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
May 30, 1998
Date of Report (Date of earliest event reported)
Mid-America Realty Investments, Inc.
(Exact name of registrant as specified in its charter)
Maryland 1-9663 47-0700007
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
11506 Nicholas Street, Suite 100
Omaha, Nebraska 68154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(402) 496-3300
<PAGE>
Item 5. OTHER EVENTS.
On June 1, 1998, Mid-America Realty Investments, Inc. ("MDI") and
Bradley Real Estate, Inc. ("Bradley") jointly issued a press release announcing
that the companies executed an Agreement and Plan of Merger, whereby MDI will
merge with and into Bradley. The press release, Agreement and Plan of Merger and
form of Preferred Stock Articles are filed hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
Exhibit 99.1 Press Release dated June 1, 1998
Exhibit 99.2 Merger Agreement
Exhibit 99.3 Form of Preferred Stock Articles
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MID-AMERICA REALTY INVESTMENTS, INC.
Date: June 1, 1998 By: /s/ Jerome L. Heinrichs
--------------------------
Jerome L. Heinrichs
Chairman and
Chief Executive Officer
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
Mid-America Realty Investments, Inc. (NYSE: MDI) and Bradley Real Estate, Inc.
(NYSE: BTR) announced today that they have executed a definitive merger
agreement by which Bradley will acquire Mid-America. Upon consummation of the
transaction, Bradley will acquire Mid- America's interest in 25 retail
properties, increasing its ownership to 88 retail properties aggregating 14.7
million square feet in 15 states.
Pursuant to the terms of the merger agreement between the two real estate
investment trusts (REITs), each share of Mid-America common stock will be
exchanged for 0.42 shares of a newly created series of Bradley preferred stock.
The new Series A Convertible Preferred Stock will have a par value of $25.00,
and thus stockholders of Mid-America will receive $10.50 of preferred stock for
each share of Mid-America common stock which they own. The preferred stock will
pay an 8.4 percent annual dividend and will be convertible into shares of
Bradley common stock at a conversion price of $24.49 per share (representing a
16 percent premium over the 20-day average closing price of Bradley common stock
prior to the signing of the merger agreement). The preferred stock is redeemable
for Bradley common stock after five years if the Bradley common stock is trading
at or above the conversion price. The preferred stock will be listed on the New
York Stock Exchange. In connection with the merger, Bradley also will assume all
of Mid-America's outstanding liabilities, making its total purchase price
approximately $153 million.
In accordance with the agreement, Mid-America will adjust its dividend payment
date to the last day of each quarter to correspond with Bradley's payment date.
Upon declaration by its board of directors, Mid-America would pay its next
dividend on June 30, 1998.
The merger agreement has been unanimously approved by the boards of directors of
both Bradley and Mid-America. The merger is subject to various closing
conditions including the approval of Mid-America stockholders. It is anticipated
that the transaction will close during the third quarter of 1998. The merger has
been structured as a tax-free transaction and will be treated as a purchase for
accounting purposes. Under the terms of the merger, there will be no changes or
additions to Bradley's senior management or board of directors.
Thomas P. D'Arcy, chairman and chief executive officer of Bradley, stated, "The
acquisition of Mid-America Realty represents another step in Bradley's continued
consolidation of grocer-anchored shopping centers in the Midwest. The
Mid-America portfolio consists of quality assets located in many of Bradley's
existing markets such as Minneapolis, Milwaukee and Indianapolis. In addition,
the acquisition provides us the opportunity to enter additional Midwest target
markets, including Omaha and Lincoln, Nebraska. Included in the acquisition are
certain properties which do not fit Bradley's core focus and following the close
of the transaction we will consider selling such non-core assets, redeploying
the proceeds into focus properties."
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Jerome Heinrichs, chairman and chief executive officer of Mid-America, stated
"After reviewing various alternatives, we believe this transaction is in the
best interest of our stockholders and employees. The combination of Mid-America
into Bradley will provide greater opportunity for the company than if we
remained independent." Dennis Gethmann, president and chief operating officer,
added, "We have the highest regard for Bradley and its management team and
consider Bradley to be the preeminent operator of community shopping centers in
the Midwest. We feel strongly that our stockholder's stake in the combined
entity represents significant value."
BT Alex. Brown is acting as financial advisor to Bradley in this transaction and
SBC Warburg Dillon Read is acting as financial advisor to Mid-America.
Mid-America is a real estate investment trust (REIT), headquartered in Omaha,
Nebraska, which focuses on the ownership and operation of community shopping
centers in the Midwest. The company owns 22 centers located in Nebraska, Iowa,
Illinois, South Dakota, Minnesota, Michigan, Wisconsin, Indiana, Arkansas,
Georgia and Tennessee. Additionally, Mid-America is a 50 percent partner in
Mid-America Bethal Limited Partnership, which owns three centers located in
Nebraska and Wisconsin.
Bradley Real Estate, Inc. is the nation's oldest real estate investment trust
(REIT) and a leading owner and operator of neighborhood and community shopping
centers located in the Midwest region of the United States. The company owns 63
properties located in 12 states aggregating 11.5 million square feet of rentable
space. The company has paid 147 consecutive quarterly dividends to its share
owners.
The preceding information contains forward-looking statements of Bradley's and
Mid-America's plans, objectives and expectations, which are dependent upon a
number of factors including a stable retailing climate in the Midwestern United
States, the financial viability of the companies' tenants and the continuing
availability of retail center acquisitions and development opportunities in the
Midwest on favorable terms. Reference is made to the discussions under the
caption "Risk Factors" in Bradley's 1997 Form 10-K report and in the description
of Mid-America's business in its 1997 Form 10-K report which include discussions
of certain other factors which could cause actual results to differ materially
from those in forward-looking statements. There can be no assurance that the
conditions to the merger agreement will be satisfied and that the merger will be
consummated.
CONTACT: Thomas P. D'Arcy, Chairman and CEO of Bradley Real Estate, Inc.,
847-272-9800; or Dennis Waite of The Financial Relations Board, 312-640-6674.
CONTACT:
Jerome L. Heinrichs Dennis G. Gethmann
Chief Executive Officer President
Mid-America Realty Investments, Inc. Mid-America Realty Investments, Inc.
(402)496-3300 (402)496-3300
<PAGE>
Exhibit 99.2
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
between
BRADLEY REAL ESTATE, INC.
and
MID-AMERICA REALTY INVESTMENTS, INC.
Dated as of May 30, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
1. The Merger......................................................................................1
1.1 The Merger.............................................................................1
1.2 The Closing............................................................................1
1.3 Effective Time.........................................................................2
1.4 Amendments of Governing Documents of the MDI Subsidiaries..............................2
1.5 Severance Pay Agreements...............................................................2
2. Charter and Bylaws of the Surviving Corporation.................................................2
2.1 Charter................................................................................3
2.2 Bylaws.................................................................................3
3. Directors and Officers of the Surviving Corporation.............................................3
3.1 Directors..............................................................................3
3.2 Officers...............................................................................3
4. MDI Stock.......................................................................................3
4.1 Conversion of the MDI Stock............................................................3
4.2 Exchange of Certificates Representing MDI Common Stock.................................5
4.3 Return of Exchange Fund................................................................6
5. Representations and Warranties of MDI...........................................................7
5.1 Existence; Good Standing; Authority; Compliance With Law...............................7
5.2 Authorization, Validity and Effect of Agreements.......................................8
5.3 Capitalization.........................................................................9
5.4 Subsidiaries..........................................................................10
5.5 Other Interests.......................................................................10
5.6 No Violation..........................................................................11
5.7 SEC Documents.........................................................................11
5.8 Litigation............................................................................12
5.9 Absence of Certain Changes or Events. ...............................................13
5.10 Taxes.................................................................................13
5.11 Books and Records.....................................................................15
5.12 Properties............................................................................15
5.13 Leases................................................................................17
5.14 Rents.................................................................................18
5.15 Environmental Matters.................................................................18
5.16 Employee Benefit Plans................................................................19
5.17 Labor Matters.........................................................................20
5.18 No Brokers............................................................................20
5.19 Opinion of Financial Advisor..........................................................21
5.20 Bradley Share Ownership...............................................................21
(i)
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Page
5.21 Related Party Transactions............................................................21
5.22 Contracts and Commitments.............................................................21
5.23 Development Rights....................................................................22
5.24 Certain Payments Resulting From Transactions..........................................22
5.25 Tenant Improvements...................................................................22
5.26 Status of Options to Purchase Real Property...........................................23
5.27 Related Parties.......................................................................23
5.28 Definition of MDI's Knowledge.........................................................23
5.29 Disclosure............................................................................23
6. Representations and Warranties of Bradley......................................................23
6.1 Existence; Good Standing; Authority; Compliance With Law..............................23
6.2 Authorization, Validity and Effect of Agreements......................................24
6.3 Capitalization........................................................................25
6.4 Subsidiaries..........................................................................26
6.5 Other Interests.......................................................................26
6.6 No Violation..........................................................................26
6.7 SEC Documents.........................................................................27
6.8 Litigation. .........................................................................28
6.9 Absence of Certain Changes............................................................28
6.10 Taxes.................................................................................29
6.11 Books and Records.....................................................................30
6.12 Employee Benefit Plans................................................................30
6.13 Labor Matters.........................................................................31
6.14 No Brokers............................................................................31
6.15 MDI Stock Ownership...................................................................31
6.16 Definition of Bradley's Knowledge.....................................................31
6.17 Environmental Matters.................................................................32
6.18 Disclosure............................................................................32
7. Covenants......................................................................................32
7.1 Acquisition Proposals.................................................................32
7.2 Conduct of Businesses.................................................................33
7.3 Meeting of Stockholders...............................................................36
7.4 Filings; Other .......................................................................38
7.5 Inspection of Records.................................................................39
7.6 Publicity.............................................................................39
7.7 Initial Listing Application...........................................................39
7.8 Further Action........................................................................39
7.9 Affiliates of MDI.....................................................................40
7.10 Expenses..............................................................................40
7.11 Indemnification.......................................................................41
7.12 Reorganization........................................................................43
7.13 Certain Benefits......................................................................43
7.14 Dividends.............................................................................43
7.15 Environmental Matters.................................................................44
(ii)
<PAGE>
Page
8. Conditions.....................................................................................44
8.1 Conditions to Each Party's Obligation to Effect the Merger............................44
8.2 Conditions to Obligations of MDI to Effect the Merger.................................45
8.3 Conditions to Obligation of Bradley to Effect the Merger..............................46
9. Termination....................................................................................47
9.1 Termination...........................................................................47
9.2 Effect of Termination.................................................................49
9.3 Payment of Termination Amount or Expenses.............................................51
9.4 Extension; Waiver.....................................................................52
10. General Provisions.............................................................................53
10.1 Nonsurvival of Representations, Warranties and Agreements.............................53
10.2 Notices...............................................................................53
10.3 Assignment; Binding Effect; Benefit...................................................54
10.4 Entire Agreement......................................................................54
10.5 Confidentiality.......................................................................54
10.6 Amendment.............................................................................55
10.7 Governing Law; Jurisdiction and Venue.................................................56
10.8 Counterparts..........................................................................56
10.9 Headings..............................................................................56
10.10 Interpretation........................................................................56
10.11 Waivers...............................................................................56
10.12 Incorporation.........................................................................56
10.13 Severability..........................................................................57
10.14 Enforcement of Agreement..............................................................57
10.15 Certain Definitions...................................................................57
(iii)
<PAGE>
EXHIBITS
EXHIBIT A - Acknowledgment of Severance Obligation
EXHIBIT B - Form of Articles Supplementary Establishing and Fixing the Rights
and Preferences of a Series of Shares of Preferred Stock for the
8.4% Convertible Preferred Stock of Bradley
EXHIBIT C - Form of Option Termination Agreement
EXHIBIT D - Form of Affiliate Letter
EXHIBIT E - Form of Opinion of Deloitte & Touche LLP
EXHIBIT F - Form of Estoppel Certificate
SCHEDULES
Schedule 8.3(f) Leases and REA Agreements Requiring Estoppel Certificates
Schedule 8.3(g) Required Consents
</TABLE>
(iv)
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of May 30, 1998, between Bradley Real Estate, Inc., a Maryland
corporation ("Bradley"), and Mid-America Realty Investments, Inc., a Maryland
corporation ("MDI").
RECITALS
A. The Board of Directors of Bradley and the Board of Directors of MDI
each have determined that a business combination between Bradley and MDI is in
the best interests of their respective companies and stockholders and presents
an opportunity for their respective companies to achieve long-term strategic and
financial benefits, and accordingly have agreed to effect the merger provided
for herein upon the terms and subject to the conditions set forth herein.
B. For federal income tax purposes, it is intended that the merger
provided for herein shall qualify as a tax-free reorganization under Section 368
of the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a plan of reorganization under Section 368 of the
Code.
C. Each of Bradley and MDI has received a fairness opinion from its
financial advisor relating to the transactions contemplated hereby as more fully
described herein.
D. Bradley and MDI desire to make certain representations, warranties
and agreements in connection with the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
1. The Merger.
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3 hereof), MDI shall be merged
with and into Bradley in accordance with this Agreement and the separate
corporate existence of MDI shall thereupon cease (the "Merger"). Bradley shall
be the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation"). The Merger shall have the effects specified in
Section 3-114 of the Maryland General Corporation Law (the "MGCL").
1.2 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the offices of
Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts, at 9:00
a.m., local time, on the first
<PAGE>
business day immediately following the day on which the last of the conditions
set forth in Article 8 shall be fulfilled or waived in accordance herewith or
(b) at such other time, date or place as the parties hereto may agree. The date
on which the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger set forth in
Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, the parties
hereto shall cause Articles of Merger satisfying the requirements of the MGCL to
be properly executed, verified and delivered for filing in accordance with the
MGCL on the Closing Date. The Merger shall become effective upon the acceptance
for record of the Articles of Merger by the State Department of Assessments and
Taxation of Maryland in accordance with the MGCL or at such later time which the
parties hereto shall have agreed upon and designated in such filing in
accordance with applicable law as the effective time of the Merger (the
"Effective Time").
1.4 Amendments of Governing Documents of the MDI Subsidiaries. In
connection with the Closing, the Articles of Incorporation, Bylaws, partnership
agreements and equivalent documents for the MDI Subsidiaries (as defined in
Section 5.1 hereof) will be amended to make certain changes to such documents in
order to reflect the Merger and the transactions contemplated by this Agreement.
MDI and the MDI Subsidiaries will take all actions which are necessary to
effectuate such amendments and will use their best efforts to cause all of the
stockholders in any MDI Subsidiary and all of the partners in any MDI Subsidiary
to approve such amendments and, if necessary, the transactions contemplated by
this Agreement and to take such other actions to effectuate such amendments and
the transactions contemplated by this Agreement as may be reasonably requested
by Bradley.
1.5 Severance Pay Agreements. Bradley agrees that after the Effective
Time, it will assume and be bound by the terms of the severance agreements (the
"Severance Agreements") entered into by MDI with each of Jerome Heinrichs and
Dennis G. Gethmann. Prior to the Effective Time, and as soon as practicable
after this Agreement is signed, MDI shall supply Bradley with the calculation of
the actual severance payments that would be payable pursuant to the Severance
Agreements. In addition, MDI agrees to obtain acknowledgments in the form
attached as Exhibit A hereto (an "Acknowledgment of Severance Obligation") from
each of Jerome Heinrichs and Dennis G. Gethmann that such individual is not, and
will not be, entitled to receive any amounts from MDI pursuant to its Severance
Pay Policy.
ARTICLE 2
2. Charter and Bylaws of the Surviving Corporation.
2.1 Charter. The Charter (as defined in the MGCL) of Bradley in effect
immediately prior to the Effective Time shall be the Charter of the Surviving
Corporation, until duly amended in accordance with applicable law.
2
<PAGE>
2.2 Bylaws. The Bylaws of Bradley in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
ARTICLE 3
3. Directors and Officers of the Surviving Corporation.
3.1 Directors. The directors of Bradley immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
3.2 Officers. The officers of Bradley immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE 4
4. MDI Stock.
4.1 Conversion of the MDI Stock.
(a) At the Effective Time, each share of the common stock,
$.01 par value per share, of Bradley ("Bradley Common Stock") outstanding
immediately prior to the Effective Time shall remain outstanding and shall
represent one share of the Common Stock, $.01 par value per share, of the
Surviving Corporation.
(b) At the Effective Time, each share of common stock, par
value $.01 per share, of MDI (the "MDI Common Stock") issued and outstanding
immediately prior to the Effective Time (other than those shares of MDI Common
Stock to be canceled pursuant to Section 4.1(d)) shall, by virtue of the Merger
and without any action on the part of MDI, Bradley or the holders of any of the
securities of any of these corporations, be converted into the right to receive
0.42 (the "Exchange Ratio") of a share of Series A 8.4% Convertible Preferred
Stock of Bradley ("Bradley Preferred Stock"), the terms of which are
substantially in the form set forth in the Articles Supplementary Establishing
and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock
(the "Articles Supplementary") attached hereto as Exhibit B; provided, however,
that if between the date of this Agreement and the Effective Time the
outstanding shares of Bradley Common Stock shall have been changed into a
different number of shares or a different class or series, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(c) As a result of the Merger and without any action on the
part of the holder thereof, at the Effective Time, all shares of MDI Common
Stock shall cease to be outstanding, shall be canceled and retired and shall
cease to exist and each holder of a
3
<PAGE>
certificate representing any shares of MDI Common Stock (a "Certificate") shall
thereafter cease to have any rights with respect to such shares of MDI Common
Stock, except the right to receive, without interest, shares of Bradley
Preferred Stock and cash in lieu of fractional shares of Bradley Preferred Stock
in accordance with Section 4.2(d) (the "Merger Consideration") upon the
surrender of such Certificate.
(d) Each share of MDI Common Stock issued and held in MDI's
treasury at the Effective Time, if any, by virtue of the Merger, shall cease to
be outstanding, shall be canceled and retired and shall cease to exist and no
payment of any consideration shall be made with respect thereto.
(e) Each outstanding stock option to purchase a share of MDI
Common Stock (an "Existing MDI Option") granted under MDI's Amended and Restated
1994 Stock Option Plan or MDI's 1995 Stock Option Plan (together, the "MDI Stock
Option Plans") which has not been exercised by the Effective Time shall, at the
Effective Time, be canceled and upon the surrender and cancellation of the
option agreement representing such option and delivery of an Option Termination
(defined below), the holders of such options shall be entitled to receive, as
consideration therefor, an amount in cash equal to the excess, if any, of the
Option Consideration (defined below) over the per share exercise price of such
stock option, without interest thereon. For the purposes of this section,
"Option Consideration" shall mean the average last sale price (or bid price for
days on which there were no sales) per share of MDI Common Stock on the New York
Stock Exchange ("NYSE") for the ten trading days preceding the fifth day prior
to the Closing Date. MDI shall take all actions necessary to ensure that (i) all
Existing MDI Options, to the extent not exercised prior to the Effective Time,
shall terminate and be canceled as of the Effective Time and thereafter shall be
of no further force or effect, (ii) no Existing MDI Options are granted after
the date hereof, and (iii) the MDI Stock Option Plans and any and all other
outstanding option arrangements or plans of MDI shall terminate as of the
Effective Time. MDI hereby represents that immediately after the Effective Time,
no Existing MDI Option holder or other participant in MDI Stock Option Plans
shall have any right to acquire equity securities of MDI, Bradley, the Surviving
Corporation or any subsidiary or affiliate thereof. MDI shall obtain, prior to
the Closing, the consent, in the form attached as Exhibit C hereto, from each
holder of an Existing MDI Option to the termination of such Existing MDI Option
and the release of any and all rights such holder had or may have in such
Existing MDI Option as contemplated by this Section 4.1(c) and a representation
of such holder as to his or her title to such stock option and agreement to the
payment terms hereof (each such document, an "Option Termination").
4.2 Exchange of Certificates Representing MDI Common Stock.
(a) As of the Effective Time, Bradley shall deposit, or shall
cause to be deposited, with an exchange agent selected by Bradley on or prior to
the Effective Time (the "Exchange Agent"), for the benefit of the holders of
shares of MDI Common Stock, for exchange in accordance with this Article 4,
certificates representing the shares of Bradley Preferred Stock and the cash in
lieu of fractional shares (such cash and certificates for shares of Bradley
Preferred Stock being hereinafter referred to as the "Exchange Fund") to be
4
<PAGE>
issued pursuant to Section 4.1 and paid pursuant to this Section 4.2 in exchange
for outstanding shares of MDI Common Stock.
(b) Promptly after the Effective Time, Bradley shall cause the
Exchange Agent to mail to each holder of record of a Certificate or Certificates
(i) a letter of transmittal which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Bradley may reasonably specify and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Bradley Preferred Stock and cash in lieu of fractional
shares. Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of such Certificate shall
be entitled to receive in exchange therefor (x) a certificate representing the
number of whole shares of Bradley Preferred Stock to which such holder shall be
entitled, and (y) a check representing the amount of cash in lieu of fractional
shares, if any, plus the amount of any dividends, or distributions, if any,
pursuant to paragraph (c) below, after giving effect to any required withholding
tax, and the Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on the cash in lieu of fractional shares or on the
dividend or distribution, if any, payable to holders of Certificates pursuant to
this Section 4.2. In the event of a transfer of ownership of MDI Common Stock
which is not registered in the transfer records of MDI, a Certificate
representing the proper number of shares of Bradley Preferred Stock, together
with a check for the cash to be paid in lieu of fractional shares plus, to the
extent applicable, the amount of any dividend or distribution, if any, payable
pursuant to paragraph (c) below, may be issued to such a transferee if the
Certificate representing shares of such MDI Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Bradley Preferred Stock paid with respect to
any shares of MDI Common Stock represented by a Certificate shall be delivered
to the holder of such Certificate until such Certificate is surrendered for
exchange as provided herein and until such time, the Exchange Agent shall hold
the amount of such dividends or distributions as a part of the Exchange Fund
(subject to returns as provided in Section 4.3 hereof); provided, however, that,
subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
the whole shares of Bradley Preferred Stock 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 such whole shares of Bradley Preferred Stock and not paid, less
the amount of any withholding or other applicable 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
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Bradley Preferred Stock, less the amount of any withholding
or other applicable taxes which may be required thereon.
5
<PAGE>
(d) At and after the Effective Time, there shall be no
transfers on the stock transfer books of MDI of the shares of MDI Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for certificates for shares of Bradley Preferred
Stock and cash in lieu of fractional shares, if any, in accordance with this
Section 4.2. Certificates surrendered for exchange by any Person constituting an
"affiliate" of MDI for purposes of Rule 145, as such rule may be amended from
time to time ("Rule 145"), of the rules and regulations promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged until Bradley has received an Affiliate Letter in the form of Exhibit
D attached hereto (an "Affiliate Letter"), from such Person as provided in
Section 7.9.
(e) No fractional shares of Bradley Preferred Stock shall be
issued pursuant hereto. In lieu of the issuance of any fractional share of
Bradley Preferred Stock pursuant to Section 4.1(b), each holder of MDI Common
Stock upon surrender of a Certificate for exchange shall be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(i) the fraction of a share of Bradley Preferred Stock which such holder would
otherwise be entitled to receive under this Article 4 by (ii) $25.00.
4.3 Return of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any shares of Bradley
Preferred Stock and any dividends or distributions paid with respect thereto)
that remains unclaimed by the former stockholders of MDI one year after the
Effective Time shall be delivered to the Surviving Corporation. Any former
stockholders of MDI who have not theretofore complied with this Article 4 shall
thereafter look only to the Surviving Corporation for payment of their shares of
Bradley Preferred Stock and cash in lieu of fractional shares (plus dividends
and distributions to the extent set forth in Section 4.2(c), if any), as
determined pursuant to this Agreement, without any interest thereon. None of
Bradley, MDI, the Exchange Agent or any other Person shall be liable to any
former holder of shares of MDI Common Stock for any amount properly delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such Person of a bond in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent or the
Surviving Corporation will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Bradley Preferred Stock and cash in lieu of fractional
shares (plus, to the extent applicable, dividends and distributions payable
pursuant to Section 4.2(c)).
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ARTICLE 5
5. Representations and Warranties of MDI.
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Bradley, which shall refer to the relevant Sections of
this Agreement (the "MDI Disclosure Letter"), MDI represents and warrants to
Bradley as follows:
5.1 Existence; Good Standing; Authority; Compliance With Law. MDI is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Maryland. MDI is duly licensed or qualified to do business
as a foreign corporation and is in good standing under the laws of any other
state of the United States in which the character of the properties owned or
leased by it therein or in which the transaction of its business makes such
qualification necessary, which states are listed in Section 5.1 of MDI
Disclosure Letter; provided, however, that if MDI has prepared Section 5.1 of
the MDI Disclosure Letter in good faith, Bradley hereby covenants not to
exercise any right that it may have to terminate this agreement pursuant to
Section 9.1(c) based solely on any breach of the representation of MDI contained
in this sentence; provided further, however, that nothing contained in this
Section 5.1 shall affect Bradley's right to terminate this Agreement pursuant to
Section 9.1(c) with respect to any matter described in this sentence that occurs
or arises after the date hereof. MDI has all requisite corporate power and
authority to own, operate, lease and encumber its properties and carry on its
business as now conducted. Each of the MDI Subsidiaries (as defined below) is a
corporation or partnership duly incorporated or organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has the corporate or partnership power and authority to own its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires such
qualification, which states are listed in Section 5.4 of the MDI Disclosure
Letter; provided, however, that if MDI has prepared Section 5.1 of the MDI
Disclosure Letter in good faith, Bradley hereby covenants not to exercise any
right that it may have to terminate this agreement pursuant to Section 9.1(c)
based solely on any breach of the representation of MDI contained in this
sentence; provided further, however, that nothing contained in this Section 5.1
shall affect Bradley's right to terminate this Agreement pursuant to Section
9.1(c) with respect to any matter described in this sentence that occurs or
arises after the date hereof. Neither MDI nor any of the MDI Subsidiaries is in
violation of any order of any court, governmental authority or arbitration board
or tribunal, or any law, ordinance, governmental rule or regulation to which MDI
or any MDI Subsidiary or any of their respective properties or assets is
subject, except where such violation would not have a material adverse effect on
the business, results of operations, properties or financial condition of MDI
and the MDI Subsidiaries taken as a whole (a "MDI Material Adverse Effect"). MDI
and the MDI Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their business as now conducted,
except where the failure to obtain any such license, permit or authorization or
to take any such action would not have a MDI Material Adverse Effect. Copies of
the Charter or other equivalent documents, Bylaws, organizational documents and
partnership and joint venture agreements
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(and in each such case, all amendments thereto) of MDI and each of the MDI
Subsidiaries are listed in Section 5.1 of MDI Disclosure Letter, and the copies
of such documents, which have previously been delivered or made available to
Bradley and its counsel, are true and correct. For the purposes of this
Agreement, the term "MDI Subsidiary" shall include any of the entities listed
under such heading in Section 5.4 of the MDI Disclosure Letter.
5.2 Authorization, Validity and Effect of Agreements. Each of MDI and
the MDI Subsidiaries has the requisite power and authority to enter into the
transactions contemplated hereby and to execute and deliver this Agreement. The
Board of Directors of MDI has, by resolutions duly adopted by unanimous vote,
approved this Agreement, the Merger and the transactions contemplated by this
Agreement and has agreed to recommend that the holders of MDI Common Stock adopt
and approve this Agreement, the Merger and the transactions contemplated by this
Agreement at the MDI stockholders' meeting which will be held in accordance with
the provisions of Section 7.3. In connection with the foregoing, the Board of
Directors of MDI has taken such actions and votes as are necessary on its part
to render the provisions of the Control Share Acquisition Statute (Title 3,
Subtitle 7), the Business Combination Statute (Title 3, Subtitle 6) and all
other applicable takeover statutes of the MGCL and any other applicable takeover
statutes of any other state, inapplicable to this Agreement, the Merger and the
transactions contemplated by this Agreement. As of the date hereof, all of the
directors and executive officers of MDI have indicated that they presently
intend to vote all shares of MDI Common Stock which they own to approve this
Agreement, the Merger, and the transactions contemplated by this Agreement at
the MDI stockholders' meeting which will be held in accordance with the
provisions of Section 7.3. Subject only to the approval of this Agreement and
the transactions contemplated hereby by the holders of two-thirds of the
outstanding shares of MDI Common Stock, the execution by MDI and the MDI
Subsidiaries of this Agreement, the ancillary agreements to which they are
parties and the consummation of the transactions contemplated by this Agreement
and the ancillary agreements has been duly authorized by all requisite corporate
or partnership action on the part of such entities, including, without
limitation, the consent of the Class B Partner of MAB (as defined in Section
5.3(b) below). This Agreement constitutes, and the ancillary agreements to which
they are parties (when executed and delivered pursuant hereto) will constitute,
the valid and legally binding obligations of MDI and the MDI Subsidiaries,
enforceable against MDI and each of the MDI Subsidiaries in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, moratorium
or other similar laws relating to creditors' rights and general principles of
equity.
5.3 Capitalization.
(a) The authorized capital stock of MDI consists of 25,000,000
shares of MDI Common Stock of which 8,285,715 shares are issued and outstanding.
All such issued and outstanding shares of MDI Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. MDI has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of MDI on any matter.
Except for the Existing MDI Options (all of which have been issued under the MDI
Stock Option Plans), there are not at the date of this Agreement
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any existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate MDI to issue, transfer or
sell any shares of capital stock of MDI. Section 5.3(a) of the MDI Disclosure
Letter sets forth a full list of the Existing MDI Options, including the name of
the person to whom such stock options have been granted, the number of shares
subject to each option, the per share exercise price for each option, the
vesting schedule for each option and the termination date for each option. There
are no agreements or understandings to which MDI or any MDI Subsidiary is a
party with respect to the voting of any shares of MDI Common Stock or which
restrict the transfer of any such shares, nor does MDI have knowledge of any
such agreements or understandings with respect to the voting of any such shares
or which restrict the transfer of any such shares. There are no outstanding
contractual obligations of MDI or any MDI Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock, partnership interests or any
other securities of MDI or any MDI Subsidiary. All dividends which have been
declared with respect to MDI Common Stock have been paid in full. Neither MDI
nor any MDI Subsidiary is under any obligation, contingent or otherwise, by
reason of any agreement to register any of their securities under the Securities
Act. After the Effective Time the Surviving Corporation will have no obligation
to issue, transfer or sell any shares of capital stock or other equity interest
of MDI or the Surviving Corporation pursuant to any MDI Stock Option Plan or any
other MDI Benefit Plan (as defined in Section 5.16 hereof).
(b) The sole general partner of Mid-America Bethal Limited
Partnership, a Nebraska limited partnership ("MAB"), is MDI. As of the date
hereof, MDI owns a 50% partnership interest in MAB and is the Class A Partner,
as defined in the Amended and Restated Limited Partnership Agreement of MAB (the
"MAB Partnership Agreement") and the Class B Partner, as defined in the
Partnership Agreement, owns a 50% partnership interest in MAB as set forth in
Section 5.4 of the MDI Disclosure Letter. All such issued and outstanding
partnership interests are duly authorized, validly issued, fully paid, and free
of preemptive rights. There are not at the date of this Agreement, any existing
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate MAB to issue, transfer or sell
any partnership interests of MAB. There are no outstanding contractual
obligations of MAB to repurchase, redeem or otherwise acquire any partnership
interests of MAB. The partnership interests owned by MDI and, to the best
knowledge of MDI, the partnership interests owned by the Class B Partner, are
subject only to the restrictions on transfer set forth in the MAB Partnership
Agreement and those imposed by applicable securities laws. MAB has not issued or
granted, and is not a party to, any commitments of any kind relating to, or any
agreements or understandings with respect to, partnership interests or any other
interest in MAB or any securities convertible into partnership interests or such
other interests and neither the Class B Partner nor MDI has offered to purchase
the other's partnership interest or has notified the other of an offer by a
third party to purchase its partnership interest. All material notices, consents
and other written communications in the last two years between MAB and either
the Class B Partner or MDI or between the Class B Partner and MDI are listed in
Section 5.3 of the MDI Disclosure Letter. Prior to the date hereof, the Class B
Partner of MAB has consented in writing to the consummation of the transactions
contemplated in this Agreement and the resulting transfer of partnership
interests of MAB held by MDI to Bradley.
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5.4 Subsidiaries. Except as set forth in Section 5.4 of the MDI
Disclosure Letter, MDI owns directly all of the outstanding shares of capital
stock or all of the partnership or other equity interests of each of the MDI
Subsidiaries. Each of the outstanding shares of capital stock in each of the MDI
Subsidiaries having corporate form is duly authorized, validly issued, fully
paid and nonassessable. Except as set forth in Section 5.4 of the MDI Disclosure
Letter, each of the outstanding shares of capital stock of, or partnership or
other equity interests in, each of the MDI Subsidiaries is owned, directly or
indirectly, by MDI free and clear of all liens, pledges, security interests,
claims or other encumbrances. The following information for each the MDI
Subsidiary is set forth in Section 5.4 of the MDI Disclosure Letter: (i) its
name and jurisdiction of incorporation or organization; (ii) the jurisdictions
in which such entity is qualified to conduct business; (iii) its authorized
capital stock or share capital or partnership or other interests; (iv) the name
of each stockholder or owner of a partnership or other equity interest and the
number of issued and outstanding shares of capital stock or share capital or
percentage ownership for non-corporate entities held by it; and (v) the name of
the general partners, if applicable. Mid-America Centers Corp. is the only MDI
Subsidiary which is a "qualified REIT subsidiary" as such term is defined under
Section 856(i) of the Code.
5.5 Other Interests. Except for interests in the MDI Subsidiaries as
set forth in Section 5.4 of the MDI Disclosure Letter, neither MDI nor any MDI
Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, trust or other
entity (other than investments in short-term investment securities). With
respect to the interests set forth in Section 5.4 of the MDI Disclosure Letter,
MDI or the applicable MDI Subsidiary, as the case may be, is a partner or
stockholder in good standing, owns such interests free and clear of all liens,
pledges, security interests, claims, options or other encumbrances, is not in
breach of any provision of any agreement, document or contract governing such
entity's rights in or to the interests owned or held, all of which agreements,
documents and contracts are set forth in Section 5.4 of the MDI Disclosure
Letter, and have not been modified or amended since their description therein,
and are in full force and effect and, to the best of the knowledge of MDI, the
other parties to such agreements, documents or contracts are not in breach of
any of their respective obligations under such agreements, documents or
contracts, and to the best of the knowledge of MDI, if such other entities were
included within the definition of MDI Subsidiaries for purposes of this
Agreement, there would be no exceptions or breaches to the representations and
warranties made in this Article for the MDI Subsidiaries.
5.6 No Violation. Neither the execution and delivery by MDI and the MDI
Subsidiaries of this Agreement or the ancillary agreements nor the consummation
by MDI and the MDI Subsidiaries of the transactions contemplated by this
Agreement and the ancillary agreements in accordance with their terms, will: (i)
conflict with or result in a breach of any provisions of the Charter, Bylaws,
organizational documents, partnership agreements, or joint venture agreements of
MDI or any MDI Subsidiary; (ii) result in a breach or violation of, a default
under, or the triggering of any payment or other material obligations pursuant
to, or accelerate vesting under, the MDI Stock Option Plans, or any grant or
award made thereunder; (iii) except as set forth in Section 5.6 of the MDI
Disclosure Letter, violate, or conflict with, or result in a breach of any
provision of, or
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constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties of MDI or the MDI Subsidiaries under, or result in
being declared void, voidable or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which MDI or any of the MDI Subsidiaries
is a party, or by which MDI or any of the MDI Subsidiaries or any of their
properties is bound or affected, which would have a material adverse effect on
any of the MDI Properties (as defined in Section 5.12 hereof), individually or
in the aggregate; or (iv) other than the filings provided for in Article 1 of
this Agreement, or required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Securities Act or applicable state securities and
"Blue Sky" laws (collectively, the "Regulatory Filings"), require any consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority except where the failure to obtain any such
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority would not have a MDI Material
Adverse Effect.
5.7 SEC Documents. A complete list of filings by MDI with the United
States Securities and Exchange Commission ("SEC") filings and each (A)
registration statement, (B) annual report on Form 10-K, (C) quarterly report on
Form 10-Q, (D) current report on Form 8-K, (E) proxy statement or information
statement, and (F) other reports filed with the SEC pursuant to the requirements
of the Exchange Act or the Securities Act (in all such cases, including all
exhibits, amendments and supplements thereto), prepared by MDI or any of the MDI
Subsidiaries or relating to properties of MDI or the MDI Subsidiaries since
January 1, 1994, is set forth in Section 5.7 of the MDI Disclosure Letter, and
copies of such documents, in the form (including exhibits and any amendments
thereto) filed with the SEC, have previously been provided or made available to
Bradley or its counsel (collectively, the "MDI Reports"). The MDI Reports were
filed with the SEC in a timely manner and constitute all forms, reports and
documents required to be filed by MDI under the Securities Act, the Exchange Act
and the rules and regulations promulgated thereunder (the "Securities Laws")
since January 1, 1994. As of their respective dates, the MDI Reports (i)
complied as to form in all material respects with the applicable requirements of
the Securities Laws and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. Each of the consolidated balance sheets of
MDI included in or incorporated by reference into the MDI Reports (including the
related notes and schedules) fairly presents the consolidated financial position
of MDI and the MDI Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of MDI included in or
incorporated by reference into the MDI Reports (including any related notes and
schedules) fairly presents the results of operations, retained earnings or cash
flows, as the case may be, of MDI and the MDI Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to normal year-end
audit adjustments which would not be material in amount or effect), in each
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case in accordance with generally accepted accounting principles consistently
applied during the periods involved, except as may be noted therein and except,
in the case of the unaudited statements, as permitted by Form 10-Q of the SEC.
Except as and to the extent set forth on the consolidated balance sheet of MDI
and the MDI Subsidiaries at December 31, 1997, including all notes thereto,
neither MDI nor any of the MDI Subsidiaries has any material liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved against in, a balance
sheet of MDI or in the notes thereto, prepared in accordance with generally
accepted accounting principles consistently applied, except liabilities arising
in the ordinary course of business since such date and liabilities for expenses
of attorneys, accountants and investment bankers incurred in connection with the
Merger. MDI represents and warrants that, as of the date hereof, it is eligible
under the regulations promulgated under the Securities Act to register the
primary issuance of its securities on Form S-3.
5.8 Litigation. Except as disclosed in Section 5.8 of the MDI
Disclosure Letter, and other than personal injury and other routine tort
litigation arising from the ordinary course of operations of MDI and the MDI
Subsidiaries (a) which are covered by adequate insurance or (b) for which all
material costs and liabilities arising therefrom are reimbursable pursuant to
common area maintenance or similar agreements, there is no suit, action or
proceeding pending (in which service of process has been received by an employee
of MDI or a MDI Subsidiary) or, to the best knowledge of MDI, threatened in
writing against or affecting MDI or any MDI Subsidiary or any of their
respective assets or properties nor is there any judgment, decree, injunction,
rule or order of any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign ("Governmental
Entity") or arbitrator outstanding against or affecting MDI or any MDI
Subsidiary or any of their respective assets or properties (any such proceeding
hereinafter referred to as "Litigation"); provided, however, that if MDI has
prepared Section 5.8 of the MDI Disclosure Letter in good faith, Bradley hereby
covenants not to exercise any right that it may have to terminate this agreement
pursuant to Section 9.1(c) based solely on any breach of the representation of
MDI contained in this sentence; provided further, however, that nothing
contained in this Section 5.8 shall affect Bradley's right to terminate this
Agreement pursuant to Section 9.1(c) with respect to any matter described in
this sentence that occurs or arises after the date hereof.
5.9 Absence of Certain Changes or Events. Except as disclosed in
Section 5.9 of the MDI Disclosure Letter, since the date of the most recent
audited financial statements included in MDI Reports (the "MDI Financial
Statement Date"), MDI and the MDI Subsidiaries have conducted their business
only in the ordinary course and there has not been (a) any change which has had
a MDI Material Adverse Effect, nor has there been any occurrence or circumstance
that with the passage of time would reasonably be expected to result in a MDI
Material Adverse Effect, (b) except for regular quarterly distributions not in
excess of $.22 per share of MDI Common Stock, respectively (or, with respect to
the period commencing on the date hereof and ending on the Closing Date,
distributions as necessary to maintain REIT status), in each case with customary
record and payment dates, any authorization, declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the MDI Common Stock, (c) any split,
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combination or reclassification of the MDI Common Stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for, or giving the right to acquire by exchange or exercise,
shares of capital stock of MDI or partnership interests in MAB or any issuance
of an ownership interest in, any MDI Subsidiary, (d) any damage, destruction or
loss, whether or not covered by insurance, that has or might reasonably be
expected to have a MDI Material Adverse Effect, (e) any change in accounting
methods, principles or practices by MDI or any MDI Subsidiary materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles ("GAAP"), or
(f) any amendment of any employment, consulting, severance, retention or any
other agreement between MDI or any Second Party Subsidiary and any officer or
director of MDI or any MDI Subsidiary.
5.10 Taxes.
(a) MDI and each of the MDI Subsidiaries has paid or caused to
be paid all federal, state, local, foreign, and other taxes, including without
limitation, income taxes, estimated taxes, alternative minimum taxes, excise
taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income, and all deficiencies, or other additions to tax, interest,
fines and penalties (collectively, "Taxes"), owed by it through the date hereof.
(b) MDI and each of the MDI Subsidiaries has timely filed, or
requested extensions to file, all federal, state, local and foreign tax returns
required to be filed by any of them through the date hereof, and all such
returns are complete and accurate. Attached as Section 5.10 to the MDI
Disclosure Letter is a list all written requests for extension of filing
obligations which MDI has submitted to the IRS and a summary of the current
status of the filing.
(c) As of December 31, 1997 and March 31, 1998, MDI had a net
operating loss carry forward for federal income tax purposes of $1,072,921 and
$1,072,921, respectively.
(d) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting by written notice to MDI or any MDI
Subsidiary or, to the knowledge of MDI or the MDI Subsidiaries, threatening to
assert against MDI or any MDI Subsidiary any deficiency or claim for additional
Taxes. There is no dispute or claim concerning any Tax liability of MDI or any
MDI Subsidiary, either claimed or raised by any governmental authority, or as to
which any officer of MDI or any MDI Subsidiary has reason to believe may be
claimed or raised by any federal or state governmental authority. No claim has
ever been made by a taxing authority in a jurisdiction where MDI or any MDI
Subsidiary does not file reports and returns that MDI or any MDI Subsidiary is
or may be subject to taxation by that jurisdiction. There are no security
interests on any of the assets of MDI or any MDI Subsidiary that arose in
connection with any failure (or alleged failure) to
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pay any Taxes. Neither MDI nor any of the MDI Subsidiaries has ever entered into
a closing agreement pursuant to Section 7121 of the Code.
(e) Neither MDI nor any of the MDI Subsidiaries has received
written notice of any audit of any tax return filed by MDI or any MDI
Subsidiary, and neither MDI nor any of the MDI Subsidiaries has been notified by
any tax authority that any such audit is contemplated or pending. Except as set
forth in Section 5.10 of the MDI Disclosure Letter, neither MDI nor any of the
MDI Subsidiaries has executed or filed with the IRS or any other taxing
authority any agreement now in effect extending the period for assessment or
collection of any income or other taxes, and no extension of time with respect
to any date on which a tax return was or is to be filed by MDI or any MDI
Subsidiary is in force. True, correct and complete copies of all federal, state
and local income or franchise tax returns filed by MDI and each of the MDI
Subsidiaries and all communications relating thereto have been delivered to
Bradley or made available to representatives of Bradley.
(f) MDI and each MDI Subsidiary has withheld and paid all
taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
party.
(g) Each of the MDI Subsidiaries of which all the outstanding
capital stock is owned solely by MDI is a Qualified REIT Subsidiary as defined
in Section 856(i) of the Code. MAB and each of the other MDI Subsidiaries listed
as a partnership or limited liability company in Section 5.4 of the MDI
Disclosure Letter are, and have been at all times, properly classified as
partnerships for federal income tax purposes and not as publicly-traded
partnerships.
(h) For all tax years of MDI, MDI has qualified as a real
estate investment trust ("REIT") within the meaning of Sections 856-860 of the
Code, including, without limitation, the requirements of Sections 856 and 857 of
the Code. For the periods described in the preceding sentence, MDI has met all
requirements necessary to be treated as a REIT for purposes of the income tax
provisions of those states in which MDI is subject to income tax and which
provide for the taxation of REITs in a manner similar to the treatment of REITs
under Sections 856-860 of the Code. For the short period ended with the date
hereof, MDI has operated in a manner that will allow it to qualify as a REIT for
the period January 1, 1998 through the Closing Date.
5.11 Books and Records.
(a) The books of account and other financial records of MDI
and each of the MDI Subsidiaries are true, complete and correct in all material
respects, have been maintained in accordance with good business practices, and
are accurately reflected in all material respects in the financial statements
included in the MDI Reports.
(b) The minute books and other records of MDI and each of the
MDI Subsidiaries have been made available to Bradley, contain in all material
respects accurate records of all meetings and accurately reflect in all material
respects all other corporate
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action of the stockholders and directors and any committees of the Board of
Directors of MDI and each of the MDI Subsidiaries and all actions of the
partners of each of the MDI Subsidiaries.
5.12 Properties. All of the real estate properties owned by MDI and
each of the MDI Subsidiaries are set forth in Section 5.12 of the MDI Disclosure
Letter. Except as set forth in Section 5.12 of the MDI Disclosure Letter, MDI
and each MDI Subsidiary owns fee simple title to each of the real properties
identified in the MDI Disclosure Letter (the "MDI Properties"), free and clear
of liens, mortgages or deeds of trust, claims against title, charges which are
liens, security interests or other encumbrances on title (collectively,
"Encumbrances") and the MDI Properties are not subject to any rights of way,
written agreements, laws, ordinances and regulations affecting building use or
occupancy, or reservations of an interest in title (collectively, "Property
Restrictions"), except for (x) Property Restrictions imposed or promulgated by
law or any governmental body or authority with respect to real property,
including zoning regulations, that do not adversely affect the current use of
the property, materially detract from the value of or materially interfere with
the present use of the property, (y) Encumbrances and Property Restrictions
disclosed on existing title reports or current surveys (in either case copies of
which title reports and surveys have been delivered or made available to Bradley
and are listed in Section 5.12 of the MDI Disclosure Letter), and (z)
mechanics', carriers', workmen's or repairmen's liens and other Encumbrances,
Property Restrictions and other limitations of any kind, if any, which,
individually or in the aggregate, are not material in amount, do not materially
detract from the value of or materially interfere with the present use of any of
the MDI Properties subject thereto or affected thereby, and do not otherwise
materially impair business operations conducted by MDI and the MDI Subsidiaries
and which have arisen or been incurred only in the ordinary course of business.
Valid policies of title insurance have been issued insuring MDI's or the
applicable MDI Subsidiary's fee simple title to each of the MDI Properties in
amounts at least equal to the purchase price thereof, and such policies are, at
the date hereof, in full force and effect and no claim has been made against any
such policy and MDI has no knowledge of any facts or circumstances which would
constitute the basis for such a claim. To the best knowledge of MDI, (i) no
certificate, permit or license from any governmental authority having
jurisdiction over any of the MDI Properties or any agreement, easement or other
right which is necessary to permit the lawful use and operation of the buildings
and improvements on any of the MDI Properties or which is necessary to permit
the lawful use and operation of all driveways, roads and other means of egress
and ingress to and from any of the MDI Properties (a "REA Agreement") has not
been obtained and is not in full force and effect, and there is no pending
threat of modification or cancellation of any of the same nor is MDI nor any MDI
Subsidiary currently in default under any REA Agreement and the MDI Properties
are in full compliance with all governmental permits, licenses and certificates,
except for any of the foregoing matters which would have a material adverse
effect on any of the MDI Properties, individually or in the aggregate; (ii) no
written notice of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement affecting any portion of any of the
MDI Properties has been issued by any governmental authority and none of the MDI
Properties are in violation of any such federal, state or municipal law, order,
ordinance, regulation or requirement, including, without limitation, the
Americans with Disabilities Act, except for
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such violations that would not have a material adverse effect on any of the MDI
Properties, individually or in the aggregate; (iii) there are no material
structural defects relating to any of the MDI Properties; (iv) there is no MDI
Property whose building systems are not in working order in any material
respect; (v) there is no physical damage to any MDI Property in excess of
$10,000 for which there is no insurance in effect covering the full cost of the
restoration; or (vi) there is no current renovation or restoration or tenant
improvements to any MDI Property or any portion thereof, the cost of which
exceeds $10,000, except in each instance as set forth in Section 5.12 of the MDI
Disclosure Letter. The use and occupancy of each of the MDI Properties complies
in all material respects with all applicable codes and zoning laws and
regulations, and MDI has no knowledge of any pending or threatened proceeding or
action that will in any manner affect the size of, use of, improvements on,
construction on, or access to any of the MDI Properties, with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such MDI Properties. Neither MDI nor any of the MDI Subsidiaries has received
any notice to the effect that (A) any betterment assessments have been levied
against, or any condemnation or rezoning proceedings are pending or threatened
with respect to any of the MDI Properties or (B) any zoning, building or similar
law, code, ordinance, order or regulation is or will be violated by the
continued maintenance, operation or use of any buildings or other improvements
on any of the MDI Properties or by the continued maintenance, operation or use
of the parking areas. Except as set forth in Section 5.12 of the MDI Disclosure
Letter, to the best knowledge of MDI, there are no facts or circumstances under
which the owner of real estate (other than MDI) can cause MDI to breach or be in
default under any lease or REA Agreement. Section 5.12 of MDI's Disclosure
Letter sets forth all fire and extended coverage casualty policies issued to MDI
and the amounts of such coverage.
5.13 Leases.
(a) Section 5.13 of the MDI Disclosure Letter sets forth a
true, accurate and complete rent roll for each of the MDI Properties (the "Rent
Roll") as of December 31, 1997. The Rent Roll includes, without limitation, the
name of the tenant, the space leased, the lease expiration date, security and
other deposits, prepaid rent (for more than 30 days), percentage rent, pro rata
share of operating expenses, taxes, charges and assessments. Section 5.13 of the
MDI Disclosure Letter contains a list of known defaults and a list of any
extraordinary clauses including, without limitation, any "kick-out" clauses,
cotenancy requirements or exclusions, exclusives, restrictions, "go-dark"
clauses, or clauses requiring any future funding of tenant improvements. Except
as noted in Section 5.13 of the MDI Disclosure Letter, to MDI's knowledge, there
is no violation of any cotenancy, exclusive or restriction listed in such
Section 5.13.
(b) As of the last day of the calendar month immediately
preceding the date hereof, (i) each of the leases and tenancies for all or any
portion of the MDI Properties (the "MDI Leases") is valid and subsisting and in
full force and effect, has not been amended, modified or supplemented; (ii) the
tenant under each of the MDI Leases is in actual possession of the leased
premises; (iii) no tenants are in arrears for the payment of rent for any month
preceding the month of the date of this Agreement or otherwise in default of
such tenant's lease obligations as to which MDI has given notice of default to
such tenant; and (iv)
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neither MDI nor any MDI Subsidiary has received any written notice from any
tenant of any intention to vacate. Neither MDI nor any MDI Subsidiary has
collected payment of rent (other than security deposits) accruing for a period
which is more than one month beyond the date of collection.
(c) MDI has previously delivered or made available to
Bradley a true and correct copy of all MDI Leases.
(d) As of the last day of the calendar month immediately
preceding the date hereof, no tenant under any of the MDI Leases has asserted
any claim of which MDI or any MDI Subsidiary has received written notice which
would materially affect the collection of rent from such tenant and neither MDI
nor any MDI Subsidiary has received written notice of any material default or
breach on the part of MDI or any MDI Subsidiary under any of the MDI Leases
which has not been cured.
(e) Section 5.13 of the MDI Disclosure Letter sets forth a
complete and correct list, as of the date hereof, of all written or oral
commitments made by MDI or any MDI Subsidiary to lease any of the MDI Properties
or any portion thereof which has not yet been reduced to a written lease. MDI
has provided true and correct copies of all such written commitments to Bradley
and Section 5.13 of the MDI Disclosure Letter provides with respect to each such
oral commitment the principal terms of such commitment, including, if
applicable, (i) the space to be occupied, (ii) the name of the tenant, (iii) the
length of the original term thereof and any right or option to renew or extend
the lease term, (iv) the monthly minimum rental, (v) rental escalations, (vi)
the terms with respect to percentage rent or other overage rent, (vii) any
provisions for tenant allowances and tenant build-out and (viii) the right of
any third-party broker to any outstanding brokerage or other commission
incidental thereto and all other financial terms.
(f) All material leases pursuant to which MDI or any MDI
Subsidiary, as lessee, leases real or personal property are in good standing,
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, any material existing default or any event which with
notice or lapse of time or both would constitute such a default, nor do any of
such leases contain any provision which would preclude the Surviving Corporation
from occupying and using the leased premises for the same purposes and upon
substantially the same rental and other terms as are applicable to the
occupation and use by MDI and the MDI Subsidiaries.
5.14 Rents. The rents and other income and charges set forth in Section
5.13 of the MDI Disclosure Letter are the actual rents, income and charges
presently being charged by MDI and the MDI Subsidiaries under the MDI Leases. No
space is occupied rent free or at a rental rate reduced from the rate stated in
Section 5.13 of the MDI Disclosure Letter. No tenant under any of the MDI Leases
is entitled to any purchase option, concessions, allowances, abatements,
set-offs, rebates or refunds or has prepaid any rents or other charges for more
than one month. None of the MDI Leases and none of the rents or other amounts
payable thereunder have been assigned, pledged or encumbered, other than to
lenders, as described in Section 5.22 of the MDI Disclosure Letter. No brokerage
or leasing
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commission or other compensation will be due or payable to any Person, firm,
corporation or other entity with respect to or on account of any of the MDI
Leases or any extensions or renewals thereof on and after the Effective Time.
5.15 Environmental Matters. None of MDI, any MDI Subsidiary or, to the
best knowledge of MDI, any other Person has caused or permitted (a) the presence
of any hazardous substances, hazardous materials, toxic substances or waste
materials (collectively, "Hazardous Materials") on any of the MDI Properties, or
(b) any spills, releases, discharges or disposal of Hazardous Materials to have
occurred or be presently occurring on or from any of the MDI Properties as a
result of any construction on or operation and use of such properties, which
presence or occurrence could, individually or in the aggregate, have a MDI
Material Adverse Effect; and in connection with the construction on or operation
and use of the MDI Properties, neither MDI nor any of the MDI Subsidiaries has
failed to comply, in any material respect, with any applicable local, state or
federal environmental law, regulation, ordinance or administrative and judicial
order relating to the generation, recycling, reuse, sale, storage, handling,
transport and disposal of any Hazardous Materials. In addition, no lien has ever
been imposed by any governmental agency on the MDI Properties in connection with
the presence of any Hazardous Materials and neither MDI nor any MDI Subsidiary
has ever entered into or been subject to any judgment, consent decree,
compliance order, or administrative order with respect to any environmental or
health and safety matter except for such judgments, consent decrees, compliance
orders or administrative orders that would not have a material adverse effect on
any of the MDI Properties, individually or in the aggregate, or received any
request for information, notice, demand letter, administrative inquiry, or
formal or informal complaint or claim with respect to any environmental or
health and safety matter within the last seven years. The MDI has provided to
Bradley copies of all documents, records, and information available to MDI and
any MDI Subsidiary concerning any environmental or health and safety matter
relevant to any MDI Properties, including, without limitation, environmental
risk assessments, site assessments, documentation regarding off-site disposal of
any Hazardous Materials, and reports, correspondence, permits, licenses,
approvals, consents, and other authorizations related to environmental or health
and safety matters issued by any governmental agency. In addition, MDI has
disclosed to Bradley all sites formerly or currently owned or operated by MDI or
any MDI Subsidiary.
5.16 Employee Benefit Plans.
(a) All employee benefits plans (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and other benefit arrangements covering employees of MDI and the MDI
Subsidiaries, other than any multiemployer plan (within the meaning of Section
3(37) of ERISA) (the "MDI Benefit Plans") are listed in Section 5.16(a) of the
MDI Disclosure Letter. True and complete copies of the MDI Benefit Plans have
been provided or made available to Bradley. To the extent applicable, the MDI
Benefit Plans have been administered in all material respects in accordance with
their terms and comply, in all material respects, with the applicable
requirements of ERISA and the Code. Any MDI Benefit Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS or a
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determination letter request has been filed with the IRS with respect to any
such plan and is still pending. No MDI Benefit Plan is covered by Title IV of
ERISA or Section 412 of the Code. No MDI Benefit Plan nor MDI or any MDI
Subsidiary has incurred any liability or penalty under Section 4975 of the Code
or Section 502(i) of ERISA. There are no pending or anticipated claims against
or otherwise involving any of the MDI Benefit Plans and no suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of MDI
Benefit Plan activities) has been brought against or with respect to any such
MDI Benefit Plan. All contributions required to be made as of the date hereof to
the MDI Benefit Plans have been made or provided for. Except as otherwise
required by Sections 601 through 608 of ERISA, Section 4980B of the Code and
applicable state laws, MDI does not maintain or contribute to any plan or
arrangement which provides or has any liability to provide life insurance,
medical or other employee welfare benefits to any employee or former employee
upon his retirement or termination of employment and MDI has never represented,
promised or contracted (whether in oral or written form) to any employee or
former employee that such benefits would be provided. Except as set forth in the
Severance Agreements, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional subsequent events directly related to the transaction
contemplated herein) (i) constitute an event under any MDI Benefit Plan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligations to fund benefits with respect to any employee, director
or consultant of MDI or any MDI Subsidiary pursuant to any MDI Benefit Plan or
(ii) result in the triggering or imposition of any restrictions or limitations
on the right of MDI or Bradley to amend or terminate any MDI Benefit Plan. No
payment or benefit which will be required to be made pursuant to the terms of
any agreement, commitment or MDI Benefit Plan, as a result of the transactions
contemplated by this Agreement, to any officer, director or employee of MDI or
any of the MDI Subsidiaries, could be characterized as an "excess parachute
payment" within the meaning of Section 280G of the Code or non-deductible by
virtue of Section 162(m) of the Code. MDI represents and warrants that the
Severance Pay Policy described in MDI's employee handbook does not apply to
either of Jerome Heinrichs or Dennis G.
Gethmann.
(b) Except as listed in Section 5.16(b) of the MDI Disclosure
Letter, neither MDI nor any MDI Subsidiary contributes to or has any liability
to contribute to a multiemployer plan. All contributions have been made as
required by the terms of each of the plans listed in Section 5.16(b) of the MDI
Disclosure Letter and the terms of any related collective bargaining agreements
and neither MDI nor any MDI Subsidiary has any knowledge or received any notice
that any such plan is in reorganization, that increased contributions are
required to avoid a reduction in plan benefits or the imposition of any excise
tax, that any such plan is or has been funded at a rate less than required under
Section 412 of the Code, or that any such plan is insolvent.
5.17 Labor Matters. Neither MDI nor any MDI Subsidiary is a party to,
or bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor union organization. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
MDI, threatened against MDI or any
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of the MDI Subsidiaries relating to their business, except for any such
proceeding which would not have a MDI Material Adverse Effect. To the knowledge
of MDI, there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of MDI or any of the MDI Subsidiaries.
5.18 No Brokers. Neither MDI nor any of the MDI Subsidiaries has
entered into any contract, arrangement or understanding with any Person or firm
which may result in the obligation of such entity or Bradley to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that MDI has retained SBC Warburg
Dillon Reed ("SBC") as its financial advisors, the arrangements with which have
been disclosed in writing to Bradley prior to the date hereof. Other than the
foregoing arrangements and Bradley's arrangement with BT Alex. Brown & Sons
Incorporated ("Alex. Brown"), MDI is not aware of any claim for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
5.19 Opinion of Financial Advisor. MDI has received the opinion of SBC,
to the effect that, as of the date hereof, the Merger Consideration is fair to
the holders of MDI Common Stock from a financial point of view, and has
delivered a true and correct copy of such opinion to Bradley.
5.20 Bradley Share Ownership. Neither MDI nor any of the MDI
Subsidiaries owns any shares of Bradley Common Stock or other securities
convertible into any shares of Bradley Common Stock.
5.21 Related Party Transactions. Set forth in Section 5.21 of the MDI
Disclosure Letter is a list of all arrangements, agreements and contracts
entered into by MDI or any of the MDI Subsidiaries (which are or will be in
effect as of or after the date of this Agreement) with (i) any consultant, other
than investment bankers, accountants or lawyers retained in the ordinary course
of business or for the purposes of the transaction contemplated hereby (A)
involving payments in excess of $25,000 or (B) which may not be terminated at
will by MDI or the MDI Subsidiary which is a party thereto, (ii) any Person who
is an officer, director or affiliate of MDI or any of the MDI Subsidiaries, any
relative of any of the foregoing or any entity of which any of the foregoing is
an affiliate, except for MDI Benefit Plans of which such individuals are
participants or (iii) any Person who acquired MDI Common Stock in a private
placement. All such documents are listed in Section 5.21 of the MDI Disclosure
Letter and the copies of such documents, which have previously been provided or
made available to Bradley and its counsel, are true and correct copies. All of
the management, leasing or other contracts to which any of the MDI Subsidiaries
or any affiliate of MDI is a party, receives income from or has obligations or
liabilities arising out of are listed on Section 5.21 of the MDI Disclosure
Letter.
5.22 Contracts and Commitments. Section 5.22 of the MDI Disclosure
Letter sets forth (i) all notes, debentures, bonds and other evidence of
indebtedness which are secured or
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collateralized by mortgages, deeds of trust or other security interests in the
MDI Properties or personal property of MDI and each of the MDI Subsidiaries and
(ii) each material commitment, contractual obligation, borrowing, capital
expenditure or transaction (each, a "Commitment") entered into by MDI or any of
the MDI Subsidiaries which may result in total payments by or liability of MDI
or any MDI Subsidiary in excess of $10,000. Copies of the foregoing are listed
in Section 5.22 of the MDI Disclosure Letter and the copies of such documents,
which have previously been provided or made available to Bradley and its
counsel, are true and correct. None of MDI or any of the MDI Subsidiaries has
received any notice of a default that has not been cured under any of the
documents described in clause (i) above or is in default respecting any payment
obligations thereunder beyond any applicable grace periods except where such
default would not have a MDI Material Adverse Effect. All joint venture
agreements to which MDI or any of the MDI Subsidiaries is a party are set forth
in Section 5.22 of the MDI Disclosure Letter and neither MDI nor any of the MDI
Subsidiaries is in default with respect to any obligations, which individually
or in the aggregate are material, thereunder.
5.23 Development Rights. Set forth in Section 5.23 of the MDI
Disclosure Letter is a list of all agreements entered into by MDI or any of the
MDI Subsidiaries relating to the development or construction of the MDI
Properties and a description of the current status of each such development. The
copies of such agreements are listed in Section 5.23 of the MDI Disclosure
Letter, and such copies, which have previously been provided to Bradley and its
counsel, are true and correct. All work to be performed, payments to be made and
actions to be taken by MDI or any of the MDI Subsidiaries prior to the date
hereof pursuant to any agreement entered into with a governmental body or
authority in connection with the development of the MDI Properties, including
any development agreement relating to a site approval, zoning reclassification
or other similar action (e.g., local improvement district, road improvement
district, environmental mitigation, etc.) has been performed, paid or taken, as
the case may be, and MDI is not aware of any planned or proposed work, payments
or actions that may be required after the date hereof pursuant to such
agreements.
5.24 Certain Payments Resulting From Transactions. Except for the
vesting of options as set forth in Section 5.3 of the MDI Disclosure Letter and
except as set forth in Section 5.24 of the MDI Disclosure Letter, the execution
of, and performance of the transactions contemplated by, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events) (i)
constitute an event under any MDI Benefit Plan, policy, practice, agreement or
other arrangement or any trust or loan (the "Employee Arrangements") that will
or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee, director
or consultant of MDI or any of the MDI Subsidiaries, or (ii) result in the
triggering or imposition of any restrictions or limitations on the right of MDI
or Bradley to amend or terminate any Employee Arrangement and receive the full
amount of any excess assets remaining or resulting from such amendment or
termination, subject to applicable taxes. No payment or benefit which will be
required to be made pursuant to the terms of any agreement, commitment or MDI
Benefit Plan, as a result of the transactions contemplated by this Agreement, to
any officer, director or employee of MDI or any of the MDI Subsidiaries,
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could be characterized as an "excess parachute payment" within the meaning of
Section 280G of the Code.
5.25 Tenant Improvements. Section 5.25 of the MDI Disclosure Letter
contains (i) a list of any unfunded tenant improvements being conducted by MDI
or any MDI Subsidiary in excess of $10,000 and (ii) to the best knowledge of
MDI, the aggregate amount of all unfunded tenant improvements for all MDI
Properties. MDI and each MDI Subsidiary has delivered or made available true and
correct copies of any and all contracts, plans, specifications and agreements in
connection with all tenant improvements in excess of $10,000.
5.26 Status of Options to Purchase Real Property. All options of MDI or
any of the MDI Subsidiaries to purchase real property, including a description
of the current status, conditions and contingencies relating to each of such
options, are set forth in Section 5.26 of the MDI Disclosure Letter.
5.27 Related Parties. Except as set forth in Section 5.27 of the MDI
Disclosure Letter, (i) MDI does not have any outstanding agreements,
arrangements or understandings, including, without limitation, leases and
promissory notes, with any Person who is or was an officer or director of MDI at
any time in the last eight (8) years, including, without limitation, Donald F.
Day, Christopher R. Held, Terry L. Clauff and Joseph H. Carter, or with any
Person that is owned in part or controlled by any such individual, and (ii)
there is no Litigation pending or, to the knowledge of MDI, threatened,
involving, relating to or affecting MDI and any Person who is or was an officer
or director of MDI at any time in the last eight (8) years, including, without
limitation, Donald F. Day, Christopher R. Held, Terry L. Clauff and Joseph H.
Carter, or any Person that is owned in part or controlled by any such
individual.
5.28 Definition of MDI's Knowledge. As used in this Agreement, the
phrase "to the knowledge of MDI" or "to the best knowledge of MDI" (or words of
similar import) means the knowledge or the best knowledge of those individuals
identified in Section 5.28 of the MDI Disclosure Letter, and includes any fact,
matter or circumstance which any of such individuals, as an ordinary and prudent
business person employed in the same capacity in the same type and size of
business as MDI, should have known.
5.29 Disclosure. The representations, warranties and statements made by
MDI in this Agreement, the ancillary agreements and in the MDI Disclosure Letter
and in the certificates and other documents delivered pursuant hereto do not
contain any untrue statement of a material fact, and, when taken together, do
not omit to state any material fact necessary to make such representations,
warranties and statements, in light of the circumstances under which they are
made, not misleading.
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ARTICLE 6
6. Representations and Warranties of Bradley.
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to MDI, which shall refer to the relevant Sections of this
Agreement (the "Bradley Disclosure Letter"), Bradley represents and warrants to
MDI as follows:
6.1 Existence; Good Standing; Authority; Compliance With Law. Bradley
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Maryland. Bradley is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of any
other state of the United States in which the character of the properties owned
or leased by it therein or in which the transaction of its business makes such
qualification necessary, which states are listed in Section 6.1 of the Bradley
Disclosure Letter; provided, however, that if Bradley has prepared Section 6.1
of the Bradley Disclosure Letter in good faith, MDI hereby covenants not to
exercise any right that it may have to terminate this agreement pursuant to
Section 9.1(d) based solely on any breach of the representation of Bradley
contained in this sentence; provided further, however, that nothing contained in
this Section 6.1 shall affect MDI's right to terminate this Agreement pursuant
to Section 9.1(d) with respect to any matter described in this sentence that
occurs or arises after the date hereof. Bradley has all requisite corporate
power and authority to own, operate, lease and encumber its properties and carry
on its business as now conducted. Each of the Bradley Subsidiaries is a
corporation or partnership duly incorporated or organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has the corporate or partnership power and authority to own its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires such
qualification, which states are listed in Section 6.4 of the Bradley Disclosure
Letter; provided, however, that if Bradley has prepared Section 6.1 of the
Bradley Disclosure Letter in good faith, MDI hereby covenants not to exercise
any right that it may have to terminate this agreement pursuant to Section
9.1(d) based solely on any breach of the representation of Bradley contained in
this sentence; provided further, however, that nothing contained in this Section
6.1 shall affect MDI's right to terminate this Agreement pursuant to Section
9.1(d) with respect to any matter described in this sentence that occurs or
arises after the date hereof. Neither Bradley nor any Bradley Subsidiary is in
violation of any order of any court, governmental authority or arbitration board
or tribunal, or any law, ordinance, governmental rule or regulation to which
Bradley or any Bradley Subsidiary or any of their respective properties or
assets is subject, except where such violation would not have a material adverse
effect on the business, results of operations, properties or financial condition
of Bradley and the Bradley Subsidiaries taken as a whole (a "Bradley Material
Adverse Effect"). Bradley and the Bradley Subsidiaries have obtained all
licenses, permits and other authorizations and have taken all actions required
by applicable law or governmental regulations in connection with their business
as now conducted, where the failure to obtain any such license, permit or
authorization or to take any such action would have a Bradley Material Adverse
Effect. Copies of the Charter and other equivalent documents and Bylaws (and all
amendments
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thereto) of Bradley and each of the Bradley Subsidiaries are listed in Section
6.1 of the Bradley Disclosure Letter, and the copies of such documents, which
have previously been delivered or made available to MDI or its counsel, are true
and correct copies. For purposes of this Agreement, the term "Bradley
Subsidiary" shall include any of the entities set forth under such heading in
Section 6.4 of the Bradley Disclosure Letter.
6.2 Authorization, Validity and Effect of Agreements. Bradley has the
requisite corporate power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement and the ancillary
agreements to which it is a party. The Board of Directors of Bradley has, by
resolutions duly adopted by unanimous vote approved this Agreement, the Merger,
the issuance of the Bradley Preferred Stock and the other transactions
contemplated by this Agreement. In connection with the foregoing, the Board of
Directors of Bradley has taken such actions and votes as are necessary on its
part to render the provisions of the Control Share Acquisition Statute, the
Business Combination Statute and all other applicable takeover statutes of the
MGCL and any other applicable takeover statutes of any other state, inapplicable
to this Agreement, the Merger, and the transactions contemplated by this
Agreement. The execution by Bradley of this Agreement, the ancillary agreements
and the consummation of the transactions contemplated by this Agreement and the
ancillary agreements has been duly authorized by all requisite corporate action
on the part of Bradley. This Agreement constitutes, and the ancillary agreements
to which it will become a party (when executed and delivered pursuant hereto)
will constitute, the valid and legally binding obligations of Bradley,
enforceable against Bradley in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
6.3 Capitalization.
(a) The authorized capital stock of Bradley consists of
80,000,000 shares of Bradley Common Stock, of which 23,701,762 are issued and
outstanding, 20,000,000 shares of preferred stock, par value $.01 per share (the
"Bradley Preferred Stock"), of which none are issued and outstanding, and
50,000,000 shares of excess stock, par value $.01 per share ("Bradley Excess
Stock"), of which none are issued and outstanding. All such issued and
outstanding shares of Bradley Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. Bradley has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of Bradley on any
matter. Except for the Bradley OP Units, as defined below, there are not at the
date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate Bradley to issue, transfer or sell any shares of Bradley Common Stock,
other than the issuance by Bradley of up to 385,550 shares of Bradley Common
Stock upon the exercise of stock options issued pursuant to Bradley's stock
option plans. There are no agreements or understandings to which Bradley or any
Bradley Subsidiary is a party with respect to the voting of any shares of
Bradley Common Stock or which restrict the transfer of any such shares, nor does
Bradley have knowledge of any such agreements or understandings with respect to
the voting of any such shares or which restrict the transfer of such shares.
Except
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for the Bradley OP Units, as defined below, there are no outstanding contractual
obligations of Bradley or any Bradley Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock, partnership interests or other
securities of Bradley or any Bradley Subsidiary.
(b) The sole general partner of Bradley Operating Limited
Partnership, a Delaware limited partnership ("Bradley OP"), is Bradley. As of
the date hereof, there are issued and outstanding 25,083,004 units of
partnership interest in Bradley OP ("Bradley OP Units"), 23,701,262 of which are
owned by Bradley and the remainder of which are owned by the Persons (the
"Limited Partners") and in the amounts set forth in Section 6.3 of the Bradley
Disclosure Letter. All such issued and outstanding Bradley OP Units are duly
authorized, validly issued, fully paid, and free of preemptive rights. There are
not at the date of this Agreement, any existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate Bradley OP to issue, transfer or sell any limited
partnership interests of Bradley OP. The Bradley OP Units owned by Bradley and,
to the best knowledge of Bradley, the Bradley OP Units owned by the Limited
Partners, are subject only to the restrictions on transfer set forth in the
Limited Partnership Agreement of Bradley OP (the "Bradley OP Partnership
Agreement") and those imposed by applicable securities laws. Except as set forth
in Section 6.3 of the Bradley Disclosure Letter, Bradley has not issued or
granted, and is not a party to, any commitments of any kind relating to, or any
agreements or understandings with respect to, Bradley OP Units or any other
interest in Bradley or any securities convertible into Bradley OP Units or such
interests.
6.4 Subsidiaries. Except as set forth in Section 6.4 of the Bradley
Disclosure Letter, Bradley owns directly or indirectly all of the outstanding
shares of capital stock or all of the partnership or other equity interests of
each of the Bradley Subsidiaries. Each of the outstanding shares of capital
stock of each of the Bradley Subsidiaries having corporate form is duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 6.4 of the Bradley Disclosure Letter, each of the outstanding shares of
capital stock of, or partnership or other equity interests in, each of the
Bradley Subsidiaries is owned, directly or indirectly, by Bradley free and clear
of all liens, pledges, security interests, claims or other encumbrances. The
following information for each Bradley Subsidiary is set forth in Section 6.4 of
the Bradley Disclosure Letter: (i) its name and jurisdiction of incorporation or
organization; (ii) the jurisdictions in which such entity is qualified to
conduct business; (iii) its authorized capital stock or share capital, or
partnership or other interests; (iv) the name of each stockholder or owner of
capital stock or share capital or percentage ownership for non-corporate
entities held by it; and (v) the name of the general partners, if applicable.
6.5 Other Interests. Except for interests in the Bradley Subsidiaries
and the securities of other publicly traded REITs, neither Bradley nor any
Bradley Subsidiary owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture, trust
or other entity, other than investments in short-term investment securities and
other than disclosed in Section 6.5 of the Bradley Disclosure Letter.
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6.6 No Violation. Except as set forth in Section 6.6 of the Bradley
Disclosure Letter, neither the execution and delivery by Bradley of this
Agreement or the ancillary agreements nor the consummation by Bradley of the
transactions contemplated by this Agreement and the ancillary agreements in
accordance with their terms, will: (i) conflict with or result in a breach of
any provisions of the Articles of Amendment or Bylaws of Bradley; (ii) result in
a breach or violation of, a default under, or the triggering of any payment or
other material obligations pursuant to, or accelerate vesting under, any of
Bradley's stock option plans, or any grant or award under any of the foregoing;
(iii) violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties of Bradley or any of the Bradley Subsidiaries under,
or result in being declared void, voidable, or without further binding effect,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease, contract,
agreement or other instrument, commitment or obligation to which Bradley or any
of the Bradley Subsidiaries is a party, or by which Bradley or any of the
Bradley Subsidiaries or any of their properties is bound or affected, except for
any of the foregoing matters which, individually or in the aggregate, would not
have a Bradley Material Adverse Effect; or (iv) other than the Regulatory
Filings, require any consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority except
where the failure to obtain any such consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority would not have a Bradley Material Adverse Effect.
6.7 SEC Documents. A complete list of Bradley SEC filings, and each (A)
registration statement, (B) annual report on Form 10-K, (C) quarterly report on
Form 10-Q, (D) current report on Form 8-K, (E) proxy statement or information
statement, and (F) any other report filed with the SEC pursuant to the Exchange
Act or the Securities Act (in all such cases, including all exhibits, amendments
and supplements thereto) prepared by Bradley or relating to either of their
respective properties since January 1, 1994, are set forth in Section 6.7 of the
Bradley Disclosure Letter, and copies of which, in the form (including exhibits
and any amendments thereto) filed with the SEC, have previously been provided or
made available to MDI or its counsel (collectively, the "Bradley Reports"). The
Bradley Reports were filed with the SEC in a timely manner and constitute all
forms, reports and documents required to be filed by Bradley under the
Securities Laws subsequent to January 1, 1994. As of their respective dates, the
Bradley Reports (i) complied as to form in all material respects with the
applicable requirements of the Securities Laws and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of Bradley included in or incorporated by reference
into the Bradley Reports (including the related notes and schedules) fairly
presents the consolidated financial position of Bradley and the Bradley
Subsidiaries as of its date and each of the consolidated statements of income,
retained earnings and cash flows of Bradley included in or incorporated by
reference into the Bradley Reports (including any related notes and schedules)
fairly presents
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the results of operations, retained earnings or cash flows, as the case may be,
of Bradley and the Bradley Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein and except, in the
case of the unaudited statements, as permitted by Form 10-Q of the SEC. Except
as and to the extent set forth on the consolidated balance sheet of Bradley and
the Bradley Subsidiaries at December 31, 1997, including all notes thereto, or
as set forth in the Bradley Reports, neither Bradley nor any of the Bradley
Subsidiaries has any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of Bradley or in the notes
thereto, prepared in accordance with generally accepted accounting principles
consistently applied, except liabilities arising in the ordinary course of
business since such date and liabilities for expenses of attorneys, accountants
and investment bankers incurred in connection with the Merger.
6.8 Litigation. Other than personal injury and other routine tort
litigation arising from the ordinary course of operations of Bradley and the
Bradley Subsidiaries (a) which are covered by adequate insurance or (b) for
which all material costs and liabilities arising therefrom are reimbursable
pursuant to common area maintenance or similar agreements, there is no suit,
action or proceeding pending (in which service of process has been received by
an employee of Bradley or a Bradley Subsidiary) or, to the best knowledge of
Bradley threatened in writing against or affecting Bradley or any Bradley
Subsidiary that, individually or in the aggregate, could reasonably be expected
to (i) have a Bradley Material Adverse Effect or (ii) prevent the consummation
of any of the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any court of Governmental Entity
or arbitrator outstanding against Bradley or any of the Bradley Subsidiaries
having, or which, insofar as reasonably can be foreseen, in the future would
have, any such effect.
6.9 Absence of Certain Changes. Since the date of the most recent
audited financial statements included in Bradley Reports (the "Bradley Financial
Statement Date"), Bradley and the Bradley Subsidiaries have conducted their
business only in the ordinary course and there has not been (a) any change which
has had a Bradley Material Adverse Effect, nor has there been any occurrence or
circumstance that with the passage of time would reasonably be expected to
result in a Bradley Material Adverse Effect, (b) except for regular quarterly
distributions not in excess of $.35 per share Bradley Common Stock or Bradley OP
Unit, respectively (or, with respect to the period commencing on the date hereof
and ending on the Closing Date, distributions as necessary to maintain REIT
status), in each case with customary record and payment dates, any
authorization, declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the Bradley
Common Stock or Bradley OP Units, (c) any split, combination or reclassification
of the Bradley Common Stock or the Bradley OP Units or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for, or giving the right to acquire by exchange or exercise,
shares of stock of Bradley or partnership interests in Bradley OP or any
issuance of an ownership interest in, any Bradley
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Subsidiary, (d) any damage, destruction or loss, whether or not covered by
insurance, that has or might reasonably be expected to have a Bradley Material
Adverse Effect, or (e) any change in accounting methods, principles or practices
by Bradley or any Bradley Subsidiary materially affecting its assets,
liabilities or business, except insofar as may have been disclosed in Bradley
Reports or required by a change in GAAP.
6.10 Taxes. Except as set forth in Section 6.10 of the Bradley
----- Disclosure Letter:
(a) Bradley and each of the Bradley Subsidiaries has paid
or caused to be paid all Taxes owed by it through the date hereof.
(b) Bradley and each of the Bradley Subsidiaries has timely
filed all federal, state, local and foreign tax returns required to be filed by
any of them through the date hereof, and all such returns completely and
accurately set forth the amount of any Taxes relating to the applicable period.
(c) Neither the IRS nor any other governmental authority is
now asserting by written notice to Bradley or any Bradley Subsidiary or, to the
knowledge of Bradley or the Bradley Subsidiaries, threatening to assert against
Bradley any deficiency or claim for additional Taxes. There is no dispute or
claim concerning any Tax liability of Bradley, either claimed or raised by any
governmental authority, or as to which any officer of Bradley has reason to
believe may be claimed or raised by any governmental authority. No claim has
ever been made by a taxing authority in a jurisdiction where Bradley does not
file reports and returns that Bradley is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the assets of Bradley or
any Bradley Subsidiary that arose in connection with any failure (or alleged
failure) to pay any Taxes. Bradley has never entered into a closing agreement
pursuant to Section 7121 of the Code.
(d) Bradley has not received written notice of any audit of
any tax return filed by Bradley, no such audit is in progress, and Bradley has
not been notified by any tax authority that any such audit is contemplated or
pending. Neither Bradley nor any of the Bradley Subsidiaries has executed or
filed with the IRS or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any income or other taxes,
and no extension of time with respect to any date on which a tax return was or
is to be filed by Bradley is in force. True, correct and complete copies of all
federal, state and local income or franchise tax returns filed by Bradley and
each of the Bradley Subsidiaries and all communications relating thereto have
been delivered to MDI or made available to representatives of MDI.
(e) Bradley and each Bradley Subsidiary has withheld and paid
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other party.
(f) Each of the Bradley Subsidiaries of which all the
outstanding capital stock is owned solely by Bradley is a Qualified REIT
Subsidiary as defined in Section 856(i) of the Code. Bradley OP and each of the
other Bradley Subsidiaries listed as a partnership
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or limited liability company in Section 6.4 of the Bradley Disclosure Letter
are, and have been at all times, properly classified as partnerships for federal
income tax purposes and not as publicly-traded partnerships.
(g) For all applicable tax years as to which Bradley's federal
income tax returns are subject to audit and Bradley is subject to assessment for
taxes reportable therein, and at all times thereafter up to and including the
date hereof, Bradley has qualified to be treated as a REIT within the meaning of
Sections 856-860 of the Code, including, without limitation, the requirements of
Sections 856 and 857 of the Code. For the periods described in the preceding
sentence, Bradley has met all requirements necessary to be treated as a REIT for
purposes of the income tax provisions of each state in which Bradley is subject
to income tax and which provides for the taxation of REITs in a manner similar
to the treatment of REITs under Sections 856-860 of the Code, but, with respect
to each such state, only for such periods for which Bradley's income tax returns
are subject to audit and Bradley is subject to assessment for taxes reportable
therein.
6.11 Books and Records. The books of account and other financial
records of Bradley and each of the Bradley Subsidiaries are true, complete and
correct in all material respects, have been maintained in accordance with good
business practices, and are accurately reflected in all material respects in the
financial statements included in the Bradley Reports. The minute books and other
records of Bradley and each of the Bradley Subsidiaries have been made available
to MDI, contain in all material respects accurate records of all meetings and
accurately reflect in all material respects all other corporate action of the
stockholders and directors and any committees of the Board of Directors of
Bradley and each of the Bradley Subsidiaries.
6.12 Employee Benefit Plans. All employee benefits plans (within the
meaning of Section 3(3) of ERISA) and other benefit arrangements covering
employees of Bradley and the Bradley Subsidiaries (other than multiemployer
plans as defined in Sections 3(37) and 4001(a)(3) of ERISA) (the "Bradley
Benefit Plans") are listed in Section 6.12 of the Bradley Disclosure Letter.
True and complete copies of the Bradley Benefit Plans have been provided or made
available to MDI. To the extent applicable, the Bradley Benefit Plans have been
administered in all material respects in accordance with their terms and comply,
in all material respects, with the applicable requirements of ERISA and the
Code. Any Bradley Benefit Plan intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS or a
determination letter request has been filed with the IRS with respect to any
such plan and is still pending. No Bradley Benefit Plan is covered by Title IV
of ERISA or Section 412 of the Code. No Bradley Benefit Plan nor Bradley or any
of the Bradley Subsidiaries has incurred any liability or penalty under Section
4975 of the Code or Section 502(i) of ERISA. There are no pending or anticipated
claims against or otherwise involving any of the Bradley Benefit Plans and no
suit, action or other litigation (excluding claims for benefits incurred in the
ordinary course of Bradley Benefit Plan activities) has been brought against or
with respect to any such Bradley Benefit Plan. All material contributions
required to be made as of the date hereof to the Bradley Benefit Plans have been
made or provided for. Except as otherwise required by Sections 601 through 608
of ERISA, Section 4980B of the Code and applicable state laws, Bradley does
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not maintain or contribute to any plan or arrangement which provides or has any
liability to provide life insurance, medical or other employee welfare benefits
to any employee or former employee upon his retirement or termination of
employment and Bradley has never represented, promised or contracted (whether in
oral or written form) to any employee or former employee that such benefits
would be provided. Except as disclosed in the Bradley Reports, the execution of,
and performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional subsequent events
directly related to the transaction contemplated herein) constitute an event
under any Bradley Benefit Plan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligations to fund benefits with
respect to any employee, director or consultant of Bradley or any Bradley
Subsidiary.
6.13 Labor Matters. Except as listed in Section 6.13 of the Bradley
Disclosure Letter, neither Bradley nor any Bradley Subsidiary is a party to, or
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor union organization. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
Bradley, threatened against Bradley or any of the Bradley Subsidiaries relating
to their business, except for any such proceeding which would not have a Bradley
Material Adverse Effect. To the knowledge of Bradley, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of Bradley or any of
the Bradley Subsidiaries.
6.14 No Brokers. Neither Bradley nor any of the Bradley Subsidiaries
has entered into any contract, arrangement or understanding with any Person or
firm which may result in the obligation of such entity or MDI to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby, except that Bradley has retained Alex.
Brown as its financial advisor, the arrangements with which have been disclosed
in writing to MDI prior to the date hereof. Other than the foregoing
arrangements and MDI's arrangements set forth in Section 5.18 of this Agreement,
Bradley is not aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
6.15 MDI Stock Ownership. Except as disclosed in Section 6.15 of the
Bradley Disclosure Letter, neither Bradley nor any of the Bradley Subsidiaries
owns any shares of capital stock of MDI or other securities convertible into
capital stock of MDI.
6.16 Definition of Bradley's Knowledge. As used in this Agreement, the
phrase "to the knowledge of Bradley" or "to the best knowledge of Bradley" (or
words of similar import) means the knowledge or the best knowledge of those
individuals identified in Section 6.16 of the Bradley Disclosure Letter, and
includes any fact, matter or circumstance which any of such individuals, as an
ordinary and prudent business person employed in the same capacity in the same
type and size of business as Bradley, should have known.
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6.17 Environmental Matters. Except as disclosed in Section 6.17 of the
Bradley Disclosure Letter, none of Bradley, any Bradley Subsidiary or, to the
best knowledge of Bradley, any other Person has caused or permitted (a) the
unlawful presence of any Hazardous Materials on any of the real properties
identified in the Bradley Disclosure Letter (the "Bradley Properties"), or (b)
any unlawful spills, releases, discharges or disposal of Hazardous Materials to
have occurred or be presently occurring on or from any of the Bradley Properties
as a result of any construction on or operation and use of such properties,
which presence or occurrence would, individually or in the aggregate, have a
Bradley Material Adverse Effect; and in connection with the construction on or
operation and use of the Bradley Properties, neither Bradley nor any of the
Bradley Subsidiaries has failed to comply, in any material respect, with any
applicable local, state or federal environmental law, regulation, ordinance or
administrative and judicial order relating to the generation, recycling, reuse,
sale, storage, handling, transport and disposal of any Hazardous Materials.
6.18 Disclosure. The representations, warranties and statements made by
Bradley in this Agreement, the ancillary agreements and in the Bradley
Disclosure Letter and in the certificates and other documents, delivered
pursuant hereto do not contain any untrue statement of a material fact, and,
when taken together, do not omit to state any material fact necessary to make
such representations, warranties and statements, in light of the circumstances
under which they are made, not misleading.
ARTICLE 7
7. Covenants.
7.1 Acquisition Proposals. Unless and until this Agreement shall have
been terminated in accordance with its terms, MDI agrees and covenants that (a)
neither it nor any MDI Subsidiary shall, and each of them shall direct and use
its best efforts to cause its respective officers, directors, employees, agents
and representatives (including, without limitation, any investment banker,
attorney or accountant retained by it or any of the MDI Subsidiaries) not to,
directly or indirectly, initiate, solicit or encourage any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a merger,
acquisition, tender offer, exchange offer, consolidation or similar transaction
involving, or any purchase of 10% or more of the assets or any equity securities
or partnership interests (including, without limitation, partnership interests
of MAB) of, MDI or any MDI Subsidiary, other than the transactions contemplated
by this Agreement (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal") or engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
Person relating to an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal; (b) MDI will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and will take the necessary steps to inform the
individuals or entities referred to above of the obligations undertaken in this
Section 7.1; and (c) MDI will notify Bradley immediately if any such inquiries
or proposals are received
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by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it; provided, however,
that nothing contained in this Section 7.1 shall prohibit the Board of Directors
of MDI, from (i) furnishing information to or entering into discussions or
negotiations with, any Person or entity that makes an unsolicited bona fide
Acquisition Proposal, if, and only to the extent that, (A) the Board of
Directors of MDI, after consultation with and based upon the advice of McGrath,
North, Mullin & Kratz, P.C., or another nationally recognized law firm selected
by MDI, determines in good faith that such action is required for the Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law, (B) prior to furnishing such information to, or entering into discussions
or negotiations with, such Person or entity, MDI provides written notice to
Bradley to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such Person or entity, and (C) MDI keeps
Bradley informed of the status of any such discussions or negotiations,
including, without limitation, promptly informing Bradley (in any case within 24
hours) of all material developments relating thereto; and (ii) to the extent
applicable, complying with Rule 14e-2 and Rule 14a-9 promulgated under the
Exchange Act with regard to an Acquisition Proposal. Notwithstanding anything to
the contrary set forth herein, nothing in this Section 7.1 shall (x) permit MDI
to terminate this Agreement (except as specifically provided in Article 9
hereof), (y) except as specifically provided in Article 9 hereof, permit MDI or
any MDI Subsidiary to enter into any agreement with respect to an Acquisition
Proposal during the term of this Agreement (it being agreed that during the term
of this Agreement, neither MDI nor any MDI Subsidiary shall enter into any
agreement with any Person that provides for, or in any way facilitates, an
Acquisition Proposal), or (z) affect any other obligation of any party under
this Agreement.
7.2 Conduct of Businesses.
(a) Prior to the Effective Time, except as specifically
permitted by this Agreement, unless the other party has consented in writing
thereto, Bradley and MDI:
(i) Shall use their reasonable best efforts, and
shall cause each of their respective Subsidiaries to use their reasonable best
efforts, to preserve intact their business organizations and goodwill and keep
available the services of their respective officers and employees;
(ii) Shall confer on a regular basis with one or more
representatives of the other to report operational matters of materiality and,
subject to Section 7.1, any proposals to engage in material transactions,
whether or not in the ordinary course of business;
(iii) Shall promptly notify the other of any material
emergency or other material change in the condition (financial or otherwise),
business, properties, assets, liabilities, prospects or the normal course of
their businesses or in the operation of their properties, any material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach in any material
respect of any representation or warranty contained herein; and
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(iv) Shall promptly deliver to the other true and
correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
(b) At all times from the execution of this Agreement
until the Effective Time, MDI:
(i) Shall, and shall cause each MDI Subsidiary to,
conduct its operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted, subject to clauses
(ii)-(xv) below;
(ii) Shall not, and shall cause each MDI Subsidiary
not to, acquire, enter into an option to acquire or exercise an option or
contract to acquire, additional real property, incur additional indebtedness
(including, without limitation, refinancing any existing indebtedness), encumber
assets or commence construction of, or enter into any agreement or commitment to
develop or construct, shopping centers or any other type of real estate projects
(including, but not limited, to options to purchase real property listed in
Section 5.26 of the MDI Disclosure Letter); provided, however, that MDI shall be
able (A) to engage in the construction of Imperial Mall in accordance with the
budget set forth in Section 7.2(b) of the MDI Disclosure Letter; and (B) to
borrow money under its existing lines of credit in the ordinary course of
business in accordance with the budget set forth in Section 7.2(b) of the MDI
Disclosure Letter; provided further that in no event shall MDI or any MDI
Subsidiary enter into any form of third party financing or refinancing of
existing indebtedness relating to Imperial Mall without the prior written
consent of Bradley.
(iii) Shall not amend its Charter or Bylaws, and
shall cause each MDI Subsidiary not to amend its Charter, Bylaws, joint venture
documents, partnership agreements or equivalent documents except as contemplated
by Section 1.4 of this Agreement;
(iv) Shall not (A) except pursuant to the exercise of
options, warrants, conversion rights and other contractual rights existing on
the date hereof and disclosed pursuant to this Agreement, issue any shares of
its capital stock, effect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction, (B) grant, confer or award any
option, warrant, conversion right or other right not existing on the date hereof
to acquire any shares of its capital stock, (C) increase any compensation or
enter into or amend any employment agreement with any of its present or future
officers or directors, or (D) adopt any new employee benefit plan (including any
stock option, stock benefit or stock purchase plan) or amend any existing
employee benefit plan in any material respect, except for changes which are less
favorable to participants in such plans;
(v) Shall not (A) declare, set aside or pay any
dividend or make any other distribution or payment with respect to any shares of
its capital stock, except in compliance with Section 7.14 of this Agreement, or
(B) directly or indirectly redeem, purchase or otherwise acquire any shares of
its capital stock or capital stock of any of the MDI Subsidiaries, or make any
commitment for any such action;
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(vi) Shall not, and shall not permit any of the MDI
Subsidiaries to, sell, lease or otherwise dispose of (A) any MDI Properties or
any portion thereof or any of the capital stock of or partnership or other
interests in any of the MDI Subsidiaries or (B) except in the ordinary course of
business, any of its other assets; provided, however, that, subject to the
approval of a committee composed of two individuals selected by Bradley and two
individuals selected by MDI, MDI may (A) lease any MDI Properties or any portion
thereof in the ordinary course of business (provided, however, that approval of
such committee shall not be required for leases of less than 5,000 square feet,
which are on market rates, terms and conditions and do not violate any
exclusives or restrictions) and (B) solicit purchase bids for the properties
located at Town West, Macon County and Imperial Mall;
(vii) Shall not, and shall not permit any of the MDI
Subsidiaries to, make any loans, advances or capital contributions to, or
investments in, any other Person;
(viii) Shall not, and shall not permit any of the MDI
Subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of MDI
included in the MDI Reports or incurred in the ordinary course of business
consistent with past practice;
(ix) Shall not, and shall not permit any of the MDI
Subsidiaries to, enter into any Commitment which may result in total payments or
liability by or to it in excess of $25,000, except for the renewal of casualty
and property insurance held by MDI in the ordinary course of business (provided,
however, that nothing contained in this clause (ix) shall permit MDI or any MDI
Subsidiary to take any action prohibited by the other provisions of this Section
7.2);
(x) Shall not, and shall not permit any of the MDI
Subsidiaries to, enter into any Commitment with any officer, director,
consultant or affiliate of MDI or any of the MDI Subsidiaries;
(xi) Shall provide Bradley with a reasonable
opportunity to review and comment on any federal income tax returns filed by MDI
or any MDI Subsidiary prior to the Effective Time;
(xii) Shall not, without prior notification and
consultation with Bradley, terminate any employee under circumstances which
would result in severance payments to such employee or pay any severance
benefits to any employee on account of such employee's termination;
(xiii) Shall maintain the MDI Properties in
substantially the same condition as the same are in as of the date of this
Agreement, subject only to reasonable use and wear and casualty;
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(xiv) Shall maintain in full force and effect fire
and extended coverage casualty insurance on the MDI Properties as shown in
Section 5.12 of the MDI Disclosure Letter; and
(xv) Shall take all such actions necessary in order
to terminate the MDI's dividend reinvestment plan as soon as possible following
the execution of this Agreement but in any event prior to the distribution of
the Merger Dividend (as defined in Section 7.14 hereof).
(c) Notwithstanding anything to the contrary set forth in this
Agreement and without limiting any of the other rights of Bradley set forth
herein, between the date of this Agreement and the Effective Time, (i) Bradley
and the Bradley Subsidiaries may enter into leases with respect to all or any
portion of the Bradley Properties, acquire, lease, enter into an option to
acquire or lease, or exercise an option or contract to acquire or lease,
additional real property, incur additional indebtedness, encumber assets or
commence construction of, or enter into any agreement or commitment to develop,
construct or renovate, shopping centers or other real estate projects, (ii)
Bradley may issue directly or indirectly in a public or private transaction any
kind of securities, including without limitation shares of any class or series
of common, preferred or other type of capital stock, and may cause Bradley OP to
issue in a public or private transaction any kind of securities, including,
without limitation, partnership units or debt securities, (iii) Bradley may
acquire, or agree to acquire any business or any corporation, partnership,
limited liability company or other business organization by merger,
consolidation or by purchasing substantially all of the assets, capital stock or
partnership or membership interests of such entity, or by any other manner, (iv)
Bradley may sell or agree to sell all or substantially all of its assets or to
issue or sell any amount of its outstanding capital stock or Bradley OP Units to
a Person or group of Persons or an entity, and may merge or consolidate with
another entity regardless of whether Bradley is the surviving entity in such
transaction, (v) Bradley may amend and/or restate its Charter and Bylaws and
Bradley and the other partners of Bradley OP may amend and/or restate the
Bradley OP Partnership Agreement, and (vi) Bradley and the Bradley Subsidiaries
may take any action necessary or advisable to effectuate any of the foregoing
clauses.
7.3 Meeting of Stockholders.
(a) MDI will take all action necessary in accordance with
applicable law and its Charter and Bylaws to convene a meeting of its
stockholders (the "Stockholders' Meeting") as promptly as practicable to
consider and vote upon the approval of this Agreement and the transactions
contemplated hereby. The Board of Directors of MDI shall recommend and declare
advisable that its stockholders approve this Agreement and the transactions
contemplated hereby, and, prior to the Effective Time, neither the Board of
Directors of MDI nor any committee thereof shall withdraw or modify the approval
or recommendation by such Board of Directors. MDI shall use its best efforts to
timely mailing the proxy statement/prospectus contained in the Form S-4 (as
defined below) to MDI's stockholders and to take all such other actions
necessary or desirable to obtain such approval; provided, however, that nothing
contained in this Section 7.3(a) shall prohibit the Board of
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Directors of MDI from failing to make such recommendation or using its best
efforts to obtain such approval if the Board of Directors of MDI has determined
in good faith after consultation with and based upon the advice of McGrath,
North, Mullin & Kratz, P.C. or another nationally recognized law firm selected
by MDI, that such action is necessary for the Board to comply with its fiduciary
duties to its stockholders under applicable law. Notwithstanding the foregoing,
MDI will immediately notify Bradley in writing if it takes any action set forth
in the prior sentence.
(b) Promptly following the execution of this agreement,
Bradley and MDI shall prepare and file a proxy statement/prospectus (the "Form
S-4") relating to the stockholder meeting of MDI and the registration of the
Bradley Preferred Stock and the Bradley Common Stock (the "Underlying Bradley
Common Stock") which will be issued upon conversion of the Bradley Preferred
Stock in accordance with the terms set forth in the Articles Supplementary. The
respective parties will cause the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Each of Bradley and MDI shall furnish
all information about itself and its business and operation and all necessary
financial information to the other as the other may reasonably request in
connection with the preparation of the Form S-4. Bradley shall use its
reasonable best efforts, and MDI will cooperate with Bradley, to have the Form
S-4 declared effective by the SEC as promptly as practicable. Bradley shall use
its reasonable best efforts to obtain, prior to the effective date of the Form
S-4, all necessary state securities law or "Blue Sky" permits or approvals
required to carry out the transactions contemplated by this Agreement and will
pay all expenses incident thereto. Bradley agrees that the Form S-4 and each
amendment or supplement thereto at the time of mailing thereof and at the time
of the meeting of stockholders of MDI, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement of a material fact
or omission to state a material fact was made by Bradley in reliance upon and in
conformity with information concerning MDI furnished to Bradley by MDI for use
in the Form S-4. MDI agrees that the information provided by it for inclusion in
the Form S-4 and each amendment or supplement thereto, at the time of mailing
thereof and at the time of the meeting of stockholders of MDI, will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by MDI in
reliance upon and in conformity with information concerning Bradley furnished to
MDI by Bradley for use in the Form S-4. Bradley will advise and deliver copies
(if any) to MDI, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Bradley
Preferred Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information.
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(c) It shall be a condition to the mailing of the proxy
statement/prospectus that (i) Bradley shall have received a "comfort" letter
from Deloitte & Touche LLP, independent public accountants for MDI, of the kind
contemplated by the Statement of Auditing Standards with respect to Letters to
Underwriters promulgated by the American Institute of Certified Public
Accountants (the "AICPA Statement"), dated as of the date on which the Form S-4
shall become effective, addressed to Bradley in form and substance reasonably
satisfactory to Bradley, concerning the procedures undertaken by Deloitte &
Touche LLP with respect to the financial statements and information of MDI and
the MDI Subsidiaries contained in the Form S-4 and the other matters
contemplated by the AICPA Statement and otherwise customary in scope and
substance for letters delivered by independent public accountants in connection
with transactions such as those contemplated by this Agreement and (ii) MDI
shall have received a "comfort" letter from KPMG Peat Marwick LLP, independent
public accountants for Bradley, of the kind contemplated by the AICPA Statement,
dated as of the date on which the Form S-4 shall become effective, addressed to
MDI, in form and substance reasonably satisfactory to MDI, concerning the
procedures undertaken by KPMG Peat Marwick LLP with respect to the financial
statements and information of Bradley and the Bradley Subsidiaries contained in
the Form S-4 and the other matters contemplated by the AICPA Statement and
otherwise customary in scope and substance for letters delivered by independent
public accountants in connection with transactions such as those contemplated by
this Agreement.
7.4 Filings; Other Action. Subject to the terms and conditions herein
provided, MDI and Bradley shall: (a) to the extent required, promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act with respect to the Merger; (b) use all reasonable best efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions and any third parties in connection with the execution
and delivery of this Agreement, and the ancillary agreements and the
consummation of the transactions contemplated by such agreements and (ii) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations; (c) use all reasonable best efforts to obtain in writing any
consents required from third parties to effectuate the Merger, such consents to
be in reasonably satisfactory form to MDI and Bradley; and (d) use all
reasonable best efforts to take, or cause to be taken, all other action and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement
and the ancillary agreements. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purpose of this
Agreement or the ancillary agreements, the proper officers and directors of
Bradley and MDI shall take all such necessary action.
7.5 Inspection of Records. From the date hereof to the Effective Time,
each of MDI and Bradley shall allow all designated officers, attorneys,
accountants and other representatives of the other access at all reasonable
times to the records and files, correspondence, audits and properties, as well
as to all information relating to commitments,
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contracts, titles and financial position, or otherwise pertaining to the
business and affairs, of MDI and Bradley and their respective subsidiaries.
7.6 Publicity. Bradley and MDI shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or any transaction contemplated herein and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which consent shall not be unreasonably withheld; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may be required by law or
the rules of the NYSE if it has used its reasonable best efforts to consult with
the other party and to obtain such party's consent but has been unable to do so
in a timely manner.
7.7 Initial Listing Application. Bradley shall promptly prepare and
submit to the NYSE an initial listing application covering the shares of Bradley
Preferred Stock issuable in the Merger and the Underlying Bradley Common Stock
issuable upon the conversion of Bradley Preferred Stock, and shall use its best
efforts to obtain, prior to the Effective Time, approval for the listing of such
Bradley Preferred Stock and Underlying Bradley Common Stock, subject to official
notice of issuance.
7.8 Further Action.
(a) Each party hereto shall, subject to the fulfillment at or
before the Effective Time of each of the conditions of performance set forth
herein or the waiver thereof, perform such further acts and execute such
documents as may reasonably be required to effect the Merger. Without limiting
the foregoing, at the Closing, MDI shall deliver, deeds, affidavits or other
documents necessary for Bradley to obtain endorsements to existing title
insurance policies or new title insurance policies which (i) insure that Bradley
(or its designee) is the record owner of the MDI Properties, subject only to the
Encumbrances, and (ii) contain a so-called "non-imputation" endorsement (such
non-imputation endorsement insuring that Bradley will not be charged with the
imputed knowledge of MDI, the MDI Subsidiaries and Affiliates thereof). In
connection with the Closing, MDI and each MDI Subsidiary shall use their
respective best efforts to deliver to Bradley such deeds, bills of sale,
assignments, certificates and affidavits as are required to effectuate the
consummation of the transactions described herein and as may be necessary to
effectuate the transfer of the MDI Properties to Bradley OP by Bradley
subsequent to the Closing.
(b) MDI shall have remedied any violations of any laws
applicable to the MDI Properties, including, without limitation, fire safety
standards, of which it has been notified by any governmental authority to the
satisfaction of and within the time periods required by such governmental
authority.
(c) MDI shall obtain updated or new surveys of each to the MDI
Properties in accordance with the "Minimum Standard Detail Requirements and
Classifications for Land Title Surveys" jointly established by ALTA and ACSM in
1992,
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which (i) include items 1-4 and 6-11 in Table A, (ii) meet the accuracy
requirements of an Urban Survey, as defined therein, and (iii) are certified to
Bradley and Bradley OP and the title insurance company specified by Bradley.
7.9 Affiliates of MDI.
(a) At least 30 days prior to the Closing Date, MDI shall
deliver to Bradley a list of names and addresses of those Persons who were, in
MDI's reasonable judgment, at the record date for its stockholders' meeting to
approve the Merger, "affiliates" (each such Person, an "Affiliate") of MDI
within the meaning of Rule 145. MDI shall provide Bradley such information and
documents as Bradley shall reasonably request for purposes of reviewing such
list. MDI shall use its reasonable best efforts to deliver or cause to be
delivered to Bradley, prior to the Closing Date, from each of the Affiliates of
MDI identified in the foregoing list, an Affiliate Letter in the form attached
hereto as Exhibit D. Bradley shall be entitled to place legends as specified in
such Affiliate Letters on the certificates evidencing any shares of Bradley
Preferred Stock to be received by such Affiliates pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for the shares of Bradley Preferred Stock, consistent with the terms of
such Affiliate Letters.
(b) Bradley shall file the reports required to be filed by it
under the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and it will take such further action as any Affiliate of MDI may
reasonably request, all to the extent required from time to time to enable such
Affiliate to sell shares of Bradley Preferred Stock received by such Affiliate
in the Merger without registration under the Securities Act pursuant to (i) Rule
145(d)(1) or (ii) any successor rule or regulation hereafter adopted by the SEC.
7.10 Expenses. Subject to the provisions of Article 9, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that (a) the filing fee in connection with the HSR Act filing, if any, (b) the
filing fee in connection with the filing of the Form S-4 with the SEC and (c)
the expenses incurred for printing and mailing the Form S-4, shall be shared
equally by MDI and Bradley. All costs and expenses for professional services
rendered pursuant to the transactions contemplated by this Agreement including,
but not limited to, investment banking and legal services, will be paid by each
party incurring such services.
7.11 Indemnification.
(a) Bradley agrees that all rights to indemnification or
exculpation now existing in favor of the directors, officers, employees,
advisors and agents of MDI and the MDI Subsidiaries (including, without
limitation, MAB) as provided in their respective charters or By-Laws in effect
as of the date hereof with respect to matters occurring at or prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect. For a period of six years after the Effective Time, Bradley shall not
amend, repeal or otherwise modify the provisions in its Charter and Bylaws
providing for exculpation of director liability and indemnification in any
manner that would materially and adversely
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affect the rights thereunder of individuals who at any time prior to the
Effective Time were directors, officers, employees, advisors or agents of MDI in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law; provided, however, that
in the event any claim or claims are asserted or made either prior to the
Effective Time or within such six year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(b) In addition to the rights provided in Section 7.11(a)
above, in the event of any threatened or actual claim, action, suit, proceeding
or investigation, whether civil, criminal or administrative, including, without
limitation, any action by or on behalf of any or all security holders of MDI or
Bradley or by or in the right of MDI or Bradley or any claim, action, suit,
proceeding or investigation in which any Person who is now, or has been, at any
time prior to the date hereof, or who becomes prior to the Effective Time, a
director of MDI (the "Indemnified Parties"), is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director of MDI or any of the MDI
Subsidiaries (including, without limitation, MAB) or any action or omission by
such Person in his capacity as a director, or (ii) this Agreement or the
transactions contemplated by this Agreement, whether in any case asserted or
arising before or after the Effective Time, Bradley on one hand and the
Indemnified Parties on the other hand, hereto agree to cooperate and use their
reasonable best efforts to defend against and respond thereto. It is understood
and agreed that, after the Effective Time, Bradley shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, liabilities, expenses (including
reasonable attorneys' fees and expenses), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation. In addition, after the Effective Time, in the event
of any such threatened or actual claim, action, suit, proceeding or
investigation, Bradley shall promptly pay and advance expenses and costs
incurred by each Indemnified Person as they become due and payable in advance of
the final disposition of any claim, action, suit, proceeding or investigation to
the fullest extent and in the manner permitted by law. Notwithstanding the
foregoing, Bradley shall pay for only one counsel and one local counsel for all
Indemnified Parties unless the use of one such counsel and one local counsel for
such Indemnified Parties would present such counsel with a conflict of interest,
in which case Bradley shall employ other counsel to the extent necessary to
avoid a conflict of interest with any counsel or party involved in the matter.
Notwithstanding anything to the contrary set forth in this Agreement, Bradley
(i) shall not be liable for any settlement effected without its prior written
consent, and (ii) shall not have any obligation hereunder to any Indemnified
Party if a court of competent jurisdiction shall determine in a final and
non-appealable order that indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. In the event of such
a final and non-appealable determination by a court that such indemnification is
prohibited by applicable law, the Indemnified Person shall promptly refund to
Bradley the amount of all expenses theretofore advanced pursuant hereto. Any
Indemnified Party wishing to claim indemnification under this Section, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify Bradley of such claim and the relevant facts and circumstances
with respect thereto, provided that the failure to provide such notice shall not
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affect the obligations of Bradley except to the extent such failure to notify
materially prejudices Bradley's ability to defend such claim, action, suit,
proceeding or investigation.
(c) At or prior to the Effective Time, Bradley shall purchase
directors' and executive officers' liability insurance policy coverage for MDI's
directors and executive officers for a period of six years following the
Effective Time, which will provide the directors and executive officers with
coverage on substantially similar terms as currently provided by MDI to such
directors and executive officers. In fulfilling its obligations under the
preceding sentence, Bradley shall not be required to pay more than $50,000 in
the aggregate (provided that if the premium of such coverage exceeds such
amount, Bradley shall be obligated to obtain a policy with the greatest dollar
amount of coverage available for costs not exceeding such amount). MDI shall
have the right to reasonably review and approve any such policy, which approval
shall not be unreasonably withheld.
(d) This Section 7.11 is intended for the irrevocable benefit
of, and to grant third party rights to, the Indemnified Parties and their
successors, assigns and heirs and shall be binding on all successors and assigns
of Bradley. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 7.11 and Bradley acknowledges and agrees
that each Indemnified Party would suffer irreparable harm and that no adequate
remedy at law exists for a breach of such covenants.
(e) In the event that Bradley or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, proper provision shall be
made so that the successors and assigns of Bradley assume the obligations set
forth in this Section.
7.12 Reorganization. From and after the date hereof and until the
Effective Time, neither Bradley nor MDI nor any of their respective subsidiaries
or other affiliates shall (i) knowingly take any action, or knowingly fail to
take any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code or (ii) enter
into any contract, agreement, commitment or arrangement with respect to the
foregoing. Following the Effective Time, Bradley shall use its best efforts to
conduct its business in a manner that would not jeopardize the characterization
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code.
7.13 Certain Benefits. Except for normal increases in the ordinary
course of business that are consistent with past practices and cost increases of
third party providers necessary to maintain benefits at current levels that, in
the aggregate, do not result in a material increase in benefits or compensation
expense to MDI or any of the MDI Subsidiaries or as set forth in Section 5.16 of
the MDI Disclosure Letter, MDI will not, and will not permit any of the MDI
Subsidiaries to, adopt or amend (except as may be required by law) any bonus,
profit sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or
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employee that increase in any manner the compensation, retirement, welfare or
fringe benefits of any director, officer or employee or pay any benefit not
required by any existing plan or arrangement (including without limitation the
granting of stock options) or take any action or grant any benefit not expressly
required under the terms of any existing agreements, trusts, plans, funds or
other such arrangements or enter into any contract, agreement, commitment or
arrangement to any of the foregoing.
7.14 Dividends
(a) Prior to the Effective Time, MDI and Bradley shall
cooperate and coordinate with each other so that (i) the record date for regular
quarterly dividends and distributions with respect to the first quarter of 1998
and thereafter until the Effective Time shall occur on the same date, (ii) the
payment date for each such regular quarterly dividend and distribution shall be
on the last day of such applicable quarter, and (iii) the amount of each such
regular quarterly dividend and distribution shall not exceed $.22 per quarter
for MDI and $.35 per quarter for Bradley.
(b) For its taxable year ending at the Effective Time (the
"Short Taxable Year") MDI will not have any (i) "net income from foreclosure
property" as defined by Section 857(b)(4) of the Code or (ii) "net income
derived from prohibited transactions" as defined by Section 857(b)(6) of the
Code. Immediately prior to the Effective Time, MDI will cause to be distributed
a dividend (within the meaning of Section 316 of the Code) to its stockholders
(the "Merger Dividend") of an amount such that (i) MDI's "real estate investment
trust taxable income" as defined in Section 857(b)(2) of the Code for the Short
Taxable Year shall equal zero; (ii) MDI's current and accumulated earnings and
profits as described in Section 312 of the Code for the Short Taxable Year shall
equal zero; and (iii) MDI's "deduction for dividends paid during the taxable
year" (within the meaning of Sections 561 and 857(a)(1) of the Code and
determined without regard to "capital gain dividends" within the meaning of
Section 857(b) of the Code) for the Short Taxable Year will equal or exceed the
amount set forth in Section 857(a)(1)(A) and (B) of the Code.
(c) MDI will do all things necessary to ensure that it
continues to meet all of the requirements to be treated as a REIT for all
purposes under the Code and the tax provisions of the State of Nebraska (and any
other state in which MDI is subject to tax and which provides for the taxation
of REITs in a manner similar to the treatment of REITs under Sections 856-860 of
the Code) and shall make any and all required filings in connection therewith,
including providing Bradley with all information, documentation and assistance
Bradley may reasonably request in order for Bradley to mail the stockholder
demand letters required by Treasury Regulation ss. 1.857-8 within 30 days after
the Effective Time and to take any other actions that may be necessary or
appropriate for Bradley, as the Surviving Corporation, to take in order to
maintain MDI's status as a REIT through the Effective Time.
7.15 Environmental Matters. MDI and Bradley shall cooperate and keep
each other informed in a timely manner regarding any communications to or
filings with any state environmental regulatory authorities regarding the MDI
Properties and MDI shall not submit
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any written communication or filing to any such state environmental authority
without the prior written consent of Bradley, which consent shall not be
unreasonably withheld.
ARTICLE 8
8. Conditions.
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part by the parties hereto, to the extent permitted by
applicable law:
(a) This Agreement and the transactions contemplated hereby
shall have been approved by the requisite vote of stockholders of MDI.
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act, if applicable, shall have expired or been terminated.
(c) Neither of the parties hereto shall be subject to any
temporary restraining order, ruling or preliminary or permanent injunction or
other order of a court of competent jurisdiction or other legal restraint or
prohibition which prohibits the consummation of the transactions contemplated by
this Agreement. In the event any such order, ruling, injunction or other
prohibition shall have been issued, each party agrees to use its best efforts to
have any such order, ruling, injunction or other prohibition lifted, stayed or
reversed.
(d) The Form S-4 shall have been declared effective by the SEC
under the Securities Act, and no stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC, and no proceedings for that purpose
shall have been initiated or, to the knowledge of Bradley or MDI, threatened by
the SEC.
(e) Bradley shall have obtained the approval for the listing
of the shares of Bradley Preferred Stock issuable in the Merger on the NYSE,
subject to official notice of issuance.
(f) Bradley shall have received all state securities or "blue
sky" permits and other authorizations necessary to issue the Bradley Preferred
Stock as contemplated in this Agreement.
(g) Bradley and MDI shall have received the opinion of
Goodwin, Procter & Hoar LLP, or another nationally recognized law firm selected
by Bradley, dated not less than five business days prior to the date the Form
S-4 is declared effective by the SEC, reasonably acceptable to Bradley, and
subject to customary conditions and qualifications (including reliance, in part,
on representations of Bradley and MDI and certain stockholders
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of MDI), to the effect that the Merger will be treated for federal income tax
purposes as a tax-free reorganization qualifying under the provisions of
Sections 368(a) of the Code, which opinion shall not have been withdrawn or
modified in any material respect.
8.2 Conditions to Obligations of MDI to Effect the Merger. The
obligation of MDI to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, unless waived by MDI:
(a) Each of the representations and warranties of Bradley
contained in this Agreement qualified as to materiality or Bradley Material
Advance Effect shall be true and correct in all respects and the representations
and warranties of Bradley contained in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Effective Time as though made on and as of the
Effective Time except to the extent any such representation or warranty is
expressly limited by its terms to another date or time, and MDI shall have
received a certificate, dated the Closing Date, signed on behalf of Bradley by
the President of Bradley to the foregoing effect.
(b) Bradley shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and MDI
shall have received a certificate, dated the Closing Date, signed on behalf of
Bradley by the President of Bradley to the foregoing effect.
(c) From the date of this Agreement through the Effective
Time, there shall not have occurred any change concerning Bradley or any of the
Bradley Subsidiaries that has had or could be reasonably likely to have a
Bradley Material Adverse Effect and MDI shall have received a certificate, dated
the Closing Date, signed on behalf of Bradley by the President of Bradley to the
foregoing effect.
(d) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board, other
regulatory body or third parties required to be made or obtained by Bradley and
its subsidiaries and affiliated entities in connection with the execution,
delivery and performance of this Agreement and the ancillary agreements shall
have been obtained or made, except where the failure to have obtained or made
any such consent, authorization, order, approval, filing or registration, would
not have Bradley Material Adverse Effect.
8.3 Conditions to Obligation of Bradley to Effect the Merger. The
obligations of Bradley to effect the Merger shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, unless waived by
Bradley:
(a) Each of the representations and warranties of MDI
contained in this Agreement qualified as to materiality or MDI Material Adverse
Effect shall be true and correct in all respects and the representations and
warranties of MDI contained in this Agreement that are not so qualified shall be
true and correct in all material respects, in each
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case as of the date of this Agreement and as of the Effective Time as though
made on and as of the Effective Time except to the extent any such
representation or warranty is expressly limited by its terms to another date or
time, and Bradley shall have received a certificate, dated the Closing Date,
signed on behalf of MDI by the President of MDI to the foregoing effect.
Notwithstanding the foregoing, the occurrence of any Litigation subsequent to
the date hereof and prior to the Effective Time, which could not reasonably be
expected to have a MDI Material Adverse Effect shall be deemed not to be a
breach of the provisions of this Section 8.3(a).
(b) MDI shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and Bradley
shall have received a certificate, dated the Closing Date, signed on behalf of
MDI by the President of MDI to the foregoing effect.
(c) Bradley shall have received Option Terminations relating
to each of the Existing MDI Options, as required by Section 4.1(e) of this
Agreement and shall have received an Acknowledgment of Severance Obligation from
each of the applicable employees as required by Section 1.5 of this Agreement.
(d) At closing, Bradley shall have received the opinion of
Deloitte & Touche LLP, in the form attached hereto as Exhibit E.
(e) From the date of this Agreement through the Effective
Time, there shall not have occurred any change concerning MDI or any of the MDI
Subsidiaries, that has had or could be reasonably likely to have a MDI Material
Adverse Effect and Bradley shall have received a certificate, dated the Closing
Date, signed on behalf of MDI by the President of MDI to the foregoing effect.
(f) MDI shall have obtained and delivered to Bradley estoppel
certificates dated no earlier than 60 days prior to the Effective Time with
respect to (x) leases and REA Agreements representing at least 90% of the total
rented space represented by the leases and REA Agreements set forth on Schedule
8.3(f) hereof and (y) leases representing a total of 50% of the total rented
space of each MDI Property, other than rented space represented by the leases
listed on Schedule 8.3(f) hereof. Such estoppel certificates shall either be (x)
substantially in the form of Exhibit F hereto or (y) in the form required by the
applicable lease.
(g) (i) The consents set forth in Schedule 8.3(g) hereof shall
have been obtained, and (ii) all other consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental commission,
board, other regulatory body or third parties required to be made or obtained by
MDI and its subsidiaries and affiliated entities in connection with the
execution, delivery and performance of this Agreement and the ancillary
agreements shall have been obtained or made, except where the failure to have
obtained or made any such consent, authorization, order, approval, filing or
registration, would not have a MDI Material Adverse Effect.
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ARTICLE 9
9. Termination.
9.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after approval and adoption
of this Agreement by the stockholders of MDI and Bradley:
(a) by mutual written consent of Bradley and MDI;
(b) by either Bradley or MDI if any United States federal or
state court of competent jurisdiction or other governmental entity shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and non-appealable,
provided that the party seeking to terminate shall have used its best efforts to
appeal such order, decree, ruling or other action;
(c) by Bradley upon a breach of any representation, warranty,
covenant or agreement on the part of MDI set forth in this Agreement, or if any
representation or warranty of MDI shall have become untrue, in either case such
that the conditions set forth in Section 8.3(a) or Section 8.3(b), as the case
may be, would be incapable of being satisfied by September 30, 1998; provided,
however, that, in any case, a willful breach of Sections 7.1, 7.2(b), 7.3(a),
7.9, 7.12 and 7.14(c) shall be deemed to cause such conditions to be incapable
of being satisfied for purposes of this Section 9.1(c);
(d) by MDI upon a breach of any representation, warranty,
covenant or agreement on the part of Bradley set forth in this Agreement, or if
any representation or warranty of Bradley shall have become untrue, in either
case such that the conditions set forth in Section 8.2(a) or Section 8.2(b), as
the case may be, would be incapable of being satisfied by September 30, 1998;
provided, however, that, in any case, a willful breach shall be deemed to cause
such conditions to be incapable of being satisfied for purposes of this Section
9.1(d);
(e) by Bradley if (i) the Board of Directors of MDI shall have
failed to make, or shall have withdrawn, amended, modified or changed its
approval or recommendation of this Agreement or any of the transactions
contemplated hereby; (ii) MDI shall have failed as soon as practicable to mail
the proxy/prospectus contained in the Form S- 4 to its stockholders or to
include the recommendation of its Board of Directors of this Agreement and the
transactions contemplated hereby in the proxy/prospectus contained in the Form
S-4; (iii) the Board of Directors of MDI shall have recommended that
stockholders of MDI accept or approve an Acquisition Proposal by a Person other
than Bradley (or MDI or its Board shall have resolved to do such); or (iv) MDI
or its Board of Directors shall have resolved to do any of the foregoing;
(f) by MDI, if the Board of Directors of MDI recommends to
MDI's stockholders approval or acceptance of a Acquisition Proposal by a Person
other than
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Bradley, but only in the event that the Board of Directors of MDI, after
consultation with and based upon the advice of McGrath, North, Mullin & Kratz,
P.C. or another nationally recognized law firm, has determined in good faith
that such action is necessary for the Board of Directors of MDI to comply with
its fiduciary duties to its stockholders under applicable law;
(g) by either Bradley or MDI if this Agreement and the
transactions contemplated hereby shall have failed to receive the requisite vote
for approval and adoption by the stockholders of MDI upon the holding of a duly
convened stockholder meeting;
(h) by either Bradley or MDI, if the Merger shall not have
been consummated on or before September 30, 1998 (other than due to the failure
of the party seeking to terminate this Agreement to perform its obligations
under this Agreement required to be performed by it at or prior to the Effective
Time); or
(i) by MDI if Bradley enters into a definitive agreement
pursuant to which Bradley agrees (A) to sell all or substantially all of its
assets or (B) to merge or consolidate with another Person if consummation of
such merger or consolidation would result in the voting securities of Bradley
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving Person) less than 50% of the combined voting power of the voting
securities of Bradley or such surviving Person outstanding immediately after
such merger or consolidation. MDI's right of termination under this Section
9.1(i) shall expire and become null and void on the seventh (7th) day after
receipt of notice by MDI that Bradley has entered into such definitive
agreement.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective employees, officers,
directors, agents, representatives or advisors, whether prior to or after the
execution of this Agreement.
9.2 Effect of Termination.
(a) In the event of the termination and abandonment of this
Agreement pursuant to Section 9.1 hereof, this Agreement shall forthwith become
void and have no effect, all rights and obligations of any party hereto shall
cease except for agreements contained in Section 10.5 and neither party shall
have any liability to the other party or any of its affiliates, directors,
officers or stockholders; provided, however, that MDI shall be required to make
such payments to Bradley as are required pursuant to this Article 9.
(b) If (x) Bradley terminates this Agreement pursuant to
Section 9.1(e)(iii) or pursuant to 9.1(c) as a result of a willful breach by MDI
or (y) MDI terminates this Agreement pursuant to Section 9.1(f), then MDI shall
pay to Bradley an amount in cash equal to the sum of (i) $2,500,000, plus (ii)
Bradley's out-of-pocket costs and expenses, in connection with this Agreement
and the transactions contemplated hereby, including, without
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limitation, fees and disbursements of accountants, attorneys and investment
bankers up to a maximum of $875,000 (clauses (i) and (ii) collectively, the
"Termination Amount") in accordance with the provisions of Section 9.3.
(c) If Bradley terminates this Agreement pursuant to Section
9.1(e)(i), 9.1(e)(ii), 9.1(e)(iv) or 9.1(c) (except for a termination because of
a willful breach by MDI in which case the provisions of Section 9.2(b) will
apply), MDI shall pay all of Bradley's out-of-pocket costs and expenses, in
connection with this Agreement and the transactions contemplated hereby,
including, without limitation, fees and disbursements of accountants, attorneys
and investment bankers (collectively, "Expenses") up to a maximum of $875,000,
in accordance with the provisions of Section 9.3.
(d) If this Agreement is terminated pursuant to Section
9.1(g), MDI shall pay all of Bradley's Expenses up to a maximum of $500,000 in
accordance with the provisions of Section 9.3.
(e) If at any time prior to or within one year after
termination of this Agreement (unless such termination was pursuant to Section
9.1(a), (b), (d), (g) or (h)) MDI enters into an agreement relating to a PTAP
(as hereinafter defined) with a Person other than Bradley or MDI's Board of
Directors recommends or resolves to recommend to MDI's stockholders approval or
acceptance of a PTAP with a Person other than Bradley, then, upon the entry into
such agreement or the making of such recommendation or resolution, MDI shall pay
to Bradley the Termination Amount in accordance with the provisions of Section
9.3 which amount shall be reduced by any monies previously paid by MDI to
Bradley pursuant to Section 9.2(b) or Section 9.2(c). For purposes of this
Agreement, PTAP shall mean any proposal or offer (including, without limitation,
any proposal or offer to its stockholders) with respect to a merger,
acquisition, tender offer, exchange offer, consolidation or similar transaction
involving, or any purchase of, 20% or more of the assets or any equity
securities of, MDI or any MDI Subsidiary, other than the transactions
contemplated by this Agreement; provided, however, that PTAP shall not include
any transaction involving the partnership interests or assets of MAB.
(f) If (A) prior to MDI's Stockholders' Meeting, a PTAP has
been received by MDI or a Person has publicly disclosed a PTAP or an intent to
make a PTAP and (B) if at any time prior to or within one year after termination
of this Agreement pursuant to Section 9.1(g), MDI enters into an agreement
relating to a PTAP with a Person other than Bradley or MDI's Board of Directors
recommends or resolves to recommend to MDI's stockholders approval or acceptance
of a PTAP with a Person other than Bradley, then upon the entry into such
agreement or the making of such recommendation or resolution, MDI shall pay to
Bradley the Termination Amount in accordance with the provisions of Section 9.3
which amount shall be reduced by any monies previously paid by MDI to Bradley
pursuant to Section 9.2(d).
(g) At any time prior to or within one year after termination
of this Agreement, MDI shall not enter into any agreement relating to a PTAP
with a Person other than Bradley unless such agreement provides that such Person
shall, upon the execution of
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such agreement, pay any Termination Amount due Bradley under this Section 9.2.
All such amounts shall be paid in accordance with the provisions of Section 9.3.
(h) The parties acknowledge and agree that the provisions for
payment of Expenses and/or the Termination Amount are included herein in order
to induce Bradley to enter into this Agreement and to reimburse Bradley for
incurring the costs and expenses related to entering into this Agreement and
consummating the transactions contemplated by this Agreement. Notwithstanding
anything to the contrary set forth in this Agreement, in the event Bradley is
required to file suit to seek all or a portion of Termination Amount and/or the
Expenses, Bradley shall be reimbursed by MDI for any and all expenses which it
has incurred in enforcing its rights hereunder, including, without limitation,
attorneys' fees and expenses. The parties further expressly acknowledge and
agree that (i) the payment of the Termination Amount shall constitute liquidated
damages with respect to any claim for damages or any other claim which Bradley
would otherwise be entitled to assert against MDI with respect to this Agreement
and the transactions contemplated hereby and shall constitute the sole and
exclusive remedy available to Bradley; and (ii) in light of the difficulty of
accurately determining actual damages with respect to the foregoing upon any
termination of this Agreement pursuant to Section 9.2 hereof, the Termination
Amount: (A) constitutes a reasonable estimate of the damages that will be
suffered by reason of any such proposed or actual termination of this Agreement
pursuant to Section 9.2 and (B) shall be in full and complete satisfaction of
any and all damages arising as a result of the foregoing. Notwithstanding the
foregoing, in the event there is a judicial determination that the Termination
Amount is invalid, illegal or unenforceable in any respect for any reason, in
whole or in part, or in the event that there is a judicial determination that
MDI's obligation to pay the Termination Amount is invalid, illegal or
unenforceable, in whole or in part, the validity, legality and enforceability of
this Agreement shall not in any way be impaired thereby and Bradley shall be
entitled to enforce all of its rights and privileges to the fullest extent of
the law, including without limitation its right to pursue a claim for monetary
damages or equitable relief against MDI; provided that in no circumstances will
the amount of monetary damages (exclusive of costs and expenses incurred in
collecting such amounts) exceed the sum of (i) $500,000 in connection with the
termination of the Agreement pursuant to Section 9.1(g), or $875,000 in
connection with any other expense award otherwise allowed under Section 9.2 for
recovery of fees and disbursements of accountants, attorneys and investment
bankers, and (ii) $2.5 million for events for which a Termination Amount would
otherwise be payable to Bradley under Section 9.2.
(i) Notwithstanding any provision to the contrary herein, the
aggregate amount of the Termination Amount or Expenses, as the case may be,
payable to Bradley pursuant to this Section 9.2 shall be subject to the
limitations set forth in Section 9.3.
9.3 Payment of Termination Amount or Expenses.
(a) In the event that MDI is obligated to pay Bradley the
Termination Amount and/or Expenses pursuant to Section 9.2 (the "Section 9.2
Amount"), MDI (or any other Person to the extent provided by Section 9.2(d))
shall pay to Bradley from the applicable Section 9.2 Amount deposited into
escrow in accordance with the next sentence,
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an amount equal to the lesser of (m) the Section 9.2 Amount and (n) the sum of
(1) the maximum amount that can be paid to Bradley without causing Bradley to
fail to meet the requirements of Sections 856(c)(2) and (3) of the Code
determined as if the payment of such amount did not constitute income described
in Sections 856(c)(2)(A)-(H) or 856(c)(3)(A)-(I) of the Code ("Qualifying
Income"), as determined by Bradley's certified public accountants, plus (2) in
the event Bradley receives either (X) a letter from Bradley's counsel indicating
that Bradley has received a ruling from the IRS described in Section 9.3(b)(ii)
or (Y) an opinion from Bradley's counsel as described in Section 9.3(b)(ii), an
amount equal to the Section 9.2 Amount less the amount payable under clause (1)
above. To secure MDI's obligation to pay these amounts, MDI shall deposit into
escrow an amount in cash equal to the Section 9.2 Amount with an escrow agent
selected by Bradley and on such terms (subject to Section 9.3(b)) as shall be
agreed upon by Bradley and the escrow agent. The payment or deposit into escrow
of the Section 9.2 Amount pursuant to this Section 9.3(a) shall be made within
three days of the event which gives rise to the payment of the Section 9.2
Amount by wire transfer or bank check. Notwithstanding anything to the contrary
in this Agreement, if MDI shall not have paid the Section 9.2 Amount within the
period set forth in the preceding sentence, Bradley shall also be entitled to
receive interest on such Section 9.2 Amount, commencing on the date that the
Section 9.2 Amount became due, at a rate per annum equal to the rate of interest
publicly announced by CitiBank, N.A., from time to time, in the City of New
York, as such Bank's prime rate.
(b) The escrow agreement shall provide that the Section 9.2
Amount in escrow or any portion thereof shall not be released to Bradley unless
the escrow agent receives any one or combination of the following: (i) a letter
from Bradley's certified public accountants indicating the maximum amount that
can be paid by the escrow agent to Bradley without causing Bradley to fail to
meet the requirements of Sections 856(c)(2) and (3) of the Code determined as if
the payment of such amount did not constitute Qualifying Income or a subsequent
letter from Bradley's accountants revising that amount, in which case the escrow
agent shall release such amount to Bradley, or (ii) a letter from Bradley's
counsel indicating that Bradley received a ruling from the IRS holding that the
receipt by Bradley of the Section 9.2 Amount would either constitute Qualifying
Income or would be excluded from gross income within the meaning of Sections
856(c)(2) and (3) of the Code (or alternatively, Bradley's legal counsel has
rendered a legal opinion to the effect that the receipt by Bradley of the
Section 9.2 Amount would either constitute Qualifying Income or would be
excluded from gross income within the meaning of Sections 856(c)(2) and (3) of
the Code), in which case the escrow agent shall release the remainder of the
Section 9.2 Amount to Bradley. MDI agrees to amend this Section 9.3 at the
request of Bradley in order to (x) maximize the portion of the Section 9.2
Amount that may be distributed to Bradley hereunder without causing Bradley to
fail to meet the requirements of Sections 856(c)(2) and (3) of the Code, (y)
improve Bradley's chances of securing a favorable ruling described in this
Section 9.3(b) or (z) assist Bradley in obtaining a favorable legal opinion from
its counsel as described in this Section 9.3(b); provided that Bradley's legal
counsel has rendered a legal opinion to Bradley to the effect that such
amendment would not cause Bradley to fail to meet the requirements of Section
856(c)(2) or (3) of the Code. The escrow agreement shall also provide that any
portion of the Section 9.2 Amount held in escrow for five years shall be
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released by the escrow agent to MDI. MDI shall not be a party to such escrow
agreement and shall not bear any cost of or have liability resulting from the
escrow agreement.
9.4 Extension; Waiver. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
10. General Provisions.
10.1 Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger,
provided, however, that the agreements contained in Article 4, the last sentence
of Section 7.4, the last sentence of Section 7.8 and Sections 7.10, 7.12, 7.13
and 7.14 and this Article 10 shall survive the Merger.
10.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
If to Bradley: Thomas P. D'Arcy
Bradley Real Estate, Inc.
40 Skokie Boulevard, Suite 600
Northbrook, IL 60062
Fax No. (847) 480-1893
With copies to: William B. King, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Fax No. (617) 523-1231
If to MDI: Dennis G. Gethmann
Mid-America Realty Investments, Inc.
11506 Nichols Street, Suite 100
Omaha, Nebraska 68154
Fax No. (402) 341-0216
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With copies to: David L. Hefflinger
McGrath, North, Mullin & Kratz, P.C.
Suite 1400, One Central Park Plaza
222 South Fifteenth Street
Omaha, Nebraska 68102
Fax No. (402) 341-0216
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
10.3 Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article 4 and Sections 7.9, 7.11, 7.12 and 7.13, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
10.4 Entire Agreement. This Agreement, the Exhibits, the MDI Disclosure
Letter and the Bradley Disclosure Letter and any documents delivered by the
parties in connection herewith constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings among the partes with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
10.5 Confidentiality.
(a) As used herein, "Confidential Material" means, with
respect to either party hereto (the "Providing Party"), all information, whether
oral, written or otherwise, furnished to the other party hereto (the "Receiving
Party") or such Receiving Party's directors, officers, partners, Affiliates (as
defined in Rule 12b-2 under the Exchange Act), employees, agents or
representatives (collectively, "Representatives"), by the Providing Party and
all reports, analyses, compilations, studies and other material prepared by the
Receiving Party or its Representatives (in whatever form maintained, whether
documentary, computer storage or otherwise) containing, reflecting or based
upon, in whole or in part, any such information. The term "Confidential
Material" does not include information which (i) is or becomes generally
available, to the public other than as a result of a disclosure by the Receiving
Party, its Representatives or anyone to whom the Receiving Party or any of its
Representatives transmit any Confidential Material in violation of this
Agreement, (ii) is or becomes known or available to the Receiving Party on a
non-confidential basis from a source (other than the Providing Party or one of
its Representatives) who is not, to the knowledge of the Receiving Party after
reasonable inquiry, prohibited from transmitting the information to
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the Receiving Party or its Representatives by a contractual, legal, fiduciary or
other obligation or (iii) is contained in the Form S-4.
(b) Subject to paragraph (c) below or except as required by
law, the Confidential Material will be kept confidential and will not, without
the prior written consent of the Providing Party, be disclosed by the Receiving
Party or its Representatives, in whole or in part, and will not be used by the
Receiving Party or its Representatives, directly or indirectly, for any purpose
other than in connection with this Agreement, the Merger or the evaluating,
negotiating or advising with respect to a transaction contemplated herein.
Moreover, each Receiving Party agrees to transmit Confidential Material to its
Representatives only if and to the extent that such Representatives need to know
the Confidential Material for purposes of such transaction and are informed by
such Receiving Party of the confidential nature of the Confidential Material and
of the terms of this Section. In any event, each Receiving Party will be
responsible for any actions by its Representatives which are not in accordance
with the provisions hereof.
(c) In the event that either Receiving Party, its
Representatives or anyone to whom such Receiving Party or its Representatives
supply the Confidential Material, are requested (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, any informal or formal investigation by any government or
governmental agency or authority or otherwise in connection with legal process)
to disclose any Confidential Material, such Receiving Party agrees (i) to
immediately notify the Providing Party of the existence, terms and circumstances
surrounding such a request, (ii) to consult with the Providing Party on the
advisability of taking legal available steps to resist or narrow such request
and (iii) if disclosure of such information is required, to furnish only that
portion of the Confidential Material which, in the opinion of such Receiving
Party's counsel, such Receiving Party is legally compelled to disclose and to
cooperate with any action by the Providing Party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Confidential Material (it being agreed that the Providing Party
shall, reimburse the Receiving Party for all reasonable out-of-pocket expenses
incurred by the Receiving Party in connection with such cooperation).
(d) In the event of the termination of this Agreement in
accordance with its terms, promptly upon request from either Providing Party,
the Receiving Party shall, except to the extent prevented by law, redeliver to
the Providing Party or destroy all tangible Confidential Material and will not
retain any copies, extracts or other reproductions thereof in whole or in part.
Any such destruction shall be certified in writing to the Providing Party by an
authorized officer of the Receiving Party supervising the same. Notwithstanding
the foregoing, each Receiving Party and one Representative designated by each
Receiving Party shall be permitted to retain one permanent file copy of each
document constituting Confidential Material.
(e) MDI and Bradley agree that prior to and within one year
after the termination of this Agreement they shall not solicit for employment,
whether as an employee
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or independent contractor, any Person who is (or has been within a period of one
year) employed by the other, without the written consent of the other.
10.6 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Board of Directors, at any time before or after
approval of matters presented in connection with the Merger by the stockholders
of MDI and Bradley, but after any such stockholder approval, no amendment shall
be made which by law requires the further approval of stockholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
10.7 Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland
without regard to its rules of conflict of laws. Each of MDI and Bradley hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Maryland and of the United States of America
located in the State of Maryland (the "Maryland Courts") for any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any litigation relating thereto except in
such courts), waives any objection to the laying of venue of any such litigation
in the Maryland Courts and agrees not to plead or claim in any Maryland Court
that such litigation brought therein has been brought in any inconvenient forum.
Each of the parties hereto agrees, (a) to the extent such party is not otherwise
subject to service of process in the State of Maryland, to appoint and maintain
an agent in the State of Maryland as such party's agent for acceptance of legal
process, and (b) that service of process may also be made on such party by
prepaid certified mail with a proof of mailing receipt validated by United
States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as if
served upon such party personally with the State of Maryland. For purposes of
implementing the parties' agreement to appoint and maintain an agent for service
of process in the State of Maryland, each such party does hereby appoint The
Corporation Trust Company, 300 East Lombard Street, Baltimore, Maryland 21202,
as such agent.
10.8 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
10.9 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
10.10 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
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10.11 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
10.12 Incorporation. The MDI Disclosure Letter and the Bradley
Disclosure Letter and all Exhibits and Schedules attached hereto and thereto and
referred to herein and therein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
10.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.14 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions thereof in any Maryland Court,
this being in addition to any other remedy to which they are entitled at law or
in equity.
10.15 Certain Definitions.
(a) As used in this Agreement, the word "Subsidiary" or
"Subsidiaries" when used with respect to any party means any corporation,
partnership, joint venture, business trust or other entity, of which such party
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization.
(b) As used in this Agreement, the word "Person" means an
individual, a corporation, a partnership, an association, a joint-stock company,
a trust, a limited liability company, any unincorporated organization or any
other entity.
(c) As used in this Agreement, the word "affiliate" shall have
the meaning set forth in Rule 12b-2 of the Exchange Act.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
BRADLEY REAL ESTATE, INC.
ATTEST:
By: /s/ William B. King By: /s/ Thomas P. D'Arcy
Name: William B. King Name: Thomas P. D'Arcy
Title: Secretary Title: Chairman and Chief Executive Officer
MID-AMERICA REALTY INVESTMENTS, INC.
ATTEST:
By: /s/ Jerome L. Heinrichs By: /s/ Dennis G. Gethmann
Name: Jerome L. Heinrichs Name: Dennis G. Gethmann
Title: Secretary Title: President
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Exhibit 99.3
BRADLEY REAL ESTATE, INC.
Articles Supplementary
8.4% Series A Convertible Preferred Stock
Bradley Real Estate, Inc., a Maryland corporation (the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article VII of the charter of the Corporation (the
"Charter"), the Board of Directors as required by Section 2-208(a) of the
Maryland General Corporation Law (the "MGCL") at a meeting duly called and held
on _________ __, 1998 has classified and designated __________ unissued shares
of the Preferred Stock of the Corporation as 8.4% Series A Convertible Preferred
Stock, with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption as follows, which upon any
restatement of the Charter shall be made part of Article VII of the Charter,
with any necessary or appropriate changes to the enumeration or lettering of the
provisions thereof:
8.4% SERIES A CONVERTIBLE PREFERRED STOCK
1. Designation, Amount and Ranking.
The designation of the Preferred Stock described in Article First
hereof shall be "8.4% Series A Convertible Preferred Stock," par value $.01 per
share (the "Series A Preferred Stock"). The number of shares of the Series A
Preferred Stock shall be
- ----------.
The Series A Preferred Stock shall, with respect to dividend rights and
rights upon liquidation, dissolution or winding up of the Corporation, rank (a)
senior to all classes or series of common stock, par value $.01 per share of the
Corporation (the "Common Stock"), and to all equity securities the terms of
which specifically provide that such equity securities rank junior to such
Series A Preferred Stock; (b) on parity with all equity securities issued by the
Corporation the terms of which specifically provide that such equity securities
rank on a parity with the Series A Preferred Stock; and (c) junior to all other
equity securities issued by the Corporation. The term "equity securities" shall
not include convertible debt securities.
2. Dividend Rights.
(a) The holders of record of outstanding shares of Series A
Preferred Stock shall be entitled to receive, when, as and if authorized by the
Board of Directors, out of funds legally available therefor, cash dividends
which are (1) cumulative, (2) preferential to the dividends paid on the
Corporation's Common Stock and (3) payable quarterly in arrears at the rate of
8.4% of the $25.00 liquidation preference per annum (equivalent to a fixed
quarterly amount of $.525 per share) (the "Dividend Amount") and no more, on or
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before the last day (or, if not a business day, the next succeeding business
day) of each March, June, September and December (each, a "Dividend Payment
Date") following the date of original issuance of the Series A Preferred Stock
(the "Original Issue Date"). Each calendar quarter immediately preceding the
Dividend Payment Date (or if the Original Issue Date is not on the first day of
a calendar quarter, the period beginning on the date of issuance and ending on
the Dividend Payment Date) is referred to hereinafter as a "Dividend Period."
Dividends will be payable to holders of record as they appear in the stock
records of the Corporation at the close of business on the applicable record
date, which shall be the same day as the record date for any dividend payable on
the Common Stock with respect to the same period or, if no such Common Stock
dividend is payable, then the record date for such Dividend Payment Date shall
be the 20th day of the calendar month in which the applicable Dividend Payment
Date falls or on such earlier date designated on at least 10 days notice by the
Board of Directors of the Corporation as the record date for such Dividend
Payment Date that is not more than 30 nor less than 10 days prior to such
Dividend Payment Date (each, a "Dividend Record Date"). Notwithstanding anything
in the terms of the Series A Preferred Stock to the contrary, the Dividend
Amount for the initial Dividend Period and, if applicable, for the next
succeeding Dividend Period(s) shall be reduced in the aggregate by the amount
(calculated to the nearest one-tenth of one cent) obtained by (x) dividing (i)
the amount of the "Merger Dividend," if any, paid to the holders of common
stock, par value $.01 per share of Mid-America Realty Investments, Inc. ("MDI"),
prior to its merger with and into the Corporation by (ii) the number of shares
of such common stock of MDI with respect to which the Merger Dividend was paid
and (y) dividing (i) the quotient so obtained by (ii) the Exchange Ratio. For
the purposes of the preceding sentence, the Merger Dividend shall have the
meaning set forth in Section 7.14(b) of the Agreement and Plan of Merger dated
as of May , 1988 by and between MDI and the Corporation, as amended from time to
time (the "Merger Agreement"), and the Exchange Ratio shall be 0.42 (or such
other amount as is provided in Section 4.1(b) of the Merger Agreement).
(b) No dividends on shares of Series A Preferred Stock shall
be authorized by the Board of Directors of the Corporation or paid or set apart
for payment by the Corporation at any such time as the terms and provisions of
any agreement of the Corporation, including any agreement relating to its
indebtedness, prohibits such authorization, payment or setting apart for payment
or provides that such authorization, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or to the extent that such
authorization or payment shall be restricted or prohibited by law. In
determining whether a distribution (other than upon voluntary or involuntary
liquidation), by dividend, redemption or other acquisition of shares of stock of
the Corporation or otherwise, is permitted under the MGCL, amounts that would be
needed, if the Corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of holders of shares of
Series A Preferred Stock will not be added to the Corporation's total
liabilities.
(c) Notwithstanding the foregoing, dividends on the Series A
Preferred Stock shall accrue whether or not the terms and provisions set forth
in Section 2(b) hereof at any time prohibit the current payment of dividends,
whether or not the Corporation has
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earnings, whether or not there are funds legally available for the payment of
such dividends and whether or not such dividends are declared. Accrued but
unpaid dividends on the Series A Preferred Stock will accumulate as of the
Dividend Payment Date on which they first become payable.
(d) The Corporation shall not (i) declare or pay or set apart
for payment any dividends or distributions on any stock ranking as to dividends
junior to the Series A Preferred Stock (other than dividends paid in shares of
such junior stock) or (ii) make any purchase or redemption of, or any sinking
fund payment for the purchase or redemption of, any stock ranking as to
dividends junior to the Series A Preferred Stock (other than a purchase or
redemption made by issue or delivery of such junior stock) unless all dividends
payable on all outstanding shares of Series A Preferred Stock for all past
Dividend Periods shall have been paid in full or declared and a sufficient sum
set apart for payment thereof; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred stock of the
Corporation in compliance with the provisions of such sinking fund may
thereafter be applied to the purchase or redemption of such preferred stock in
accordance with the terms of such sinking fund.
(e) All dividends declared on shares of any other class of
preferred stock or series thereof ranking on a parity as to dividends with the
Series A Preferred Stock shall be declared pro rata, so that the amounts of
dividends declared per share on the Series A Preferred Stock for the Dividend
Period of the Series A Preferred Stock ending either on the same day or within
the dividend period of such other stock, shall, in all cases, bear to each other
the same ratio that accrued dividends per share on the Series A Preferred Stock
and such other class or series of stock bear to each other.
(f) Any dividend payment made on shares of the Series A
Preferred Stock shall first be credited against the earliest accrued but unpaid
dividend due with respect to such shares which remains payable. Holders of the
Series A Preferred Stock shall not be entitled to any dividend, whether payable
in cash, property or stock, in excess of full cumulative dividends on the Series
A Preferred Stock as described above.
3. Liquidation Rights.
(a) Subject to any prior rights of any class or series of
stock, in the event of any liquidation, dissolution, or winding up of the
Corporation, either voluntary or involuntary, the holders of Series A Preferred
Stock then outstanding shall be entitled to receive out of the assets of the
Corporation legally available for distribution, on a prior basis and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of Common Stock by reason of their ownership of such
stock, a liquidation preference of $25.00 per share, plus an amount equal to all
accrued but unpaid dividends as determined in accordance with Section 2(c) for
each share of Series A Preferred Stock then held by them. If, upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock shall be insufficient to permit the
payment to such holders and the holders of any other class or series of stock on
parity with the Series A Preferred Stock of the full aforesaid amounts to
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which they are entitled, then, subject to any prior rights of any classes or
series of stock, the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably to the holders of Series
A Preferred Stock and any other shares of stock on a parity for liquidation
purposes in proportion to the aggregate amounts to which each such holder would
otherwise be respectively entitled.
(b) After payment of the full amount of the liquidating
distributions to which they are entitled pursuant to Section 3(a) hereof, the
holders of Series A Preferred Stock will have no right or claim to any of the
remaining assets of the Corporation.
(c) Written notice of any such liquidation, dissolution or
winding up of the Corporation, stating the payment date or dates when, and the
place or places where, the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage pre-paid, not less than 30
nor more than 60 days prior to the payment date stated therein, to each record
holder of the Series A Preferred Stock at the respective addresses of such
holders as the same shall appear on the stock transfer records of the
Corporation.
(d) The consolidation or merger of the Corporation with or
into any other corporation, partnership, limited liability company, trust or
other entity or of any other corporation, partnership, limited liability
company, trust or other entity with or into the Corporation, or the sale, lease,
transfer or conveyance of all or substantially all of the property or business
of the Corporation or a statutory share exchange, shall not be deemed to
constitute a liquidation, dissolution or winding up of the Corporation.
4. Conversion.
4.1 Right to Convert.
Each holder of shares of Series A Preferred Stock shall be entitled, at
any time and from time to time after the Dividend Record Date for the first
Dividend Period for which the Dividend Amount is not subject to being reduced in
accordance with the last two sentences of Section 2(a) hereof, to cause any or
all of his, her or its shares of Series A Preferred Stock to be converted
(without taking into account any accumulated, accrued but unpaid dividends) into
shares of Common Stock as follows; provided, however, that no holder of Series A
Preferred Stock shall be entitled to convert shares of such Series A Preferred
Stock into Common Stock pursuant to the foregoing provision, if, immediately
after such conversion, such person would be in violation of Section 9.2 of the
Charter as supplemented by Section 9 hereof. The number of shares of Common
Stock to which a holder of Series A Preferred Stock shall be entitled to receive
upon conversion shall be the product obtained by multiplying the Conversion Rate
(as defined below) by the number of shares of Series A Preferred Stock being
converted at such time. The Conversion Rate shall be the quotient obtained by
dividing $25.00 by the Conversion Price. The Conversion Price shall, except as
adjusted pursuant to Section 4.4 below, be $24.49. The right to convert shares
of Series A Preferred Stock which have been called for redemption pursuant to
Section 5 hereof, however, shall terminate at the close of business on the
Series A Preferred Redemption Date
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(as defined in Section 5(b)), unless the Corporation shall default in making
payment of any cash payable upon such redemption under Section 5 hereof.
4.2 Procedure for Conversion.
In order to exercise its right to convert shares of Series A Preferred
Stock into Common Stock, the holder of shares of Series A Preferred Stock shall
surrender the certificate(s) therefor, duly endorsed if the Corporation shall so
require, or accompanied by appropriate instruments of transfer satisfactory to
the Corporation, at the office of any transfer agent for the Series A Preferred
Stock or if there is no such transfer agent, at the principal offices of the
Corporation, or at such other office as may be designated by the Corporation,
together with written notice that such holder elects to convert such shares.
Such notice shall also state the name(s) and address(es) in which such holder
wishes the certificate(s) for the shares of Common Stock issuable upon
conversion to be issued. As soon as practicable after a conversion, the
Corporation shall issue and deliver at said office a certificate or certificates
for the number of whole shares of Common Stock issuable upon conversion of the
shares of Series A Preferred Stock duly surrendered for conversion to the
person(s) entitled to receive the same. Shares of Series A Preferred Stock shall
be deemed to have been converted immediately prior to the close of business on
the date on which the certificates therefor and notice of intention to convert
the same are duly received by the Corporation in accordance with the foregoing
provisions, and the person(s) entitled to receive the Common Stock issuable upon
such conversion shall be deemed for all purposes as record holder(s) of such
Common Stock as of the close of business on such date (hereinafter, the
"Conversion Date").
Holders of shares of Series A Preferred Stock at the close of business
on a Dividend Record Date shall be entitled to receive the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such Dividend Record Date and prior to such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowances for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Common Stock issued upon such
conversion.
4.3 No Fractional Shares.
No fractional shares shall be issued upon conversion of the Series A
Preferred Stock into Common Stock, and, in lieu thereof, the Corporation shall
pay a cash adjustment in an amount equal to the same fraction of the last sale
price (or bid price if there were no sales) per share of Common Stock on the New
York Stock Exchange on the business day which immediately precedes the
Conversion Date or, if such Common Stock is not then listed on the New York
Stock Exchange, of the market price per share (as determined in a manner
prescribed by the Board of Directors of the Corporation) at the close of
business on the business day which immediately precedes the Conversion Date. If
a certificate or certificates representing more than one share shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion
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thereof shall be computed on the basis of the aggregate number of shares of
Series A Preferred Stock so surrendered.
4.4 Adjustments; Change in Control Transactions.
(a) In the event the Corporation shall at any time (i) pay a
dividend or make a distribution to holders of Common Stock in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a larger
number of shares, or (iii) combine its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Price shall be adjusted by multiplying
the Conversion Price by a fraction, the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such dividend,
distribution, subdivision or combination and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such dividend,
distribution, subdivision or combination. An adjustment made pursuant to this
subparagraph (a) shall become effective immediately upon the opening of business
on the day next following the record date in the case of a dividend or
distribution (except as provided in paragraph (h) of this Section 4.4 below) and
shall become effective immediately upon the opening of business on the day next
following the effective date in the case of a subdivision, combination or
reclassification.
(b) In the event the Corporation shall at any time distribute
to all holders of its Common Stock (i) any rights or warrants to subscribe for
or purchase any security of the Corporation (excluding those rights and warrants
issued to all holders of Common Stock entitling them for a period expiring
within 45 days after the record date referred to in subparagraph (c) below to
subscribe for or purchase Common Stock, which rights and warrants are referred
to in and treated under subparagraph (c) below), or any evidence of indebtedness
or other securities of the Corporation (other than Common Stock) or (ii) cash or
other assets (excluding cash dividends or distributions in an amount not in
excess of the greater of either (x) with respect to all cash dividends or
distributions paid on Common Stock after December 31, 1997, the cumulative
amount of funds from operations reported for the Corporation after December 31,
1997, or (y) with respect to cash dividends or distributions paid on Common
Stock for any fiscal year, the taxable income as reflected on the Corporation's
federal income tax return on Form 1120 REIT (or successor form) for such fiscal
year), then in each such case the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on the record date for the
determination of the stockholders entitled to receive such distribution by a
fraction, the denominator of which shall be the Fair Market Value of the Common
Stock and the numerator of which shall be the Fair Market Value of the Common
Stock less the then fair market value (as determined in good faith by the Board
of Directors of the Corporation or a duly authorized committee thereof, which
determination shall be conclusive) of the portion of the rights, warrants,
evidence of indebtedness or other securities, cash or other assets so
distributed applicable to one share of Common Stock. Such adjustment shall
become effective immediately upon the opening of business on the day next
following the record date for the determination of stockholders entitled to
receive such distribution.
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(c) In the event the Corporation shall at any time issue
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than the Fair
Market Value of Common Stock on the record date for the determination of
stockholders entitled to receive such rights, options or warrants, then the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on such record date by a fraction, the numerator of which
shall be the sum of (i) the number of shares of Common Stock outstanding on the
close of business on such record date and (ii) the number of shares of Common
Stock that the aggregate proceeds to the Corporation from the exercise of such
rights, options or warrants for shares of Common Stock would purchase at the
Fair Market Value and the denominator of which will be the sum of number of
shares of Common Stock outstanding on the close of business on such record date
and the number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights, options or warrants. Such adjustment shall
become effective immediately upon the opening of business on the day next
following the record date for the determination of stockholders entitled to
receive such rights, options or warrants.
(d) Whenever the Conversion Price shall be adjusted as herein
provided, the Corporation shall cause to be mailed by first class mail, postage
prepaid, as soon as practicable to each holder of record of shares of Series A
Preferred Stock a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price, together with an explanation of the
calculation of the same.
(e) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease of at
least 1% in such price; provided, however, that any adjustment that by reason of
this subparagraph (e) is not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made in accordance with the
provisions of this Section 4.4 (other than this subparagraph (e)) not later than
such time as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. Notwithstanding any other
provisions of this Section 4.4, the Corporation shall not be required to make
any adjustment of the Conversion Price for the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under such plan. All
calculations under this Section 4.4 shall be made to the nearest cent with $.005
being rounded upward or to the nearest one-tenth of a share (with .05 of a share
being rounded upward), as the case may be. Anything in this Section 4.4 to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in addition
to those required by this Section 4.4, as in its discretion, it shall determine
to be advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights, options or
warrants to purchase stock or securities, or a distribution of other assets
(other than cash dividends) hereafter made by the Corporation to its
stockholders shall not be taxable.
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(f) If the Corporation shall be party to, or shall have
entered into an agreement for, any transaction (including, without limitation, a
merger, consolidation, statutory share exchange or sale of all or substantially
all of its assets), in each case as a result of which shares of Common Stock
generally shall be converted into the right to receive stock, securities or
other property (including cash or any combination thereof) (a "Transaction"),
the terms of the Agreement for such Transaction shall provide, in connection
with such Transaction, that each share of Series A Preferred Stock shall be
converted into the number and kind of shares of stock, securities or other
property receivable upon such Transaction by a holder of the number of shares of
Common Stock issuable upon conversion of such share of Series A Preferred Stock
immediately prior to such Transaction. The Corporation shall not be party to any
Transaction unless the terms of such Transaction are consistent with the
provisions of this Section 4.4(f).
(g) For the purposes of this Section 4.4, "Fair Market Value"
shall mean the average of the last reported sale price (or bid price if there
were no sales) per share of Common Stock as reported on the New York Stock
Exchange (or such other national securities exchange or NASDAQ National Market
on which the Common Stock is traded at the time of such computation) during 5
consecutive trading days selected by the Corporation commencing not more than 20
trading days before, and ending not later than the day immediately prior to the
"ex" date with respect to the issuance or distribution requiring such
computation. The term "'ex' date," when used with respect to any issuance or
distribution, means the first day on which the Common Stock trades regular way,
without the right to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine the Fair Market Value. In
the event that, at any time, the Common Stock is not then traded on a national
securities exchange or the NASDAQ National Market then "Fair Market Value" shall
be determined in good faith by the Board of Directors of the Corporation.
(h) In any case in which this Section 4.4 provides that an
adjustment shall become effective on the date next following the record date for
an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any shares of Series A Preferred Stock converted after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment and (B) fractionalizing
any shares of Series A Preferred Stock and/or paying to such holder any amount
of cash in lieu of any fraction pursuant to Section 4.3. Any adjustment of the
Conversion Price in accordance with either paragraph (b) or (c) of this Section
4.4 shall be disregarded if, as, and when the rights to acquire shares of Common
Stock upon exercise or conversion of the rights, warrants, options which give
rise to such adjustment expire or are cancelled without having been exercised,
so that the Conversion Price effective immediately upon such cancellation or
expiration shall be equal to the Conversion Price in effect immediately prior to
the time of the issuance of the expired or cancelled rights, warrants or
options, with such additional adjustments as would have been made to the
Conversion Price had the expired or cancelled rights, warrants or options never
been issued.
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(i) There shall be no adjustment of the Conversion Price in
case of the issuance of any shares of Common Stock of the Corporation in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Section 4.4. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one paragraph of this
Section 4.4, only one adjustment shall be made, and such adjustment shall be the
amount of adjustment that has the highest absolute value. Notwithstanding
anything in this Section 4.4 to the contrary, no adjustment shall be made to the
Conversion Price as a result of the issuance of rights by the Company in
connection with the establishment of a shareholder rights plan (or other
comparable plan) so long as the terms of such plan provide that such rights will
attach to the shares of Common Stock into which the Series A Preferred Stock may
be converted at the time of such conversion.
4.5 Other.
(a) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the maximum number of
shares of Common Stock issuable upon the conversion of all shares of Series A
Preferred Stock then outstanding, and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A Preferred Stock, in
addition to such other remedies as shall be available to the holders of such
Series A Preferred Stock, the Corporation shall take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes.
(b) The Corporation shall pay any taxes that may be payable in
respect of the issuance of shares of Common Stock upon conversion of shares of
Series A Preferred Stock, but the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer of shares of Series A
Preferred Stock or any transfer involved in the issuance of shares of Common
Stock in a name other than that in which the shares of Series A Preferred Stock
so converted are registered, and the Corporation shall not be required to
transfer any such shares of Series A Preferred Stock or to issue or deliver any
such shares of Common Stock unless and until the person(s) requesting such
transfer or issuance shall have paid to the Corporation the amount of any such
taxes, or shall have established to the satisfaction of the Corporation that
such taxes have been paid.
(c) Holders of Series A Preferred Stock shall be entitled to
receive copies of all communications by the Corporation to its holders of Common
Stock, concurrently with the distribution of such communications to such
stockholders.
5. Redemption.
(a) At any time and from time to time following the fifth
anniversary of the Original Issue Date, the Corporation may, in its sole and
absolute discretion, redeem all of the outstanding shares of Series A Preferred
Stock; provided, however, that the Corporation may only exercise this redemption
right so long as (i) the average of the last sale price (or bid price for days
on which there were no sales) per share of Common Stock
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on the New York Stock Exchange for the twenty trading-day period preceding the
date on which the Corporation exercises such redemption right, or (ii) if such
Common Stock is not then listed on the New York Stock Exchange, the market price
per share (as determined in a manner prescribed by the Board of Directors of the
Corporation) at the close of business on the business day which immediately
precedes the date on which the Corporation exercises such redemption right,
equals or exceeds the Conversion Price. Notwithstanding anything in this Section
5 to the contrary, the Series A Preferred Stock shall at all times remain
subject to the provisions of Article IX of the Charter and Section 9 hereof
relating to Excess Stock.
(b) The Corporation may exercise its right of redemption
pursuant to clause (a) of this Section 5 by giving written notice by first class
mail, postage pre-paid, to each of the record holders of Series A Preferred
Stock at the respective addresses of such holders as the same shall appear on
the stock transfer records of the Corporation. This redemption shall become
effective, without any further action by the Corporation, on the 30th day
following the date on which the Corporation mails the written notice of
redemption to the holders of the Series A Preferred Stock (such 30th day being
referred to as the "Series A Preferred Redemption Date"). The written notice
shall specify the date of the Series A Preferred Redemption Date. Each holder of
Series A Preferred Stock may exercise the conversion rights described in Section
4 for any share of Series A Preferred Stock at any time prior to the Series A
Preferred Redemption Date.
(c) On a Series A Redemption Date, each share of Series A
Preferred Stock so redeemed shall be redeemed in cash or immediately available
funds at a price per share equal to $25.00, plus all accrued but unpaid
dividends (such amount being referred to as the "Series A Preferred Redemption
Amount").
(d) In the event that the funds of the Corporation legally
available for redemption of the Series A Preferred Stock on any Series A
Preferred Redemption Date are insufficient to redeem the number of shares of
Series A Preferred Stock to be so redeemed on such date, the holders of Series A
Preferred Stock shall share ratably in any funds legally available for
redemption of such shares according to the respective amounts which would be
payable with respect to the number of shares owned by them if the shares to be
so redeemed on such Series A Preferred Redemption Date were redeemed in full and
the number of shares of Series A Preferred Stock held by each holder shall be
reduced in an amount which shall bear the same ratio to the actual number of
shares of Series A Preferred Stock required to be redeemed on such Series A
Preferred Redemption Date as the number of shares of Series A Preferred Stock
then held by such holder bears to the aggregate number of shares of Series A
Preferred Stock then outstanding. The Corporation shall in good faith use
reasonable efforts as expeditiously as possible to eliminate, or obtain an
exception, waiver or exemption from, any and all restrictions under applicable
law that prevented the Corporation from redeeming all of the shares of Series A
Preferred Stock to be redeemed hereunder. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of shares of
Series A Preferred Stock, such funds will be used to redeem the balance of such
shares, or such portion thereof for which funds are available on the basis set
forth above. If any shares of Series A Preferred Stock are not redeemed for the
foregoing reason or because
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the Corporation otherwise failed to pay or tender to pay the aggregate Series A
Preferred Redemption Consideration on the shares of Series A Preferred Stock
required to be redeemed, all shares which have not been redeemed shall remain
outstanding and entitled to all the rights and preferences provided herein.
(e) Upon receipt of payment of the Series A Preferred
Redemption Consideration, each holder of shares of Series A Preferred Stock to
be redeemed shall surrender the certificate or certificates representing such
shares to the Corporation, duly assigned or endorsed for transfer (or
accompanied by duly executed stock powers relating thereto), at the principal
executive office of the Corporation or the offices of the transfer agent for the
Series A Preferred Stock or such office or offices in the continental United
States of an agent for redemption as may from time to time be designated by
notice to the holders of Series A Preferred Stock.
(f) Notwithstanding anything in this Section 5 to the
contrary, no shares of Series A Preferred Stock may be redeemed except from
proceeds from the sale of other equity securities of the Corporation, including,
but not limited to, shares of Common Stock, shares of preferred stock,
depositary shares, interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing.
6. Voting Rights.
(a) The holders of Series A Preferred Stock shall have the
right, with the holders of Common Stock and any other equity securities so
authorized, to vote in the election of directors of the Corporation and upon
each other matter coming before any meeting of the stockholders on which the
holders of Common Stock are entitled to vote, on the basis of one vote for each
share of Common Stock into which the shares of Series A Preferred Stock held by
such holders are then convertible (rounded to the nearest whole number of
shares). The holders of Series A Preferred Stock and Common Stock shall vote
together as one class except as otherwise set forth herein.
(b) If six quarterly dividends (whether or not consecutive)
payable on shares of Series A Preferred Stock or on any class or series of
preferred stock which ranks pari passu with the Series A Preferred Stock as to
dividends ("Parity Stock") are in arrears, the number of directors then
constituting the Board of Directors of the Corporation will be automatically
increased by two, and the holders of the shares of Series A Preferred Stock,
voting together as a class with the holders of shares of any other class or
series of Parity Stock entitled to such voting rights (the Series A Preferred
Stock and any such other class or series, the "Voting Preferred Stock"), will
have the right to elect at any annual meeting of stockholders or a properly
called special meeting of the holders of Voting Preferred Stock two additional
directors who are nominees of any holder of Voting Preferred Stock to serve on
the Corporation's Board of Directors until all such accrued but unpaid dividends
have been authorized and paid or set aside for payment. At such time as all such
accrued but unpaid dividends have been authorized and paid or set aside for
payment, the right of the holders of the Voting Preferred Stock to elect such
additional two directors shall cease (but
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subject always to the same provision for the vesting of such voting rights in
the case of any similar future arrearages in six quarterly dividends), and the
terms of office of all persons elected as directors by the holders of the Voting
Preferred Stock shall forthwith terminate and the number of the Board of
Directors shall automatically be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of shares of Voting
Preferred Stock and prior to the termination of such voting power, the Secretary
of the Corporation may, and upon the written request of any holder of Series A
Preferred Stock (addressed to the Secretary at the principal office of the
Corporation) shall, call a special meeting of the holders of the Voting
Preferred Stock for the election of the two directors to be elected by them as
herein provided; such call to be made by notice similar to that provided in the
Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days after receipt of
any such request, then any holder of shares of Voting Preferred Stock may call
such meeting, upon the notice above provided, and for that purpose shall have
access to the stock books of the Corporation. The directors elected at any such
special meeting shall serve until the next annual meeting of the stockholders or
special meeting held in lieu thereof and until their respective successors are
duly elected and qualified, if such directorship shall not have previously
terminated as above provided. If any vacancy shall occur among the directors
elected by the holders of the Voting Preferred Stock, a successor shall be
elected by the Board of Directors upon the nomination of the then-remaining
director elected by the holders of the Voting Preferred Stock or (if there is no
such remaining director or successor thereto, by the holders of the Voting
Preferred Stock) the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in place thereof
and until their successor is duly elected and qualified if such directorship
shall not have previously terminated as provided above.
(c) The approval of the holders of two-thirds of the
outstanding shares of Series A Preferred Stock voting as a single class is
required in order to (i) approve any amendment of the terms of the Series A
Preferred Stock which affects materially and adversely the rights, preferences,
privileges or voting power of shares of Series A Preferred Stock, or (ii)
authorize or create or increase the authorized amount of, any shares of any
class or series or any security convertible into shares of any class or series
ranking senior to the Series A Preferred Stock in the distribution of assets on
any liquidation, dissolution or winding up of the Corporation and/or in the
payment of dividends. For purposes of the foregoing and without limitation of
the foregoing, (i) the increase or decrease in the amount of authorized stock of
any class or series of equity securities of the Corporation, including the
Series A Preferred Stock, (ii) the creation of a new class or series of stock
having rights, preferences, privileges or voting power on a parity with or
junior to the rights, preferences or privileges of the Series A Preferred Stock
in the distribution of assets on any liquidation, dissolution or winding up of
the Corporation and/or in the payment of dividends and (iii) the entering into
of any agreement providing for the actions in (i) or (ii) above and the taking
of any actions in connection with the consummation of any such agreement shall
not be deemed to materially and adversely affect the rights, preferences,
privileges or voting power of the Series A Preferred Stock, and the holders of
Series A Preferred Stock shall not have any right to vote as a single class on
or consent to such
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actions. Notwithstanding anything in the terms of the Series A Preferred Stock
to the contrary, the holders of Series A Preferred Stock are not entitled to
vote as a single class on (i) any Transaction, (ii) any transaction (including,
without limitation, a merger, consolidation, statutory share exchange or sale of
all or substantially all of its assets) in which the Corporation would be the
surviving corporation (an "Acquisition Transaction"), or (iii) on any other
matter except as specifically provided in this Section 6, irrespective of the
effect such Transaction, Acquisition Transaction, or other matter may have on
the rights, preferences, privileges or voting power of the Series A Preferred
Stock or of Voting Preferred Stock.
7. No Preemptive or Other Rights.
The holders of Series A Preferred Stock shall have no preemptive
rights, including preemptive rights with respect to any shares of stock or other
securities of the Corporation convertible into or carrying rights or options to
purchase any such shares.
8. Reacquired Shares.
Shares of Series A Preferred Stock converted, redeemed or otherwise
purchased or acquired by the Corporation shall be authorized but unissued shares
of preferred stock without designation as to series and may after such
restoration be reclassified by the Board of Directors as provided in Section 7.5
of the Charter.
9. Ownership Limit
(a) The provisions of Article IX of the Charter (including
without limitation the authority of the Board of Directors set forth in such
Article) are applicable to the Series A Preferred Stock and the holders thereof
and are supplemented as provided in this Section 9.
(b) No person may directly or indirectly own a number of
shares of Series A Preferred Stock (i) whose value is in excess of 9.8% of the
aggregate value of all outstanding Stock of the Corporation or (ii) which when
converted as provided in Section 4.1 hereof (without giving effect as to whether
such Series A Preferred Stock is then convertible) would result in such person
being the beneficial owner of in excess of 9.8% of the number of shares of
Common Stock of the Corporation that would be outstanding after the conversion
of such person's (but not of other holders') shares of Series A Preferred Stock.
(c) For purposes of applying the Ownership Limit contained in
Section 9.2 of the Charter to holders of Common Stock of the Corporation, shares
of Series A Preferred Stock shall be deemed to have no value, the effect of this
provision being that the Ownership Limit with respect to Common Stock shall be
9.8% of the number of outstanding shares of Common Stock.
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SECOND: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
THIRD: The undersigned President of the Corporation acknowledges these
Articles Supplementary to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
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IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
President and attested to by its Secretary on this _____ of __________, 1998.
ATTEST: BRADLEY REAL ESTATE, INC.
______________________________ By:_______________________ _(SEAL)
William B. King Thomas P. D'Arcy
Secretary President and Chief Executive
Officer
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