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