<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)
SANTA ANITA REALTY ENTERPRISES, INC.
SANTA ANITA OPERATING COMPANY
- --------------------------------------------------------------------------------
(Name of Issuers)
COMMON STOCK, $.10 PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
8012 09206
8012 12101
----------------------------------------
(CUSIP Numbers)
ABRAHAM D. GOSMAN
MEDITRUST
197 FIRST AVENUE
NEEDHAM HEIGHTS, MA 02194-9127
(617) 433-6000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
with a copy to:
MICHAEL J. BOHNEN, ESQ.
NUTTER, MCCLENNEN & FISH, LLP
ONE INTERNATIONAL PLACE
BOSTON, MA 02110-2699
(617) 439-2000
APRIL 13, 1997
----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
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Page 1 of 8
CUSIP NOS. 8012 09206
8012 12101
----------
SCHEDULE 13D
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MEDITURST
(I.R.S. ID#: 04-6532031
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WORKING CAPITAL (WC)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [_]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MASSACHUSETTS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER
1,249,035 (SEE PAGE 2, FOOTNOTE 1)
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
1,249,035 (SEE PAGE 2, FOOTNOTE 1)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,249,035 (SEE PAGE 2, FOOTNOTE 1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.8%
14 TYPE OF REPORTING PERSON*
MASSACHUSETTS BUSINESS TRUST (00)
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
1
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Page 2 of 8
ITEM 1. SECURITY AND ISSUER.
Issuers: Santa Anita Realty Enterprises, Inc. ("Realty")
301 West Huntington Drive, Suite 405
Arcadia, California 91007
Santa Anita Operating Company ("Operating")
285 West Huntington Drive
Arcadia, California 91007
Security: Common Stock, $.10 par value
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) This statement is being filed by Meditrust, a Massachusetts
business trust ("Meditrust"). The principal executive offices of Meditrust are
located at 197 First Avenue, Needham Heights, Massachusetts 02194-9127.
Meditrust is a real estate investment trust which provides its investors
with the opportunity to participate in the investment in income-producing health
care related facilities.
Information as to each of the executive officers and trustees of Meditrust
is set forth on Schedule I hereto, which is incorporated by reference herein.
Each of such persons is a citizen of the United States.
(d) During the last five years, neither Meditrust nor, to the best of
Meditrust's knowledge, any of the individuals named in Schedule I hereto, has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, neither Meditrust nor, to the best of
Meditrust's knowledge, any of the individuals named in Schedule I hereto, has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4 below, pursuant to the terms of the
Merger Agreement (as defined below), Meditrust has agreed to purchase up to
1,249,035/1/ paired common shares
- -------------------
/1/ Represents a number of shares equal to 9.8% of the Paired Shares
outstanding immediately after the sale to Meditrust based on the 11,496,225
Paired Shares issued and outstanding on April 22, 1997. Such number of shares is
subject to change as a result of
2
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Page 3 of 8
of the Issuers (the "Paired Shares"), each of which consists of one share of the
Common Stock of Realty, $.10 par value (the "Realty Common Stock") and one share
of the Common Stock of Operating, $.10 par value (the "Operating Common Stock"),
at $31.00 per Paired Share subject to customary anti-dilution adjustments.
Meditrust intends to finance such purchase from cash on hand.
ITEM 4. PURPOSE OF TRANSACTION.
On April 13, 1997, Meditrust and its wholly-owned subsidiary, Meditrust
Acquisition Corporation IV, a Delaware corporation ("MAC" and, together with
Meditrust, "Meditrust" for the purposes of this Item 4), entered into a
definitive Agreement and Plan of Merger with Realty and Operating ("Santa
Anita"), which was amended and restated pursuant to an Amended and Restated
Agreement and Plan of Merger dated as of April 13, 1997 (the "Merger
Agreement"). When the transaction is consummated, Meditrust will be merged into
Santa Anita, and holders of shares of Meditrust beneficial interest without par
value ("Meditrust Shares") and shares of MAC common stock, $1.00 par value (the
"MAC Shares") will receive 1.2016 Paired Shares for each Meditrust Share and MAC
Share they own in a tax-free exchange of shares. Based on the closing price of
Meditrust Shares on April 11, 1997 of $37.25 per share, the transaction will
have an initial value to the shareholders of Santa Anita of approximately $383
million, or $31.00 per Paired Share. Upon completion of the merger, the
surviving corporations will be called Meditrust Corporation and Meditrust
Operating Company.
Pursuant to the Merger Agreement, Meditrust has agreed to purchase
1,249,035/2/ Paired Shares at $31.00 per Paired Share, subject to customary
anti-dilution adjustments. In addition, Santa Anita has agreed to sell to one or
more unaffiliated parties designated by Meditrust approximately 1,004,225/3/
Paired Shares at a price of $31.00 per Paired Share. The Merger Agreement also
provides that, if requested by Santa Anita, Meditrust will make available to
Santa Anita $100 million (less the purchase price of the 1,249,035/4/ Paired
Shares acquired by
- -------------------
changes in the number of outstanding Paired Shares prior to the date of such
purchase by Meditrust, so that it will always represent 9.8% of the outstanding
Paired Shares.
/2/ See footnote 1.
/3/ Represents a number of shares equal to 19.6% of the Paired Shares
outstanding immediately prior to the sale to Meditrust, less the number of
shares to be sold to Meditrust, based on the 11,496,225 Paired Shares
issued and outstanding on April 22, 1997. Such number of shares is subject
to change as a result of changes in the number of outstanding Paired Shares
prior to the date of such purchase by Meditrust and such unaffiliated party
or parties, so that it will always represent a number as calculated in the
preceding sentence.
/4/ See footnote 1.
3
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Page 4 of 8
Meditrust) to be used by Santa Anita for a cash self tender or cash
election to its shareholders at a price of $31.00 per Paired Share.
Upon completion of the Merger, up to twelve directors designated by
Meditrust will serve on the Boards of Directors of Meditrust Corporation
and Meditrust Operating Company, the surviving entities, each of which will
include two current members of the Board of Directors of Realty and
Operating as the case may be.
Upon completion of the Merger, the Certificates of Incorporation of
the Issuers shall be amended to increase each of their authorized capital
stock to 256,000,000 shares of which 250,000,000 shares shall be common
stock and 6,000,000 shares shall be preferred stock.
Upon completion of the Merger, Meditrust Corporation expects to
distribute dividends of at least 95% of its annual REIT taxable income in
order to maintain its status as a real estate investment trust under the
Internal Revenue Code.
The transaction, which has been approved unanimously by the Board of
Trustees of Meditrust, the Board of Directors of MAC and the Boards of
Directors of Santa Anita, is subject to regulatory approvals and approvals
of the shareholders of both Meditrust and Santa Anita.
The Merger Agreement is attached hereto as Exhibit 1 and incorporated
herein by reference in its entirety. The foregoing summary of the Merger
Agreement does not purport to be complete and is qualified in its entirety
by reference to such exhibit.
Except as set forth in this Item 4 or the Merger Agreement,
neither Meditrust nor, to the best of Meditrust's knowledge, any of the
individuals named in Schedule I hereto, has any plans or proposals which
relate to or which would result in any of the actions specified in Clauses
(a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) By reason of its execution of the Merger Agreement, pursuant
to Rule 13d-3(d)(1)(i) promulgated under the Securities Exchange Act of
1934, as amended, Meditrust may be deemed to beneficially own 1,249,035/5/
shares of Realty Common Stock or approximately 9.7% of the outstanding
Realty Common Stock on April 22, 1997 and 1,249,035/6/ shares of Operating
Common Stock or approximately 9.8% of the outstanding Operating Common
Stock on April 22, 1997.
Neither Meditrust nor, to the best of Meditrust's knowledge, any of
the individuals named in Schedule I hereto owns any Santa Anita Common
Stock.
-------------------
/5/ See footnote 1.
/6/ See footnote 1.
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(c) Neither Meditrust nor, to the best of Meditrust's knowledge, any
of the individuals named in Schedule I hereto has effected any transaction
in the Santa Anita Common Stock during the past 60 days.
(d) Until Meditrust purchases 1,249,035/7/ shares of the Santa Anita
Common Stock pursuant to the Merger Agreement, Meditrust does not have the
right to receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of, any of the Santa Anita Common Stock.
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
The Merger Agreement contains certain customary restrictions on the
conduct of the business of the Issuers pending the Merger, including
certain customary restrictions relating to Realty Common Stock and
Operating Common Stock. Furthermore, pursuant to the Merger Agreement the
Issuers granted Meditrust the right to designate one or more unaffiliated
parties who may purchase from the Issuers an aggregate of 1,004,225/8/
Paired Shares. Except as provided in the Merger Agreement or as set forth
herein, neither Meditrust nor, to the best of Meditrust's knowledge, any of
the individuals named in Schedule I hereto, has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Issuers, including, but not
limited to transfer or voting of any securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or losses, or the giving or withholding of
proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Amended and Restated Agreement and Plan of Merger dated as of April
13, 1997 by and between Meditrust, Meditrust Acquisition
Corporation IV, Santa Anita Realty Enterprises, Inc. and Santa
Anita Operating Company.
-------------------
/7/ See footnote 1.
/8/ See footnote 3.
5
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
/s/ Michael S. Benjamin
--------------------------------------
Michael S. Benjamin
Senior Vice President
and Secretary
Date: April 23, 1997
344226
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Page 7 of 8
SCHEDULE I
TRUSTEES AND EXECUTIVE OFFICERS
OF MEDITRUST
The name, residence or business address, present principal occupation
or employment (if any), and the name, principal business and address of any
corporation or other organization in which such employment is conducted (if
any), of each of the trustees and executive officers of Meditrust is set
forth below.
MEDITRUST
---------
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OF
NAME EMPLOYMENT AND ADDRESS
- ------------------------ ---------------------------------------------
<S> <C>
EXECUTIVE OFFICERS:
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Abraham D. Gosman Chairman, Chief Executive Officer and
Trustee of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
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David F. Benson President, Treasurer and Trustee of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
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Michael F. Bushee Chief Operating Officer of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
- -----------------------------------------------------------------------
Michael S. Benjamin Senior Vice President, Secretary and
Corporate Counsel of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
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Laurie Tidor Chief Financial Officer of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
- -----------------------------------------------------------------------
</TABLE>
7
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Page 8 of 8
<TABLE>
<CAPTION>
<S> <C>
Stephen H. Press Vice President of Acquisitions of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
- -----------------------------------------------------------------------
John G. Dermitt Controller of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
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TRUSTEES:
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Abraham D. Gosman Chairman, Chief Executive Officer and
Trustee of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
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David F. Benson President, Treasurer and Trustee of Meditrust
197 First Avenue
Needham Heights, MA 02194-9127
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Edward W. Brooke Partner, O'Connor & Hannan
2500 Virginia Avenue, N.W.
Suite 301 South
Washington, DC 20037
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Philip L. Lowe Principal, Philip L. Lowe and Associates
330 Beacon Street
Boston, MA 02116
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Thomas J. Magovern Regional Vice President
Real Estate Asset Management
Summit Bank
750 Walnut Avenue
Cranford, New Jersey 07016
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Gerald Tsai, Jr. Chairman, Chief Executive Officer
and President of Delta Life Corporation
530 Oak Court
Memphis, TN 38117
- -----------------------------------------------------------------------
Frederick W. Zuckerman General Partner, Zuckerman, Firstenberg
and Associates LLC
605 Park Avenue, #20A
New York, NY 10021
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</TABLE>
8
<PAGE>
- --------------------------------------------------------------------------------
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>
TABLE OF CONTENTS
-----------------
PAGE
----
RECITALS
AGREEMENT
ARTICLE I
THE REORGANIZATION; CLOSING; EFFECTIVE TIME...... 2
<TABLE>
<S> <C> <C>
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
<TABLE>
<S> <C> <C>
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
<TABLE>
<S> <C> <C>
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
<TABLE>
<S> <C> <C>
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
</TABLE>
2
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<TABLE>
<S> <C> <C>
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
<TABLE>
<C> <S>............................................<C>
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
</TABLE>
3
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<TABLE>
<C> <S> <C>
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
<TABLE>
<S> <C>......................................... <C>
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>
4
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ARTICLE VII
CONDITIONS..................... 41
<TABLE>
<C> <S> <C>
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
<TABLE>
<S> <C>.......................................... <C>
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
<TABLE>
<S> <C> <C>
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
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Section 9.10: No Third-Party Beneficiaries................... 48
Section 9.11: Specific Performance........................... 48
Section 9.12: Trust.......................................... 48
</TABLE>
6
<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
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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
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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
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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
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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,
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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
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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
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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
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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.
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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
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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
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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
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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.
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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.
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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
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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.
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(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.
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(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
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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.
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(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
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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.
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(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
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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.
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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)
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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.
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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
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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
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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.
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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,
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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
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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:
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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
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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)
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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
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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
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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.
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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,
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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.
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(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
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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
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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.
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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
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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
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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.
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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
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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
47
<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.
48
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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
49
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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.
50
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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.
51
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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.
52
<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.
53
<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.
54
<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
55
<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.
56
<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.
B-1
<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:
B-2
<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;
B-3
<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.
B-4
<PAGE>
"REIT": a real estate investment trust which meets the requirements
----
of Sections 856 through 860 of the Code.
B-5
<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.
C-1
<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]
C-2
<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;
C-3
<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.
C-4
<PAGE>
"REIT": a real estate investment trust which meets the requirements
----
of Sections 856 through 860 of the Code.
C-5
<PAGE>
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.
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1.1. Definitions. As used in this Exhibit:
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"Beneficially Owning" means owning Realty Shares directly, indirectly
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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
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have a correlative meaning.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
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time to time.
"Commission" shall mean the Securities and Exchange Commission or any
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other federal agency at the time administering the Securities Act.
"Continuously Effective", with respect to a specified registration
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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
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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,
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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
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Unaffiliated Acquired Shares pursuant to Section 1.7 of the Agreement.
"Ownership Limit" when used with respect to Realty means 8% in value,
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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
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"paired" pursuant to the Pairing Agreement dated December 20, 1979 between
Realty and Operating, as it may be amended from time to time.
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"Person" shall mean any individual, corporation, partnership, joint
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venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Register", "registered", and "registration" shall refer to a
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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
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pursuant to Section 1.6 or 1.7 of the Agreement.
"Registrable Securities then outstanding" shall mean, with respect to
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a specified determination date, the Registrable Securities owned by MT on such
date.
"Registration Expenses" shall have the meaning set forth in Section
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5.1.
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"REIT Requirements" shall mean the requirements for Realty to (i)
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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
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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,
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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,
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however, that any transfer or other disposition upon foreclosure or other
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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,
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or, in the case of a co-managed underwriting, the managing underwriter
designated as the Underwriters' Representative by the co-managers.
"Violation" shall have the meaning set forth in Section 6.1.
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Section 2. Shelf Registration.
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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
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addressed to the attention of the Secretary of each of Realty and
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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.
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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
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2, if the Board of Directors of Realty or the Board of Directors of Operating
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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-
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public information and that the United States securities laws prohibit any
Person who has material non-public 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
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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
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2 shall be deemed to have been satisfied upon the effective date of the
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registration statement, provided no stop order or similar order, or proceedings
for such an order, is thereafter entered or initiated.
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2.5. A registration pursuant to this Section 2 shall be on such
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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.
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2.6. If the registration pursuant to Section 2 involves an
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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
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and Operating.
Section 3. Registration Procedures. Whenever required under Section
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2 to effect the registration of any Registrable Securities, Realty and Operating
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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,
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however, that before filing a registration statement or prospectus or any
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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
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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 post-effective 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 pre-effective or post-effective 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
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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
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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 out-of-pocket 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,
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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 so-called
"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
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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
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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
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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,
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however, that Realty and Operating shall not be required to pay for any expenses
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of any registration proceeding begun pursuant to Section 2 if the registration
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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
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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"):
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(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
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Section 6.1 shall not apply to amounts paid in settlement of any such loss,
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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
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agreement contained in this Section 6 shall not apply to the extent that any
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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
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Section 6.2 shall not apply to amounts paid in settlement of any such loss,
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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
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proceeds from the applicable offering received by MT.
6.3. Promptly after receipt by an indemnified party under this Section
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6 of notice of the commencement of any action, suit, proceeding, investigation
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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
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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
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prejudice but shall not relieve the indemnifying party of any liability that it
may have to any indemnified party otherwise than
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<PAGE>
pursuant to this Section 6. Any fees and expenses incurred by the indemnified
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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
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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:
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(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
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Section 6.2, any legal or other fees or expenses reasonably incurred by such
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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
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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
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fraudulent misrepresentation (within the meaning of Section
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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
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indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 6 without regard to the relative fault of such
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indemnifying party or indemnified party or any other equitable consideration
referred to in Section 6.4.
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6.6. The obligations of Realty, Operating and MT under this Section 6
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shall survive the completion of any offering of Registrable Securities pursuant
to a registration statement under this Agreement, and otherwise.
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