the aggregate, have a
Material
Adverse Effect on Operating. Operating has all requisite
corporate power
and authority to own or lease and operate its properties and
to carry on
its business as now conducted. Operating has delivered to
MT complete and
correct copies of the Certificate of Incorporation (the
"Operating
Certificate") and by-laws (the "Operating By-laws") of
Operating, in each
case as amended and in effect on the date hereof.
5.3.2 Operating Subsidiaries. The Operating
Disclosure Schedule
accurately and completely sets forth as to (a) each
subsidiary of Operating
which is a corporation, its name, the jurisdiction of its
incorporation,
the number of shares of its capital stock of each class
outstanding and the
number of such outstanding shares owned by Operating and its
other
subsidiaries and (b) as to each subsidiary of Operating
which is not a
corporation, its name, the jurisdiction of its organization
or formation
and a detailed description of its capital structure which
indicates the
direct or indirect interest of Operating in such subsidiary.
Each
subsidiary of Operating is a trust, corporation, limited
liability company
or partnership duly organized, validly existing and in good
standing under
the laws of the jurisdiction of its formation and has all
requisite power
and authority to own or lease and operate its properties,
and to carry on
its business as now conducted. All of the issued and
outstanding shares of
capital stock or other equity interests in each subsidiary
of Operating are
validly issued, fully paid and nonassessable and owned
beneficially by
Operating, free and clear of any liens or other
encumbrances, and there are
no options, warrants or other rights to acquire, or
agreements or
commitments pursuant to which any such subsidiary is
obligated to issue,
sell, purchase or redeem shares of capital stock or other
equity interests
in such subsidiary.
<PAGE>
5.3.3 Capitalization. On the date hereof, the
authorized capital of
Operating consists of 6,000,000 shares of preferred stock,
$.10 par value
(the "Operating Preferred Shares"), and 19,000,000 shares of
common stock,
$.10 par value (the "Operating Common Shares" and together
with the
Operating Preferred Shares, the "Operating Shares"), of
which 867,343
Operating Preferred Shares and 11,496,225 Operating Common
Shares are
validly issued and outstanding and are fully paid and
nonassessable and of
which none is reserved for any purpose, except those
Operating Shares
issuable upon exercise of the Operating Options (as
hereinafter defined).
Operating has granted options to purchase an aggregate of
470,000 Operating
Common Shares (the "Operating Options") pursuant to option
plans of
Operating. Except for the Operating Options, and except as
contemplated by
this Agreement or as disclosed in the Operating Disclosure
Schedule, there
are no options, warrants or other rights to acquire, or
agreements or
commitments pursuant to which Operating is obligated to
issue, sell,
purchase or redeem shares of capital stock of Operating.
59,291 restricted
Operating Common Shares have been issued pursuant to
Operating's 1995 Share
Award Plan. The Acquired Shares and the Unaffiliated
Acquired Shares have
been duly authorized and when issued and paid for in
accordance with the
terms of this Agreement, will be fully paid and
nonassessable Santa Anita
Shares, not subject to any preemptive right.
5.3.4 Authority.
(a) Operating has full corporate power and
authority to enter
into this Agreement and, subject to the approval by the
shareholders
of Operating of the Operating Shareholder Matters, to
consummate the
transactions contemplated hereby.
(b) The execution, delivery and performance by
Operating of this
Agreement and the consummation by Operating of the
transactions
contemplated hereby have been duly authorized by all
necessary
corporate action on the part of Operating, subject to
the approval by
the shareholders of Operating of the Operating
Shareholder Matters.
This Agreement is the legal, valid and binding
agreement of Operating,
enforceable against Operating in accordance with its
respective terms.
(c) The execution or delivery by Operating of
this Agreement and
consummation of the transactions contemplated hereby or
compliance
with or fulfillment of the terms and provisions hereof
by Operating,
will not (i) conflict with, result in a breach of the
terms,
conditions or provisions of, or constitute a default,
an event of
default or an event creating rights of acceleration,
termination or
cancellation or a loss of rights, or result in the
creation or
imposition of any encumbrance upon any of the assets of
Operating or
any of its subsidiaries, under the Operating
Certificate, the
Operating By-laws, the organizational documents of any
subsidiary of
Operating, the Pairing Agreement or any other
instrument or agreement
to which Operating or any of
<PAGE>
its subsidiaries is a party or any of their respective
properties is
subject or by which any of them is bound or any
statute, other law or
regulatory provision affecting any of them, or (ii)
require the
approval, consent or authorization of, or the making of
any
declaration, filing or registration with, any third
party or any
foreign, federal, state or local court, governmental
authority or
regulatory body, by or on behalf of Operating or any of
its
subsidiaries, except for (A) the filing of appropriate
documents with
the SEC and pursuant to the HSR Act, (B) approval by
the shareholders
of Operating of the Operating Shareholder Matters, (C)
those matters
set forth in the Operating Disclosure Schedule (D)
filings with the
Secretary of State of Delaware and (E) such conflicts,
breaches,
defaults, events, creations, impositions, approvals,
consents,
declarations, filings or authorizations, which would
not reasonably be
expected to either (x) have a Material Adverse Effect
on Operating or
(y) prevent or hinder the consummation of the
transactions
contemplated hereby.
(d) The Pairing Agreement is duly and validly
authorized and is
a valid and binding agreement, enforceable against
Operating in
accordance with its terms. The Operating Shares are
paired with the
Realty Shares pursuant to the Pairing Agreement and
Section 136(c)(3)
of the Deficit Reduction Act of 1984; such pairing does
not cause the
activities of Operating to be attributed to Realty as
provided in
Section 269B(a)(3) of the Code.
(e) The Board of Directors of Operating has taken
all action to
exempt the transactions contemplated by this Agreement
from Section
203 of the DGCL, the Rights Agreement and Article Ninth
of the
Operating Certificate.
5.3.5 Litigation. Except as disclosed in the
Operating Disclosure
Schedule or in the Santa Anita SEC Documents, there are no
actions, suits
or proceedings or court orders or decrees pending, or, to
the knowledge of
Operating, threatened to which Operating or its subsidiaries
is a party or
any of its properties is subject or by which it is bound
before or by any
court or governmental agency, which if determined adversely
to the
interests of Operating or its subsidiaries, would reasonably
be expected to
either (x) have a Material Adverse Effect on Operating or
(y) prevent or
hinder the consummation of the transactions contemplated
hereby.
5.3.6 Financial Statements. Prior to the execution of
this
Agreement, Operating has delivered to MT true and complete
copies of the
audited consolidated balance sheets of Operating and its
subsidiaries as of
December 31, 1996, 1995 and 1994, and the related audited
consolidated
statements of operations, shareholders' equity and cash
flows for each of
the fiscal years then ended, together with a true and
correct copy of the
report on such audited information by Kenneth Leventhal &
Co. (for the 1994
fiscal year) and Ernst & Young LLP (for the 1995 and 1996
fiscal years),
and all letters from such accountants with respect to the
results of such
audits. Except as set forth in the notes thereto, all such
financial
statements were prepared in accordance with GAAP and fairly
present the
consolidated financial condition and
<PAGE>
results of operations of Operating and its consolidated
subsidiaries as of
the respective dates thereof and for the respective periods
covered
thereby.
5.3.7 Absence of Changes. Except for the execution
and delivery of
this Agreement and the transactions to take place pursuant
hereto on the
Closing Date, and except as disclosed in the Operating
Disclosure Schedule,
since December 31, 1996, there has not been any material
adverse change, or
any event or development which, individually or together
with other such
events, could reasonably be expected to result in a Material
Adverse Effect
on Operating.
5.3.8 No Undisclosed Liabilities. Except as reflected
or reserved
against in the consolidated balance sheet included in
Operating's audited
financial statements for the year ended December 31, 1996 or
in the notes
thereto or as disclosed in the Operating Disclosure
Schedule, there are no
liabilities against, relating to or affecting Operating or
any of its
subsidiaries or any of its assets and properties, known,
unknown, fixed or
contingent, other than liabilities incurred in the ordinary
course of
business consistent with past practice and such other
liabilities which in
the aggregate would not reasonably be expected to result in
a Material
Adverse Effect on Operating.
5.3.9 Santa Anita SEC Documents. Except as referenced
in the
Operating Disclosure Schedule, (i) Operating has previously
delivered or
made available to MT complete and correct copies of the
Santa Anita SEC
Documents; (ii) as of their respective dates, none of the
Santa Anita SEC
Documents contained any untrue statement of a material fact
or omitted to
state a material fact required to be stated therein or
necessary to make
the statements therein not misleading; and (iii) Operating
has timely made
all filings required under the Securities Act and the
Exchange Act and, as
of their respective dates, all such filings complied, in all
material
respects, with the requirements of the Securities Act and
the Exchange Act,
as applicable.
5.3.10 Certain Matters. Except as disclosed in the
Santa Anita SEC
Documents, the Operating Disclosure Schedule or in reports
of consultants
or title companies delivered to MT prior to the date of this
Agreement,
there are no structural, mechanical, HVAC, zoning or title
conditions
relating to real property of Operating or any of its
subsidiaries would
reasonably be expected, individually or in the aggregate, to
have a
Material Adverse Effect on Operating.
5.3.11 Environmental Matters. Each of Operating and
its subsidiaries
has obtained all licenses which are required in respect of
its business,
operations, assets and properties under applicable
environmental laws other
than those which the failure to obtain would not reasonably
be expected,
individually or in the aggregate, to have a Material Adverse
Effect on
Operating. Except as disclosed in the Operating Disclosure
Schedule, each
of Operating and its subsidiaries is in compliance with the
terms and
conditions of all such licenses and with any applicable
environmental law,
except those where the failure to be in compliance would not
reasonably be
expected, individually or in the aggregate, to have a
Material Adverse
Effect on Operating.
<PAGE>
5.3.12 Compliance with Laws and Orders. Except as
disclosed in the
Operating Disclosure Schedule, none of Operating and its
subsidiaries is,
nor has any of Operating and its subsidiaries at any time
within the last
five years been, in violation of or in default under any law
or order
including, without limitation, the California Horse Racing
Board applicable
to Operating and its subsidiaries or any of their assets and
properties,
which violations or default would reasonably be expected,
individually or
in the aggregate, to have a Material Adverse Effect on
Operating.
5.3.13 Real Property
(a) As to real property which is owned to the best
of its
knowledge, by Operating or by any of its subsidiaries,
good and
marketable title to the real property, free and clear
of any liens or
other encumbrances, except the liens and encumbrances
disclosed in the
Operating Disclosure Schedule or which would not
individually or in
the aggregate, have a Material Adverse Effect on
Operating.
(b) As to real property in which Operating or any
of its
subsidiaries has a leasehold interest, Operating or
such subsidiary
has a valid, binding and enforceable leasehold
interest, free and
clear of any liens or other encumbrances except the
liens and
encumbrances disclosed in the Operating Disclosure
Schedule or which
would not, individually or in the aggregate, have a
Material Adverse
Effect on Operating.
(c) As to real property which is owned indirectly
by Operating or
any of its subsidiaries, through Operating's or any of
its
subsidiaries' interest in a joint venture, partnership
or similar
ownership venture, (i) Operating or its subsidiaries,
as the case may
be, has a good and valid interest in such joint
venture, partnership
or other entity free and clear of any liens or other
encumbrances; and
(ii), to the knowledge of Operating such joint venture,
partnership or
other entity has good and marketable title to such real
property, in
the case of owned real property, or a valid, binding
and enforceable
leasehold interest in such real property, in the case
of leased real
property, free and clear of any liens or other
encumbrances, except
the liens and encumbrances disclosed in the Operating
Disclosure
Schedule or which would not, individually or in the
aggregate, have a
Material Adverse Effect on Operating.
5.3.14 Indebtedness. Neither Operating nor any of its
subsidiaries
is in default or breach under any indebtedness of Operating
or any of its
subsidiaries, except where such default or breach,
individually or in the
aggregate, would not have a Material Adverse Effect on
Operating.
5.3.15 No Finder. Neither Operating nor any party
acting on behalf
of Operating has paid or become obligated to pay any fee or
commission to
any broker,
<PAGE>
finder or intermediary for or on account of the transactions
contemplated
by this Agreement, other than to Morgan Stanley & Co.
Incorporated pursuant
to a letter agreement dated August 1, 1996.
5.3.16 Former Agreement. The Amended and Restated
Formation
Agreement, dated as of October 24, 1996, as amended as of
January 7, 1997,
among Operating, Realty and Colony has been terminated in
accordance with
its terms and Realty and Operating have no liabilities or
obligations,
contingent or otherwise, under or arising out of such
agreement or the
transactions contemplated thereby, except for obligations
under the
confidentiality provisions of such agreement, certain
registration rights,
certain limited rights of indemnification and as disclosed
in the Operating
Disclosure Schedule.
5.3.17 Tax Matters.
(a) Operating and its subsidiaries have timely,
completely and
correctly filed all Federal, state and local tax
returns and reports
required to be filed by them, and have timely paid or
made adequate
provision for the payment of all taxes, if any,
required to be paid
with respect thereto, except where the failure to file
or pay is not
reasonably expected to have a Material Adverse Effect
on Operating.
Except as set forth in the Operating Disclosure
Schedule, neither
Operating nor any of its subsidiaries have been audited
or examined by
the IRS or any state or local taxing authority and no
notice of any
such audit has been received by Operating or any of its
subsidiaries,
nor have Operating or any of its subsidiaries extended
any applicable
statute of limitations for the assessment or
collections of tax. No
liens for taxes exist with respect to any assets or
properties of
Operating or any of its subsidiaries, except for
statutory liens for
taxes not yet due.
(b) Operating and each of its subsidiaries has
complied with all
applicable laws, rules and regulations relating to the
payment and
withholding of taxes (including, without limitations,
withholding of
taxes pursuant to Sections 1441, 1442, 3121 and 3402 of
the Code or
similar provisions under any foreign federal laws or
any state or
local laws, domestic or foreign) and has, within the
time and the
manner prescribed by law, withheld from and paid over
to the proper
governmental authorities all amounts required to be so
withheld and
paid over under applicable laws, except where the
failure to pay or
withhold is not reasonably expected to have a Material
Adverse Effect
on Operating.
5.3.18 Benefit Plans.
(a) Each Pension Plan, Welfare Plan and other
plan, arrangement
or policy (written or oral) relating to stock options,
stock
purchases, compensation, deferred compensation,
severance, fringe
benefits or other
<PAGE>
employee benefits, in each case maintained or
contributed to, or
required to be maintained or contributed to, by
Operating or its
subsidiaries for the benefit of any present or former
employee,
officer or director (each of the foregoing, a "Benefit
Plan") has been
administered in all material respects in accordance
with its terms.
Operating and its subsidiaries and all their Benefit
Plans are in
compliance with the applicable provisions of ERISA, all
other
applicable laws and all applicable collective
bargaining agreements,
except where the failure to comply would not reasonably
be expected to
have a Material Adverse Effect on Operating.
(b) None of Operating or any Commonly Controlled
Entity has
incurred any liability to a Pension Plan under Title IV
of ERISA
(other than for contributions or liabilities under
Section 412 of the
Code not yet due) or to the Pension Benefit Guaranty
Corporation
(other than for payment of premiums not yet due) that,
when aggregated
with other such liabilities, would result in a material
liability of
Operating, which liability has not been fully paid.
(c) No Commonly Controlled Entity has withdrawn
from any
"multiemployer plan" (as defined in Section 4001(a)(3)
of ERISA) where
such withdrawal has resulted or would result in any
material
"withdrawal liability" (within the meaning of Section
4201 of ERISA)
that has not been fully paid.
(d) Each Benefit Plan that is a Welfare Plan may
be amended or
terminated at any time after the Effective Time without
any material
increase in liability to the Surviving Corporations.
(e) Except as set forth in the Operating
Disclosure Schedule, no
employee of Operating or any of its subsidiaries will
be entitled to
any additional benefits or any acceleration of the time
of payment or
vesting of any benefits under any Benefit Plan as a
result of the
transactions contemplated by this Agreement.
(f) Each such Benefit Plan intended to be
qualified under Section
401(a) of the Code has received a favorable
determination letter from
the IRS that covers the Tax Reform Act of 1986.
ARTICLE VI
COVENANTS
SECTION 6.1: CONDUCT PENDING THE CLOSING. Each of MT,
MOC, Realty and
Operating covenants and agrees as to itself and its subsidiaries
that, from and
after the date hereof until the Effective Time, except insofar as
the other
party shall otherwise consent or except as otherwise contemplated
by this
Agreement or its Disclosure Schedule:
<PAGE>
6.1.1 Taking into account any operational matters that may
arise that are
primarily attributable to the pendency of the
Reorganization, it will use
reasonable best efforts such that the business of it and its
subsidiaries
will be conducted only in the ordinary and usual course
consistent with
past practice and existing business plans and, to the extent
consistent
therewith, it and its subsidiaries will use all reasonable
efforts to
preserve their business organization intact and maintain
their existing
relations with customers, suppliers, employees and business
associates.
6.1.2 Neither Realty nor MT shall take any action or
omit to take any
action that would cause Realty or MT to be disqualified as a
REIT or which
would result in a loss of Realty's status as grandfathered
from the
application of Section 269B(a)(3) of the Code pursuant to
Section 136(c)(3)
of the Deficit Reduction Act of 1984 or other failure to
meet the REIT
Requirements.
6.1.3 Neither Realty nor Operating shall, and
Operating shall cause
the subsidiaries it controls not to, without the prior
written consent of
MT, which shall not be unreasonably withheld,
(a) voluntarily sell, transfer or dispose of any
real property of
Realty or of Operating;
(b) incur any debt or lease obligations or
purchase money
financing obligations, other than, in each case, in the
ordinary course of
business consistent with past practice (for example, trade
payables);
(c) acquire any additional real estate or other
assets (other
than receipt of cash or investments of cash in
cash-equivalents in
connection with permitted sales of assets);
(d) adopt or propose any change in their
respective certificates
of incorporation or any material change in their respective
bylaws;
(e) subject to the provisions of Section 6.2,
adopt, or permit
any of their respective subsidiaries to adopt, a plan or
agreement of
complete or partial liquidation, dissolution, merger,
consolidation,
restructuring, recapitalization or other material
reorganization of
Operating, Realty or any of their respective subsidiaries
(other than a
liquidation or dissolution of any subsidiary or a merger or
consolidation
between wholly owned subsidiaries);
(f) redeem, purchase or otherwise acquire directly
or indirectly
any of Operating's or Realty's capital stock;
(g) (i) grant any severance or termination pay to
any director,
officer or employee, (ii) enter into any employment,
deferred compensation
or other similar agreement (or any amendment to any such
existing
agreement) with any
<PAGE>
director, officer or employee, (iii) increase benefits
payable under any
existing severance or termination pay policies or employment
agreements or
(iv) increase compensation, bonus or other benefits payable
to directors,
officers or employees other than, in the case of clause (iv)
only,
increases in compensation, bonus or other benefits payable
to employees in
the ordinary course of business consistent with past
practice or merit
increases in salaries of employees at regularly scheduled
times in
customary amounts consistent with past practices;
(h) issue or enter into any executory agreement to
issue any new
equity securities other than (A) Santa Anita Shares issued
in replacement
of lost, stolen or transferred outstanding shares, (B) Santa
Anita Shares
to be issued upon exercise of options or warrants
outstanding, (C) Santa
Anita Shares to be issued upon exchange of Santa Anita
Preferred Shares,
(D) Santa Anita Shares to be issued pursuant to the Rights
Agreement, or
(E) as otherwise contemplated by this Agreement;
(i) declare and pay any dividends or make other
distributions to
holders of Realty Shares in excess of $.20 per Realty Share
per quarter or
such additional dividends as are otherwise necessary for
Realty to satisfy
the REIT Requirements, or repay indebtedness except for
scheduled
repayments pursuant to the terms of such indebtedness;
(j) amend or terminate the Rights Agreement unless
advised by
outside counsel that such amendment or termination could
reasonably be
required by the fiduciary duties of its Board of Directors;
or
(k) agree, or permit any subsidiary to agree, or
commit to do any
of the foregoing.
6.1.4 MT shall not, without the prior written consent
of Realty and
Operating, which shall not be unreasonably withheld,
(a) issue any MT Shares at a price materially less
than
prevailing market prices, except for MT Shares issued
pursuant to
existing contractual obligations or pursuant to
employee benefit
plans; and
(b) increase its quarterly dividends to holders of
MT Shares by
more than $.0075 per MT Share per quarter or by such
additional amount
as is otherwise necessary for MT to satisfy the REIT
Requirements.
SECTION 6.2: ACQUISITION PROPOSALS. (a) From the date of
this Agreement
until the Closing Date, neither Realty nor Operating nor any of
their respective
subsidiaries will, and each of Realty and Operating will use
their best efforts
to cause their respective directors and any other persons acting,
or purporting
to act, on their behalf (including, but not limited to, their
officers,
employees, investment bankers, financial advisors, attorneys or
accountants)
<PAGE>
not to, initiate any contact with, solicit, encourage or enter
into or continue
any discussions, negotiations, understandings or agreements with,
anyone other
than MT (a "Third Party") with respect to, or furnish or disclose
any non-public
information regarding Realty, Operating or their subsidiaries, to
any Third
Party in connection with, any Competing Transaction Proposal.
Notwithstanding
the foregoing, to the extent the Realty Board and the Operating
Board could
reasonably be required by their fiduciary duties as determined in
good faith on
the written advice of outside counsel to Realty and Operating, to
take the
following steps at any time prior to approval by the Realty
shareholders of the
Realty Shareholder Matters and approval by the Operating
shareholders of the
Operating Shareholder Matters, (i) Realty and Operating may, in
response to an
unsolicited request, furnish non-public information with respect
to Realty and
Operating or their subsidiaries to any Third Party pursuant to a
customary
confidentiality and standstill agreement and discuss that
information (but not a
Competing Transaction Proposal) with the Third Party and (ii)
upon receipt by
Realty or Operating of a Competing Transaction Proposal from a
Third Party, if
each of the Realty Board and the Operating Board has reasonably
determined that
the transaction contemplated by the Competing Transaction
Proposal, if
consummated, would constitute an Alternative Transaction, then
Realty and
Operating may participate in discussions and negotiations with
the Third Party
regarding the Competing Transaction Proposal.
(b) At least five business days prior to entering into
definitive
agreements with respect to an Alternative Transaction, Realty and
Operating will
deliver an Alternative Transaction Notice to MT advising it of
the determination
by the Realty Board and the Operating Board that the transaction
contemplated by
the Competing Transaction Proposal would constitute an
Alternative Transaction,
which notice will include a summary of the Alternative
Transaction. During such
five business day period, MT may propose an improved transaction
to Realty and
Operating.
(c) If prior to the approval by the shareholders of
Realty of the
Realty Shareholder Matters and approval by the shareholders of
Operating of the
Operating Shareholder Matters (i) Realty and Operating have
delivered an
Alternative Transaction Notice to MT in accordance with Section
6.2(b), (ii) the
terms of the Alternative Transaction are not modified in a manner
adverse to
Realty or Operating and (iii) Realty and Operating have paid the
Termination Fee
to MT and reimbursed MT's Transaction Expenses, then Realty and
Operating may
terminate this Agreement and enter into an agreement with a
Qualified Third
Party with respect to the Alternative Transaction described in
the Alternative
Transaction Notice that Realty and Operating gave to MT. A
"Qualified Third
Party" means a Third Party which the Board of Directors of Realty
and Operating
reasonably determine has the financial ability (including, to the
extent
external financing will be required, binding commitments for that
financing) to
complete an Alternative Transaction.
(d) Neither Realty nor Operating will modify, or
release any third
party from, any confidentiality or standstill agreement to which
either of them
is a party.
SECTION 6.3: INFORMATION SUPPLIED. Each of the parties
hereto agrees
that none of the information supplied or to be supplied by it for
inclusion or
incorporation by reference in
<PAGE>
any registration statement, proxy statement or Schedule 14A, or
any amendment or
supplement thereto, will, in the case of a registration
statement, at the time
such registration statement and each amendment and supplement
thereto becomes
effective under the Securities Act, or, in the case of a proxy
statement or
Schedule 14A, at the time such proxy statement or Schedule 14A
and each
amendment and supplement thereto is filed with the SEC or mailed
to shareholders
and at the time of the applicable meeting, contain any untrue
statement of a
material fact or omit to state any material fact required to be
stated therein
or necessary in order to make the statements therein not
misleading.
SECTION 6.4: SHAREHOLDER APPROVALS; REGISTRATION
STATEMENT.
6.4.1 Registration Statement. Realty, Operating, MT
and MOC shall
prepare and file with the SEC the Registration Statement
registering the
issuance of the Santa Anita Shares to MT's and MOC's
shareholders, which
shall include a joint proxy statement to solicit proxies in
connection with
the meetings of the shareholders of each of Realty,
Operating, MT and MOC
referred to in Section 6.4.2 (the form of such joint proxy
statement,
together with any amendments thereof or supplements thereto,
mailed to the
shareholders of each of Realty, Operating, MT and MOC in
connection with
such meetings is referred to herein as the "Proxy
Statement").
6.4.2 Shareholder Meetings. Subject to the second
succeeding
sentence, each of Realty, Operating, MT and MOC agrees to
take, in
accordance with applicable law and its Certificate of
Incorporation and By-
laws or Charter, all action necessary to convene a meeting
of its
respective shareholders, as promptly as practicable after
the Proxy
Statement is cleared by the SEC, to consider and vote upon
the approval of
the transactions contemplated hereby. Subject to the next
succeeding
sentence, each of the Realty Board, the Operating Board, the
MT Board and
the Board of Directors of MOC shall recommend such adoption
and approval
and shall take all lawful action to solicit such approval by
shareholders.
Each of the Realty Board or the Operating Board may fail to
take action
necessary to convene a meeting of its shareholders or make
such a
recommendation, or withdraw, modify, or change any such
recommendation, or
recommend any other offer or proposal, only if Realty and
Operating have
complied with Section 6.2(a) and an Alternative Transaction
is pending at
the time the Realty Board and Operating Board make such
determination;
provided that no such failure to convene a meeting or to
recommend, or no
such withdrawal, modification or change of any such
recommendation or
recommendation of any other offer or proposal shall be made
unless (a)
Realty and Operating shall have delivered to MT at least 48
hours written
notice advising MT that the Boards of Realty and Operating
have received a
proposal for an Alternative Transaction and identifying the
person or
persons making such proposal and (b) such Board, based on
the written
opinion of its outside counsel, has determined that
convening such a
meeting, making such recommendation, or the failure to
recommend any other
offer or proposal, or the failure to so withdraw, modify, or
change its
recommendation, or the failure to recommend any other offer
or proposal,
could reasonably be deemed to cause the members of such
board to breach
their fiduciary duties under applicable
<PAGE>
law. In such event, notwithstanding anything contained in
this Agreement
to the contrary, any such failure to convene such a meeting,
failure to
recommend, withdrawal, modification, or change of
recommendation or
recommendation of such other offer or proposal, or the
entering by Realty
and Operating into an agreement with respect to an
Alternative Transaction
in accordance with Section 6.2, shall not constitute a
breach of this
Agreement by Realty and Operating. Neither MT nor MOC shall
be required to
convene its shareholder meeting if Realty and Operating do
not convene
their respective shareholder meetings as described in this
Section 6.4.2.
SECTION 6.5: OTHER ACTIONS.
6.5.1 Each party hereto shall cooperate with the other
parties
hereto, subject to the terms and conditions set forth
herein, use its
reasonable best efforts promptly to prepare and file all
necessary
documentation, to effect all necessary applications,
notices, petitions,
filings and other documents, and to obtain as promptly as
practicable all
necessary permits, consents, orders, approvals and
authorizations of, or
any exemption by, all third parties and Governmental
Entities necessary or
advisable to consummate the transactions contemplated
hereby. Each party
shall have the right to review in advance, and each will use
its best
efforts to consult with the other, in each case, subject to
applicable laws
relating to the exchange of information, with respect to all
the
information relating to the other parties which appear in
any filing made
with, or written materials submitted to, any third party or
any
Governmental Entity in connection with the transactions
contemplated
hereby. In exercising the foregoing rights, each of the
parties hereto
shall act reasonably and as promptly as practicable. Each
party hereto
shall consult with the other parties hereto with respect to
the obtaining
of all permits, consents, approvals and authorizations of
all third parties
and Governmental Entities necessary or advisable to
consummate the
transactions contemplated hereby and each party shall keep
the other
parties hereto apprised of the status of matters relating to
completion of
the transactions contemplated hereby.
6.5.2 Each party hereto shall, upon request and except
as otherwise
may be required by applicable law, furnish the other parties
hereto with
all information concerning itself, its subsidiaries,
directors, trustees,
officers and shareholders and other Affiliates and such
other matters as
may be reasonably necessary or advisable in connection any
statement,
filing, notice or application made by or on behalf of such
other party or
any of its Affiliates to any Governmental Entity in
connection with any
transactions contemplated by this Agreement.
6.5.3 Each party hereto shall, subject to applicable
laws relating to
the exchange of information, promptly furnish the other
parties hereto with
copies of written communications received by each such
party, or any of its
subsidiaries, associates or other Affiliates, from, or
delivered by any of
the foregoing to, any Governmental Entity in respect of the
transactions
contemplated hereby.
<PAGE>
6.5.4 Each party hereto shall cooperate with each
other party hereto
and promptly take or cause to be taken all actions and do or
cause to be
done all things necessary, proper or advisable to obtain
favorable review
of the proposed transaction under the HSR Act, which efforts
shall include,
without limitation, except as otherwise may be required by
applicable law,
obtaining mutual agreement concerning agency appearances and
submissions
and allowing each party or its attorneys to (i) interview
the other party's
employees, (ii) review the other party's documents and data,
(iii) assist
in all preparation for any agency interviews, depositions or
voluntary
agency appearances and attend such appearances to the extent
permitted by
agency rules and (iv) review and approve in advance of
submission any
written materials to be submitted to the agency. Each of
the parties
hereto shall use reasonable best efforts to resolve any
objections that may
be asserted with respect to the Reorganization by the
Department of
Justice, the Federal Trade Commission, any State Attorney
General or any
other Governmental Entity (including, without limita tion,
objections under
any antitrust laws). In the event a suit is threatened or
instituted
challenging the Reorganization as violative of any antitrust
laws, each
party shall use reasonable efforts to avoid the filing of,
resist or
resolve such suit. The parties hereto shall use reasonable
efforts to take
such action as may be required: (i) by the Department of
Justice, the
Federal Trade Commission, any State Attorney General or any
other
Governmental Entity in order to resolve such objections as
any of them may
have to the Reorganization, or (ii) by any federal or state
court of the
United States, in any suit brought by a private party or
Governmental
Entity challenging the Reorganization as violative of any
antitrust laws,
in order to avoid the entry of, or to cause the withdrawal
or voiding of,
any injunction, temporary restraining order or other order
which has the
effect of preventing the consummation of the transactions
contemplated
hereby.
6.5.5 Realty and Operating shall, on or prior to April
15, 1997, file
their joint Annual Report on Form 10-K for the fiscal year
ended December
31, 1996 substantially in the forms provided to MT prior to
the date of
this Agreement.
SECTION 6.6: ACCESS.
(a) Upon reasonable notice, and except as may otherwise
be required by
applicable law or contractual requirements, each party hereto
shall afford each
other party's Representatives full access, during normal business
hours
throughout the period until the Effective Time, to its
properties, books,
Contracts, records, employees, contract employees and accountants
and, during
such period, shall (and shall cause each of its subsidiaries to)
furnish
promptly to the other party all information concerning its
business, properties
and personnel as may reasonably be requested, provided that no
investigation
pursuant to this Section 6.6 shall be deemed to modify any
representation or
warranty made by the party furnishing such information. Each
party hereto shall
not, and shall cause its respective Representatives not to, use
any information
obtained pursuant to this Section for any purpose unrelated to
the consummation
of the transactions contemplated by this Agreement. Subject to
the requirements
of law, pending consummation of the transactions herein
contemplated,
<PAGE>
each party conducting an investigation hereunder (the "Examining
Party") shall
keep confidential, and shall cause its Representatives to keep
confidential, all
information and documents obtained from the other party (the
"Examined Party")
pursuant to this Section or during the investigation leading up
to the execution
of this Agreement unless such information (i) was already known
to the Examining
Party (unless subject to a separate confidentiality agreement
with the Examined
Party), (ii) becomes available to the Examining Party from other
sources not
known by the Examining Party to be bound by a confidentiality
obligation to the
Examined Party, (iii) is independently acquired by the Examining
Party as a
result of work carried out by any employee or representative of
the Examining
Party to whom no disclosure of such information has been made,
(iv) is disclosed
with the prior written approval of the Examined Party or (v) is
or becomes
readily ascertainable from published information or trade
sources. Upon any
termination of this Agreement, each party shall (i) collect and
deliver to the
other party all nonpublic documents obtained by it or any of its
Representatives
from the other party and then in their possession and any copies
thereof and
(ii) destroy or cause to be destroyed all notes, memoranda or
other documents in
the possession of it or any of its Representatives containing or
reflecting any
nonpublic information obtained from the other party.
(b) Each of Realty and Operating agrees that it will
notify MT in
advance of any material communications made to or received from
the SEC, the
IRS, the California Horse Racing Board and any other regulatory
authority having
jurisdiction over Realty or Operating and, to the extent
reasonably practicable,
will solicit MT's comments regarding such communications and any
written
materials submitted to any such authority.
(c) Each of Realty and Operating agrees to make
available to MT
promptly upon the written request of MT, and in no event later
than the time
prescribed by applicable statute, all information and materials
to which MT
would be entitled under Section 220 of the DGCL if MT were a
shareholder of
Realty and Operating at the time of such request. Each of Realty
and Operating
further agrees to treat MT as a shareholder of such company and
to afford to MT
all rights to which MT would be entitled a shareholder under
Rules 14a-7 and
14d-5 under the Exchange Act (it being understood that such right
may not be
satisfied by Realty or Operating electing to mail materials to
its
shareholders).
SECTION 6.7: NOTIFICATION OF CERTAIN MATTERS.
(a) Each party shall give prompt notice to the other
party of any
change that is reasonably likely to result in any Material
Adverse Effect.
(b) Each of Realty and Operating shall promptly (and in
any event
within 48 hours) notify MT and provide copies of (i) any request
made by any
shareholder pursuant to Section 220 of the DGCL or Rules 14d-5 or
14a-7 under
the Exchange Act and (ii) any amendments filed by any person
holding in excess
of 5% of the Santa Anita Shares to their statements on Schedule
13D.
<PAGE>
(c) Each party shall give prompt notice to the other
parties of (i)
any notice or communication from any Person alleging that the
consent of such
person is or may be required in connection with the consummation
of the
transactions contemplated by this Agreement and (ii) any actions,
suits,
proceedings, court orders or decrees commenced or, to its
knowledge, threatened
against it or any of its subsidiaries which, if pending on the
date of this
Agreement, would be required to be disclosed pursuant to Section
5.1.5, 5.2.4 or
5.3.5, as applicable.
SECTION 6.8: PUBLICITY. The initial press release
relating hereto shall
be a joint press release and, thereafter, each party hereto shall
consult with
each other party hereto prior to issuing any press releases or
otherwise making
public statements with respect to the transactions contemplated
hereby and prior
to making any filings with any Governmental Entity or stock
exchange with
respect thereto.
SECTION 6.9: INDEMNIFICATION OF DIRECTORS AND OFFICERS.
From and after
the Closing Date, each of Realty Surviving Corporation and
Operating Surviving
Corporation shall indemnify, defend and hold harmless the
respective present
officers, directors and employees of Realty and Operating and any
of their
respective subsidiaries against all losses, expenses, claims,
damages or
liabilities arising out of actions or omissions occurring on or
prior to the
Closing Date (including, without limitation, the transactions
contemplated by
this Agreement) to the full extent permitted or required under
applicable law
(and shall also advance expenses as incurred to the fullest
extent permitted
under applicable law, provided that, to the extent required by
applicable law,
the person to whom expenses are advanced provides an undertaking
to repay such
advances if it is ultimately determined that such person is not
entitled to
indemnification). Each of Realty and Operating agrees that all
rights to
indemnification, including provisions relating to advances of
expenses incurred
in defense of any action or suit, existing in favor of the
present directors,
officers and employees of Realty and Operating or any of their
respective
subsidiaries (collectively, the "Indemnified Parties") as
provided in the Realty
Certificate or Realty By-laws and the Operating Certificate or
Operating By-laws
or pursuant to other agreements, as in effect as of the date
hereof, shall
survive the Closing and shall continue in full force and effect.
Each of Realty
Surviving Corporation and Operating Surviving Corporation shall
maintain in
effect for not less than six years the current policies (or
comparable policies)
of directors' and officers' liability insurance maintained by
Realty and
Operating with respect to matters occurring prior to the Closing
Date; provided
--------
however, that if the aggregate annual premiums for such insurance
during such
- -------
six year period shall exceed 200% of the per annum rate of the
aggregate premium
currently paid by Operating and Realty and any of their
respective subsidiaries
for such insurance on the date of this Agreement, then MT shall
cause each of
Realty Surviving Corporation and Operating Surviving Corporation
to, and each of
Realty Surviving Corporation and Operating Surviving Corporation
shall, provide
the most advantageous coverage that shall then be available at an
annual premium
equal to 200% of such rate. This Section 6.9 is intended to
benefit the
Indemnified Parties.
SECTION 6.10: COLONY TERMINATION FEE. Realty and Operating
have paid to
Colony $4,500,000 as a termination fee and transaction expenses
pursuant to the
Amended and
<PAGE>
Restated Formation Agreement, dated as of October 24, 1996, as
amended as of
January 7, 1997. If either MT or MOC fail to call their
respective shareholders
meetings or the shareholders fail to approve the MT Shareholder
Matters or the
MOC Shareholder Matters at their respective shareholder meetings,
and the Realty
Shareholder Matters and the Operating Shareholder Matters are
approved and all
other conditions to MT's consummation of the Reorganization have
been satisfied,
MT shall pay to Realty and Operating $4,000,000 in the aggregate;
provided,
however, that if Realty determines, in its sole and absolute
discretion, that
its portion of such amount will affect its qualification as a
REIT, then the
parties will negotiate in good faith an arrangement acceptable to
Realty. In no
event shall such payment be less than the maximum amount which
Realty may
receive without affecting its qualification as a REIT.
ARTICLE VII
CONDITIONS
SECTION 7.1: CONDITIONS TO EACH PARTY'S OBLIGATION. The
respective
obligation of each party hereto to consummate the Mergers is
subject to the
fulfillment of each of the following conditions:
7.1.1 Shareholder Approval. The MT Shareholder
Matters shall have
been duly approved by the shareholders of MT, the MOC
Shareholder Matters
shall have been duly approved by the shareholders of MOC,
the Realty
Shareholder Matters shall have been duly approved by the
shareholders of
Realty and the Operating Shareholder Matters shall have been
duly approved
by the shareholders of Operating in accordance with
Massachusetts law (in
the case of MT), the DGCL, other applicable law and the
Certificates of
Incorporation and By-laws or Charter of each of them.
7.1.2 Governmental and Regulatory Consents. The
waiting periods
applicable to the consummation of the transactions
contemplated hereby
under the HSR Act shall have expired or been terminated and
all filings
required to be made prior to the Closing by any party hereto
or any of its
respective subsidiaries with, and all con sents, approvals
and
authorizations required to be obtained prior to the Closing
by any party
hereto or any of its respective subsidiaries from, any
Governmental Entity
in connection with the execution and delivery of this
Agreement and the
consummation of the transactions contemplated hereby shall
have been made
or obtained, except where the failure to obtain such
consents is not
reasonably likely to have a Material Adverse Effect on the
Surviving
Corporations and could not reasonably be expected to subject
the parties
hereto or their Affiliates or any directors, trustees or
officers of any of
the foregoing to the risk of criminal liability.
7.1.3 Third-Party Consents. All consents or approvals
of all persons
(other than Governmental Entities) required for or in
connection with or as
a result of the execution, delivery and performance of this
Agreement and
the consummation of the
<PAGE>
transactions contemplated hereby shall have been obtained
and shall be in
full force and effect, except for those the failure of which
to obtain
would not have a Material Adverse Effect.
7.1.4 Litigation. No United States or state court or
other
Governmental Entity of competent jurisdiction shall have
enacted, issued,
promulgated, enforced or entered any statute, rule,
regulation, judgment,
decree, injunction or other order (whether temporary,
preliminary or
permanent) which is in effect and prohibits con summation of
the
transactions contemplated hereby.
7.1.5 Opinions.
(a) MT, Realty and Operating shall have received
an opinion from
O'Melveny & Myers LLP, dated the Effective Time, and
reasonably
satisfactory to MT, Realty and Operating, to the effect
that (i) for
the calendar year 1996, Realty met the requirements of
the Code for
qualification as a REIT, and if Realty continues its
operations in the
same manner as it has in such year, Realty will
continue to so
qualify; and (ii) (A) the consummation by Realty and
Operating of the
transaction contemplated by this Agreement will not
adversely affect
the qualification of Realty as a REIT or (B) its
ability to retain its
status as grandfathered from the application of Section
269B(a) (3) of
the Code pursuant to Section 136(c) (3) of the Deficit
Reduction Act
of 1984. Nutter, McClennen & Fish, LLP may rely upon
the opinion in
clause (ii)(B) in giving its opinion referred to in
clause (b) below.
(b) MT, Realty and Operating shall have received
an opinion of
Nutter, McClennen & Fish, LLP, dated the Effective
Time, and
reasonably satisfactory to MT, Realty and Operating,
to the effect
that (i) immediately prior to the Effective Time, MT
was qualified as
a REIT and (ii) the consummation by Realty and
Operating of the
transaction contemplated by this Agreement will not
adversely affect
the qualification of Realty as a REIT or its ability to
retain its
status as grandfathered from the application of Section
269B(a)(3) of
the Code pursuant to Section 136(c)(3) of the Deficit
Reduction Act of
1984.
(c) MT shall have received an opinion from Nutter,
McClennen &
Fish, LLP, dated the Effective Time, and reasonably
satisfactory to
MT, to the effect that the merger of MT with and into
Realty, and the
merger of MOC with and into Operating, shall qualify as
a
"reorganization" under Section 368(a) of the Code.
7.1.6 Registration Statement. The Registration
Statement shall have
become effective under the Securities Act and no stop order
suspending the
effectiveness of the Registration Statement shall have been
issued and no
proceedings for that purpose shall have been initiated or
threatened by the
SEC.
<PAGE>
SECTION 7.2: CONDITIONS TO OBLIGATION OF MT. The
obligation of MT to
consummate the Reorganization is also subject to the fulfillment
or waiver by MT
prior to the Closing of each of the following conditions:
7.2.1 Representations and Warranties. The
representations and
warranties of each of Realty and Operating set forth in this
Agreement
qualified by materiality shall be true and correct and those
not so
qualified shall be true and correct in all material respects
as of the date
of this Agreement and as of the Closing Date as though made
on and as of
the Closing Date (except that representations and warranties
that by their
terms speak as of the date of this Agreement or some other
date shall be
true and correct as of such date), and MT shall have
received certificates
signed on behalf of each of Realty and Operating by an
officer to such
effect.
7.2.2 Performance of Obligations. Realty and
Operating shall have
complied with all covenants in all material respects and
performed in all
material respects all obligations required to be performed
by it under this
Agreement at or prior to the Closing Date, and MT shall have
received a
certificate signed on behalf of each of the Companies by an
officer to such
effect.
7.2.3 No Material Adverse Effect. Between the date
hereof and the
Closing Date, there shall have been no Material Adverse
Effect on Realty or
Operating; and there shall have been delivered to MT a
certificate with
respect to Realty and a certificate with respect to
Operating, each to such
effect, dated the Closing Date, signed on behalf of Realty
and Operating;
provided that no Material Adverse Effect on Realty or
Operating shall be
--------
deemed to occur solely as a result of actions taken or not
taken in
accordance with the provisions of Section 6.1.
7.2.4 Rights. The Rights under the Rights Agreement
shall not have
become exercisable.
7.2.5 Resignation of Directors. MT shall have
received the
resignations of all directors of Realty and Operating,
except those
directors designated by MT pursuant to Section 3.1 and
Section 3.2 hereof.
7.2.6 The Exchange Approval. The Santa Anita Shares
to be issued in
the Mergers shall have been approved for listing on the
Exchange upon
official notice of issuance.
SECTION 7.3: CONDITIONS TO OBLIGATION OF REALTY AND
OPERATING. The
obligation of Realty and Operating to consummate the
Reorganization is also
subject to the fulfillment or waiver by Realty and Operating
prior to the
Closing Date of each of the following conditions:
7.3.1 Representations and Warranties. The
representations and
warranties of MT set forth in this Agreement qualified by
materiality shall
be true and correct and
<PAGE>
those not so qualified shall be true and correct in all
material respects
as of the date of this Agreement and as of the Closing Date
as though made
on and as of the Closing Date (except that representations
and warranties
that by their terms speak as of the date of this Agreement
or some other
date shall be true and correct as of such date) and Realty
and Operating
shall have received certificates signed on behalf of MT by
an officer to
such effect.
7.3.2 Performance of Obligations. Each of MT and MOC
shall have
complied with all covenants in all material respects and
performed in all
material respects all obligations required to be performed
by it under this
Agreement at or prior to the Closing Date, and Realty and
Operating shall
have received certificates signed on behalf of each of MT
and MOC by an
officer to such effect.
7.3.3 No Material Adverse Effect. Between the date
hereof and the
Closing Date, there shall have been no Material Adverse
Effect on Buyer;
and there shall have been delivered to Realty and Operating
a certificate
with respect to Buyer to such effect, dated the Closing
Date, signed on
behalf of Buyer.
ARTICLE VIII
TERMINATION
SECTION 8.1: TERMINATION BY MUTUAL CONSENT. This
Agreement may be
terminated, and the Reorganization may be abandoned, at any time
prior to the
Effective Time, before or after the approval by the shareholders
of MT, MOC,
Operating and/or Realty, by the mutual consent of each party
hereto, by action
of its Board.
SECTION 8.2: TERMINATION BY ANY PARTY HERETO. This
Agreement may be
terminated, and the Reorganization may be abandoned before or
after the approval
by the shareholders of MT, MOC, Operating and/or Realty, by
action of the Board
of any party hereto, if (i) the Reorganization shall not have
been consummated
by April 13, 1998 or (ii) if MT, Realty, Operating or MOC convene
the
shareholders meeting contemplated by Section 6.4 and MT's,
Realty's, Operating's
or MOC's shareholders fail to approve the MT Shareholder Matters,
Realty
Shareholder Matters, Operating Shareholder Matters or MOC
Shareholder Matters,
as the case may be, at their respective shareholders meetings or
(iii) Realty
and Operating enter into an Alternative Transaction pursuant to
Section 6.2,
provided that, (A) in the case of a termination pursuant to
clause (i) above,
the terminating party shall not have breached in any material
respect its
obligations under this Agreement in any manner that shall have
caused or
resulted in the failure referred to above and (B) Realty and
Operating shall not
have the right to terminate pursuant to clause (iii) unless they
have complied
with their obligations under Section 6.2(a), Section 6.2(b) and
Section 6.2(c)
and paid the Termination Fee and expenses pursuant to Section
8.6.
SECTION 8.3: TERMINATION BY MT. This Agreement may be
terminated and the
Reorganization may be abandoned at any time prior to the
Effective Time, before
or after the
<PAGE>
adoption and approval by shareholders of MT referred to in
Section 6.4, by
action of the MT Board, if (i) either Realty or Operating shall
have failed to
comply in any material respect with any of the covenants or
agreements contained
herein to be performed by such Company at or prior to the time of
termination;
or (ii) either of the Realty Board or the Operating Board shall
have failed to
recommend to its shareholders the approval of the transactions
contemplated
hereby or shall have withdrawn, modified or changed in a manner
adverse to MT
its approval or recommendation of this Agreement.
SECTION 8.4: TERMINATION BY EITHER OF REALTY OR OPERATING.
This
Agreement may be terminated and the Reorganization may be
abandoned at any time
prior to the Effective Time, before or after the adoption and
approval by
shareholders of Realty or Operating referred to in Section 6.4,
by action of
either the Realty Board or the Operating Board, if (i) MT shall
have failed to
comply in any material respect with any of the covenants or
agreements contained
herein to be performed by it at or prior to the time of
termination; or (ii) the
MT Board or the Board of Directors of MOC shall have failed to
recommend to
their respective shareholders the approval of the transactions
contemplated
hereby, or shall have withdrawn, modified or changed in a manner
adverse to
Realty or Operating its approval or recommendation of this
Agreement.
SECTION 8.5: EFFECT OF TERMINATION AND ABANDONMENT. In
the event of
termination of this Agreement and the abandonment of the
Reorganization pursuant
to this Article VIII, other than as set forth in Section 8.6 and
the following
sentence, no party hereto (or any of its directors or officers)
shall have any
liability or further obligation to any other party, except that
nothing herein
will relieve any party from liability for any material and
willful breach of any
covenant contained herein, and except that the provisions of
Sections 6.6
(excluding the first sentence thereof), 6.10, 8.6 and this
Section 8.5 shall
survive such termination. If Realty or Operating merges with, or
sells or
otherwise transfers directly or indirectly more than 25% of its
assets to a
Third Party, or any Third Party (individually or as part of a
group), acquires
directly or indirectly beneficial ownership of more than 30% of
the Santa Anita
Shares, or Realty or Operating enter into an agreement providing
for any of the
foregoing, in each case within one year after the earlier of (i)
the date of the
meeting of shareholders of Realty and Operating convened to
consider the Realty
Shareholder Matters and the Operating Shareholder Matters and
(ii) the
termination of this Agreement (other than pursuant to Section
6.2(c)), Realty
and Operating shall pay MT the sum of $12 million in the
aggregate, less the
amount of the Termination Fee, if paid.
SECTION 8.6: PAYMENT OF EXPENSES AND TERMINATION FEE.
Each party shall
bear its own expenses in connection with the matters contemplated
by this
Agreement, except that Realty and Operating shall pay (a) the
Termination Fee
and Transaction Expenses to MT under the circumstances set forth
in Section 6.2;
(b) the Transaction Expenses to MT if the Realty Shareholder
Matters or the
Operating Shareholder Matters are not approved as contemplated in
Section 6.4;
and (c) the amount set forth in Section 8.5 if the conditions set
forth therein
are satisfied. MT shall pay the amount set forth in Section 6.10
if the
conditions set forth therein are satisfied.
<PAGE>
ARTICLE IX
MISCELLANEOUS AND GENERAL
SECTION 9.1: SURVIVAL. Only those agreements and
covenants of the
parties which by their express terms apply in whole or in part
after the
Effective Time shall survive the Effective Time. All other
representations,
warranties, agreements and covenants, shall be deemed only to be
conditions of
the Reorganization and shall not survive the Effective Time.
SECTION 9.2: MODIFICATION OR AMENDMENT. Subject to the
applicable
provisions of the DGCL, at any time prior to the Effective Time,
before or after
the adoption and approval by shareholders of any party referred
to in Section
6.4, the parties hereto may modify or amend this Agreement, by
written agreement
executed and delivered by duly authorized officers of the
respective parties.
SECTION 9.3: WAIVER OF CONDITIONS. The conditions to each
party's
obligation to consummate the Reorganization are for the sole
benefit of such
party and may be waived by such party in whole or in part to the
extent
permitted by applicable law.
SECTION 9.4: COUNTERPARTS. For the convenience of the
parties hereto,
this Agreement may be executed in any number of separate
counterparts, each such
counterpart being deemed to be an original instrument, and all
such counterparts
shall together constitute the same agreement.
SECTION 9.5: GOVERNING LAW. This Agreement shall be
governed by and
construed in accordance with the laws of the State of Delaware
applicable to
contracts made and performed in such state.
SECTION 9.6: NOTICES. Any notice, request, instruction or
other document
to be given hereunder by any party to the other shall be in
writing and shall be
deemed to have been duly given (i) on the date of delivery if
delivered
personally, or by telecopy or facsimile, upon confirmation of
receipt, (ii) on
the first business day following the date of dispatch if
delivered by Federal
Express or other next-day courier service, or (iii) on the third
business day
following the date of mailing if delivered by registered or
certified mail,
return receipt requested, postage prepaid. All notices hereunder
shall be
delivered as set forth below, or pursuant to such other
instructions as may be
designated in writing by the party to receive such notice.
If to MT or MOC, addressed to:
Meditrust
197 First Avenue
Needham, Massachusetts 02194
Attention: President
Fax No.: (617) 433-1290
<PAGE>
with a copy to:
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Attention: Michael J. Bohnen, Esq.
Fax No.: (617) 973-9748
If to Realty, addressed to:
Santa Anita Realty Enterprises, Inc.
301 West Huntington Drive, Suite 405
Arcadia, California 91007
Attention: Mr. Brian L. Fleming
Fax No.: (818) 574-0634
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Attention: Frederick B. McLane, Esq.
Fax No.: (213) 669-6407
If to Operating, addressed to:
Santa Anita Operating Company
285 West Huntington Drive
Arcadia, California 91007
Attention: Mr. William C. Baker
Fax No.: (818) 574-6687
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Attention: Frederick B. McLane, Esq.
Fax No.: (213) 669-6407
SECTION 9.7: ENTIRE AGREEMENT, ETC. This Agreement (and
the Exhibits and
Disclosure Schedules hereto) (a) constitute the entire agreement,
and supersede
all other prior agreements, understandings, representations and
warranties, both
written and oral, among the parties, with respect to the subject
matter hereof
including, without limitation, the Agreement
<PAGE>
and Plan of Merger dated as of April 13, 1997, and (b) shall not
be assignable
by operation of law or otherwise.
SECTION 9.8: CAPTIONS. The Article, Section and paragraph
captions
herein are for convenience of reference only, do not constitute
part of this
Agreement and shall not be deemed to limit or otherwise affect
any of the
provisions hereof.
SECTION 9.9: SEVERABILITY. If any provision of this
Agreement or the
application thereof to any person or circumstance is determined
by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining
provisions hereof, or the application of such provision to
persons or
circumstances other than those as to which it has been held
invalid or
unenforceable, shall remain in full force and effect and shall in
no way be
affected, impaired or invalidated thereby, so long as the
economic or legal
substance of the transactions contemplated hereby is not affected
in any manner
adverse to any party. Upon such determination, the parties shall
negotiate in
good faith in an effort to agree upon a suitable and equitable
substitute
provision to effect the original intent of the parties.
SECTION 9.10: NO THIRD-PARTY BENEFICIARIES. Nothing
contained in this
Agreement, except as provided in Section 6.9 hereof, expressed or
implied, is
intended to confer upon any person or entity other than the
parties hereto, any
benefit, right or remedies.
SECTION 9.11: SPECIFIC PERFORMANCE. The parties hereto
agree that
irreparable damage would occur in the event any of the provisions
of this
Agreement were not performed in accordance with the terms hereof
and that the
parties shall be entitled to specific performance of the terms
hereof, in
addition to any other remedy at law or equity.
SECTION 9.12: TRUST. The Declaration of Trust establishing
MT, dated
August 6, 1985, a copy of which, together with all amendments
thereto (the
"Declaration"), is duly filed in the office of the Secretary of
State of the
Commonwealth of Massachusetts, provides that the name "Meditrust"
or "MT" refers
to the trustees under the Declaration collectively as trustees,
but not
individually or personally. No trustee, officer, director,
shareholder,
employee or agent of MT or its subsidiaries shall be held to any
personal
liability, jointly or severally, for any obligation of, or claim
against MT or
any of its subsidiaries. All persons dealing with MT, in any
way, shall look
only to MT's assets for recovery of any judgment or suit or the
performance of
any obligation.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by
the duly authorized officers of the parties hereto on the date
first hereinabove
written.
SANTA ANITA REALTY ENTERPRISES, INC.
By /s/ BRIAN L. FLEMING
- ----------------------------------------------
Executive Vice President
SANTA ANITA OPERATING COMPANY
By /s/ WILLIAM C. BAKER
- ----------------------------------------------
Chief Executive Officer
MEDITRUST
By /s/ DAVID F. BENSON
- ----------------------------------------------
President
MEDITRUST ACQUISITION CORPORATION IV
By /s/ DAVID F. BENSON
- ----------------------------------------------
President
<PAGE>
Annex A
DEFINED TERMS
Acquired Shares: as defined in Section 1.6.1.
Affiliate: as defined in Rule 12b-2 under the Exchange
Act.
Agreement: as defined in the Preamble.
Alternative Transaction: a transaction that is the
subject of a
Competing Transaction Proposal with a Third Party that the Realty
Board and the
Operating Board in good faith on the advice of a nationally
recognized financial
advisor determine could provide greater value to their
shareholders than the
transactions contemplated here.
Alternative Transaction Notice: a notice of the
determination of the
Realty Board and the Operating Board that the transaction
contemplated by a
Competing Transaction Proposal would be an Alternative
Transaction, which notice
contains the information described in 6.2(b).
Benefit Plan: as defined in Section 5.1.17.
Board: the MT Board, the Operating Board or the Realty
Board.
Closing: as defined in Section 1.5.
Closing Date: as defined in Section 1.5.
Code: the Internal Revenue Code of 1986, as amended.
Commonly Controlled Entity: any person or entity that,
together with
another person or entity, is treated as a single employer under
Section 414 of
the Code.
Competing Transaction Proposal: a bona fide proposal
from a Third
Party relating to any recapitalization, business combination,
asset sale, joint
venture or other transaction which would be inconsistent with the
transactions
which are the subject of this Agreement.
Contract: any agreement, lease, contract, note,
mortgage, indenture,
arrangement or other obligation or commitment.
DGCL: the Delaware General Corporation Law as in
effect at the
relevant times for purposes of this Agreement.
<PAGE>
Disclosure Schedules: the Operating Disclosure
Schedule, the Realty
Disclosure Schedule and the MT Disclosure Schedule.
Distribution Amount: an amount equal to the excess of
(i) an amount
determined by multiplying a fraction (the numerator of which is
the fair market
value of an Operating Share as of April 13, 1997 as determined by
Morgan Stanley
& Co. Incorporated, and the denominator of which is $31.00) by
the number of
Santa Anita Shares outstanding as of the date the promissory note
referred to in
Section 1.2 is issued, over (ii) .019 multiplied by the product
of $31.00 and
the number of Santa Anita Shares outstanding as of the date the
promissory note
referred to in Section 1.2 is issued.
Effective Time: as defined in Section 1.4.
Employee Stock Options: as defined in Section 4.5.10.
ERISA: as defined in Section 5.1.17.
Escrow Agent: the agent holding the MOC Shares.
Examined Party: as defined in Section 6.6.
Examining Party: as defined in Section 6.6.
Excess Shares: as defined in Section 4.5.4.
Exchange: the New York Stock Exchange, Inc.
Exchange Act: the Securities Exchange Act of 1934, as
amended, and
the rules and regulations promulgated thereunder.
Exchange Agent: as defined in Section 4.5.2.
Exchange Ratio: as defined in Section 4.3.
GAAP: generally accepted accounting principles
consistently applied.
Governmental Entity: any governmental or regulatory
authority,
agency, court, commission or other entity.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as
amended.
Indemnified Parties: as defined in Section 6.9.
IRS: the United States Internal Revenue Service.
<PAGE>
Material Adverse Effect: with respect to any party, an
effect which
would be materially adverse to the properties, business,
financial condition,
results of operations or prospects of such party and its
subsidiaries taken as a
whole.
Mergers: as defined in Recital D.
MOC: as defined in the Preamble.
MOC Amount: an amount equal to .019 multiplied by the
product of
$37.25 times the number of shares outstanding immediately prior
to the issuance
and delivery of the MT Note.
MOC Charter: as defined in Section 5.1.4.
MOC Shareholder Matters: adoption of this Agreement.
MOC Shares: the common stock of MOC issued to MT and
distributed to
MT's shareholders prior to the Mergers equal in amount to the
number of MT
Shares outstanding immediately prior to the Mergers.
MT: as defined in the Preamble.
MT Board: the Board of Trustees of MT.
MT Charter: as defined in Section 5.1.1.
MT Disclosure Schedule: the disclosure schedule dated
the date of the
Agreement delivered by MT to the other parties and relating to
this Agreement.
MT Note: as defined in Recital A.
MT Options: as defined in Section 5.1.3.
MT SEC Documents: all filings made by MT with the SEC
since December
31, 1994.
MT Shares: the shares of beneficial interest without
par value of MT.
MT Shareholder Matters: the adoption of this
Agreement.
Old MT Certificate: a certificate for MT Shares.
Old MOC Certificate: a certificate for MOC Shares.
Operating: as defined in the Preamble.
<PAGE>
Operating Board: the Board of Directors of Operating.
Operating By-Laws: as defined in Section 5.3.1.
Operating Certificate: as defined in Section 5.3.1.
Operating Common Shares: as defined in Section 5.3.3.
Operating Disclosure Schedule: the disclosure schedule
dated the date
of the Agreement delivered by Operating to MT and relating to
this Agreement.
Operating Merger: as defined in Recital C.
Operating Merger Certificate: as defined in Section
1.4.
Operating Options: as defined in Section 5.3.3.
Operating Preferred Shares: as defined in Section
5.3.3.
Operating Shareholder Matters: the adoption of this
Agreement and
issuance of Operating Common Shares pursuant to the Operating
Merger.
Operating Shares: as defined in Section 5.3.3.
Operating Surviving Corporation: as defined in Section
1.3.2.
Pairing Agreement: as defined in Section 5.2.3(c).
Pension Plan: as defined in Section 5.1.17.
Person: an individual, joint venture, partnership,
limited liability
company, trust, business trust, corporation, cooperative,
association, private
foundation, charitable trust, employee pension, profit sharing,
stock bonus or
supplemental unemployment benefit trust, or any other entity.
Private Letter Rulings: as defined in Section
5.2.16(b).
Proxy Statements: as defined in Section 6.4.1.
Realty: as defined in the Preamble.
Realty Board: the Board of Directors of Realty.
Realty By-Laws: as defined in Section 5.2.1.
<PAGE>
Realty Certificate: as defined in Section 5.2.1.
Realty Common Shares: as defined in Section 5.2.3.
Realty Disclosure Schedule: the disclosure schedule
dated the date of
this Agreement delivered by Realty to MT and relating to this
Agreement.
Realty Merger: as defined in Recital C.
Realty Merger Certificate: as defined in Section 1.4.
Realty Options: as defined in Section 5.2.2.
Realty Preferred Shares: as defined in Section 5.2.2.
Realty Shareholder Matters: the adoption of this
Agreement and the
issuance of Realty Common Shares pursuant to the Realty Merger.
Realty Shares: as defined in Section 5.2.2.
Realty Surviving Corporation: as defined in Section
1.3.1.
Registration Statement: the registration statement on
Form S-4 to be
filed by Realty and Operating with the SEC in connection with the
Reorganization
with respect to the Santa Anita Shares to be issued to MT's
shareholders.
Reorganization: the Mergers and other transactions
contemplated
hereby.
REIT: a real estate investment trust, as defined in
Section 856 of
the Code.
REIT Requirements: the requirements for Realty or MT,
as applicable,
to (i) qualify as a REIT under the Code, (ii) to avoid any
federal income or
excise tax liability, (iii) as to Realty only, retain its status
as
grandfathered from the application of Section 269B(a)(3) of the
Code pursuant to
Section 136(c)(3) of the Deficit Reduction Act of 1984, (iv) as
to Realty only,
retain the benefits of the Private Letter Rulings, and (v)
otherwise maintain
the current federal income tax treatment of the pairing
arrangement for the
Santa Anita Shares.
Representatives: with respect to any party, such
party's officers,
employees, counsel, accountants and other authorized
representatives.
Rights: the rights of the shareholders of Realty and
Operating under
the Rights Agreement.
<PAGE>
Rights Agreement: the Rights Agreement, dated as of
June 15, 1989,
among Realty, Operating and Union Bank, as Rights Agent.
Santa Anita SEC Documents: all filings made by Realty
or Operating
with the SEC since December 31, 1994, including the Annual Report
on Form 10-K
for the year ended December 31, 1996, in the form attached to the
Realty and
Operating Disclosure Schedules.
Santa Anita Shares: paired common stock, $.10 par
value per share, of
Realty and Operating.
Santa Anita Share Certificates: as defined in Section
4.5.2.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as
amended, and the rules
and regulations promulgated thereunder.
subsidiary: any corporation or other organization
whether
incorporated or unincorporated of which at least 25% of the
securities or
interests having by the terms thereof or any agreement ordinary
voting power to
elect the board of directors or others per forming similar
functions with
respect to such corporation or other organization that is
directly or indirectly
owned or controlled by such party or by any one or more of its
subsidiaries, or
by such party and one or more of its subsidiaries.
Surviving Corporations: the Realty Surviving
Corporation and the
Operating Surviving Corporation, each as "Surviving Corporation".
Termination Fee: $12,000,000, provided, however, that
if MT
determines, in its sole and absolute discretion, that such amount
will affect
its qualification as a REIT, then the parties will reasonably
negotiate an
arrangement acceptable to MT. In no event shall such payment be
less than the
maximum amount which MT may receive without affecting its
qualification as a
REIT.
Third Party: as defined in Section 6.2.
Transaction Expenses: fees and disbursements of MT's
counsel,
accountants and other financial, legal, accounting or other
advisors incurred by
it in connection with the preparation and negotiation of the
Agreement and the
consummation of the matters contemplated hereby in an amount no
greater than
$1,000,000.
Unaffiliated Acquired Shares: as defined in Section
1.7.
Unaffiliated Person: a Person whose ownership of
Unaffiliated
Acquired Shares will not cause (i) any Person to own, directly or
indirectly,
after application of the
<PAGE>
attribution rules of Section 318(a) of the Code, as modified by
Section 856(d)
(5) of the Code, more than 9.9% in value of the common stock and
preferred stock
of Realty and Operating, or (ii) Realty to fail to satisfy any of
the REIT
Requirements.
Welfare Plans: as defined in Section 5.1.17.
<PAGE>
Annex B
CERTIFICATE
REGARDING CERTAIN SHARE OWNERSHIP MATTERS
In connection with the issuance to Meditrust
("Purchaser") by the
Company of its common stock constituting [____%] of the total
outstanding common
stock of the Company, Purchaser hereby certifies and warrants
that for the
period beginning April 13, 1997 through the Effective Time:
1. No Person Constructively Owns, directly or
indirectly, more than
9.9% in value of the stock of Purchaser.
2. No corporation (as defined for federal or state
income tax
purposes) of which Purchaser Constructively Owns, directly or
indirectly, more
than 9.9% in value of the stock of such corporation,
Constructively Owns any
shares of the Company (excluding for this purpose any Paired
Shares owned,
directly or indirectly, by Purchaser without regard to the
Constructive
Ownership Rules).
3. No partnership (as defined for federal or state
income tax
purposes) of which Purchaser is a partner or other equity member
Constructively
Owns any shares of the Company (excluding for this purpose any
Paired Shares
owned, directly or indirectly, by Purchaser without regard to the
Constructive
Ownership Rules).
4. No trust (as defined for federal or state income
tax purposes) of
which Purchaser is a beneficiary Constructively Owns any shares
of the Company
(excluding for this purpose any Paired Shares owned, directly or
indirectly, by
Purchaser without regard to the Constructive Ownership Rules).
5. Purchaser Constructively Owns, directly or
indirectly, no more
than 9.9% by value of the stock of the Company (including for
this purpose any
Paired Shares issued pursuant to the Merger Agreement).
6. The issuance of Paired Shares to Purchaser
pursuant to Section
1.6 of the Merger Agreement will not cause Purchaser or any other
Person to
Constructively Own more than 9.9% by value of the stock of the
Company or cause
any rent received by the Company to fail to qualify as "rents
from real
property" within the meaning of Section 856(d)(2)(B) of the Code
or cause the
Company to be "closely held" within the meaning of Section 856(h)
of the Code.
7. Purchaser is acquiring Paired Shares for
investment purposes
only, and not with a view to their resale or other distribution.
<PAGE>
8. Purchaser is an "accredited investor" within the
meaning of
Regulation D under the Securities Act of 1933.
9. Purchaser will not transfer all or any portion of
the Paired
Shares to any Person if the ownership of such shares by such
Person will cause
any Person to Constructively Own, directly or indirectly, more
than 9.9% by
value of the stock of the Company (including for this purpose any
Paired Shares
issued pursuant to the Merger Agreement) or cause the Company to
be "closely
held" within the meaning of Section 856(h) of the Code.
For the purposes of this Certificate capitalized terms
shall have the
meanings assigned to such terms in Exhibit A hereto.
IN WITNESS WHEREOF, I have executed this Certificate as
of
_______________, 1997.
MEDITRUST, a Massachusetts
Business Trust
By:______________________
Name:
Title:
<PAGE>
EXHIBIT A
Definitions
"Code": the Internal Revenue Code of 1986, as amended.
"Company": Santa Anita Realty Enterprises, Inc.
"Constructive Ownership Rules": the constructive
ownership rules of
Section 318 of the Code, as modified by Section 856(d)(5) of the
Code.
Generally, these rules provide:
a. an individual is considered as owning the
Ownership Interest that
is owned, directly or constructively, by or for
his spouse, his
children, his grandchildren, and his parents;
b. an Ownership Interest that is owned, directly or
constructively,
by or for a partnership or estate is considered as
owned
proportionately by its partners or beneficiaries;
c. an Ownership Interest that is owned, directly or
constructively,
by or for a trust is considered as owned by its
beneficiaries in
proportion to the actuarial interest of such
beneficiaries
(provided, however, that in the case of a "grantor
trust" the
Ownership Interest will be considered as owned by
the grantors);
d. if 10 percent or more in value of the stock in a
corporation is
owned, directly or constructively, by or for any
person, such
person shall be considered as owning the Ownership
Interest that
is owned, directly or constructively, by or for
such corporation
in that proportion which the value of the stock
which such person
so owns bears to the value of all the stock in
such corporation;
e. an Ownership Interest that is owned, directly or
constructively,
by or for a partner of a partnership or a
beneficiary of an
estate or trust shall be considered as owned by
the partnership,
estate, or trust;
f. if 10 percent or more in value of the stock in a
corporation is
owned, directly or constructively, by or for any
person, such
corporation shall be considered as owning the
Ownership Interest
that is owned, directly or constructively, by or
for such person;
<PAGE>
g. if any person has an option to acquire an
Ownership Interest
(including an option to acquire an option or any
one of a series
of such options), such Ownership Interest shall be
considered as
owned by such person;
h. an Ownership Interest that is constructively owned
by a person by
reason of the application of the rules described
in paragraphs
(a) through (g) above shall, for purposes of
applying paragraphs
(a) through (g), be considered as directly owned
by such person
provided, however, that (i) an Ownership Interest
constructively
owned by an individual by reason of paragraph (a)
shall not be
considered as owned by him for purposes of again
applying
paragraph (a) in order to make another the
constructive owner of
such Ownership Interest, (ii) an Ownership
Interest
constructively owned by a partnership, estate,
trust, or
corporation by reason of the application of
paragraphs (e) or (f)
shall not be considered as owned by it for
purposes of applying
paragraphs (b), (c), or (d) in order to make
another the
constructive owner of such Ownership Interest,
(iii) if an
Ownership Interest may be considered as owned by
an individual
under paragraphs (a) or (g), it shall be
considered as owned by
him under paragraph (g), and (iv) for purposes of
the above
described rules, an S corporation shall be treated
as a
partnership and any shareholder of the S
corporation shall be
treated as a partner of such partnership except
that this rule
shall not apply for purposes of determining
whether stock in the
S corporation is constructively owned by any
person.
i. For purposes of the above summary of the
constructive ownership
rules, the term "Ownership Interest" means the
ownership of stock
with respect to a corporation and, with respect to
any other type
of entity, the ownership of an interest in either
its assets or
net profits.
"Constructively Owns": a Person constructively owns
any asset which
such Person is considered to own after application of the
Constructive
Ownership Rules.
"Merger Agreement": that certain Agreement and Plan of
Merger dated as
of April 13, 1997, by and among Santa Anita Realty Enterprises,
Inc., Santa
Anita Operating Company, Meditrust and Meditrust Acquisition
Corporation.
"Paired Shares": paired common stock, $.10 par value
per share, of
Santa Anita Realty Enterprises, Inc. and Santa Anita Operating
Company.
"Person": an individual, joint venture, partnership,
limited
liability company, trust, business trust, corporation,
cooperative, association,
private foundation, charitable trust, employee pension, profit
sharing, stock
bonus or supplemental unemployment benefit trust, or any other
entity.
<PAGE>
"REIT": a real estate investment trust which meets the
requirements
----
of Sections 856 through 860 of the Code.
<PAGE>
Annex C
CERTIFICATE
REGARDING CERTAIN SHARE OWNERSHIP MATTERS
In connection with the issuance to _________
("Purchaser") by the
Company of its common stock constituting [____%] of the total
outstanding common
stock of the Company, Purchaser hereby certifies and warrants
that for the
period beginning April 13, 1997 through the Effective Time:
1. If the Purchaser is a corporation (as defined for
federal or
state income tax purposes), no Person Constructively Owns,
directly or
indirectly, more than 9.9% in value of the stock of Purchaser.
2. If the Purchaser is not a corporation (as defined
for federal or
state income tax purposes), no Person Constructively Owns,
directly or
indirectly, an interest of more than 9.9% in the assets or net
profits of the
Purchaser.
3. No corporation (as defined for federal or state
income tax
purposes) of which Purchaser Constructively Owns, directly or
indirectly, more
than 9.9% in value of the stock of such corporation,
Constructively Owns any
shares of the Company (excluding for this purpose any Paired
Shares owned,
directly or indirectly, by Purchaser without regard to the
Constructive
Ownership Rules).
4. No partnership (as defined for federal or state
income tax
purposes) of which Purchaser is a partner or other equity member
Constructively
Owns any shares of the Company (excluding for this purpose any
Paired Shares
owned, directly or indirectly, by Purchaser without regard to the
Constructive
Ownership Rules).
5. No trust (as defined for federal or state income
tax purposes) of
which Purchaser is a beneficiary Constructively Owns any shares
of the Company
(excluding for this purpose any Paired Shares owned, directly or
indirectly, by
Purchaser without regard to the Constructive Ownership Rules).
6. Purchaser Constructively Owns, directly or
indirectly, no more
than 9.9% by value of the stock of the Company (including for
this purpose any
Paired Shares issued pursuant to the Merger Agreement).
7. The issuance of Paired Shares to Purchaser
pursuant to Section
1.7 of the Merger Agreement will not cause Purchaser or any other
Person to
Constructively Own more than 9.9% by value of the stock of the
Company or cause
any rent received by the Company to fail to qualify as "rents
from real
property" within the meaning of Section 856(d)(2)(B) of the Code
or cause the
Company to be "closely held" within the meaning of Section 856(h)
of the Code.
<PAGE>
8. Purchaser is acquiring Paired Shares for investment
purposes only,
and not with a view to their resale or other distribution.
9. Purchaser is an "accredited investor" within the
meaning of
Regulation D under the Securities Act of 1933.
10. There is no understanding or arrangement between
Purchaser and
any other Person as to how the Purchaser will vote the Paired
Shares being
issued to Purchaser.
11. Purchaser will not transfer all or any portion of
the Paired
Shares to any Person if (i) the ownership of such shares by such
Person will
cause any Person to Constructively Own, directly or indirectly,
more than 9.9%
by value of the stock of the Company (including for this purpose
any Paired
Shares issued pursuant to the Merger Agreement), or (ii) there is
any
understanding or arrangement between the transferee and any other
Person who
Constructively Owns Paired Shares as to how the transferee will
vote such Paired
Shares, or (iii) the ownership of such shares by such Person will
cause the
Company to be "closely held" within the meaning of Section 856(h)
of the Code.
For the purposes of this Certificate capitalized terms
shall have the
meanings assigned to such terms in Exhibit A hereto.
IN WITNESS WHEREOF, I have executed this Certificate as
of
_______________, 1997.
_______________________________
[Name]
_______________________________
[Title]
<PAGE>
EXHIBIT A
Definitions
"Code": the Internal Revenue Code of 1986, as amended.
"Company": Santa Anita Realty Enterprises, Inc.
"Constructive Ownership Rules": the constructive
ownership rules of
Section 318 of the Code, as modified by Section 856(d)(5) of the
Code.
Generally, these rules provide:
a. an individual is considered as owning the
Ownership Interest that
is owned, directly or constructively, by or for
his spouse, his
children, his grandchildren, and his parents;
b. an Ownership Interest that is owned, directly or
constructively,
by or for a partnership or estate is considered as
owned
proportionately by its partners or beneficiaries;
c. an Ownership Interest that is owned, directly or
constructively,
by or for a trust is considered as owned by its
beneficiaries in
proportion to the actuarial interest of such
beneficiaries
(provided, however, that in the case of a "grantor
trust" the
Ownership Interest will be considered as owned by
the grantors);
d. if 10 percent or more in value of the stock in a
corporation is
owned, directly or constructively, by or for any
person, such
person shall be considered as owning the Ownership
Interest that
is owned, directly or constructively, by or for
such corporation
in that proportion which the value of the stock
which such person
so owns bears to the value of all the stock in
such corporation;
e. an Ownership Interest that is owned, directly or
constructively,
by or for a partner of a partnership or a
beneficiary of an
estate or trust shall be considered as owned by
the partnership,
estate, or trust;
f. if 10 percent or more in value of the stock in a
corporation is
owned, directly or constructively, by or for any
person, such
corporation shall be considered as owning the
Ownership Interest
that is owned, directly or constructively, by or
for such person;
<PAGE>
g. if any person has an option to acquire an
Ownership Interest
(including an option to acquire an option or any
one of a series
of such options), such Ownership Interest shall be
considered as
owned by such person;
h. an Ownership Interest that is constructively owned
by a person by
reason of the application of the rules described
in paragraphs
(a) through (g) above shall, for purposes of
applying paragraphs
(a) through (g), be considered as directly owned
by such person
provided, however, that (i) an Ownership Interest
constructively
owned by an individual by reason of paragraph (a)
shall not be
considered as owned by him for purposes of again
applying
paragraph (a) in order to make another the
constructive owner of
such Ownership Interest, (ii) an Ownership
Interest
constructively owned by a partnership, estate,
trust, or
corporation by reason of the application of
paragraphs (e) or (f)
shall not be considered as owned by it for
purposes of applying
paragraphs (b), (c), or (d) in order to make
another the
constructive owner of such Ownership Interest,
(iii) if an
Ownership Interest may be considered as owned by
an individual
under paragraphs (a) or (g), it shall be
considered as owned by
him under paragraph (g), and (iv) for purposes of
the above
described rules, an S corporation shall be treated
as a
partnership and any shareholder of the S
corporation shall be
treated as a partner of such partnership except
that this rule
shall not apply for purposes of determining
whether stock in the
S corporation is constructively owned by any
person.
i. For purposes of the above summary of the
constructive ownership
rules, the term "Ownership Interest" means the
ownership of stock
with respect to a corporation and, with respect to
any other type
of entity, the ownership of an interest in either
its assets or
net profits.
"Constructively Owns": a Person constructively owns
any asset which
such Person is considered to own after application of the
Constructive
Ownership Rules.
"Merger Agreement": that certain Agreement and Plan of
Merger dated as
of April 13, 1997, by and among Santa Anita Realty Enterprises,
Inc., Santa
Anita Operating Company, Meditrust and Meditrust Acquisition
Corporation.
"Paired Shares": paired common stock, $.10 par value
per share, of
Santa Anita Realty Enterprises, Inc. and Santa Anita Operating
Company.
"Person": an individual, joint venture, partnership,
limited
liability company, trust, business trust, corporation,
cooperative, association,
private foundation, charitable trust, employee pension, profit
sharing, stock
bonus or supplemental unemployment benefit trust, or any other
entity.
<PAGE>
"REIT": a real estate investment trust which meets the
requirements
of Sections 856 through 860 of the Code.
Annex D
REGISTRATION RIGHTS
Unless otherwise indicated, capitalized terms used
herein shall have the meanings assigned to them in the Agreement
and Plan of Merger dated as of April 13, 1997 (the "Agreement")
to which this exhibit is attached.
Section 1. Definitions and Usage.
1.1. Definitions. As used in this Exhibit:
"Beneficially Owning" means owning Realty Shares
directly, indirectly or constructively by a Person through the
application of Section 318(a) of the Code, as modified by Section
856(d)(5) of the Code, or Section 544 of the Code, as modified by
Section 856(h) of the Code. The term "Beneficially Own" shall
have a correlative meaning.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Continuously Effective", with respect to a specified
registration statement, shall mean that such registration
statement shall not cease to be effective and available for
Transfers of Registrable Securities thereunder for longer than
either (i) any ten (10) consecutive business days, or (ii) an
aggregate of fifteen (15) business days during the period
specified in the relevant provision of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act
of 1934 and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Issuance Percentage", when used with respect to Realty
and Operating, shall mean the relative percentages that Realty
and Operating may from time to time determine based on their
joint determination of the relative values of Realty Shares and
Operating Shares.
"MT" shall mean MEDITRUST under the Agreement or any
purchaser of Unaffiliated Acquired Shares pursuant to Section 1.7
of the Agreement.
"Ownership Limit" when used with respect to Realty
means 8% in value, voting power or in number, whichever is more
restrictive, of the issued and outstanding capital stock of
Realty and, when used with respect to Operating means 8% in
value, voting power or in number, whichever is more restrictive,
of the issued and outstanding capital stock of Operating.
"Paired Shares" means an Operating Share and a Realty
Share which are "paired" pursuant to the Pairing Agreement dated
December 20, 1979 between Realty and Operating, as it may be
amended from time to time.
<PAGE>
"Person" shall mean any individual, corporation,
partnership, joint venture, association, jointstock company,
limited liability company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
"Register", "registered", and "registration" shall
refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the
Securities Act, and the declaration or ordering by the Commission
of effectiveness of such registration statement or document.
"Registrable Securities" shall mean any Santa Anita
Shares issued pursuant to Section 1.6 or 1.7 of the Agreement.
"Registrable Securities then outstanding" shall mean,
with respect to a specified determination date, the Registrable
Securities owned by MT on such date.
"Registration Expenses" shall have the meaning set
forth in Section 5.1.
"REIT Requirements" shall mean the requirements for
Realty to (i) continue to qualify as a REIT under the Code and
the rules and regulations promulgated thereunder, (ii) retain the
benefits of those certain private letter rulings issued by the
Internal Revenue Service to Realty dated as of October 16, 1979,
as supplemented January 11, 1980, (iv) avoid any federal income
or excise tax liability, and (iii) retain its status as
grandfathered from the application of Section 269B(a)(3) of the
Code pursuant to Section 136(c)(3) of the Deficit Reduction Act
of 1984.
"Securities Act" shall mean the Securities Act of 1933
and the rules and regulations of the Commission thereunder, all
as the same may be in effect at the time.
"Transfer" shall mean and include the act of selling,
giving, transferring, creating a trust (voting or otherwise),
assigning or otherwise disposing of (other than pledging,
hypothecating or otherwise transferring as security) (and
correlative words shall have correlative meanings); provided,
however, that any transfer or other disposition upon foreclosure
or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation
or other transfer as security shall constitute a "Transfer."
"Underwriters' Representative" shall mean the managing
underwriter, or, in the case of a comanaged underwriting, the
managing underwriter designated as the Underwriters'
Representative by the comanagers.
"Violation" shall have the meaning set forth in Section
6.1.
Section 2. Shelf Registration.
2.1. If the Agreement is terminated for any reason and
within 15 business days after the date of such termination MT
shall make a written request to Realty and Operating, then Realty
and Operating shall cause to be filed with the Commission a
registration statement under the Securities Act for an offering
on a delayed or continuous basis pursuant to Rule 415 or such
other appropriate rule under the Securities Act, and Realty and
Operating shall include therein all or any portion of the
Registrable Securities as MT shall request in such written
request. Any request made pursuant to this Section 2.1 shall be
addressed to the attention of the Secretary of each of Realty and
<PAGE>
Operating, and shall specify the number of Registrable Securities
to be registered, the intended methods of disposition thereof and
that the request is for a demand Registration pursuant to this
Section 2.1.
2.2. Realty and Operating shall be entitled to postpone
for up to 90 days the filing, effectiveness, supplementing or
amending of any registration statement otherwise required to be
prepared and filed pursuant to this Section 2, if the Board of
Directors of Realty or the Board of Directors of Operating
determines that such registration and the Transfer of Registrable
Securities contemplated thereby would interfere with, or require
premature disclosure of, any material financing, acquisition,
disposition, reorganization or other transaction involving Realty
or Operating or any of their respective subsidiaries and Realty
or Operating, as the case may be, promptly gives MT notice of
such determination. MT hereby acknowledges that any notice given
by Realty or Operating pursuant to this Section 2.2 shall
constitute material non public information and that the United
States securities laws prohibit any Person who has material
nonpublic information about a company from purchasing or selling
securities of such company or from communicating such information
to any other Person under circumstances in which it is reasonably
foreseeable that such Person is likely to purchase or sell such
securities.
2.3. Following receipt of a request for a registration
pursuant to Section 2.1, Realty and Operating shall:
(i) File the registration statement with the
Commission as promptly as practicable and shall use their
respective reasonable efforts to have the registration declared
effective under the Securities Act as soon as reasonably
practicable, in each instance giving due regard to the need to
prepare current financial statements, conduct due diligence and
complete other actions that are reasonably necessary to effect a
registered public offering.
(ii) Use their respective reasonable efforts to
keep the relevant registration statement Continuously Effective
until such date as of which all the Registrable Securities under
the registration statement have been disposed of in a manner
described in the registration statement, but in no event later
than the 120th day following the effective date of such
registration statement. Notwithstanding the foregoing, if for any
reason the effectiveness of a registration pursuant to this
Section 2 is suspended, the relevant foregoing period shall be
extended by the aggregate number of days of such suspension.
2.4. Notwithstanding anything in this Agreement to the
contrary, no registration shall be effected hereunder and no
Transfer of Registrable Securities may be effected if as a result
thereof Realty would not satisfy the REIT Requirements in any
respect or if such registration or Transfer would result in any
Person Beneficially Owning Paired Shares in excess of the
Ownership Limit. For purposes of the preceding sentence,
registration shall not be deemed to have been effected (i) unless
a registration statement with respect thereto has become
effective, or (ii) if after such registration statement has
become effective, the related offer, sale or distribution of
Registrable Securities thereunder is prohibited by any stop
order, injunction or other order or requirement of the Commission
or other governmental agency or court for any reason not
attributable to MT and such prohibition is not thereafter
eliminated. If Realty and Operating shall have complied with
their respective obligations under this Agreement, a right to
demand a registration pursuant to this Section 2 shall be
deemed to have been satisfied upon the effective date of the
registration statement, provided no stop order or similar order,
or proceedings for such an order, is thereafter entered or
initiated.
<PAGE>
2.5. A registration pursuant to this Section 2 shall
be on such appropriate registration form of the Commission as
shall be selected by Realty and Operating and shall permit the
disposition of the Registrable Securities in accordance with the
intended method or methods of disposition specified in the
request pursuant to Section 2.1.
2.6. If the registration pursuant to Section 2 involves
an underwritten offering (whether on a "firm commitment," "best
efforts" or "all reasonable efforts" basis or otherwise), MT
shall select the underwriter or underwriters and manager or
managers to administer such underwritten offering; provided,
however, that each Person so selected shall be acceptable to
Realty and Operating.
Section 3. Registration Procedures. Whenever required
under Section 2 to effect the registration of any Registrable
Securities, Realty and Operating shall, as expeditiously as
practicable:
3.1. Prepare and file with the Commission a
registration statement with respect to such Registrable
Securities and use their respective reasonable efforts to cause
such registration statement to become effective; provided,
however, that before filing a registration statement or
prospectus or any amendments or supplements thereto, Realty and
Operating shall furnish to one firm of counsel for MT copies of
all such documents in the form substantially as proposed to be
filed with the Commission.
3.2. Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as
may be necessary to comply with the provisions of the Securities
Act and rules thereunder with respect to the disposition of all
securities covered by such registration statement. Realty and
Operating shall amend the registration statement or supplement
the prospectus so that it will remain current and in compliance
with the requirements of the Securities Act for the period
specified in Section 2.3(ii), and if during such period any event
or development occurs as a result of which the registration
statement or prospectus contains a misstatement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, Realty or Operating shall promptly notify MT, amend
the registration statement or supplement the prospectus so that
each will thereafter comply with the Securities Act and furnish
to MT such amended or supplemented prospectus, which MT shall
thereafter use in the Transfer of Registrable Securities covered
by such registration statement. Pending any such amendment or
supplement, MT shall cease making offers or Transfers of
Registrable Shares pursuant to the prior prospectus. In the
event that any Registrable Securities included in a registration
statement subject to, or required by, this Agreement remain
unsold at the end of the period during which Realty and Operating
are obligated to use their respective reasonable efforts to
maintain the effectiveness of such registration statement, Realty
and Operating may file a posteffective amendment to the
registration statement for the purpose of removing such
Registrable Securities from registered status.
3.3. Furnish to MT without charge, such numbers of
copies of the registration statement, any preeffective or
posteffective amendment thereto, the prospectus, including each
preliminary prospectus and any amendments or supplements thereto,
in each case in conformity with the requirements of the
Securities Act and the rules thereunder, and such other related
documents as MT may reasonably request in order to facilitate the
disposition of Registrable
<PAGE>
Securities owned by MT.
3.4. Use their respective reasonable efforts (i) to
register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such
states where an exemption from registration is not available and
as shall be reasonably requested by the Underwriters'
Representative and (ii) to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification (or exemption from
qualification) of the offer and transfer of any of the
Registrable Securities in any state, at the earliest possible
moment; provided, however, that neither Realty nor Operating
shall be required in connection therewith or as a condition
thereto to qualify to do business or to consent to general
service of process in any state.
3.5. In the event of any underwritten offering, use
their respective reasonable efforts to enter into and perform
their respective obligations under an underwriting agreement
(including indemnification and contribution obligations of
underwriters), in usual and customary form, with the managing
underwriter or underwriters of such offering. Realty and
Operating shall also cooperate with MT and the Underwriters'
Representative for such offering in the marketing of the
Registrable Securities, including making available the officers,
accountants, counsel, premises, books and records of Realty and
Operating for such purpose, but neither Realty nor Operating
shall be required to incur any material outofpocket expense
pursuant to this sentence.
3.6. Promptly notify MT of any stop order issued or
threatened to be issued by the Commission in connection therewith
and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
3.7. Make available for inspection by MT, any
underwriter participating in such offering and the
representatives of MT and such Underwriter (but not more than one
firm of counsel to MT), all financial and other information as
shall be reasonably requested by them, and provide MT, any
underwriter participating in such offering and the
representatives of MT and such Underwriter the reasonable
opportunity to discuss the business affairs of Realty and
Operating with their principal executives and independent public
accountants who have certified the audited financial statements
included in such registration statement, in each case all as
necessary to enable them to exercise their due diligence
responsibility under the Securities Act; provided, however, that
information that Realty or Operating determines to be
confidential and which Realty or Operating advises such Person in
writing, is confidential shall not be disclosed unless such
Person signs a confidentiality agreement reasonably satisfactory
to Realty and Operating or MT agrees to be responsible for such
Person's breach of confidentiality on terms reasonably
satisfactory to Realty and Operating.
3.8. Use their respective reasonable efforts to obtain
a socalled "comfort letter" from the independent public
accountants of Realty and Operating, and legal opinions of
counsel to Realty and Operating addressed to MT in customary form
and covering such matters of the type customarily covered by such
letters, and in a form that shall be reasonably satisfactory to
MT. Delivery of any such opinion or comfort letter shall be
subject to the recipient furnishing such written representations
or acknowledgements as are customarily provided by selling
stockholders who receive such comfort letters or opinions.
3.9. Use their respective reasonable efforts to cause
the Registrable Securities covered by such registration statement
(i) if the Paired Shares are then listed on a securities
<PAGE>
exchange or included for quotation in a recognized trading
market, to continue to be so listed or included for a reasonable
period of time after the offering, and (ii) to be registered with
or approved by such other United States or state governmental
agencies or authorities as may be necessary by virtue of the
business and operations of Realty and Operating to enable MT to
consummate the disposition of such Registrable Securities.
3.10. Take such other actions as are reasonably
required in order to expedite or facilitate the disposition of
Registrable Securities included in each such registration.
Section 4. MT's Obligations. It shall be a condition
precedent to the obligations of Realty and Operating to take any
action pursuant to this Agreement with respect to the Registrable
Securities of MT that MT shall:
4.1. Furnish to Realty and Operating such information
regarding MT, the number of the Registrable Securities owned by
it, and the intended method of disposition of such securities as
shall be required to effect the registration of MT's Registrable
Securities, and to cooperate fully with Realty and Operating in
preparing such registration.
Section 5. Expenses of Registration. Expenses in
connection with registrations pursuant to this Agreement shall be
allocated and paid as follows:
5.1. Realty and Operating shall bear and pay all
expenses incurred in connection with any registration, filing, or
qualification of Registrable Securities, including all
registration, filing and National Association of Securities
Dealers, Inc. fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and
delivery expenses, the reasonable fees and disbursements of
counsel for Realty and Operating, and of the independent public
accountants for Realty and Operating, including the expenses of
"cold comfort" letters required by or incident to such
performance and compliance (the "Registration Expenses"), but
excluding underwriting discounts and commissions relating to
Registrable Securities (which shall be paid by MT) and all fees
and expenses of counsel for MT; provided, however, that Realty
and Operating shall not be required to pay for any expenses of
any registration proceeding begun pursuant to Section 2 if the
registration is subsequently withdrawn. Realty and Operating
each agree between themselves that they shall bear and pay
Registration Expenses in an amount equal to its respective
Issuance Percentage of such Registration Expenses and that they
shall reimburse each other to the extent necessary to cause each
of them to so bear and pay such respective amounts.
Section 6. Indemnification; Contribution. If any
Registrable Securities are included in a registration statement
under this Agreement:
6.1. To the extent permitted by applicable law, each of
Realty and Operating, severally and not jointly, shall indemnify
and hold harmless MT, each Person, if any, who controls MT within
the meaning of the Securities Act, and each officer, director,
partner and employee of MT and such controlling Person, against
any and all losses, claims, damages, liabilities and expenses
(joint or several), including reasonable attorneys' fees and
disbursements and reasonable expenses of investigation, incurred
by such party pursuant to any actual or threatened action, suit,
proceeding or investigation, or to which any of the foregoing
Persons may otherwise become subject under the Securities Act,
the Exchange Act or other federal or state laws, insofar as such
losses, claims, damages, liabilities and expenses arise out of or
are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
<PAGE>
(i) Any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein, or any amendments or supplements
thereto; or
(ii) The omission or alleged omission to state
therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading;
provided, however, that the indemnification required by this
Section 6.1 shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or expense if such settlement
is effected without the consent of Realty or Operating (which
consent shall not be unreasonably withheld), nor shall Realty or
Operating be liable in any such case for any such loss, claim,
damage, liability or expense to the extent that it arises out of
or is based upon a Violation which occurs in reliance upon and in
conformity with information furnished to Realty or Operating by
MT expressly for use in connection with such registration; and
provided, further, that the indemnity agreement contained in this
Section 6 shall not apply to the extent that any such loss is
based on or arises out of an untrue statement or alleged untrue
statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from any
preliminary prospectus if the final prospectus shall correct such
untrue statement or alleged untrue statement, or such omission or
alleged omission, and a copy of the final prospectus has not been
sent or given to such person at or prior to the confirmation of
sale to such person if an underwriter was under an obligation to
deliver such final prospectus and failed to do so.
6.2. To the extent permitted by applicable law, MT
shall indemnify and hold harmless Realty, Operating, each of the
directors, officers and employees of Realty and Operating, and
each Person, if any, who controls Realty or Operating within the
meaning of the Securities Act, against any and all losses,
claims, damages, liabilities and expenses (joint and several),
including reasonable attorneys' fees and disbursements and
reasonable expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or
investigation, or to which any of the foregoing Persons may
otherwise become subject under the Securities Act, the Exchange
Act or other federal or state laws, but only insofar as such
losses, claims, damages, liabilities and expenses arise out of or
are based upon any Violation, in each case to the extent that
such Violation arises out of or is based upon information
furnished by MT expressly for use in connection with such
registration; provided, however, that (x) the indemnification
required by this Section 6.2 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense
if such settlement is effected without the consent of MT (which
consent shall not be unreasonably withheld) and (y) in no event
shall the amount of any indemnity under this Section 6.2 exceed
the gross proceeds from the applicable offering received by MT.
6.3. Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action,
suit, proceeding, investigation or threat thereof made in writing
for which such indemnified party may make a claim under this
Section 6, such indemnified party shall deliver to the
indemnifying party a written notice thereof and the indemnifying
party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties. The
failure to deliver written notice to the indemnifying party
within a reasonable time following the commencement of any such
action, if prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the
indemnified party under this Section 6 to the extent of such
prejudice but shall not relieve the indemnifying party of any
liability that it may have to any indemnified party otherwise
than
<PAGE>
pursuant to this Section 6. Any fees and expenses incurred by the
indemnified party (including any fees and expenses incurred
in connection with investigating or preparing to defend such
action or proceeding) shall be paid to the indemnified party,
as incurred, within thirty (30) days of written notice thereof
to the indemnifying party. Any such indemnified party shall
have the right to employ separate counsel in any such action,
claim or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall
be the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses or
(ii) the indemnifying party shall have failed to promptly assume
the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including
any impleaded parties) include both such indemnified party and
the indemnifying party, and such indemnified party shall have
been advised by counsel that there may be one or more legal
defenses available to it which are different from or in addition
to those available to the indemnifying party and that the
assertion of such defenses would create a conflict of interest
such that counsel employed by the indemnifying party could not
faithfully represent the indemnified party (in which case, if
such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding
on behalf of such indemnified party, it being understood,
however, that the indemnifying party shall not, in connection
with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings
in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all
such indemnified parties, unless in the reasonable judgment of
such indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties
with respect to such action,, claim or proceeding, in which event
the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels).
6.4. If the indemnification required by this Section 6
from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to in this Section 6:
(i) The indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such Violation.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in
Section 6.1 and Section 6.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding.
(ii) The parties agree that it would not be just and
equitable if contribution pursuant to this Section 6.4 were
determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable
considerations referred to in Section 6.4(i). No Person guilty
of fraudulent misrepresentation (within the meaning of Section
<PAGE>
11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent
misrepresentation.
6.5. If indemnification is available under this Section
6, the indemnifying parties shall indemnify each indemnified
party to the full extent provided in this Section 6 without
regard to the relative fault of such indemnifying party or
indemnified party or any other equitable consideration referred
to in Section 6.4.
6.6. The obligations of Realty, Operating and MT under
this Section 6 shall survive the completion of any offering of
Registrable Securities pursuant to a registration statement under
this Agreement, and otherwise.
