SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 17, 1994
HEALTH EQUITY PROPERTIES INCORPORATED
(Exact Name of registrant as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation)
33-17379
(Commission File Number)
56-1591771
(IRS Employer Identification Number)
915 West Fourth Street, Winston-Salem, North Carolina 27101
(Address of principal executive offices)
Registrant's telephone number, including area code: 910 723-7580
Item 5. Other events
On June 17, 1994 the Registrant announced the execution of a
definitive merger agreement with Omega Healthcare Investors, Inc.
("Omega") providing, among other things, for the merger of the
Registrant with and into Omega as further described in the Press
Release attached as an exhibit to this report. A copy of the
Merger Agreement is attached hereto as an exhibit and
incorporated by reference herein.
Item 7. Exhibits
Exhibit 2.1 Form of Merger Agreement
Exhibit 99.1 Press Release dated June 17, 1994 announcing
proposed merger transaction.
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, thereto duly authorized.
HEALTH EQUITY PROPERTIES INCORPORATED
By: Susan L. Christiansen
Vice President and General Counsel
Date: June 22, 1994
EXHIBIT 2.1
_________________________________________________________________
_________________________________________________________________
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Dated as of June 17, 1994
by and between
OMEGA HEALTHCARE INVESTORS, INC.
and
HEALTH EQUITY PROPERTIES INCORPORATED
________________________________________________________________
________________________________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . 1
SECTION 1.2 Effective Time of the Merger . . . . . 2
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Articles of Incorporation. . . . . . . 2
SECTION 2.2 Bylaws . . . . . . . . . . . . . . . . 2
SECTION 2.3 Directors. . . . . . . . . . . . . . . 3
SECTION 2.4 Officers . . . . . . . . . . . . . . . 3
SECTION 2.5 Further Action . . . . . . . . . . . . 3
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Company Shares
in the Merger . . . . . . . . . . . . 3
SECTION 3.2 No Modification of Purchaser Securities 6
SECTION 3.3 Exchange of Certificates . . . . . . . 6
SECTION 3.4 No Fractional Securities . . . . . . . 8
SECTION 3.5 Dissenting Stockholders . . . . . . . 8
SECTION 3.6 Closing. . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1 Organization and Qualification. . . . . 10
SECTION 4.2 Capitalization. . . . . . . . . . . . . 10
SECTION 4.3 Subsidiaries. . . . . . . . . . . . . . 11
SECTION 4.4 Authority; Non-Contravention; Approvals 11
SECTION 4.5 Reports and Financial Statements. . . . 12
SECTION 4.6 Absence of Undisclosed Liabilities. . . 13
SECTION 4.7 Absence of Certain Changes or Events. . 14
SECTION 4.8 Litigation. . . . . . . . . . . . . . . 14
SECTION 4.9 Registration Statement and
Proxy Statement. . . . . . . . . . . . 15
SECTION 4.10 No Violation of Law . . . . . . . . . . 15
SECTION 4.11 Compliance with Agreements. . . . . . . 17
SECTION 4.12 Taxes . . . . . . . . . . . . . . . . . 17
SECTION 4.13 Employee Benefit Plans; ERISA . . . . . 19
SECTION 4.14 Certain Agreements. . . . . . . . . . . 20
SECTION 4.15 Labor Controversies . . . . . . . . . . 21
SECTION 4.16 Books, Records and Accounts . . . . . . 21
SECTION 4.17 Opinion of Financial Advisor. . . . . . 22
SECTION 4.18 Company Ownership of the Purchaser
Common Stock . . . . . . . . . . . . . 22
SECTION 4.19 NYSE. . . . . . . . . . . . . . . . . . 22
SECTION 4.20 Contracts, Etc. . . . . . . . . . . . . 22
SECTION 4.21 Intellectual Property . . . . . . . . . 24
SECTION 4.22 Disclosure. . . . . . . . . . . . . . . 24
SECTION 4.23 Brokers and Finders . . . . . . . . . . 24
SECTION 4.24 REIT Qualification. . . . . . . . . . . 24
SECTION 4.25 Title to Properties . . . . . . . . . . 25
SECTION 4.26 Title Insurance . . . . . . . . . . . . 25
SECTION 4.27 Environmental Matters . . . . . . . . . 25
SECTION 4.28 Over Financing. . . . . . . . . . . . . 26
SECTION 4.29 Defects . . . . . . . . . . . . . . . . 26
SECTION 4.30 Condemnation. . . . . . . . . . . . . . 26
SECTION 4.31 Taxes and Assessments on
Company Properties . . . . . . . . . . 26
SECTION 4.32 Properties and Leases . . . . . . . . . 26
SECTION 4.33 Mortgages . . . . . . . . . . . . . . . 27
SECTION 4.34 Company Mortgage Loans. . . . . . . . . 29
SECTION 4.35 Investment Company Act. . . . . . . . . 30
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 5.1 Organization and Qualification. . . . . 30
SECTION 5.2 Capitalization. . . . . . . . . . . . . 31
SECTION 5.3 Subsidiaries. . . . . . . . . . . . . . 32
SECTION 5.4 Authority; Non-Contravention; Approvals 32
SECTION 5.5 Reports and Financial Statements. . . . 33
SECTION 5.6 Absence of Undisclosed Liabilities. . . 34
SECTION 5.7 Absence of Certain Changes or Events. . 34
SECTION 5.8 Litigation. . . . . . . . . . . . . . . 35
SECTION 5.9 Registration Statement and Proxy
Statement. . . . . . . . . . . . . . . 35
SECTION 5.10 No Violation of Law . . . . . . . . . . 36
SECTION 5.11 Compliance with Agreements. . . . . . . 37
SECTION 5.12 Taxes . . . . . . . . . . . . . . . . . 37
SECTION 5.13 Employee Benefit Plans; ERISA . . . . . 39
SECTION 5.14 Certain Agreements. . . . . . . . . . . 40
SECTION 5.15 Labor Controversies . . . . . . . . . . 41
SECTION 5.16 Books, Records and Accounts . . . . . . 41
SECTION 5.17 Opinion of Financial Advisor. . . . . . 41
SECTION 5.18 Purchaser Ownership of the
Company Common Stock. . . . . . . . . . 42
SECTION 5.19 Contracts, Etc.. . . . . . . . . . . . . 42
SECTION 5.20 Intellectual Property. . . . . . . . . . 43
SECTION 5.21 Disclosure . . . . . . . . . . . . . . . 43
SECTION 5.22 Brokers and Finders. . . . . . . . . . . 44
SECTION 5.23 REIT Qualification . . . . . . . . . . . 44
SECTION 5.24 Title to Properties. . . . . . . . . . . 44
SECTION 5.25 Title Insurance. . . . . . . . . . . . . 44
SECTION 5.26 Environmental Matters. . . . . . . . . . 45
SECTION 5.27 Over Financing . . . . . . . . . . . . . 45
SECTION 5.28 Defects. . . . . . . . . . . . . . . . . 45
SECTION 5.29 Condemnation . . . . . . . . . . . . . . 45
SECTION 5.30 Taxes and Assessments on Properties. . . 45
SECTION 5.31 Properties and Leases. . . . . . . . . . 46
SECTION 5.32 Mortgages. . . . . . . . . . . . . . . . 47
SECTION 5.33 Purchaser Mortgage Loans . . . . . . . . 48
SECTION 5.34 Investment Company Act . . . . . . . . . 49
SECTION 5.35 NYSE Listing . . . . . . . . . . . . . . 50
ARTICLE VI
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 6.1 Conduct of Business by the Company
Pending the Merger. . . . . . . . . . . 50
SECTION 6.2 Conduct of Business by the Purchaser
Pending the Merger. . . . . . . . . . . 52
SECTION 6.3 Acquisition Transactions . . . . . . . . 52
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information . . . . . . . . . 54
SECTION 7.2 Registration Statement and
Proxy Statement . . . . . . . . . . . . 55
SECTION 7.3 Stockholders' Approval . . . . . . . . . 55
SECTION 7.4 Compliance with the Securities Act . . . 55
SECTION 7.5 NYSE . . . . . . . . . . . . . . . . . . 55
SECTION 7.6 Expenses . . . . . . . . . . . . . . . . 55
SECTION 7.7 Agreement to Cooperate . . . . . . . . . 56
SECTION 7.8 Public Statements . . . . . . . . . . . 56
SECTION 7.9 Corrections to the Proxy Statement/
Prospectus and Registration Statement . . . . 56
SECTION 7.10 Amendment of Company Leases . . . . . . . . . 57
SECTION 7.11 Continued Qualification as a Real Estate
Investment Trust. . . . . . . . . . . . . . . 57
SECTION 7.12 Consulting and Noncompetition Agreements 57
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation
to Effect the Merger. . . . . . . . . . . . . . 58
SECTION 8.2 Conditions to Obligation of the Company
to Effect the Merger. . . . . . . . . . . . . . 58
SECTION 8.3 Conditions to Obligation of the Purchaser
to Effect the Merger. . . . . . . . . . . . . . 60
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. . . . . . . . . . . . . . . . 61
SECTION 9.2 Effect of Termination. . . . . . . . . . . 62
SECTION 9.3 Amendment. . . . . . . . . . . . . . . . . 62
SECTION 9.4 Waiver . . . . . . . . . . . . . . . . . . 62
SECTION 9.5 Expense Reimbursement; Liquidated Damages. 62
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations and
Warranties. . . . . . . . . . . . . . . . 63
SECTION 10.2 Notices. . . . . . . . . . . . . . . . . . 63
SECTION 10.3 Interpretation . . . . . . . . . . . . . . 64
SECTION 10.4 Miscellaneous . . . . . . . . . . . . . . 64
SECTION 10.5 Counterparts . . . . . . . . . . . . . . . 64
SECTION 10.6 Parties In Interest . . . . . . . . . . . 64
EXHIBITS
Exhibit I: Articles of Merger -- Maryland
Exhibit II: Articles of Merger -- North Carolina
Exhibit III: Opinion of Argue Pearson Harbison & Myers
Exhibit IV: Opinion of Jones, Day, Reavis & Pogue
Exhibit V: Opinion of Stroock & Stroock & Lavan
Exhibit VI: Opinion of Stroock & Stroock & Lavan
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement"), is entered into as of June 17, 1994 by and between
Omega Healthcare Investors, Inc., a Maryland corporation
("Purchaser"), and Health Equity Properties Incorporated, a North
Carolina corporation (the "Company").
WHEREAS, the Boards of Directors of the Purchaser and the
Company have approved the merger of the Company with and into the
Purchaser or, at the option of the Purchaser, a wholly owned
subsidiary of the Purchaser, pursuant to this Agreement (the
"Merger") and the transactions contemplated hereby upon the terms
and subject to the conditions set forth herein;
WHEREAS, it is intended that Purchaser and the Company and
their respective stockholders (except to the extent such
stockholders receive cash in lieu of fractional shares or upon
the exercise of dissenters' rights) will recognize no gain or
loss for federal income tax purposes as a result of the
consummation of the Merger; and
WHEREAS, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as
hereinafter defined) the Company shall be merged with and into
the Purchaser or, at the option of the Purchaser, a wholly owned
subsidiary of the Purchaser, in accordance with the provisions of
(i) Section 3-105 of the Maryland General Corporation Law (the
"MGCL") and with the effect provided in Section 3-114 of the MGCL
and (ii) Section 55-11-05 of the North Carolina Business
Corporation Act (the "NCBCA") and with the effect provided in
Section 55-11-06 of the
NCBCA, and the separate existence of the Company shall thereupon
cease. The Purchaser or such wholly owned subsidiary shall be
the surviving corporation in the Merger (hereinafter sometimes
referred to as the "Surviving Corporation") and shall continue to
be governed by the laws of the State of Maryland and the name of
the Surviving Corporation shall remain "Omega Healthcare
Investors, Inc." In the event the Company is merged with and
into a wholly owned subsidiary of the Purchaser, the name of the
Surviving Corporation shall be as set forth in the Merger Filing
(as hereinafter defined). Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time of the
Merger, (a) the Surviving Corporation shall possess all assets
and property of every description, and every interest therein,
wherever located, and the rights, privileges, immunities, powers,
franchises and authority, of a public as well as of a private
nature, of each of the Purchaser and the Company, (b) all
obligations belonging to or due each of the Purchaser and the
Company shall be vested in, and become the obligations of, the
Surviving Corporation without further act or deed, (c) title to
any real estate or any interest therein vested in either of the
Purchaser and the Company shall not revert or in any way be
impaired by reason of the Merger, (d) all rights of creditors and
all liens upon any property of any of the Purchaser and the
Company shall be preserved unimpaired and (e) the Surviving
Corporation shall be liable for all of the obligations of each of
the Purchaser and the Company and any claim existing, or action
or proceeding pending, by or against either of the Purchaser or
the Company may be prosecuted to judgment with right of appeal,
as if the Merger had not taken place.
SECTION 1.2 Effective Time of the Merger. The Merger shall
become effective at such time (the "Effective Time") as the
Articles of Merger, in the form set forth as Exhibit I hereto,
are filed with the Secretary of State of the State of Maryland
and the Articles of Merger, in the form set forth as Exhibit II
hereto, are filed with the Secretary of State of the State of
North Carolina (the "Merger Filing") or such later date and time
as may be specified in the Articles of Merger; such filings shall
be made simultaneously with or as soon as practicable after the
closing of the transactions contemplated by this Agreement in
accordance with Section 3.6.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Articles of Incorporation. The Articles of
Incorporation of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation after the Effective
Time, until duly amended in accordance with the terms thereof and
applicable law.
SECTION 2.2 Bylaws. The Bylaws of the Surviving
Corporation as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation after the
Effective Time, and thereafter may be amended in accordance with
their terms and as provided by the Articles of Incorporation of
the Surviving Corporation and applicable law.
SECTION 2.3 Directors. The directors of the Surviving
Corporation at the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of
Incorporation and applicable law.
SECTION 2.4 Officers. The officers of the Surviving
Corporation at the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of
Incorporation and Bylaws.
SECTION 2.5 Further Action. If at any time after the
Effective Time of the Merger the Purchaser shall consider that
any further deeds, assignments, conveyances, agreements,
documents, instruments or assurances in law or any other things
are necessary or desirable to vest, perfect, confirm or record in
the Surviving Corporation the title to any property, rights,
privileges, powers and franchises of the Company to be acquired
by the Surviving Corporation by reason of, or as a result of, the
Merger, or otherwise to carry out the provisions of this
Agreement, the Board of Directors and officers of the Company
last in office shall, to the extent then permitted so to do by
applicable law, execute and deliver, upon the Purchaser's
reasonable request, any and all deeds, assignments, conveyances,
agreements, documents, instruments or assurances in law, and do
all other things necessary or proper to vest, perfect, confirm or
record title to such property, rights, privileges, powers and
franchises in the Surviving Corporation, and otherwise to carry
out the provisions of this Agreement.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Company Shares in the Merger.
(a) At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any capital stock
of the Company:
(i) Each share of Common Stock, $.01 par value per
share, of the Company (the "Company Common Stock"), issued and
outstanding at the Effective Time, subject to the terms and
conditions of this Agreement, shall be converted (except as
provided in clause (ii) of this Section 3.1(a)), without any
further action, into the right to receive, and become
exchangeable for, 0.393 shares (the "Exchange Ratio") of fully
paid and non-assessable Common Stock, $0.10 par value per share,
of the Purchaser ("Purchaser Common Stock"); provided, however,
that the Exchange Ratio shall be renegotiated by the parties
hereto if, at any time prior to the tenth business day before the
date of the special meeting of stockholders of the Company called
to obtain the Company Stockholders' Approval, the average closing
price of Purchaser Common Stock on the New York Stock Exchange
("NYSE") for a period of 30 consecutive trading days shall be
less than $19.00 per share.
(ii) Each share of Company Common Stock, if any, owned
by the Purchaser or any subsidiary of the Purchaser or the
Company or any subsidiary of the Company immediately prior to the
Effective Time shall be cancelled and shall cease to exist from
and after the Effective Time;
(iii) (a) Any option, warrant or right to purchase
capital stock of the Company outstanding on the date hereof shall
be exercised or cancelled prior to the Effective Time in
accordance with the terms thereof except for employee stock
options granted pursuant to the Third Amended and Restated 1989
Nonqualified Stock Option Plan (the "Options") and except for
such other rights to purchase or acquire Company Common Stock as
are listed on Schedule 3.1(a)(iii) hereto (the "Other Rights").
The Purchaser shall assume the obligations of the Company arising
with respect to the Other Rights such that the holder of such
Other Rights shall receive, if and when issued in accordance with
the terms of such Other Rights, such amount of Purchaser Common
Stock as constitutes the economic equivalent of the Company
Common Stock such holder would have received prior to the
Effective Time upon the vesting and exercise of such Other Rights
converted into Purchaser Common Stock at the Exchange Ratio.
Prior to the Effective Time, the Board of Directors of the
Company will adopt such resolutions, if any, as are necessary to
adjust the terms of all outstanding Options to provide that each
Option, whether or not exercisable or vested as of the date
hereof, will become fully exercisable and vested effective as of
immediately prior to the Effective Time. Effective as of
immediately prior to the Effective Time, each Option will be
cancelled in exchange for a payment in cash by the Surviving
Corporation of an amount equal to the product of (i) the total
number of shares of Company Common Stock subject to such Option
multiplied by (ii) the excess of $9.791 over the exercise price
per share subject to such Option, less applicable withholding
taxes. The Company will, upon the request of the Purchaser, take
all such action as is necessary or appropriate to effect the
provisions of this Section 3.1(a)(iii), including, without
limitation, obtaining the written acknowledgment of each employee
holding an Option that the payment of the amount of cash referred
to hereinabove will satisfy and discharge in full the Company's
and the Surviving Corporation's obligation to each employee
pursuant to any such Option.
(b) The Company shall take such actions as are
necessary to ensure that from and after the Effective Time none
of the Company, the Surviving Corporation or any of their
respective subsidiaries is or will be bound by any options,
warrants, rights or agreements (other than pursuant to the Other
Rights) which would entitle any person, other than Purchaser or
its wholly owned subsidiaries, to beneficially own, or receive
any payments in respect of (other than as otherwise contemplated
by Section 3.5 hereof and this Section 3.1(a)(iii)), any capital
stock of the Company or the Surviving Corporation.
(iv) All shares of Company Common Stock allocated as of
the Effective Time to the various participants in the Company's
Stock Purchase Plan (the "Stock Purchase Plan") will be converted
into shares of Purchaser Common Stock at the Exchange Ratio, all
in accordance with Section 3.1(a)(i). With respect to the Stock
Purchase Plan, the Company will: (i) immediately after the date
hereof, cause the Stock Purchase Plan to be terminated effective
as of June 30, 1994 but such termination shall be conditioned
upon the consummation of the Merger; (ii) as soon as practicable
after the Effective Time, cause all amounts deferred through
payroll deductions between June 30, 1994 and the Effective Time
to be returned, without interest, to the participants who have
deferred such amounts; (iii) treat all other amounts deferred
through payroll deductions prior to the date hereof and not yet
used to purchase Company Common Stock pursuant to the terms of
the Stock Purchase Plan as if such amounts were used to purchase
Company Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of the closing price per
share of the Company Common Stock on January 1, 1994 or the
closing price per share of the Company Common Stock on the
trading date last preceding the date of this Agreement, as such
closing price is reported on the NYSE; and (iv) pay each
participant thereunder an amount equal to the product of (A) the
number of shares deemed purchased by such participant pursuant to
subsection (iii) above multiplied by (B) $9.791, less applicable
withholding taxes. The Company shall amend the Stock Purchase
Plan, if necessary, and terminate the Stock Purchase Plan and
take such other actions as are necessary to ensure that from and
after the Effective Time, neither the Company nor the Surviving
Corporation is or will be bound by any obligations, rights or
agreements which would entitle any participant to own
beneficially, or receive any payments (other than as otherwise
contemplated by Section 3.5 hereof and this Section 3.1(a)(iv))
in respect of, any capital stock of the Company or the Surviving
Corporation. Promptly following the public announcement of the
execution of this Agreement, the Company shall inform the
participants of the Stock Purchase Plan of the provisions set
forth in this Section 3.1(a)(iv).
(b) If, prior to the Effective Time, the Purchaser should
split or combine the Purchaser Common Stock, or pay a stock
dividend or other stock distribution in Purchaser Common Stock,
or otherwise change the Purchaser Common Stock into any other
securities, then the Exchange Ratio will be appropriately
adjusted to reflect such split, combination, stock dividend or
other distribution or change.
(c) If, prior to the Effective Time, the Company should
establish a record date for the payment of any cash dividend with
respect to shares of Company Common Stock other than a regular
quarterly dividend paid in an amount and at such time as is
consistent with the Company's established practice, then the
Exchange Ratio will be appropriately reduced so as to reflect the
per share amount of such dividend.
SECTION 3.2 No Modification of Purchaser Securities. Each
share of Purchaser Common Stock issued and outstanding at the
Effective Time shall remain issued and outstanding thereupon and
shall not be converted or the terms thereof modified in the
Merger.
SECTION 3.3 Exchange of Certificates.
(a) From and after the Effective Time, each holder of an
outstanding certificate which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock
("Company Certificates") shall cease to have any right as a
stockholder of the Company, except as otherwise provided in this
Agreement or by applicable law, and each such holder shall be
entitled to receive in exchange for such holder's Company
Certificates, upon surrender thereof to an exchange agent
selected by the Purchaser (the "Exchange Agent"), a certificate
or certificates representing the number of whole shares of
Purchaser Common Stock which such holder is entitled to receive
pursuant to Section 3.1(a) and cash for any fractional share of
Purchaser Common Stock which such holder may be entitled to
receive pursuant to Section 3.4 hereof. Notwithstanding any
other provision of this Agreement, (i) until holders or
transferees of Company Certificates theretofore representing
shares of Company Common Stock have surrendered such certificates
for exchange as provided herein, (A) no dividends shall be paid
by the Company with respect to any shares represented by such
Company Certificates (other than such dividends as may be
required to be paid by the Company after the date hereof to
comply with the requirements for continuing qualification as a
"real estate investment trust" under the Code (as hereinafter
defined) and the rules and regulations thereunder) and any
dividends that may become payable on Purchaser Common Stock
subsequent to the Effective Time shall be deposited with the
Exchange Agent to be held for and paid to holders of Company
Common Stock upon surrender of Company Certificates in exchange
for shares of Purchaser Common Stock and (B) no payment for
fractional shares shall be made and (ii) without regard to when
such Company Certificates are surrendered for exchange as
provided herein, no interest shall be paid on any dividends or
any payment for fractional shares. If any certificate for shares
of Purchaser Common Stock is to be issued in a name other than
that in which the Company Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange
that the person requesting such exchange shall pay any transfer
or other taxes required by reason of the issuance of certificates
for such shares of Purchaser Common Stock in a name other than
that of the registered holder of the Company Certificate so
surrendered, or shall establish to the satisfaction of the
Purchaser that such tax has been paid or is not applicable. No
transfers of Company Common Stock shall be made on the stock
transfer books of the Company after the Effective Time.
(b) Promptly after the Effective Time, the Purchaser shall
make available to the Exchange Agent (i) a sufficient number of
certificates representing shares of Purchaser Common Stock
required to effect the exchange referred to in Section 3.3(a) and
(ii) in the event that the Purchaser shall declare and pay any
dividends on Purchaser Common Stock subsequent to the Effective
Time, cash in an amount sufficient to enable the Exchange Agent
to pay the appropriate dividends on any shares of Purchaser
Common Stock when issued in exchange for Company Common Stock.
(c) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Company Certificate as
of the Effective Time (i) a form letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss
and title to the Company Certificates shall pass, only upon
actual delivery of the Company Certificates to the Exchange
Agent) and (ii) instructions for use in effecting the surrender
of the Company Certificates in exchange for certificates
representing shares of Purchaser Common Stock. Upon surrender of
Company Certificates for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal and such
other documents as the Exchange Agent shall reasonably require,
the holder of such Company Certificates shall be entitled to
receive in exchange therefor a certificate representing that
number of whole shares of Purchaser Common Stock into which the
shares of Company Common Stock theretofore represented by the
Company Certificates so surrendered shall have been converted
pursuant to the provisions of Section 3.1(a) and payment for any
fractional share of Purchaser Common Stock and any dividends that
may have become payable with respect to the Purchaser Common
Stock, and the Company Certificates so surrendered shall
forthwith be cancelled. Until so surrendered, Company
Certificates shall represent solely the right to receive the
number of whole shares of Purchaser Common Stock that shall be
issued in exchange for the Company Common Stock, any dividends on
Purchaser Common Stock that may have become payable during the
period commencing on the Effective Time and ending on the
effective date of the exchange of Company Certificates for
Purchaser Common Stock and cash in lieu of a fractional share of
Purchaser Common Stock as contemplated by Section 3.4.
Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of shares of Company
Common Stock for any shares of Purchaser Common Stock or
dividends or distributions thereon delivered to a public official
pursuant to applicable abandoned property, escheat or similar
laws. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the Purchaser
Common Stock held by it from time to time hereunder.
(d) At any time following 180 days after the Effective Time
of the Merger, the Surviving Corporation shall be entitled to
require the Exchange Agent to deliver to the Surviving
Corporation any Purchaser Common Stock and cash deposited with
the Exchange Agent to enable the Exchange Agent to pay for any
fractional shares of Purchaser Common Stock as well as any
accrued dividends on Purchaser Common Stock pursuant to Section
3.3(a) which had been made available to the Exchange Agent by or
on behalf of the Purchaser and which has not been disbursed to
holders of Company Certificates representing shares of Company
Common Stock, and thereafter such holders shall be entitled to
look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof
with respect to the consideration payable upon due surrender of
their certificates representing shares of Company Common Stock.
SECTION 3.4 No Fractional Securities. Notwithstanding any
other provision of this Agreement, no certificates or scrip for
fractional shares of Purchaser Common Stock shall be issued in
the Merger and no Purchaser Common Stock dividend, stock split or
interest shall be paid or have effect with respect to any
fractional interest in a share of Purchaser Common Stock, and
such fractional interests shall not entitle the owner thereof to
vote or to any other rights of a security holder. In lieu of any
such fractional shares, each holder of Company Common Stock who
would otherwise have been entitled to receive a fraction of a
share of Purchaser Common Stock upon surrender of Company
Certificates for exchange pursuant to this Article III will
receive a payment in cash therefor (without interest) at a pro
rata price based on the Exchange Ratio.
SECTION 3.5 Dissenting Stockholders.
(a) For each outstanding share of Company Common Stock, the
holder of which has delivered to the Company a written demand for
the fair value of such holder's Company Common Stock in
accordance with Section 55-13-21 of the NCBCA and whose rights
have not terminated under such Section (any shareholder duly
making such demand being hereinafter called a "Dissenting
Stockholder"), such shares of Company Common Stock shall not be
converted into or represent a right to receive Purchaser Common
Stock hereunder. If any Dissenting Stockholder shall in
accordance with Section 55-13-21 of the NCBCA become entitled to
receive payment of the fair value for his or her shares, such
payment shall be made by the Purchaser and the shares of Company
Common Stock held by such Dissenting Stockholder shall thereupon
be cancelled; provided, however, that the Purchaser may terminate
this Agreement as more fully set forth in Section 9.1 if the
total number of shares of Company Common Stock as to which all
Dissenting Stockholders shall have become entitled to receive the
fair value thereof pursuant to Section 55-13-21 of the NCBCA
exceeds 10% of the total number of shares of Company Common Stock
issued and outstanding as of the Effective Time unless the
Purchaser, in its sole discretion, elects to waive the limitation
contained in this proviso. If the rights of any Dissenting
Stockholder shall have terminated in accordance with Section 55-
13-21 of the NCBCA, such Dissenting Stockholder shall no longer
be entitled to receive payment of the fair value of his or her
shares of Company Common Stock under Section 55-13-21 of the
NCBCA and such shares of Company Common Stock shall thereupon be
deemed as of the Effective Time of the Merger to have been
converted into and to have become exchangeable for Purchaser
Common Stock, together with payment for any fractional share of
Purchaser Common Stock and any dividends that may have become
payable with respect to the Purchaser Common Stock, without any
interest thereon, all in accordance with Section 3.3(c) of this
Agreement.
(b) At all times prior to the Effective Time of the
Merger, the Company shall give the Purchaser prompt notice of any
written demands for the fair value of any shares of Company
Common Stock, attempted withdrawals of such demands and any other
instruments served pursuant to the NCBCA and received by the
Company relating to stockholders' rights to receive fair value of
shares of Company Common Stock. The Company shall consult with
the Purchaser regarding all negotiations between the Company and
holders of Company Common Stock with respect to such demands.
The Company shall not, except with the prior written consent of
the Purchaser, voluntarily make any payment with respect to any
demands for fair value of shares of Company Common Stock, or
offer to settle or settle any such demands or approve any
withdrawal of any such demands.
SECTION 3.6 Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at
the offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue,
New York, New York 10022, on the third business day immediately
following the date on which the last of the conditions set forth
in Article VIII hereof is fulfilled or waived, or at such other
time and place as the Purchaser and the Company shall mutually
agree (the date on which the Closing occurs being the "Closing
Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as
follows:
SECTION 4.1 Organization and Qualification. The Company
and each of the Company Subsidiaries (as hereinafter defined) is
a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and
each has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its
business as it is now being conducted and as proposed by the
Company and each such Company Subsidiary to be conducted. The
Company and each Company Subsidiary is qualified to do business
and is in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing
will not have and would not reasonably be expected to have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries, taken as a
whole. True, accurate and complete copies of the charter and
bylaws of the Company and each Company Subsidiary, in each case
as in effect on the date hereof, including all amendments
thereto, have heretofore been delivered to the Purchaser.
SECTION 4.2 Capitalization.
(a) The authorized capital stock of the Company consists of
130 million shares of Company Common Stock and 50 million shares
of Preferred Stock, $0.01 par value per share. As of June 3,
1994, 14,585,813 shares of the Company Common Stock were issued
and outstanding and no shares of any other class of capital stock
of the Company were issued and outstanding. All of the issued
and outstanding shares of Company Common Stock are validly issued
and are fully paid, nonassessable and free of preemptive rights.
The authorized capital stock of each Company Subsidiary is owned
100% by the Company and all of the issued and outstanding shares
of each Company Subsidiary are fully paid and nonassessable.
(b) Except as set forth in Schedule 4.2(b) hereto, as of
June 3, 1994 there were no outstanding subscriptions, options,
calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument
or other agreement, obligating the Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of the
Company or any Company Subsidiary or obligating the Company or
any Company Subsidiary to grant, extend or enter into any such
agreement or commitment. There are no voting trusts, proxies or
other agreements or understandings to which the Company is a
party or is bound with respect to the voting of any shares of
capital stock of the Company or any Company Subsidiary.
Subsequent to June 3, 1994, neither the Company nor any Company
Subsidiary has (i) issued any shares of Company Common Stock
except upon exercise or conversion of the above-described stock
equivalents or (ii) issued any additional stock equivalents.
SECTION 4.3 Subsidiaries. The Company has no subsidiaries
except as disclosed on Schedule 4.3 hereto ("Company
Subsidiaries"). Each Company Subsidiary is a "qualified REIT
subsidiary" under Section 856 of the Code. Neither the Company
nor any Company Subsidiary is a partner in any partnership or
joint venture and will not become one prior to the Effective
Time.
SECTION 4.4 Authority; Non-Contravention; Approvals.
(a) The Company has full corporate power and authority to
enter into this Agreement and, subject to the Company
Stockholders' Approval (as hereinafter defined) and the Company
Required Statutory Approvals (as hereinafter defined), to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement, and the consummation by the
Company of the transactions contemplated hereby, have been duly
authorized by the Company's Board of Directors and no other
corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated
hereby, except for the Company Stockholders' Approval and the
obtaining of the Company Required Statutory Approvals. This
Agreement has been duly and validly executed and delivered by the
Company, and, assuming the due authorization, execution and
delivery hereof by the Purchaser, constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable
principles.
(b) Except as set forth in Schedule 4.4(b) hereto, the
execution and delivery of this Agreement by the Company do not,
and the consummation by the Company of the transactions
contemplated hereby will not, violate, 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 of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Company or any Company Subsidiary
under any of the terms, conditions or provisions of (i) the
Articles of Incorporation or Bylaws of the Company or any Company
Subsidiary, (ii) subject to obtaining the Company Required
Statutory Approvals and the receipt of the Company Stockholders'
Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any court or governmental authority applicable to the Company or
any Company Subsidiary or, to the Company's best knowledge, any
of their respective properties or assets, or (iii) any note,
bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which the Company or any
Company Subsidiary is now a party or by which the Company or any
Company Subsidiary or, to the Company's best knowledge, any of
their respective properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such
violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens, security interests, charges
or encumbrances that would not, in the aggregate, have, or be
reasonably expected to have, a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations or prospects of the Company and the
Company Subsidiaries, taken as a whole.
(c) Except for (i) any filings by the Purchaser and the
Company that may be required by Title II of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
(ii) the filing of the Proxy Statement/Prospectus (as defined
below) with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration of the effectiveness
thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filing with the
Secretary of State of the State of Maryland and the Secretary of
State of the State of North Carolina in connection with the
Merger, (iv) any required filings with or approvals from
applicable state environmental authorities and (v) any required
filings with or approvals from applicable state health care
regulation and licensing authorities (the filings and approvals
referred to in clauses (i) through (v) are collectively referred
to as the "Company Required Statutory Approvals"), to the
Company's best knowledge, no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated
hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate,
have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of
operations or prospects of the Company and the Company
Subsidiaries, taken as a whole.
(d) For purposes of this Agreement, unless the context
specifically requires otherwise, any circumstances including,
without limitation, any liability, obligation, contingency,
event, action or change, referred to in this Agreement shall be
deemed to be "material" if the loss, expense, accrual, penalty,
fee, fine or other cost associated therewith exceeds, either
individually or in the aggregate, $250,000.
SECTION 4.5 Reports and Financial Statements.
(a) The Company has filed with the SEC all forms,
statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it
under each of the Securities Act and the Exchange Act and the
respective rules and regulations thereunder, all of which
complied in all material respects with all applicable
requirements of the appropriate federal securities act and the
rules and regulations thereunder. The Company has previously
delivered to the Purchaser copies of its (i) Annual Reports on
Form 10-K for the fiscal year ended December 31, 1993 (the
"Company 10-K") and for all of the preceding fiscal years for
which such reports were required to be filed, as filed with the
SEC, (ii) annual reports to stockholders for the three most
recent fiscal years in the form provided to stockholders, (iii)
proxy and information statements relating to (A) all meetings of
its stockholders (whether annual or special) and (B) actions by
written consent in lieu of a stockholders' meeting from January
1, 1991 until the date hereof, (iv) Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994 (the "Company 10-Q") and (v)
all other reports or registration statements filed by the Company
with the SEC since January 1, 1991 (other than Registration
Statements filed on Form S-8) (the documents referred to in
clauses (i), (ii), (iii), (iv) and (v) are collectively referred
to as the "Company SEC Reports"). As of their respective dates,
the Company SEC Reports 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 therein, in
light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and
unaudited interim consolidated financial statements of the
Company and the Company Subsidiaries included in such reports
(the "Company Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis and fairly present the financial position
of the Company and the Company Subsidiaries on a consolidated
basis as of the dates thereof and the results of their operations
and cash flows for the periods then ended (except that the
unaudited interim financial statements do not contain any notes
thereto and are subject to normal year-end audit adjustments,
which individually and in the aggregate, will not materially
adversely affect the unaudited interim financial statements).
(b) All of the accounts receivable of the Company and the
Company Subsidiaries included in the Company Financial Statements
or otherwise, including any transactions with related parties,
reflect actual transactions and will not be subject to offset or
deduction and, except as disclosed on Schedule 4.5(b), have
arisen in the ordinary course of business. Except as disclosed
on Schedule 4.5(b) hereto, all of such accounts receivable will
be collected (without recourse to any judicial proceedings)
within one month of the Closing Date at the aggregate recorded
amounts thereof net of any reserves established in a manner
consistent with past practices of the Company.
SECTION 4.6 Absence of Undisclosed Liabilities. Except as
disclosed on Schedule 4.6 hereto, neither the Company nor any
Company Subsidiary had, at December 31, 1993, and has not
incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature (other
than ordinary and recurring operating expenses), (a) except
liabilities, obligations or contingencies which are accrued or
reserved against in the Company Financial Statements or reflected
in the notes thereto and (b) except for any liabilities,
obligations or contingencies which (i) would not, in the
aggregate, have, or be reasonably expected to have, a material
adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries, taken as a
whole or (ii) have been discharged or paid in full prior to the
date hereof.
SECTION 4.7 Absence of Certain Changes or Events. Since
December 31, 1993, there has not been any material adverse
change, or any event which would reasonably be expected to result
in a material adverse change, individually or in the aggregate,
in the business, operations, properties, assets, liabilities,
condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries, taken as a
whole.
SECTION 4.8 Litigation.
(a) Except as disclosed on Schedule 4.8 hereto, there are
no claims, suits, actions or proceedings pending against,
relating to or affecting the Company or any Company Subsidiary
or, to the best of the Company's knowledge without any
independent investigation, (i) any of the Company's properties or
(ii) any of the Company's or a Company Subsidiary's borrowers or
lessees before or by any court, governmental department,
commission, agency, instrumentality or authority, or any
arbitrator. Except as disclosed on Schedule 4.8 hereto, to the
best of the Company's knowledge without any independent
investigation, there are no claims, suits, actions or proceedings
threatened against, relating to or affecting the Company, any
Company Subsidiary or any of their respective properties or, any
of the Company's borrowers or lessees, before or by any court,
governmental department, commission, agency, instrumentality,
authority or arbitrator that could reasonably be expected, either
alone or in the aggregate with all such claims, actions or
proceedings, to affect materially and adversely the business,
operations, properties (including the present maintenance,
operation, occupancy or use of any such property), assets,
condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries, taken as a
whole. Except as disclosed on Schedule 4.8, neither the Company
nor any Company Subsidiary is subject to any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or authority, or any
arbitrator which prohibits or restricts the consummation of the
transactions contemplated hereby or would have any material
adverse effect on the business, operations, properties (including
the present maintenance, operation, occupancy or use of any such
property), assets, condition (financial or other), results of
operations or prospects of the Company and the Company
Subsidiaries, taken as a whole.
(b) There is no litigation or governmental investigation
pending or, to the best of the Company's knowledge, threatened,
nor is there any order, injunction or decree, outstanding,
existing or relating to the Company or any Company Subsidiary,
or, to the best of the Company's knowledge without any
independent investigation, any of their respective properties,
that could have a material adverse effect upon the present
maintenance, operation, occupancy or use of such Company
Property.
SECTION 4.9 Registration Statement and Proxy Statement.
None of the information to be supplied by the Company for
inclusion or incorporation by reference in (a) the Registration
Statement on Form S-4 to be filed under the Securities Act with
the SEC by the Purchaser in connection with the Merger for the
purpose of registering the shares of the Purchaser Common Stock
to be issued in the Merger (the "Registration Statement") or (b)
the proxy or information statement to be distributed in
connection with the Company's and Purchaser's meetings of their
respective stockholders to vote upon this Agreement and the
transactions contemplated hereby (the "Proxy Statement" and,
together with the prospectus included in the Registration
Statement, the "Proxy Statement/ Prospectus") will, in the case
of the Proxy Statement/Prospectus or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy
Statement/Prospectus and any amendments or supplements thereto,
and at the time of the meetings of stockholders of the Company
and Purchaser to be held in connection with the transactions
contemplated by this Agreement or, in the case of the
Registration Statement, as amended or supplemented, at the time
it becomes effective and at the time of such meetings of the
stockholders of the Company and the Purchaser, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement/Prospectus
will comply as to form in all material respects with all
applicable laws, including the provisions of the Securities Act
and the Exchange Act (as applicable thereto) and the rules and
regulations promulgated thereunder, except that no representation
is made by the Company with respect to information supplied by
the Purchaser or derived therefrom for inclusion therein.
SECTION 4.10 No Violation of Law. Except as disclosed on
Schedule 4.10 hereto, none of the Company, any Company Subsidiary
or, to the best of the Company's knowledge without any
independent investigation, any of the Company's borrowers or
lessees is in violation of or has been given notice or been
charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation or any
applicable medical waste law, ordinance or regulation) of any
governmental or regulatory body or authority, except for
violations which, in the aggregate, do not have, and would not
reasonably be expected to have, a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations or prospects of the Company and the
Company Subsidiaries taken as a whole or of any such borrower or
lessee. Except as disclosed on Schedule 4.10 hereto, no
investigation or review of the Company, the Company Subsidiaries
or, to the best knowledge of the Company without any independent
investigation, of any of the Company's borrowers or lessees by
any governmental or regulatory body or authority is pending or,
to the best knowledge of the Company without any independent
investigation, threatened, nor has any governmental or regulatory
body or authority indicated to the Company or any Company
Subsidiary an intention to conduct the same, other than, in each
case, those the outcome of which, as far as reasonably can be
foreseen, will not have, and would not reasonably be expected to
have, a material adverse effect on the business, operations,
properties (including the present maintenance, operation,
occupancy or use of any such property), assets, condition
(financial or other), results of operations or prospects of the
Company and the Company Subsidiaries taken as a whole or of any
such borrower or lessee. Except as disclosed on Schedule 4.10
hereto, the Company, the Company Subsidiaries and, to the
Company's best knowledge without any independent investigation,
each of their respective borrowers and lessees, has all permits,
licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to
conduct its business as presently conducted and as proposed by
the Company, such Company Subsidiary or such borrower or lessee
to be conducted (the foregoing hereinafter referred to
collectively as the "Permits"), except for permits, licenses,
franchises, variances, exemptions, orders, authorizations,
consents and approvals the absence of which, alone or in the
aggregate, would not have a material adverse effect on the
business, operations, properties (including the present
maintenance, operation, occupancy or use of any such property),
assets, condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries taken as a
whole or such borrower or lessee. Except as set forth on
Schedule 4.10, the Company, the Company Subsidiaries and, to the
best knowledge of the Company without any independent
investigation, each of the Company's borrowers and lessees, (a)
has duly and currently filed all reports and other information
required to be filed with any federal, state or local
governmental or regulatory authority in connection with the
Permits, (b) is not in violation of the terms of any Permit,
except for delays in filing reports or violations which, alone or
in the aggregate, would not have a material adverse effect on the
business, operations, properties (including the present
maintenance, operation, occupancy or use of any such property),
assets, condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries taken as a
whole or such borrower or lessee and (c) is using and occupying
each of the Company Properties in a manner that complies with all
applicable codes and zoning laws and regulations except where the
failure to so comply would not have, or would not be reasonably
expected to have a material adverse effect on the business,
operations, properties (including the present maintenance,
operation, occupancy or use of any such property), assets,
condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries taken as a
whole or such borrower or lessee.
SECTION 4.11 Compliance with Agreements. Except as
disclosed on Schedule 4.11 hereto, neither the Company, any
Company Subsidiary nor, to the best of the Company's knowledge
without any independent investigation, any other party is in
breach or violation of or in default in the performance or
observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could
result in a default under, (a) the Articles of Incorporation or
Bylaws of the Company or any Company Subsidiary or (b) any
contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other
instrument to which the Company or any Company Subsidiary is a
party or by which it is bound or to which any of its properties
are subject, which breaches, violations and defaults, in the case
of clause (b) of this Section 4.11, would have, or be reasonably
expected to have, in the aggregate, a material adverse effect on
the business, operations, properties (including the present
maintenance, operation, occupancy or use of any such property),
assets, condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries taken as a
whole.
SECTION 4.12 Taxes.
(a) The Company has (i) duly filed with the appropriate
governmental authorities all Tax Returns (as hereinafter defined)
required to be filed by it for all periods ending on or prior to
the Effective Time, has not filed for an extension to file any
Tax Returns not yet filed except with respect to such Tax Returns
as are listed on Schedule 4.12(a) hereto and such Tax Returns are
true, correct and complete in all material respects and (ii) duly
paid in full or made adequate provision for the payment of all
Taxes (as hereinafter defined) for all periods ending at or prior
to the Effective Time (whether or not shown on any Tax Return).
Except as set forth in Schedule 4.12(a) hereto, the Tax Returns
referred to in clause (i) hereinabove have been examined by the
United States Internal Revenue Service ("IRS") or the appropriate
governmental authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed
has expired, all deficiencies asserted or assessments made as a
result of such examinations have been paid in full and no issues
that have been raised by the relevant governmental authority in
connection with the examination of any of the Tax Returns
referred to in clause (i) hereinabove are currently pending. No
claim has been made by any authority in a jurisdiction where the
Company or any Company Subsidiary does not file a Tax Return that
the Company or any Company Subsidiary is or may be subject to tax
in such jurisdiction. No waivers of statutes of limitation have
been given by or requested with respect to any Taxes of the
Company. The Company has not agreed to any extension of time
with respect to any Tax deficiency. The liabilities and reserves
for Taxes reflected in the Company balance sheet as of December
31, 1993 contained in the Company 10-K (the "1993 Company Balance
Sheet") are adequate to cover all Taxes for all periods ending on
or prior to December 31, 1993 and, to the best of the Company's
knowledge without any independent investigation, there are no
liens for Taxes upon any property or asset of the Company, except
for liens for Taxes not yet due. The Company is not a party to
any agreement providing for the allocation or sharing of Taxes
with any entity except for certain of the Company Leases (as
hereinafter defined) which provide that the lessee thereunder
shall pay all taxes assessed with respect to the demised Company
Property. The Company has not, with regard to any assets or
property held, acquired or to be acquired by it, filed a consent
to the application of Section 341(f) of the Internal Revenue Code
of 1986, as amended, and all regulations promulgated thereunder,
as in effect from time to time (the "Code"). Neither the Company
nor any of its officers (including the employee responsible for
Tax matters) expect any authority to assess any additional Taxes
for any period for which Tax Returns have been filed. The
Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owning to
any employee, independent contractor, creditors, stockholder, or
other third party. The Company has or will have, by the
Effective Time, received cash sufficient to satisfy the
requirements of Section 857(a) of the Code for the taxable years
of the Company up to the Effective Time.
(b) The Company has not made any payments, is not obligated
to make any payments, and is not a party to any agreement that
under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the
Code.
(c) Except as set forth on Schedule 4.12(c) hereto, the
Company has not been a member of any affiliated or combined group
of companies that files a consolidated, affiliated, or other
combined group Tax Return and the Company has no liability for
the Taxes of any person under Treasury Regulations 1.1502-6 (or
any similar provision of non-federal law) as a transferee or
successor, by contract, or otherwise.
(d) For purposes of this Agreement, the term "Taxes" shall
mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, occupation, use,
service, service use, license, payroll, franchise, transfer and
recording taxes, fees and charges, imposed by the United States,
or any state, local or foreign government or subdivision or
agency thereof whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include
any interest, fines, penalties or additional amounts attributable
or imposed or with respect to any such taxes, charges, fees,
levies or other assessments.
(e) For purposes of this Agreement, the term "Tax Return"
shall mean any return, report or other document or information
required to be supplied to a taxing authority in connection with
Taxes.
SECTION 4.13 Employee Benefit Plans; ERISA.
(a) Except as set forth in Schedule 4.13(a) hereto, at the
date hereof, the Company does not maintain or contribute to, and
is not a party to, any material employee benefit plans, programs,
arrangements and practices (such plans, programs, arrangements
and practices of the Company and its subsidiaries being referred
to as the "Company Plans"), including employee benefit plans
within the meaning set forth in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and all
regulations promulgated thereunder, as in effect from time to
time ("ERISA"), or any written employment contracts which
contracts are not immediately terminable without penalty or
further liability, or other similar material arrangements for the
provision of benefits (excluding any "Multiemployer Plan" within
the meaning of Section 3(37) of ERISA or any "Multiple Employer
Plan" within the meaning of Section 413(c) of the Code).
Schedule 4.13(a) hereto lists all Multiemployer Plans and
Multiple Employer Plans which the Company maintains or to which
it makes contributions. The Company does not have any obligation
to create any additional such plan or to amend any such plan so
as to increase benefits thereunder, except as required under the
terms of the Company Plans, under existing collective bargaining
agreements or to comply with applicable law.
(b) Except as set forth in Schedule 4.13(b) hereto, (i)
there have been no prohibited transactions within the meaning of
Section 406 or 407 of ERISA or Section 4975 of the Code with
respect to any of the Company Plans that could result in
penalties, taxes or liabilities which, singly or in the
aggregate, could have a material adverse effect on the business,
operations, properties, assets, condition (financial or other)
results of operations or prospects of the Company, (ii) there is
no outstanding liability in excess of $10,000, whether measured
alone or in the aggregate, under Title IV of ERISA with respect
to any of the Company Plans except for premiums due, (iii)
neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the
Company Plans subject to Title IV of ERISA other than in a
"standard termination" described in Section 4041(b) of ERISA,
(iv) none of the Company Plans has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last
day of the most recent fiscal year of each of the Company Plans
ended prior to the date of this Agreement, (v) the current
present value of all projected benefit obligations under each of
the Company Plans which is subject to Title IV of ERISA did not,
as of its latest valuation date, exceed the then current value of
the assets of such plan allocable to such benefit liabilities
(based upon reasonable actuarial assumptions currently utilized
for such Company Plan), (vi) each of the Company Plans has been
operated and administered in all material respects in accordance
with applicable laws during the period of time covered by the
applicable statute of limitations, (vii) each of the Company
Plans which is intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be
so qualified and such determination has not been modified,
revoked or limited by failure to satisfy any condition thereof or
by a subsequent amendment thereto or a failure to amend, except
that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Company
Plans, and the period for making any such necessary retroactive
amendments has not expired, (viii) with respect to Multiemployer
Plans, the Company has not, since January 1, 1988, made or
suffered a "complete withdrawal" or a "partial withdrawal," as
such terms are respectively defined in Sections 4203,4204 and
4205 of ERISA and, to the best knowledge of the Company, no event
has occurred or is expected to occur which presents a material
risk of a complete or partial withdrawal under said Sections
4203,4204 and 4205, (ix) to the best knowledge of the Company,
there are no material pending, threatened or anticipated claims
involving any of the Company Plans other than claims for benefits
in the ordinary course, and (x) the Company has no current
liability in excess of $10,000, whether measured alone or in the
aggregate, for plan termination or withdrawal (complete or
partial) under Title IV of ERISA based on any plan to which any
entity that would be deemed one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code contributed
during the period of time covered by the applicable statute of
limitations (the "Company Controlled Group Plans"), and the
Company does not reasonably anticipate that any such liability
will be asserted against the Company, none of the Company
Controlled Group Plans has an "accumulated funding deficiency"
(as defined in Section 302 of ERISA and 412 of the Code), and no
Company Controlled Group Plan has an outstanding funding waiver
which could result in the imposition of liens, excise taxes or
liability against the Company in excess of $10,000 whether
measured alone or in the aggregate.
SECTION 4.14 Certain Agreements.
(a) Except as set forth on Schedule 4.14(a) hereto, as of
the date hereof, neither the Company nor any Company Subsidiary
is a party to any oral or written (i) consulting or similar
agreement with any present or former director, officer or
employee or any entity controlled by any such person not
terminable on 30 days' or less notice for a total cost not in
excess of $5,000, (ii) agreement with any executive officer or
other key employee of the Company or any Company Subsidiary the
benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction
involving the Company or any Company Subsidiary of the nature
contemplated by this Agreement, (iii) agreement with respect to
the employment of any executive officer or other key employee of
the Company or any Company Subsidiary or (iv) agreement or plan,
including any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any
of the benefits of which will be calculated on the basis of the
transactions contemplated by this Agreement.
(b) Except as disclosed on Schedule 4.14(b) hereto, neither
the Company nor any Company Subsidiary is indebted for money
borrowed, either directly or indirectly, from any of its
officers, directors, or any Affiliate (as defined below), in any
amount whatsoever; nor are any of its officers, directors, or
Affiliates indebted for money borrowed from the Company; nor are
there any transactions of a continuing nature between the Company
or any Company Subsidiary and any of its officers, directors, or
Affiliates (other than by or through the regular employment
thereof by the Company) not subject to cancellation which will
continue beyond the time the Merger becomes effective, including,
without limitation, use of the Company's or any Company
Subsidiary's assets for personal benefit with or without adequate
compensation. For purposes of this Agreement, the term
"Affiliate" shall mean any Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by,
or is under common control with, the Person specified. As used
in the foregoing definition, the term (i) "control" shall mean
the power through the ownership of voting securities, contract,
or otherwise to direct the affairs of another Person and (ii)
"Person" shall mean an individual, firm, trust, association,
corporation, partnership, government (whether federal, state,
local or other political subdivision, or any agency or bureau of
any of them) or other entity.
SECTION 4.15 Labor Controversies. Except as set forth on
Schedule 4.15 hereto, (a) neither the Company nor any Company
Subsidiary is a party to any collective bargaining agreements,
(b) there are no controversies pending or, to the best knowledge
of the Company, threatened between the Company and any
representatives of any of its employees, (c) there are no
material organizational efforts presently being made involving
any of the presently unorganized employees of the Company or any
Company Subsidiary, (d) the Company and the Company Subsidiaries
have complied in all material respects with all laws relating to
the employment of labor, including, without limitation, any
provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes
and (e) no person has asserted that the Company or any Company
Subsidiary is liable in any material amount for any arrears of
wages or any taxes or penalties for failure to comply with any of
the foregoing.
SECTION 4.16 Books, Records and Accounts. The Company's
books, records and accounts fairly and accurately reflect the
transactions and dispositions of assets of the Company and the
Company Subsidiaries, and the Company's system of internal
accounting controls is sufficient to assure that: (i)
transactions are executed in accordance with management's
authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles, and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management's authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken
with respect to any differences. Except as disclosed in Schedule
4.16 hereto, the Company has segregated all funds for security
and similar deposits received from its lessees and borrowers.
SECTION 4.17 Opinion of Financial Advisor. The Company has
received from a financial advisor satisfactory to the Company's
Board of Directors, an opinion to the effect that, as of the date
hereof, the Exchange Ratio is fair, from a financial point of
view, to the Company's stockholders. Such opinion (a copy of
which has been delivered to the Purchaser) has not been
withdrawn, revoked or modified.
SECTION 4.18 Company Ownership of the Purchaser Common
Stock. The Company is and, to the best of its knowledge, its
"affiliates" and "associates" collectively are, and as of the
Effective Time will be, the "beneficial owner" (as such terms are
defined in rules and regulations under the Securities Act and the
Exchange Act) of, less than 1% of the outstanding shares of the
Purchaser Common Stock.
SECTION 4.19 NYSE. The Company Common Stock is, and
immediately prior to the Effective Time will be, listed on the
NYSE.
SECTION 4.20 Contracts, Etc.
(a) Schedule 4.20(a) consists of a true and complete list
of all contracts, agreements, commitments and other instruments
(whether oral or written, and including any and all amendments or
modifications thereto) to which the Company or any Company
Subsidiary is a party that: (i) involve a receipt or an
expenditure or require the performance of services or delivery of
goods to, by, through, on behalf of or for the benefit of the
Company or any Company Subsidiary, which in each case relates to
a contract, agreement, commitment or instrument that either (A)
requires payments or receipts in excess of $10,000 per year or
(B) are not terminable by the Company or a Company Subsidiary on
notice of 30 days or less without penalty or the Company or a
Company Subsidiary being liable for damages; or (ii) involve an
obligation for the performance of services or delivery of goods
by the Company or any Company Subsidiary that cannot, or in
reasonable probability will not, be performed within 45 days
subsequent to the date of this Agreement including, without
limitation any of the following which meet the aforementioned
criteria:
(i) Any contracts, commitments or agreements, the
lack of consummation or performance of which would, either singly
or in the aggregate, have an adverse impact upon the business,
operations or financial condition of the Company and the Company
Subsidiaries, taken as a whole, including, without limitation,
any contract or commitment which is outside of the normal,
ordinary and usual requirements of the Company's or any Company
Subsidiaries' business or at a price or prices in excess of those
otherwise available at the time such contract or commitment was
entered into;
(ii) Any note receivable;
(iii) Any single contract or commitment, or sales
or purchase order, which involves future payments, performance of
services or delivery of goods and/or materials, to or by the
Company or any Company Subsidiary with an amount or value in the
aggregate in excess of $10,000 per year (other than trade
accounts payable incurred in the ordinary course of business with
an amount or value of less than $10,000 per year);
(iv) Any contract or agreement with a creditor
not made in the ordinary course of business;
(v) Any contract, agreement, understanding or
arrangement restricting the Company or any Company Subsidiary
from carrying on its business anywhere in the world;
(vi) Any instrument or arrangement evidencing or
related to indebtedness for money borrowed or to be borrowed,
whether directly or indirectly, by way of purchase money
obligation, guaranty, subordination, conditional sale, lease-
purchase or otherwise; and
(vii) Any contract, agreement, understanding or
arrangement between the Company or any Company Subsidiary, and
any Affiliate of the Company.
(b) All of the contracts, agreements or instruments
described in Schedule 4.20(a) hereto are valid and binding upon
the Company and the other parties thereto and are in full force
and effect and enforceable in accordance with their terms, and
neither the Company nor any Company Subsidiary that is a party
thereto nor, to the best of the Company's knowledge, any other
party to any such contract, commitment or arrangement has
breached any provision of, or is in default under, the terms
thereof. Except for terms specifically described in Schedule
4.20(a), neither the Company nor any Affiliate thereof has
received any payment from any contracting party in connection
with or as an inducement for entering into any contract,
agreement or instrument except for payment for actual services
rendered or to be rendered by the Company or any Company
Subsidiary consistent with amounts historically charged for such
services.
SECTION 4.21 Intellectual Property. Schedule 4.21 hereto
sets forth a complete and correct list and summary description of
all trademarks, tradenames, service marks, service names, brand
names, copyrights and patents, registrations thereof and
applications therefor, applicable to or used in the business of
the Company or any Company Subsidiary, together with a complete
list of all licenses granted by or to the Company or any Company
Subsidiary with respect to any of the above. All such
trademarks, tradenames, service marks, service names, brand
names, copyrights and patents are owned by the Company or a
Company Subsidiary, free and clear of all liens, claims, security
interests and encumbrances of any nature whatsoever. Except as
set forth on Schedule 4.21 hereto, neither the Company nor any
Company Subsidiary is currently in receipt of any notice of any
violation or infringement of, and neither the Company nor any
Company Subsidiary is violating or infringing, the rights of
others in any trademark, tradename, service mark, copyright,
patent, trade secret, know-how or other intangible asset.
SECTION 4.22 Disclosure. This Agreement and the Schedules
hereto disclose all facts material to the properties, assets,
business or operations of the Company and the Company
Subsidiaries, taken as a whole, except for such facts which,
singly or in the aggregate, could not reasonably be expected to
materially and adversely affect the properties, assets, business,
operations, condition (financial or other), results of operations
or prospects of the Company and the Company Subsidiaries, taken
as a whole. No statement contained herein or in any certificate,
schedule, list, exhibit or other instrument furnished by the
Company to the Purchaser pursuant to the provisions hereof
contains or will contain any untrue statement of any material
fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not
misleading. Matters disclosed on each Schedule hereto shall be
deemed disclosed only for purposes of the matters to be disclosed
on such Schedule and shall not be deemed to be disclosed for any
other purpose unless expressly provided therein.
SECTION 4.23 Brokers and Finders. The Company has not
employed any broker, finder or other intermediary in connection
with the transactions contemplated by this Agreement which would
be entitled to any brokerage, finder's or similar fee or
commission in connection with this Agreement or the transactions
contemplated hereby.
SECTION 4.24 REIT Qualification. At all times during its
existence, the Company has been, and as of the Effective Time the
Company will be, organized in conformity with the requirements
for qualification and, as of the date hereof for all taxable
periods has qualified, as a "real estate investment trust" under
the Code and the rules and regulations thereunder. The Company
has at all times during its existence (i) met the 75%, 95% and
30% income tests set forth in Section 856 of the Code, (ii) met
the 75% and 25% asset tests set forth in Section 856 of the Code
and (iii) distributed dividends to its stockholders at least
equal to the 95% requirements of Section 857 of the Code.
SECTION 4.25 Title to Properties. The Company has good and
marketable title in fee simple to all real property owned by it
(individually, a "Company Property" and collectively, the
"Company Properties"), and good and marketable title to all
personal property owned by it which is material to its business,
in each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those disclosed on
Schedule 4.25 hereto and those which would not, either
individually or in the aggregate, have a material adverse effect
on any Company Property (including the present maintenance,
operation, occupancy or use of any such Company Property)
(collectively, the "Company Permitted Encumbrances").
SECTION 4.26 Title Insurance.
(a) Except as set forth on Schedule 4.26 hereto, an owner's
policy of title insurance issued by a nationally recognized title
insurance company in a form and containing coverages customarily
approved and required by institutional investors has been
obtained for each Company Property. Except as set forth on
Schedule 4.26, each owner's policy of title insurance insures the
fee simple ownership interest of the Company or the appropriate
Company Subsidiary in each Company Property subject only to the
Company Permitted Encumbrances and is in an amount at least equal
to the sum of (i) the cost of the acquisition of such Company
Property and (ii) any subsequent cost of the construction and
installation of the improvements made by the Company located on
such Company Property (measured at the time of such
construction).
(b) Except as set forth on Schedule 4.26 hereto, a
mortgagee's policy of title insurance issued by a nationally
recognized title insurance company in a form and containing
coverages customarily approved and required by institutional
investors and insuring title in the priority listed in Schedule
4.34 has been obtained for each Company Mortgage Loan (as
hereinafter defined). Each mortgagee's policy of title insurance
insures the mortgage interest of the Company or the appropriate
Company Subsidiary in the real property encumbered by the Company
Mortgage Loan and is in an amount at least equal to the debt of
the obligor secured by the Company Mortgage Loan.
SECTION 4.27 Environmental Matters. Except as disclosed on
Schedule 4.27 hereto, since January 1, 1989, all of the
properties of the Company have been the subject of preliminary
environmental assessments in compliance with the American Society
for Testing and Materials standard for Phase I Environmental Site
Assessments, E-1528 (March 15, 1993), or other environmental
assessments, inspections or reviews more likely to reveal
environmental liabilities. Except as disclosed on Schedule 4.27
hereto, the Company has no knowledge of (i) the unlawful presence
of any hazardous substances, hazardous materials, toxic
substances or waste materials or bio-medical waste (collectively,
"Hazardous Materials") on any of the properties of the Company or
(ii) any unlawful spills, releases, discharges or disposal of
Hazardous Materials that have occurred or are presently occurring
off any of the Company Properties as a result of any construction
on or operation and use of any of the Company Properties.
SECTION 4.28 Over Financing. Except as set forth on
Schedule 4.28 hereto, the Company has not distributed to its
stockholders the proceeds of any financing of the Company's
properties.
SECTION 4.29 Defects. Except as set forth on Schedule 4.29
hereto, to the best of the Company's knowledge without any
independent investigation, there are no material defects in the
improvements located on a Company Property including, without
limitation, any defect in the foundation, structural systems,
roof or the electrical, plumbing, heating, ventilating or air
conditioning systems included within the improvements located on
such Company Property and there are no repairs or deferred
maintenance required to be made thereto.
SECTION 4.30 Condemnation. There is no pending or, to the
best of the Company's knowledge without any independent
investigation, threatened public or private condemnation or
similar proceeding affecting a Company Property or any part
thereof which could have material adverse effect upon the present
maintenance, operation, occupancy or use of such Company
Property.
SECTION 4.31 Taxes and Assessments on Company Properties.
To the best of the Company's knowledge without any independent
investigation, there are no material unpaid real estate property
taxes or assessments due and payable against a Company Property.
Neither the Company nor any Company Subsidiary has received any
notice of assessment for public improvements with respect to or
relating to a Company Property.
SECTION 4.32 Properties and Leases. Schedule 4.32 hereto
sets forth a complete and correct list of (i) all Company
Properties and (ii) all leases of the Company Properties or any
part thereof in effect on the date hereof (individually, a
"Company Lease" and collectively, the "Company Leases") and sets
forth a complete and correct description of the following:
(a) The land, building and approximate square footage of
the demised premises under each Company Lease;
(b) the name of the tenant and any guarantor under each
Company Lease;
(c) the date of each Company Lease and any amendment or
modification thereof, the commencement or amendment start date of
each Company Lease and the expiration date of the term of each
Company Lease;
(d) the amount of annual or monthly base rent and
additional rent due under each Company Lease and the amount, or
the basis of calculation thereof, of any scheduled increase or
other escalation in the annual and monthly base rent or
additional rent;
(e) any renewal, extension, expansion or cancellation right
of the tenant under each Company Lease;
(f) any option or first refusal purchase right of the
tenant under each Company Lease;
(g) any security deposit or outstanding rent concession or
abatement under each Company Lease;
There are no leases, tenancies, licenses or other rights of
occupancy or use of the Company Properties or any portion thereof
except for the Company Leases and except as set forth on Schedule
4.32 hereto. Each Company Lease is valid and enforceable, is in
full force and effect, has not been amended, modified or
supplemented except as set forth on Schedule 4.32 hereto, and the
tenant thereunder has accepted its demised premises, is in actual
possession in the normal course and has commenced payment of rent
and additional rent, if applicable, therefor. Except as set
forth on Schedule 4.32 hereto, each Company Lease provides that
the tenant thereunder is required to pay all operating expenses,
repairs and maintenance, and taxes and insurance in connection
with the maintenance, ownership, use and occupancy of the Company
Property demised thereunder. Neither the Company nor any Company
Subsidiary is in default in the payment or performance of any
obligation binding on the Company or a Company Subsidiary under a
Company Lease and neither the Company nor any Company Subsidiary
has given notice of default to a tenant (which default has not
previously been cured), nor does any condition or event exist
which with the giving of notice or the passage of time, or both,
would constitute a default by the Company or any Company
Subsidiary or, to the best of the Company's knowledge without any
independent investigation, by a tenant under a Company Lease.
The Company does not have any knowledge of any claim, offset,
right of recoupment or defense available to a tenant under a
Company Lease. There have been no material waivers by the
Company or any Company Subsidiary of any default under or breach
of a Company Lease by a Tenant. Except for the Company Mortgages
(as hereinafter defined), neither the Company nor any Company
Subsidiary has assigned, pledged, hypothecated or otherwise
encumbered any of its right, title or interest in and to a
Company Lease or any rents payable thereunder. No tenant has an
option or first refusal purchase right under a Company Lease
except as set forth on Schedule 4.32 hereto.
SECTION 4.33 Mortgages. Schedule 4.33 hereto sets forth a
complete and correct list of all mortgages, deeds of trust, deeds
to secure debt and other similar security interests encumbering
the Company Properties or any part thereof (individually, a
"Company Mortgage" and collectively, the "Company Mortgages") and
sets forth a complete and correct description of the following:
(a) the Company Property encumbered by each Company
Mortgage;
(b) the name of the obligor, guarantor and the holder of
each Company Mortgage;
(c) the priority of each Company Mortgage and any mortgage,
deed of trust or other similar instrument that is either prior to
or subordinate to each Company Mortgage;
(d) the date of each Company Mortgage and any amendment or
modification thereof;
(e) the original principal amount of the debt secured by
each Company Mortgage, the current rate of interest thereunder
and the current outstanding principal balance thereof;
(f) the maturity date of the debt secured by each Company
Mortgage, the type of debt secured thereby and whether any
balloon payment is due at the maturity of the debt secured
thereby;
(g) the amount of the current monthly payment of interest,
principal or other amounts due under each Company Mortgage and
the amount of any other mandatory principal or other payment due
thereunder prior to the maturity date of the debt secured
thereby;
(h) any amount that has not been disbursed or advanced to
the Company by the holder of a Company Mortgage that such holder
is obligated to disburse or advance;
(i) any prepayment premiums with respect to the prepayment
(full or partial) of the debt secured by each Company Mortgage
and the current penalty payable in connection with any such
prepayment; and
(j) the amount of any escrow deposits or other deposits or
payments held under each Company Mortgage by the holder of each
Company Mortgage.
There are no mortgages, deeds of trusts, deeds to secure debt or
other similar instruments encumbering the Company Properties or
any portion thereof except for the Company Mortgages. Each
Company Mortgage is valid and enforceable, is in full force and
effect, and has not been amended, modified or supplemented except
as set forth in Schedule 4.33 hereto. All payments, installments
and charges due and payable under a Company Mortgage have been
paid in full. Neither the Company nor any Company Subsidiary has
received notice of default by the Company or any Company
Subsidiary (which default has not previously been cured) from the
holder of a Company Mortgage nor, to the best of the Company's
knowledge, does any condition or event exist which with the
giving of notice or the passage of time, or both, would
constitute a default by the Company or any Company Subsidiary
under a Company Mortgage. Except as set forth on Schedule 4.33
hereto, the occurrence of any of the transactions contemplated by
this Agreement will not require the consent or approval of the
holder of a Company Mortgage and will not violate, conflict with
or constitute a default by the Company or any Company Subsidiary
under a Company Mortgage or result in a condition or event which
with the giving of notice or the passage of time, or both, would
constitute a default by the Company under a Company Mortgage.
SECTION 4.34 Company Mortgage Loans. Schedule 4.34 hereto
sets forth a complete and correct list of all loans made by the
Company or any Company Subsidiary to others secured by a
mortgage, deed of trust, deed to secure debt or other similar
instrument encumbering real property and personalty related to
such real property (individually, a "Company Mortgage Loan" and
collectively, the "Company Mortgage Loans") and sets forth a
complete and accurate description of the following:
(a) the real property encumbered by each Company Mortgage
Loan;
(b) the name of the obligor, guarantor and the holder of
each Company Mortgage Loan;
(c) the priority of each Company Mortgage Loan and any
mortgage, deed of trust, deed to secure debt or other similar
instrument that is either prior to or subordinate to each Company
Mortgage Loan;
(d) the date of each Company Mortgage Loan and any
amendment or modification thereof;
(e) the original principal amount of the debt secured by
each Company Mortgage Loan, the current rate of interest
thereunder and the current outstanding principal thereof;
(f) the maturity date of the debt secured by each Company
Mortgage Loan, the type of debt secured thereby and whether any
balloon payment is due at the maturity of the debt secured
thereby;
(g) the amount of the current monthly payment of interest,
principal or other amounts due under each Company Mortgage Loan
and the amount of any other mandatory principal or other payment
due thereunder prior to the maturity date of the debt secured
thereby;
(h) any amount that has not been disbursed or advanced to
the obligor under each Company Mortgage Loan by the Company or a
Company Subsidiary that the Company or a Company Subsidiary is
obligated to disburse or advance;
(i) any prepayment premiums with respect to the prepayment
(full or partial) of the debt secured by each Company Mortgage
Loan and the current penalty payable in connection with any such
prepayment; and
(j) the amount of any escrow deposits or other deposits or
payments held under each Company Mortgage Loan by the Company or
a Company Subsidiary.
There are no loans made by the Company or any Company Subsidiary
to others secured by a mortgage, deeds of trust, deed to secure
debt or other similar instruments encumbering real property and
personally related to such real property except for the Company
Mortgage Loans. Each Company Mortgage Loan is valid and
enforceable, is in full force and effect and has not been
amended, modified or supplemented except as set forth in Schedule
4.34 hereto. All payments, installments and charges due and
payable under each Company Mortgage Loan have been paid in full.
The Company is not in default in the payment or performance of
any obligation under a Company Mortgage Loan and has not given
any notice of default to an obligor under a Company Mortgage Loan
(which default has not previously been cured) nor, to the best of
the Company's knowledge without any independent investigation,
does any condition or event exist which with the giving of notice
or the passage of time, or both, would constitute a default by an
obligor under a Company Mortgage Loan. No obligor under a
Company Mortgage Loan has a valid defense to the payment in full
of the Company Mortgage Loan nor is such Company Mortgage Loan
subject to any valid right of rescission, set-off, abatement,
diminution, counterclaim or defense. There have been no waivers
by the Company or any Company Subsidiary of any default under or
breach of a Company Mortgage Loan by an obligor under a Company
Mortgage Loan. The occurrence of any of the transactions
contemplated by this Agreement does not require the consent or
approval of the obligor under a Company Mortgage Loan and will
not violate, conflict with or constitute a default by the Company
or any Company Subsidiary under a Company Mortgage Loan or result
in a condition or event which with the giving of notice or the
passage of time, or both, would constitute a default by the
Company or any Company Subsidiary under a Company Mortgage Loan.
SECTION 4.35 Investment Company Act. The Company is not,
and as of the Effective Time will not be, an "investment company"
or company "controlled" by "an investment company" within the
meaning of the Investment Company Act of 1940, as amended.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as
follows (and for the purpose of this Article V, all references to
the "Purchaser" shall be deemed to include all Purchaser
Subsidiaries, as hereinafter defined, unless the context
otherwise requires):
SECTION 5.1 Organization and Qualification. The Purchaser
and each of the Purchaser Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and each has the requisite
corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now
being conducted and as proposed by the Purchaser to be conducted.
The Purchaser and each Purchaser Subsidiary is qualified to do
business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the nature of
the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing
will not have, and would not reasonably be expected to have, a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or
prospects of the Purchaser and the Purchaser Subsidiaries taken
as a whole. True, accurate and complete copies of each of the
Articles of Incorporation and Bylaws of the Purchaser and each
Purchaser Subsidiary as in effect on the date hereof, including
all amendments thereto, have heretofore been delivered to the
Company.
SECTION 5.2 Capitalization.
(a) The authorized capital stock of the Purchaser consists
of 50,000,000 shares of Purchaser Common Stock of which 9,655,315
shares are issued and outstanding as of June 3, 1994; and
10,000,000 shares of preferred stock, $1.00 par value per share
of which no shares are issued and outstanding as of June 3, 1994.
All of the issued and outstanding shares of Purchaser Common
Stock are validly issued and are fully paid, nonassessable and
free of preemptive rights. No subsidiary of the Purchaser holds
any shares of capital stock of the Purchaser. The authorized
capital stock of each Purchaser Subsidiary is owned 100% by the
Purchaser and all of the issued and outstanding shares of each
Purchaser Subsidiary are fully paid and nonassessable.
(b) Except as set forth in Schedule 5.2(b) hereto, as of
the date hereof, there are no outstanding subscriptions, options,
calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument
or other agreement that is presently exercisable obligating the
Purchaser or any Purchaser Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of
the capital stock of the Purchaser or any Purchaser Subsidiary or
obligating the Purchaser or any Purchaser Subsidiary to grant,
extend or enter into any such agreement or commitment. There are
no voting trusts, proxies or other agreements or understandings
to which the Purchaser is a party or is bound with respect to the
voting of any shares of capital stock of the Purchaser or any
Purchaser Subsidiary. The shares of the Purchaser Common Stock
to be issued to stockholders of the Company in connection with
the Merger will be at the Effective Time duly authorized, validly
issued, fully paid and nonassessable and free of preemptive
rights. The Purchaser Common Stock to be issued in the Merger
will be duly authorized and, when issued in accordance with the
terms of the Articles of Merger and this Agreement, will be
validly issued, fully paid and non-assessable and no stockholder
of the Purchaser will have any preemptive rights with respect
thereto. The shares of Purchaser Common Stock to be issued in
the Merger will, when issued, be registered under the Securities
Act and the Exchange Act and registered or exempt from
registration under any applicable state securities laws.
SECTION 5.3 Subsidiaries. The Purchaser has no
subsidiaries except as disclosed on Schedule 5.3 hereto
("Purchaser Subsidiaries"). Each Purchaser Subsidiary is a
"qualified REIT subsidiary" under Section 856 of the Code.
Neither the Purchaser nor any Purchaser Subsidiary is a partner
in any partnership or joint venture and will not become one prior
to the Effective Time.
SECTION 5.4 Authority; Non-Contravention; Approvals.
(a) The Purchaser has full corporate power and authority to
enter into this Agreement and, subject to the Purchaser
Stockholders' Approval (as hereinafter defined) and the Purchaser
Required Statutory Approvals (as hereinafter defined) to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement, and the consummation by the
Purchaser of the transactions contemplated hereby, have been
duly authorized by the Purchaser's Board of Directors and no
other corporate proceedings on the part of the Purchaser are
necessary to authorize the execution and delivery of this
Agreement and the consummation by the Purchaser of the
transactions contemplated hereby, except for the Purchaser
Stockholders' Approval and the obtaining of the Purchaser
Required Statutory Approvals. This Agreement has been duly and
validly executed and delivered by the Purchaser, and, assuming
the due authorization, execution and delivery hereof by the
Company, constitutes a valid and binding agreement of the
Purchaser enforceable against the Purchaser in accordance with
its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors'
rights generally and (ii) general equitable principles.
(b) Except as set forth in Schedule 5.4(b) hereto, the
execution and delivery of this Agreement by the Purchaser do
not, and the consummation by the Purchaser of the transactions
contemplated hereby will not, violate, 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 of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Purchaser under any of the terms,
conditions or provisions of (i) the Purchaser's Articles of
Incorporation or Bylaws, (ii) subject to obtaining the Purchaser
Required Statutory Approvals and the Purchaser Stockholders'
Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any court or governmental authority applicable to the Purchaser
or, to the best of the Purchaser's knowledge, any of its
properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of
any kind to which the Purchaser is now a party or by which the
Purchaser or to the Purchaser's best knowledge any of its
properties or assets may be bound, excluding from the foregoing
clauses (ii) and (iii) such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens,
security interests, charges or encumbrances that would not, in
the aggregate, have, or be reasonably expected to have a material
adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or
prospects of the Purchaser.
(c) Except for (i) any filings by the Purchaser and the
Company that may be required by the HSR Act, (ii) the filing of
the Registration Statement, including the Proxy
Statement/Prospectus with the SEC pursuant to the Securities Act
and the Exchange Act, and the declaration of the effectiveness
thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filing with the
Secretary of State of the State of Maryland and the Secretary of
State of the State of North Carolina in connection with the
Merger, (iv) any required filings with or approvals from
applicable state environmental authorities and (v) any required
filings with or approvals from applicable state health care
regulation and licensing authorities (the filings and approvals
referred to in clauses (i) through (v) are collectively referred
to as the "Purchaser Required Statutory Approvals"), to the
Purchaser's best knowledge, no declaration, filing or
registration with, or notice to, or authorization, consent or
approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the
Purchaser or the consummation by the Purchaser of the
transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be,
would not, in the aggregate, have a material adverse effect on
the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the
Purchaser.
SECTION 5.5 Reports and Financial Statements. (a) Since
March 31, 1992, the Purchaser has filed with the SEC, all forms,
statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it
under each of the Securities Act and the Exchange Act and the
respective rules and regulations thereunder all of which complied
in all material respects with all applicable requirements of the
appropriate federal securities act and the rules and regulations
thereunder. The Purchaser has previously delivered to the
Company copies of its (a) Annual Reports on Form 10-K for the
fiscal year ended December 31, 1993 ("Purchaser 10-K") and for
the immediately preceding fiscal year, as filed with the SEC, (b)
annual reports to stockholders for the two most recent fiscal
years in the form provided to stockholders, (c) proxy and
information statements relating to all meetings of its
stockholders (whether annual or special) from March 31, 1992,
until the date hereof, (d) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 (the "Purchaser 10-Q") and (e) all
other reports or registration statements filed by the Purchaser
with the SEC since March 31, 1992 (other than Registration
Statements filed on Form S-8) (collectively, the "Purchaser SEC
Reports"). As of their respective dates, the Purchaser SEC
Reports 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 therein, in light of the
circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim
consolidated financial statements of the Purchaser included in
such reports (the "Purchaser Financial Statements") have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis and fairly present the
financial position of the Purchaser as of the dates thereof and
the results of the Purchaser's operations and cash flows for the
periods then ended (except that the unaudited interim financial
statements do not contain any notes thereto and are subject to
normal year-end audit adjustments, which individually and in the
aggregate, will not materially adversely affect the unaudited
interim financial statements).
(b) All of the accounts receivable of the Purchaser
included in the Purchaser Financial Statements or otherwise,
including any transactions with related parties, reflect actual
transactions and will not be subject to offset or deduction and,
except as disclosed on Schedule 5.5(b), have arisen in the
ordinary course of business. Except as disclosed on Schedule
5.5(b) hereto, all of such accounts receivable will be collected
(without recourse to any judicial proceedings) within six months
of the Closing Date at the aggregate recorded amounts thereof net
of any reserves established in a manner consistent with past
practices of the Company.
SECTION 5.6 Absence of Undisclosed Liabilities. Except as
disclosed on Schedule 5.6 hereto, the Purchaser did not have at
December 31, 1993, and has not incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature (other than ordinary and recurring
operating expenses), (a) except liabilities, obligations or
contingencies which are accrued or reserved against in the
Purchaser Financial Statements or reflected in the notes thereto
and (b) except for any liabilities, obligations or contingencies
which (i) would not, in the aggregate, have a material adverse
effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the
Purchaser or (ii) have been discharged or paid in full prior to
the date hereof.
SECTION 5.7 Absence of Certain Changes or Events. Since
December 31, 1993, there has not been any material adverse change
or any event which would reasonably be expected to result in a
material adverse change, individually or in the aggregate, in the
business, operations, properties, assets, liabilities, condition
(financial or other), results of operations or prospects of the
Purchaser.
SECTION 5.8 Litigation.
(a) Except as disclosed on Schedule 5.8 hereto, there are
no claims, suits, actions or proceedings pending against,
relating to or affecting the Purchaser or any of its properties
or, to the Purchaser's best knowledge without any independent
investigation, any of the Purchaser's borrowers or lessees,
before or by any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator. Except
as disclosed on Schedule 5.8 hereto, to the Purchaser's best
knowledge without any independent investigation, there are no
claims, suits actions or proceedings threatened against, relating
to or affecting the Purchaser or any of its properties, or, any
of the Purchaser's borrowers or lessees or any of such borrowers'
or lessees' respective properties, before or by any court,
government department, commission, agency, instrumentality or
authority or any arbitrator which could reasonably be expected,
either alone or in the aggregate with all such claims, actions or
proceedings, to affect materially and adversely the business,
operations, properties (including the present maintenance,
operation, occupancy or use of any such property), assets,
condition (financial or other), results of operations or
prospects of the Purchaser. Except as disclosed on Schedule 5.8,
the Purchaser is not subject to any judgment, decree, injunction,
rule or order of any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator which
prohibits or restricts the consummation of the transactions
contemplated hereby or would have any material adverse effect on
the business, operations, properties (including the present
maintenance, operation, occupancy or use of any such property),
assets, condition (financial or other), results of operations or
prospects of the Purchaser.
(b) There is no litigation or governmental investigation
pending or, to the best of the Purchaser's knowledge, threatened,
nor is there any order, injunction or decree, outstanding,
existing or relating to the Purchaser or, to the best of the
Purchaser's knowledge without any independent investigation, any
of its properties that could have a material adverse effect upon
the present maintenance, operation, occupancy or use of such
property.
SECTION 5.9 Registration Statement and Proxy Statement.
None of the information to be supplied by the Purchaser for
inclusion or incorporation by reference in (a) the Registration
Statement or (b) the Proxy Statement/Prospectus will, in the case
of the Proxy Statement/Prospectus or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy
Statement/Prospectus and any amendments or supplements thereto,
and at the time of the meetings of stockholders of the Company
and the Purchaser to be held in connection with the transactions
contemplated by this Agreement or, in the case of the
Registration Statement, as amended or supplemented, at the time
it becomes effective and at the time of such meeting of the
stockholders of the Company and the Purchaser, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement/Prospectus
will comply as to form in all material respects with all
applicable laws, including the provisions of the Securities Act
and the Exchange Act (as applicable thereto) and the rules and
regulations promulgated thereunder, except that no representation
is made by the Purchaser with respect to information supplied by
the Company or derived therefrom for inclusion therein.
SECTION 5.10 No Violation of Law. Except as disclosed on
Schedule 5.10 hereto, neither the Purchaser nor, to the
Purchaser's best knowledge without any independent investigation,
any of the Purchaser's borrowers or lessees is in violation of or
has been given notice or been charged with any violation of, any
law, statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any applicable environmental law,
ordinance or regulation or any applicable medical waste law,
ordinance or regulation) of any governmental or regulatory body
or authority, except for violations which, in the aggregate, do
not have, and would not reasonably be expected to have, a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or
prospects of the Purchaser or of any such borrower or lessee.
Except as disclosed on Schedule 5.10 hereto, no investigation or
review of the Purchaser or, to the best knowledge of the
Purchaser without any independent investigation, of any of the
Purchaser's borrowers or lessees by any governmental or
regulatory body or authority is pending or, to the best knowledge
of the Purchaser without any independent investigation,
threatened, nor has any governmental or regulatory body or
authority indicated to the Purchaser an intention to conduct the
same, other than, in each case, those the outcome of which, as
far as reasonably can be foreseen, will not have, and would not
reasonably be expected to have, a material adverse effect on the
business, operations, properties (including the present
maintenance, operation, occupancy or use of any such property),
assets, condition (financial or other), results of operations or
prospects of the Purchaser or of any such borrower or lessee.
Except as disclosed on Schedule 5.10 hereto, the Purchaser and,
to the Purchaser's best knowledge without any independent
investigation, each of the Purchaser's borrowers and lessees, has
all permits, licenses, franchises, variances, exemptions, orders
and other governmental authorizations, consents and approvals
necessary to conduct its business as presently conducted and as
proposed by the Purchaser or such borrower or lessee to be
conducted, except for permits, licenses, franchises, variances,
exemptions, orders, authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not have a
material adverse effect on the business, operations, properties
(including the present maintenance, operation, occupancy or use
of any such property), assets, condition (financial or other),
results of operations or prospects of the Purchaser or such
borrower or lessee. The Purchaser and, to the best knowledge of
the Purchaser without any independent investigation, each of the
Purchaser's borrowers and lessees, (a) has duly and currently
filed all reports and other information required to be filed with
any federal, state or local governmental or regulatory authority
in connection with the Permits, (b) is not in violation of the
terms of any Permit, except for delays in filing reports or
violations which, alone or in the aggregate, would not have a
material adverse effect on the business, operations, properties
(including the present maintenance, operation, occupancy or use
of any such property), assets, condition (financial or other),
results of operations or prospects of the Purchaser or such
borrower or lessee and (c) is using and occupying each of the
Purchaser Properties in a manner that complies with all
applicable codes and zoning laws and regulations except where the
failure to so comply would not have, or would not be reasonably
expected to have, a material adverse effect on the business,
operations, properties (including the present maintenance,
operation, occupancy or use of any such property), assets,
condition (financial or other), results of operations or
prospects of the Purchaser or such borrower or lessee.
SECTION 5.11 Compliance with Agreements. Except as
disclosed on Schedule 5.11 hereto, neither the Purchaser nor, to
the best of the Purchaser's best knowledge without any
independent investigation, any other party is in breach or
violation of or in default in the performance or observance of
any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, could result in a
default under, (a) the Articles of Incorporation or Bylaws of the
Purchaser or (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which the Purchaser is a party or by which it
is bound or to which any of its properties are subject, which
breaches, violations and defaults, in the case of clause (b) of
this Section 5.11, would have, or be reasonably expected to have,
in the aggregate, a material adverse effect on the business,
operations, properties (including the present maintenance,
operation, occupancy or use of any such property), assets,
condition (financial or other), results of operations or
prospects of the Purchaser.
SECTION 5.12 Taxes.
(a) The Purchaser has (i) duly filed with the appropriate
governmental authorities all Tax Returns required to be filed by
it for all periods ending on or prior to the Effective Time, has
not filed for an extension to file any Tax Returns except with
respect to such Tax Returns as are listed on Schedule 5.12(a)
hereto and such Tax Returns are true, correct and complete in all
material respects and (ii) duly paid in full or made adequate
provision for the payment of all Taxes for all periods ending at
or prior to the Effective Time (whether or not shown on any Tax
Return). Except as set forth in Schedule 5.12(a) hereto, the Tax
Returns referred to in clause (i) hereinabove have been examined
by the IRS or the appropriate governmental authority or the
period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, all deficiencies
asserted or assessments made as a result of such examinations
have been paid in full and no issues that have been raised by the
relevant governmental authority in connection with the
examination of any of the Tax Returns referred to in clause (i)
hereinabove are currently pending. No claim has been made by any
authority in a jurisdiction where the Purchaser does not file a
Tax Return that the Purchaser is or may be subject to tax in such
jurisdiction. No waivers of statutes of limitation have been
given by or requested with respect to any Taxes of the Purchaser.
The Purchaser has not agreed to any extension of time with
respect to any Tax deficiency. The liabilities and reserves for
Taxes reflected in the Purchaser balance sheet as of December 31,
1993 contained in the Purchaser 10-K (the "1993 Purchaser Balance
Sheet") are adequate to cover all Taxes for all periods ending on
or prior to December 31, 1993, and to the best of the Purchaser's
knowledge without any independent investigation, there are no
liens for Taxes upon any property or asset of the Purchaser,
except for liens for Taxes not yet due. The Purchaser is not a
party to any agreement providing for the allocation or sharing of
Taxes with any entity except for certain Purchaser Leases (as
defined in Section 5.31 hereof) which provide that the lessee
thereunder shall pay all taxes assessed with respect to the
demised property. The Purchaser has not, with regard to any
assets or property held, acquired or to be acquired by it, filed
a consent to the application of Section 341(f) of the Code
regulations promulgated thereunder, as in effect from time to
time. Neither the Purchaser nor any of its officers (including
the employee responsible for Tax matters) expect any authority to
assess any additional Taxes for any period for which Tax Returns
have been filed. The Purchaser has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owning to any employee, independent contractor,
creditors, stockholder, or other third party. The Purchaser has
or will have, by the Effective Time, received cash sufficient to
satisfy the requirements of Section 857(a) of the Code for the
taxable years of the Purchaser up to the Effective Time.
(b) The Purchaser has not made any payments, is not
obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G
of the Code.
(c) Except as set forth on Schedule 5.12(c) hereto, the
Purchaser has not been a member of any affiliated or combined
group of companies that files a consolidated, affiliated, or
other combined group Tax Return and the Purchaser has no
liability for the Taxes of any person under Treasury Regulations
1.1502-6 (or any similar provision of non-federal law) as a
transferee or successor, by contract, or otherwise.
SECTION 5.13 Employee Benefit Plans; ERISA.
(a) Except as set forth in Schedule 5.13(a) hereto, at the
date hereof, the Purchaser does not maintain or contribute to,
and is not a party to, any material employee benefit plans,
programs, arrangements and practices (such plans, programs,
arrangements and practices of the Purchaser and its subsidiaries
being referred to as the "Purchaser Plans"), including employee
benefit plans within the meaning set forth in Section 3(3) of
ERISA, or any written employment contracts which contracts are
not immediately terminable without penalty or further liability,
or other similar material arrangements for the provision of
benefits (excluding any Multiemployer Plan or any Multiple
Employer Plan. Schedule 5.13(a) hereto lists all Multiemployer
Plans and Multiple Employer Plans which the Purchaser maintains
or to which it makes contributions. The Purchaser does not have
any obligation to create any additional such plan or to amend any
such plan so as to increase benefits thereunder, except as
required under the terms of the Purchaser Plans, under existing
collective bargaining agreements or to comply with applicable
law.
(b) Except as set forth in Schedule 5.13(b) hereto, (i)
there have been no prohibited transactions within the meaning of
Section 406 or 407 of ERISA or Section 4975 of the Code with
respect to any of the Purchaser Plans that could result in
penalties, taxes or liabilities which, singly or in the
aggregate, could have a material adverse effect on the business,
operations, properties, assets, condition (financial or other)
results of operations or prospects of the Purchaser, (ii) there
is no outstanding liability in excess of $10,000, whether
measured alone or in the aggregate, under Title IV of ERISA with
respect to any of the Purchaser Plans except for premiums due,
(iii) neither the Pension Benefit Guaranty Corporation nor any
plan administrator has instituted proceedings to terminate any of
the Purchaser Plans subject to Title IV of ERISA other than in a
"standard termination" described in Section 4041(b) of ERISA,
(iv) none of the Purchaser Plans has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last
day of the most recent fiscal year of each of the Purchaser Plans
ended prior to the date of this Agreement, (v) the current
present value of all projected benefit obligations under each of
the Purchaser Plans which is subject to Title IV of ERISA did
not, as of its latest valuation date, exceed the then current
value of the assets of such plan allocable to such benefit
liabilities (based upon reasonable actuarial assumptions
currently utilized for such Purchaser Plan), (vi) each of the
Purchaser Plans has been operated and administered in all
material respects in accordance with applicable laws during the
period of time covered by the applicable statute of limitations,
(vii) each of the Purchaser Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has
been determined by the IRS to be so qualified and such
determination has not been modified, revoked or limited by
failure to satisfy any condition thereof or by a subsequent
amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain
the "qualified" status of such Purchaser Plans, and the period
for making any such necessary retroactive amendments has not
expired, (viii) with respect to Multiemployer Plans, the
Purchaser has not, since March 31, 1992, made or suffered a
"complete withdrawal" or a "partial withdrawal," as such terms
are respectively defined in Sections 4203,4204 and 4205 of ERISA
and, to the best knowledge of the Purchaser, no event has
occurred or is expected to occur which presents a material risk
of a complete or partial withdrawal under said Sections 4203,4204
and 4205, (ix) to the best knowledge of the Purchaser, there are
no material pending, threatened or anticipated claims involving
any of the Purchaser Plans other than claims for benefits in the
ordinary course, and (x) the Purchaser has no current liability
in excess of $10,000, whether measured alone or in the aggregate,
for plan termination or withdrawal (complete or partial) under
Title IV of ERISA based on any plan to which any entity that
would be deemed one employer with the Purchaser under Section
4001 of ERISA or Section 414 of the Code contributed during the
period of time covered by the applicable statute of limitations
(the "Purchaser Controlled Group Plans"), and the Purchaser does
not reasonably anticipate that any such liability will be
asserted against the Purchaser, none of the Purchaser Controlled
Group Plans has an "accumulated funding deficiency" (as defined
in Section 302 of ERISA and 412 of the Code), and no Purchaser
Controlled Group Plan has an outstanding funding waiver which
could result in the imposition of liens, excise taxes or
liability against the Purchaser in excess of $10,000 whether
measured alone or in the aggregate.
SECTION 5.14 Certain Agreements.
(a) Except as set forth on Schedule 5.14(a) hereto, as of
the date hereof, the Purchaser is not a party to any oral or
written (i) consulting or similar agreement with any present or
former director, officer or employee or any entity controlled by
any such person not terminable on 30 days' or less notice for a
total cost not in excess of $5,000, (ii) agreement with any
executive officer or other key employee of the Purchaser the
benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction
involving the Purchaser of the nature contemplated by this
Agreement, (iii) agreement with respect to the employment of any
executive officer or other key employee of the Purchaser, or (iv)
agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of the transactions contemplated by this
Agreement.
(b) Except as disclosed on Schedule 5.14(b) hereto, the
Purchaser is not indebted for money borrowed, either directly or
indirectly, from any of its officers, directors, or any
Affiliate, in any amount whatsoever; nor are any of its officers,
directors, or Affiliates indebted for money borrowed from the
Purchaser; nor are there any transactions of a continuing nature
between the Purchaser and any of its officers, directors, or
Affiliates (other than by or through the regular employment
thereof by the Purchaser) not subject to cancellation which will
continue beyond the time the Merger becomes effective, including,
without limitation, use of the Purchaser's assets for personal
benefit with or without adequate compensation.
SECTION 5.15 Labor Controversies. Except as set forth on
Schedule 5.15 hereto, (a) the Purchaser is not a party to any
collective bargaining agreements, (b) there are no controversies
pending or, to the best knowledge of the Purchaser, threatened
between the Purchaser and any representatives of any of its
employees, (c) there are no material organizational efforts
presently being made involving any of the presently unorganized
employees of the Purchaser or its subsidiaries, (d) the Purchaser
has complied in all material respects with all laws relating to
the employment of labor, including, without limitation, any
provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes,
and (e) no person has asserted that the Purchaser is liable in
any material amount for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
SECTION 5.16 Books, Records and Accounts. The Purchaser's
books, records and accounts fairly and accurately reflect the
Purchaser's transactions and dispositions of assets, and the
Purchaser's system of internal accounting controls is sufficient
to assure that: (i) transactions are executed in accordance with
management's authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles, and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. Except as disclosed in
Schedule 5.16 hereto, the Purchaser has segregated all funds for
security and similar deposits received from its lessees and
borrowers.
SECTION 5.17 Opinion of Financial Advisor. The Purchaser
has received from a financial advisor satisfactory to the
Purchaser's Board of Directors, an opinion to the effect that, as
of the date hereof, the Exchange Ratio is fair, from a financial
point of view, to the Purchaser's stockholders. Such opinion has
not been withdrawn, revoked or modified.
SECTION 5.18 Purchaser Ownership of the Company Common
Stock. The Purchaser is and, to the best of its knowledge, its
"affiliates" and "associates" collectively are, and as of the
Effective Time will be the beneficial owner of less than 1% of
the outstanding shares of the Company Common Stock.
SECTION 5.19 Contracts, Etc.
(a) Schedule 5.19(a) consists of a true and complete list
of all contracts, agreements, commitments and other instruments
(whether oral or written, and including any and all amendments or
modifications thereto) to which the Purchaser is a party that:
(i) involve a receipt or an expenditure by the Purchaser require
the performance of services or delivery of goods to, by, through,
on behalf of or for the benefit of the Purchaser, which in each
case relates to a contract, agreement, commitment or instrument
that either (A) requires payments or receipts in excess of
$10,000 per year or (B) are not terminable by the Purchaser on
notice of 30 days or less without penalty or the Purchaser being
liable for damages; or (ii) involve an obligation for the
performance of services or delivery of goods by the Purchaser
that cannot, or in reasonable probability will not, be performed
within 45 days subsequent to the date of this Agreement
including, without limitation any of the following which meet the
aforementioned criteria:
(i) Any contracts, commitments or agreements, the
lack of consummation or performance of which would, either singly
or in the aggregate, have an adverse impact upon the Purchaser's
business, operations or financial condition, including, without
limitation, any contract or commitment which is outside of the
normal, ordinary and usual requirements of the Purchaser's
business or at a price or prices in excess of those otherwise
available at the time such contract or commitment was entered
into;
(ii) Any note receivable;
(iii) Any single contract or commitment, or sales
or purchase order, which involves future payments, performance of
services or delivery of goods and/or materials, to or by the
Purchaser with an amount or value in the aggregate in excess of
$10,000 per year (other than trade accounts payable incurred in
the ordinary course of business with an amount or value of less
than $10,000 per year);
(iv) Any contract or agreement with a creditor
not made in the ordinary course of business;
(v) Any contract, agreement, understanding or
arrangement restricting the Purchaser from carrying on its
business anywhere in the world;
(vi) Any instrument or arrangement evidencing or
related to indebtedness for money borrowed or to be borrowed,
whether directly or indirectly, by way of purchase money
obligation, guaranty, subordination, conditional sale, lease-
purchase or otherwise; and
(vii) Any contract, agreement, understanding or
arrangement between the Purchaser and any Affiliate of the
Purchaser.
(b) All of the contracts, agreements or instruments
described in Schedule 5.19(a) hereto are valid and binding upon
the Purchaser and the other parties thereto and are in full force
and effect and enforceable in accordance with their terms, and
neither the Purchaser nor, to the best of the Purchaser's
knowledge, any other party to any such contract, commitment or
arrangement has breached any provision of, or is in default
under, the terms thereof. Except for terms specifically
described in Schedule 5.19(a), neither the Purchaser nor any
Affiliate thereof has received any payment from any contracting
party in connection with or as an inducement for entering into
any contract, agreement or instrument except for payment for
actual services rendered or to be rendered by the Purchaser
consistent with amounts historically charged for such services.
SECTION 5.20 Intellectual Property. Schedule 5.20 hereto
sets forth a complete and correct list and summary description of
all trademarks, tradenames, service marks, service names, brand
names, copyrights and patents, registrations thereof and
applications therefor, applicable to or used in the business of
the Purchaser, together with a complete list of all licenses
granted by or to the Purchaser with respect to any of the above.
All such trademarks, tradenames, service marks, service names,
brand names, copyrights and patents are owned by the Purchaser,
free and clear of all liens, claims, security interests and
encumbrances of any nature whatsoever. Except as set forth on
Schedule 5.20 hereto, the Purchaser is not currently in receipt
of any notice of any violation or infringement of, and the
Purchaser is not violating or infringing, the rights of others in
any trademark, tradename, service mark, copyright, patent, trade
secret, know-how or other intangible asset.
SECTION 5.21 Disclosure. This Agreement and the Schedules
hereto disclose all facts material to the properties, assets,
business or operations of the Purchaser except for such facts
which, singly or in the aggregate, could not reasonably be
expected to materially and adversely affect the properties,
assets, business, operations, condition (financial or other),
results of operations or prospects of the Purchaser. No
statement contained herein or in any certificate, schedule, list,
exhibit or other instrument furnished by the Purchaser to the
Company pursuant to the provisions hereof contains or will
contain any untrue statement of any material fact or omits or
will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading. Matters
disclosed on each Schedule hereto shall be deemed disclosed only
for purposes of the matters to be disclosed on such Schedule and
shall not be deemed to be disclosed for any other purpose unless
expressly provided therein.
SECTION 5.22 Brokers and Finders. The Purchaser has not
employed any broker, finder or other intermediary in connection
with the transactions contemplated by this Agreement which would
be entitled to any brokerage, finder's or similar fee or
commission in connection with this Agreement or the transactions
contemplated hereby.
SECTION 5.23 REIT Qualification. At all times during its
existence, the Purchaser has been, and as of the Effective Time
the Purchaser will be, organized in conformity with the
requirements for qualification and, as of the date hereof for all
taxable periods has qualified, as a "real estate investment
trust" under the Code and the rules and regulations thereunder.
The Purchaser has at all times during its existence (i) met the
75%, 95% and 30% income tests set forth in Section 856 of the
Code, (ii) met the 75% and 25% asset tests set forth in Section
856 of the Code and (iii) distributed dividends to its
stockholders at least equal to the 95% requirements of Section
857 of the Code.
SECTION 5.24 Title to Properties. The Purchaser has good
and marketable title in fee simple to all real property owned by
it (individually, a "Purchaser Property" and collectively, the
"Purchaser Properties"), and good and marketable title to all
personal property owned by it which is material to its business,
in each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those disclosed on
Schedule 5.24 hereto and those which would not, either
individually or in the aggregate, have a material adverse effect
on any Purchaser Property (including the present maintenance,
operation, occupancy or use of any such Purchaser Property)
(collectively, the "Purchaser Permitted Encumbrances").
SECTION 5.25 Title Insurance.
(a) Except as set forth on Schedule 5.25 hereto, an owner's
policy of title insurance issued by a nationally recognized title
insurance company in a form and containing coverages customarily
approved and required by institutional investors has been
obtained for each Purchaser Property. Each owner's policy of
title insurance insures the fee simple ownership interest of the
Company in each Purchaser Property subject only to the Purchaser
Permitted Encumbrances and is in an amount at least equal to the
sum of (i) the cost of the acquisition of such Purchaser Property
and (ii) any subsequent cost of the construction and installation
of the improvements made by the Purchaser located on such
Purchaser Property (measured at the time of such construction).
(b) Except as set forth on Schedule 5.25 hereto, a
mortgagee's policy of title insurance issued by a nationally
recognized title insurance company in a form and containing
coverages customarily approved and required by institutional
investors and insuring title in the priority listed in Schedule
5.33 has been obtained for each Purchaser Mortgage Loan (as
hereinafter defined). Each mortgagee's policy of title insurance
insures the mortgage interest of the Purchaser in the real
property encumbered by the Purchaser Mortgage Loan and is in an
amount at least equal to the debt of the obligor secured by the
Purchaser Mortgage Loan.
SECTION 5.26 Environmental Matters. Except as disclosed on
Schedule 5.26 hereto, all of the properties of the Purchaser have
been the subject within the past 24 months of preliminary
environmental assessments in compliance with the American Society
for Testing and Materials standard for Phase I Environmental Site
Assessments, E-1528 (March 15, 1993), or other environmental
assessments, inspections or reviews more likely to reveal
environmental liabilities. Except as disclosed on Schedule 5.26
hereto, the Purchaser has no knowledge of (i) the unlawful
presence of any Hazardous Materials on any of the properties of
the Purchaser or (ii) any unlawful spills, releases, discharges
or disposal of Hazardous Materials that have occurred or are
presently occurring off any of the Purchaser Properties as a
result of any construction on or operation and use of any of the
Purchaser Properties.
SECTION 5.27 Over Financing. Except as set forth on
Schedule 5.27 hereto, the Purchaser has not distributed to its
stockholders the proceeds of any financing of the Purchaser's
properties.
SECTION 5.28 Defects. Except as set forth on Schedule 5.28
hereto, to the Purchaser's best knowledge without any independent
investigation there are no material defects in the improvements
located on a Purchaser Property including, without limitation,
any defect in the foundation, structural systems, roof or the
electrical, plumbing, heating, ventilating or air conditioning
systems included within the improvements located on such
Purchaser Property and there are no repairs or deferred
maintenance required to be made thereto.
SECTION 5.29 Condemnation. There is no pending or, to the
Purchaser's best knowledge without any independent investigation,
threatened public or private condemnation or similar proceeding
affecting a Purchaser Property or any part thereof which could
have material adverse effect upon the present maintenance,
operation, occupancy or use of such Purchaser Property.
SECTION 5.30 Taxes and Assessments on Properties. To the
Purchaser's best knowledge without any independent investigation,
there are no material unpaid real estate property taxes or
assessments due and payable against a Purchaser Property and the
Purchaser has not received any notice of assessment for public
improvements with respect to or relating to a Purchaser Property.
SECTION 5.31 Properties and Leases. Schedule 5.31 hereto
sets forth a complete and correct list of (i) all Purchaser
Properties and (ii) all leases of the Purchaser Properties or any
part thereof in effect on the date hereof (individually, a
"Purchaser Lease" and collectively, the "Purchaser Leases") and
sets forth a complete and correct description of the following:
(a) The land, building and approximate square footage of
the demised premises under each Purchaser Lease;
(b) the name of the tenant and any guarantor under each
Purchaser Lease;
(c) the date of each Purchaser Lease and any amendment or
modification thereof, the commencement or amendment start date of
each Purchaser Lease and the expiration date of the term of each
Purchaser Lease;
(d) the amount of annual or monthly base rent and
additional rent due under each Purchaser Lease and the amount, or
the basis of calculation thereof, of any scheduled increase or
other escalation in the annual and monthly base rent or
additional rent;
(e) any renewal, extension, expansion or cancellation right
of the tenant under each Purchaser Lease;
(f) any option or first refusal purchase right of the
tenant under each Purchaser Lease;
(g) any security deposit or outstanding rent concession or
abatement under each Purchaser Lease;
There are no leases, tenancies, licenses or other rights of
occupancy or use of the Purchaser Properties or any portion
thereof except for the Purchaser Leases and except as set forth
on Schedule 5.31 hereto. Each Purchaser Lease is valid and
enforceable, is in full force and effect, has not been amended,
modified or supplemented except as set forth on Schedule 5.31
hereto, and the tenant thereunder has accepted its demised
premises, is in actual possession in the normal course and has
commenced payment of rent and additional rent, if applicable,
therefor. Except as set forth on Schedule 5.31 hereto, each
Purchaser Lease provides that the tenant thereunder is required
to pay all operating expenses, repairs and maintenance, and taxes
and insurance in connection with the maintenance, ownership, use
and occupancy of the Purchaser Property demised thereunder. The
Purchaser is not in default in the payment or performance of any
obligation binding on the Purchaser under a Purchaser Lease and
the Purchaser has not given notice of default to a tenant under a
Purchaser Lease (which default has not previously been cured),
nor does any condition or event exist which with the giving of
notice or the passage of time, or both, would constitute a
default by the Purchaser or, to the best of the Purchaser's
knowledge without any independent investigation, by a tenant
under a Purchaser Lease. The Purchaser does not have any
knowledge of any claim, offset, right of recoupment or defense
available to a tenant under a Purchaser Lease. There have been
no material waivers by the Purchaser of any default under or
breach of a Purchaser Lease by a Tenant. Except for the
Purchaser Mortgages (as hereinafter defined), the Purchaser has
not assigned, pledged, hypothecated or otherwise encumbered any
of its right, title or interest in and to a Purchaser Lease or
any rents payable thereunder. No tenant has an option or first
refusal purchase right under a Purchaser Lease except as set
forth on Schedule 5.31 hereto.
SECTION 5.32 Mortgages. Schedule 5.32 hereto sets forth a
complete and correct list of all mortgages, deeds of trust, deeds
to secure debt and other similar security interests encumbering
the Purchaser Properties or any part thereof (individually, a
"Mortgage" and collectively, the "Purchaser Mortgages") and sets
forth a complete and correct description of the following:
(a) the Purchaser Property encumbered by each Purchaser
Mortgage;
(b) the name of the obligor, guarantor and the holder of
each Purchaser Mortgage;
(c) the priority of each Purchaser Mortgage and any
mortgage, deed of trust or other similar instrument that is
either prior to or subordinate to each Purchaser Mortgage;
(d) the date of each Purchaser Mortgage and any amendment
or modification thereof;
(e) the original principal amount of the debt secured by
each Purchaser Mortgage, the current rate of interest thereunder
and the current outstanding principal balance thereof;
(f) the maturity date of the debt secured by each Purchaser
Mortgage, the type of debt secured thereby and whether any
balloon payment is due at the maturity of the debt secured
thereby;
(g) the amount of the current monthly payment of interest,
principal or other amounts due under each Purchaser Mortgage and
the amount of any other mandatory principal or other payment due
thereunder prior to the maturity date of the debt secured
thereby;
(h) any amount that has not been disbursed or advanced to
the Purchaser by the holder of a Purchaser Mortgage that such
holder is obligated to disburse or advance;
(i) any prepayment premiums with respect to the prepayment
(full or partial) of the debt secured by each Purchaser Mortgage
and the current penalty payable in connection with any such
prepayment; and
(j) the amount of any escrow deposits or other deposits or
payments held under each Purchaser Mortgage by the holder of each
Purchaser Mortgage.
Except as set forth in Schedule 5.32, there are no mortgages,
deeds of trusts, deeds to secure debt or other similar
instruments encumbering the Purchaser Properties or any portion
thereof except for the Purchaser Mortgages. Each Purchaser
Mortgage is valid and enforceable, is in full force and effect,
and has not been amended, modified or supplemented except as set
forth in Schedule 5.32 hereto. All payments, installments and
charges due and payable under a Purchaser Mortgage have been paid
in full. The Purchaser has not received notice of default by the
Purchaser (which default has not previously been cured) from the
holder of a Purchaser Mortgage nor, to the best of the
Purchaser's knowledge, does any condition or event exist which
with the giving of notice or the passage of time, or both, would
constitute a default by the Purchaser under a Purchaser Mortgage.
The occurrence of any of the transactions contemplated by this
Agreement will not require the consent or approval of the holder
of a Purchaser Mortgage and will not violate, conflict with or
constitute a default by the Purchaser under a Purchaser Mortgage
or result in a condition or event which with the giving of notice
or the passage of time, or both, would constitute a default by
the Purchaser under a Purchaser Mortgage.
SECTION 5.33 Purchaser Mortgage Loans. Schedule 5.33
hereto sets forth a complete and correct list of all loans made
by the Purchaser to others secured by a mortgage, deed of trust,
deed to secure debt or other similar instrument encumbering real
property and personalty related to such real property
(individually, a "Purchaser Mortgage Loan" and collectively, the
"Purchaser Mortgage Loans") and sets forth a complete and
accurate description of the following:
(a) the real property encumbered by each Purchaser Mortgage
Loan;
(b) the name of the obligor, guarantor and the holder of
each Purchaser Mortgage Loan;
(c) the priority of each Purchaser Mortgage Loan and any
mortgage, deed of trust, deed to secure debt or other similar
instrument that is either prior to or subordinate to each
Purchaser Mortgage Loan;
(d) the date of each Purchaser Mortgage Loan and any
amendment or modification thereof;
(e) the original principal amount of the debt secured by
each Purchaser Mortgage Loan, the current rate of interest
thereunder and the current outstanding principal thereof;
(f) the maturity date of the debt secured by each Purchaser
Mortgage Loan, the type of debt secured thereby and whether any
balloon payment is due at the maturity of the debt secured
thereby;
(g) the amount of the current monthly payment of interest,
principal or other amounts due under each Purchaser Mortgage Loan
and the amount of any other mandatory principal or other payment
due thereunder prior to the maturity date of the debt secured
thereby;
(h) any amount that has not been disbursed or advanced to
the obligor under each Purchaser Mortgage Loan by the Purchaser
that the Purchaser is obligated to disburse or advance;
(i) any prepayment premiums with respect to the prepayment
(full or partial) of the debt secured by each Purchaser Mortgage
Loan and the current penalty payable in connection with any such
prepayment; and
(j) the amount of any escrow deposits or other deposits or
payments held under each Purchaser Mortgage Loan by the
Purchaser.
There are no loans made by the Purchaser to others secured by a
mortgage, deeds of trust, deed to secure debt or other similar
instruments encumbering real property and personally related to
such real property except for the Purchaser Mortgage Loans. Each
Purchaser Mortgage Loan is valid and enforceable, is in full
force and effect and has not been amended, modified or
supplemented except as set forth in Schedule 5.33 hereto. All
payments, installments and charges due and payable under each
Purchaser Mortgage Loan have been paid in full. The Purchaser is
not in default in the payment or performance of any obligation
under a Purchaser Mortgage Loan and has not given notice of
default by an obligor (which default has not previously been
cured) to an obligor under a Purchaser Mortgage Loan nor does any
condition or event exist which with the giving of notice or the
passage of time, or both, would constitute a default by an
obligor under a Purchaser Mortgage Loan. No obligor under a
Purchaser Mortgage Loan has a valid defense to the payment in
full of the Purchaser Mortgage Loan nor is such Purchaser
Mortgage Loan subject to any valid right of rescission, set-off,
abatement, diminution, counterclaim or defense. There have been
no waivers by the Purchaser of any default under or breach of a
Purchaser Mortgage Loan by an obligor under a Purchaser Mortgage
Loan. The occurrence of any of the transactions contemplated by
this Agreement does not require the consent or approval of the
obligor under a Purchaser Mortgage Loan and will not violate,
conflict with or constitute a default by the Purchaser under a
Purchaser Mortgage Loan or result in a condition or event which
with the giving of notice or the passage of time, or both, would
constitute a default by the Purchaser under a Purchaser Mortgage
Loan.
SECTION 5.34 Investment Company Act. The Purchaser is not,
and as of the Effective Time will not be, an "investment company"
or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 5.35 NYSE Listing. The Purchaser Common Stock is,
and as of the Effective Time will be, listed on the NYSE.
ARTICLE VI
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 6.1 Conduct of Business by the Company Pending the
Merger. After the date hereof and prior to the Closing Date or
earlier termination of this Agreement, unless the Purchaser shall
otherwise agree in writing or as may be otherwise specifically
contemplated by this Agreement, the Company shall:
(a) conduct its business in the ordinary and usual course
of business and consistent with past practice;
(b) not (i) amend or propose to amend its Articles of
Incorporation or Bylaws, or (ii) split, combine or reclassify its
outstanding capital stock or declare, set aside or pay any
dividend or distribution payable in cash, stock, property or
otherwise; provided, however, that the Company may declare and
pay a regular quarterly dividend for the second quarter of 1994
on Company Common Stock in an amount not to exceed $0.245 per
share of Company Common Stock, and, in the event the Effective
Time shall not have occurred on or prior to November 1, 1994, the
Company may thereafter declare and pay a regular quarterly
dividend for the third quarter of 1994 on Company Common Stock in
an amount not to exceed $0.245 per share of Company Common Stock;
(c) not issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, any additional shares of, or
any options, warrants or rights of any kind to acquire any shares
of the Company's capital stock of any class or any debt or equity
securities convertible into or exchangeable for such capital
stock or amend or modify the terms and conditions of any of the
foregoing, except that in the ordinary course of its business and
consistent with its past practices, the Company may issue shares
upon exercise of outstanding options or warrants to purchase
Company Common Stock and in connection with the exercise of the
rights to acquire Company Common Stock as are listed on Schedule
3.1(a)(iii), in all events in accordance with the terms thereof;
(d) not (i) incur or become contingently liable with
respect to any indebtedness for borrowed money, (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares of
its capital stock, other than as required by the governing terms
of such securities, (iii) take any action which would jeopardize
the Company's status as a real estate investment trust, (iv) make
any acquisition of any assets or businesses except for the
consummation of the matters set forth on Schedule 4.20(a) hereto,
(v) sell any assets or businesses, or (vi) enter into any
contract, agreement,
commitment or arrangement with respect to any of the foregoing,
except as contemplated by Schedule 4.20(a)) hereto;
(e) use reasonable efforts to preserve intact its business
organization and goodwill, keep available the services of its
present officers and key employees, and preserve the goodwill and
business relationships with all lessees, operators, suppliers,
distributors, customers, and others having business relationships
with the Company and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(f) confer with one or more representatives of the
Purchaser when requested, to report on material operational
matters and the general status of ongoing operations of the
Company's business;
(g) not enter into or amend any employment, severance,
special pay arrangement with respect to termination of employment
or other similar arrangements or agreements with any directors,
officers, employees or other representatives, or agree to do so
except that the Company shall amend all existing employment,
severance and similar agreements or arrangements to provide that
the Company will not be obligated to reimburse any employees for
any excise or other taxes that may become payable by any such
employees as a result of any payments made pursuant to such
agreement or arrangement;
(h) not, other than in accordance with established
compensation adjustment policies and as contemplated by this
Agreement, increase the rate of remuneration payable to any of
its directors, officers, employees or other representatives, or
agree to do so;
(i) not adopt, enter into or amend any bonus, profit
sharing, compensation, stock option, pension, retirement,
deferred compensation, health care, employment or other employee
benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any employee or retiree, except as required
to comply with changes in applicable law or as contemplated by
this Agreement;
(j) file, if the Merger is not previously consummated, its
Quarterly Report on Form 10-Q for the quarter ending June 30,
1994 on or before the date prescribed therefor pursuant to the
Exchange Act and such report shall comply with all of the
requirements of the Exchange Act; and
(k) maintain, in full force and effect, with all premiums
due thereon paid, policies of insurance covering all of the
insurable tangible assets and businesses of the Company and the
Company Subsidiaries in amounts and as to foreseeable risks
usually insured against by persons operating similar businesses
under valid and enforceable policies of insurance issued by
insurers of recognized responsibility.
SECTION 6.2 Conduct of Business by the Purchaser Pending
the Merger. After the date hereof and prior to the Closing Date
or earlier termination of this Agreement, unless the Company
shall otherwise agree in writing or as may be otherwise
specifically contemplated by this Agreement, the Purchaser shall:
(a) conduct its business in the ordinary and usual course
of business and consistent with past practice;
(b) not (i) amend or propose to amend its Articles of
Incorporation or Bylaws, or (ii) split, combine or reclassify its
outstanding capital stock or declare, set aside or pay any
dividend or distribution payable in cash, stock, property or
otherwise other than regular quarterly dividends on Purchaser
Common Stock in an amount not to exceed $0.54 per share of
Purchaser Common Stock;
(c) not take any action which would jeopardize the
Purchaser's status as a real estate investment trust;
(d) use reasonable efforts to preserve intact its business
organization and goodwill, keep available the services of its
present officers and key employees, and preserve the goodwill and
business relationships with all lessees, operators, suppliers,
distributors, customers, and others having business relationships
with the Purchaser and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(e) confer with one or more representatives of the Company
when requested to report on material operational matters and the
general status of ongoing operations of the Purchaser's business;
(f) file its Quarterly Report on Form 10-Q for the quarter
ending June 30, 1994 on or before the date prescribed therefor
pursuant to the Exchange Act and such report shall comply with
all of the requirements of the Exchange Act; and
(g) maintain, in full force and effect, with all premiums
due thereon paid, policies of insurance covering all of the
insurable tangible assets and businesses of the Purchaser in
amounts and as to foreseeable risks usually insured against by
persons operating similar businesses under valid and enforceable
policies of insurance issued by insurers of recognized
responsibility.
SECTION 6.3 Acquisition Transactions. After the date
hereof and prior to the Effective Time or earlier termination of
this Agreement, unless the Purchaser shall otherwise agree in
writing, the Company shall not initiate, solicit, negotiate,
encourage, or provide confidential information to facilitate, and
the Company shall cause any officer, director or employee of, or
any attorney, accountant, investment banker or other agent
retained by the Company not to initiate, solicit, negotiate,
encourage, or provide confidential information to facilitate, any
proposal or offer to acquire all or any substantial part of the
business and properties of the Company, or capital stock of the
Company, whether by merger, purchase of assets, tender offer or
otherwise, whether for cash, securities or any other
consideration or combination thereof (such transactions being
referred to herein as "Acquisition Transactions"); provided,
however, that the Company may furnish (on terms, including
confidentiality terms, substantially similar to those set forth
in the Confidentiality Agreement dated May 26, 1994 by and among
the Purchaser, the Company and the other entities named therein
as parties, hereinafter the "Confidentiality Agreement")
information concerning its business, properties or assets to a
corporation, partnership, person or other entity or group (a
"Potential Acquiror") if (i) the Company's Board of Directors is
advised by its financial advisor that such Potential Acquiror can
reasonably be expected to possess the financial wherewithal to
consummate an Acquisition Transaction that would yield a higher
value to the Company's stockholders than will the Merger, (ii)
the Company's Board of Directors determines that such Potential
Acquiror is likely to submit a bona fide offer to consummate an
Acquisition Transaction on terms that would yield such a higher
value to the Company's stockholders if provided with confidential
information about the Company, and (iii) based upon the written
opinion of special counsel to the Board of Directors of the
Company to such effect addressed and delivered to the Board of
Directors of the Company (a copy of which shall have been
furnished by the Company to the Purchaser), the Company's Board
of Directors determines that the failure to provide such
confidential information would be inconsistent with the proper
discharge by the Company's Board of Directors of its fiduciary
duty to stockholders of the Company. Following receipt of a bona
fide offer from a Potential Acquiror proposing an Acquisition
Transaction, which offer the Board of Directors of the Company
determines would likely yield a higher value to the Company's
stockholders than will the Merger, the Company may, with respect
to such Potential Acquiror, negotiate and take any of the actions
otherwise prohibited by this Section 6.3 if, in the written
opinion of special counsel to the Board of Directors of the
Company addressed and delivered to the Board of Directors of the
Company (a copy of which shall have been furnished by the Company
to the Purchaser), the failure to negotiate with such Potential
Acquiror would be inconsistent with the proper discharge by the
Company's Board of Directors of its fiduciary duty to the
stockholders of the Company. In the event the Company shall
determine to provide any information as described above, or shall
receive any offer relating to an Acquisition Transaction, it
shall promptly notify the Purchaser (a "Notice of Proposal") as
to the fact that information is to be provided or that an offer
relating to an Acquisition Transaction has been received and
shall furnish to the Purchaser the identity of the recipient of
such information or the proponent of such Acquisition Transaction
if applicable, and, if an offer or proposal regarding an
Acquisition Transaction has been received, a description of the
material terms thereof, and the Purchaser may elect to terminate
this Agreement in accordance with Article IX hereof. The Company
may enter into a definitive agreement for an Acquisition
Transaction meeting the requirements of clause (i) above with a
Potential Acquiror with which it is permitted to negotiate
pursuant to this Section 6.3, provided that at least five
business days prior to the Company's execution thereof the
Company shall have notified the Purchaser in writing indicating
the Company's intent to enter into such agreement and describing
all of the material terms of such agreement. Concurrently with
the execution of such a definitive agreement, the Purchaser or
the Company may terminate this Agreement in accordance with
Article IX hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information. The Company shall
afford to the Purchaser and its accountants, counsel, financial
advisors and other representatives (the "Purchaser
Representatives") and the Purchaser shall afford to the Company
and its accountants, counsel, financial advisors and other
representatives (the "Company Representatives") full access
during normal business hours throughout the period prior to the
Effective Time to all of properties, books, contracts,
commitments and records (including, but not limited to, Tax
Returns) of the Company and the Purchaser, as appropriate, and,
during such period, each shall furnish promptly to the other (i)
a copy of each report, schedule and other document filed or
received pursuant to the requirements of federal or state
securities laws or filed with the SEC in connection with the
transactions contemplated by this Agreement or which may have a
material effect on the Company's or the Purchaser's business,
Properties or personnel, as appropriate, and (ii) such other
information concerning their respective businesses, Properties
and personnel as shall be reasonably requested; provided that no
investigation pursuant to this Section 7.1 shall affect any
representation or warranty made herein or the conditions to the
obligations of the respective parties hereto to consummate the
Merger. All non-public documents and information furnished to
the Purchaser or to the Company, as the case may be, in
connection with the transactions contemplated by this Agreement
shall be deemed to have been received pursuant to and shall be
subject to the provisions of the Confidentiality Agreement except
that the Purchaser and the Company may disclose such information
as may be necessary in connection with seeking the Purchaser
Required Statutory Approvals, the Company Required Statutory
Approvals, the Purchaser Stockholders' Approval and the Company
Stockholders' Approval. The Company shall promptly advise the
Purchaser and the Purchaser shall promptly advise the Company in
writing of any change or the occurrence of any event after the
date of this Agreement having, or which, insofar as can
reasonably be foreseen, in the future may have, any material
adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or
prospects of the Company and the Company Subsidiaries taken as a
whole or the Purchaser and the Purchaser Subsidiaries taken as a
whole, as the case may be.
SECTION 7.2 Registration Statement and Proxy Statement.
The Purchaser and the Company shall file with the SEC as soon as
is reasonably practicable after the date hereof the Proxy
Statement/Prospectus and shall use all reasonable efforts to have
the Registration Statement declared effective by the SEC as
promptly as practicable. The Purchaser shall also take any
action required to be taken under applicable state blue sky or
securities laws in connection with the issuance of Purchaser
Common Stock. The Purchaser and the Company shall promptly
furnish to each other all information, and take such other
actions, as may reasonably be requested in connection with any
action by any of them in connection with the preceding sentence
and shall cooperate with one another and use their respective
best efforts to facilitate the expeditious consummation of the
transactions contemplated by the Agreement.
SECTION 7.3 Stockholders' Approval. The Purchaser and the
Company shall each promptly take such action as may be required
by their respective Articles of Incorporation and applicable law
to obtain the requisite stockholder approval of this Agreement
and the transactions contemplated hereby (the "Purchaser
Stockholders' Approval" and "Company Stockholders' Approval," as
appropriate), and shall use their respective best efforts to
obtain stockholder approval and adoption of this Agreement and
the transactions contemplated hereby as soon as practicable
following the date upon which the Registration Statement is
declared effective by the SEC. Subject to the fiduciary duties
of the Board of Directors of the Purchaser and the Company under
applicable law, the Purchaser and the Company shall, through
their respective Boards of Directors, recommend to their
respective stockholders the approval of this Agreement and of the
transactions contemplated by this Agreement.
SECTION 7.4 Compliance with the Securities Act. The
Company shall use its best efforts to cause each principal
executive officer, each director and each other person who is an
"affiliate", as that term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act, of the Company to deliver to
the Purchaser on or prior to the Effective Time a written
agreement (an "Affiliate Agreement") to the effect that such
person will not offer to sell, sell or otherwise dispose of any
shares of Purchaser Common Stock issued in the Merger, except, in
each case, pursuant to an effective registration statement or in
compliance with Rule 145, as amended from time to time, or in a
transaction which, in the opinion of legal counsel satisfactory
to the Purchaser, is exempt from the registration requirements of
the Securities Act.
SECTION 7.5 NYSE. The Purchaser shall use its best efforts
to effect, at or before the Effective Time, authorization for
listing on the NYSE upon official notice of issuance, of the
shares of Purchaser Common Stock to be issued pursuant to the
Merger.
SECTION 7.6 Expenses. 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 those expenses incurred in connection with printing and
distributing the Proxy Statement/Prospectus shall be shared
equally by the Purchaser and the Company.
SECTION 7.7 Agreement to Cooperate. Subject to the terms
and conditions herein provided, each of the parties hereto shall
cooperate and use their respective best efforts to take, or cause
to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its best efforts
to identify and obtain all necessary or appropriate waivers,
consents and approvals to effect all necessary registrations,
filings and submissions (including, but not limited to, the
Company Required Statutory Approvals, the Purchaser Required
Statutory Approvals, any filings under federal and state
securities laws and, if necessary, the HSR Act and any
submissions requested by the Federal Trade Commission or
Department of Justice in connection therewith) and to lift any
injunction or other legal bar to the Merger (and, in such case,
to proceed with the Merger as expeditiously as possible),
subject, however, to obtaining the necessary approvals by the
stockholders of each of the Purchaser and the Company of this
Agreement and the transactions contemplated hereby subject at all
times to the fiduciary duties of the Boards of Directors of each
of the Company and the Purchaser.
SECTION 7.8 Public Statements. The parties shall consult
with each other prior to issuing any press release or any written
public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such
press release or written public statement prior to review and
approval by the other party, except that prior review and
approval shall not be required if, in the reasonable judgment of
the party seeking to issue such release or public statement,
prior review and approval would prevent the timely dissemination
of such release or announcement in violation of any applicable
law, rule, regulation or policy of the NYSE.
SECTION 7.9 Corrections to the Proxy Statement/Prospectus
and Registration Statement. Prior to the date of approval of
this Agreement and the transactions contemplated hereby by the
stockholders of each of the Purchaser and the Company, each of
the Purchaser and the Company shall correct promptly any
information provided by it to be used specifically in the Proxy
Statement/Prospectus and Registration Statement or relating to it
and incorporated by reference into the Proxy Statement/Prospectus
and Registration Statement that shall have become false or
misleading in any material respect and shall take all steps
necessary to file with the SEC and have declared effective or
cleared by the SEC any amendment or supplement to the Proxy
Statement/Prospectus or the Registration Statement so as to
correct the same and to cause the Proxy Statement/Prospectus as
so corrected to be disseminated to the stockholders of the
Company, in each case to the extent required by applicable law.
SECTION 7.10 Amendment of Company Leases. The Company
will, without any cost to the Purchaser, amend any and all leases
pertaining to the Company's use of office space and office
equipment to provide that from and after the Effective Time, (i)
the expressed term of all such leases shall be month-to-month,
(ii) the Purchaser shall be permitted to use such space and
equipment (assuming compliance by the Purchaser with the terms of
such leases) and (iii) all such leases may be terminated by
either party thereto at any time without penalty upon the giving
of 60 days prior written notice of intent to terminate.
SECTION 7.11 Continued Qualification as a Real Estate
Investment Trust. From and after the date hereof through the
Effective Time, the Company and the Purchaser will maintain their
respective qualifications as "real estate investment trusts"
under the Code and the rules and regulations thereunder. The
Company will make dividend distributions during the Company's
final taxable period sufficient to satisfy the requirement of
Section 857 of the Code.
SECTION 7.12 Consulting and Noncompetition Agreements.
(a) Prior to the Effective Time, the Purchaser shall
enter into Consulting and Noncompetition Agreements, directly or
indirectly, with W. G. Benton, G. L. Clark, Jr. and S. L.
Christiansen (the "Consultants") pursuant to which the
Consultants shall agree, for a period of five years, to provide
certain consulting services to Purchaser and to refrain from
engaging in activities that compete with the business of the
Purchaser in (i) owning and leasing and (ii) providing mortgage
financing secured by income producing health care facilities,
with a principal focus on long-term care facilities, all as
presently conducted and as contemplated to be conducted
immediately following the Effective Time; provided, however, that
the provisions of such agreements will not preclude the
Consultants from owning, operating, managing, financing or
otherwise investing in assisted living facilities.
(b) At the Effective Time, the Purchaser shall advance
to each Consultant the aggregate amount payable pursuant to such
Consultant's Consulting and Noncompetition Agreement over the
term thereof; provided that such Consultant shall execute a note,
in a form satisfactory to the Purchaser, providing that (i) the
principal of (and any interest accrued thereon) shall be forgiven
in equal annual increments over the term of such Consulting and
Noncompetition Agreement and (ii) upon any breach by a Consultant
of his or her Consulting and Noncompetition Agreement, the then
remaining outstanding principal balance of such note (and any
interest accrued thereon) shall be accelerated and become
immediately due and payable.
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect
the Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) The Company shall have obtained the necessary approval
by the Company's stockholders of this Agreement and the
transactions contemplated hereby;
(b) The Purchaser shall have obtained the necessary
approval by the Purchaser's stockholders of this Agreement and
the transactions contemplated hereby;
(c) The waiting period applicable to the consummation of
the Merger under the HSR Act, if applicable, shall have expired
or been terminated;
(d) The Registration Statement shall have become effective
in accordance with the provisions of the Securities Act, and no
stop order suspending such effectiveness shall have been issued
and remain in effect;
(e) No preliminary or permanent injunction or other order
or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in
effect (each party agreeing to use its best efforts to have any
such injunction, order or decree lifted);
(f) All governmental consents, orders and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby; including, without limitation the Company
Required Statutory Approvals and the Purchaser Required Statutory
Approvals shall have been obtained and be in effect at the
Effective Time, and all consents, orders and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have become final orders; and
(g) The Company and the Purchaser shall each have received
an opinion from their respective counsel to the effect that the
Merger will qualify as a reorganization under Section 368 of the
Code and that no income or gain will be recognized by the Company
or the Purchaser as a result of the Merger.
SECTION 8.2 Conditions to Obligation of the Company to
Effect the Merger. Unless waived by the Company, the obligation
of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Purchaser shall have performed in all material
respects its agreements contained in this Agreement required to
be
performed on or prior to the Closing Date and the representations
and warranties of the Purchaser contained in this Agreement shall
be true and correct in all material respects on and as of (i) the
date made and (ii) the Closing Date (except in the case of
representations and warranties expressly made solely with
reference to a particular date which shall be true and correct as
of the date specified); and the Company shall have received a
certificate of an officer of the Purchaser to that effect;
(b) The Company shall have received an opinion from (i)
Argue Pearson Harbison & Myers, general counsel to the Purchaser,
dated the Closing Date, substantially in the form set forth in
Exhibit III hereto and (ii) Jones, Day, Reavis & Pogue, special
counsel to the Purchaser, dated the Closing Date, substantially
in the form set forth in Exhibit IV hereto;
(c) The Company shall have received "comfort" letters in
customary form from Ernst & Young, certified public accountants
for the Purchaser, dated the date of the Proxy
Statement/Prospectus, the effective date of the Registration
Statement and the Closing Date (or such other date reasonably
acceptable to the Company) with respect to certain financial
statements and other financial information included in the
Registration Statement;
(d) The Registration Statement to be filed by the Purchaser
subsequent to the date hereof with the SEC covering the offering
and issuance to the stockholders of the Company of the shares of
Purchaser Common Stock into which all of the issued and
outstanding shares of Company Common Stock are to be converted as
provided in the Agreement, shall have become effective under the
Securities Act and the Purchaser Common Stock to be issued in
connection with the Merger shall have been authorized for listing
on the NYSE upon official notice of issuance;
(e) The Company shall have tendered the payments
contemplated by Section 3.1(a)(iii) to each holder of Options
outstanding immediately prior to the Effective Time;
(f) The Company and/or the Purchaser shall have tendered
the severance and related payments described on Schedule 4.14(a),
less any applicable withholding taxes;
(g) The Purchaser shall have advanced the funds
contemplated by Section 7.12 to each Consultant who has executed
a note as contemplated by Section 7.12; and
(h) No governmental consent, order or approval legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have any terms which in the reasonable
judgment of the Company, when taken together with the terms of
all such consents, orders or approvals, would materially impair
the value of the Purchaser Common Stock to be received by
stockholders of the Company as a result of the Merger, and no
governmental authority shall have promulgated any statement, rule
or regulation which, when taken together with all such
promulgations, would materially impair the value of the Purchaser
Common Stock to be received by stockholders of the Company as a
result of the Merger.
SECTION 8.3 Conditions to Obligation of the Purchaser to
Effect the Merger. Unless waived by the Purchaser, the
obligation of the Purchaser to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the
additional following conditions:
(a) The Company shall have performed in all material
respects its agreements contained in this Agreement required to
be performed on or prior to the Closing Date and the
representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on
and as of (i) the date made and (ii) the Closing Date (except in
the case of representations and warranties expressly made solely
with reference to a particular date which shall be true and
correct as of the date specified); and the Purchaser shall have
received a Certificate of the President and Chief Executive
Officer of the Company to that effect;
(b) The Purchaser shall have received opinions from Stroock
& Stroock & Lavan, counsel to the Company dated the Closing Date,
substantially in the form set forth in Exhibit V and Exhibit VI
hereto;
(c) The Purchaser shall have received "comfort" letters in
customary form from Coopers & Lybrand, certified public
accountants for the Company, dated the date of the Proxy
Statement/Prospectus, the effective date of the Registration
Statement and the Closing Date (or such other date reasonably
acceptable to the Purchaser) with respect to certain financial
statements and other financial information included in the
Registration Statement;
(d) The Affiliate Agreements required to be delivered to
the Purchaser pursuant to Section 7.4 hereof shall have been
furnished as required by Section 7.4;
(e) No governmental consent, order or approval legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have any terms which in the reasonable
judgment of the Purchaser, when taken together with the terms of
all such consents, orders or approvals, would materially impair
the value of the Company to the Purchaser, and no governmental
authority shall have promulgated any statute, rule or regulation
which, when taken together with all such promulgations, would
materially impair the value of the Company to the Purchaser;
(f) The holders of 10% or less of the outstanding Company
Common Stock shall have qualified as Dissenting Stockholders;
(g) The performance of this Agreement will not jeopardize
the status of the Purchaser or the Company as a "real estate
investment trust" under the Codes and the rules and regulations
thereunder; and
(h) Each Consultant shall have executed a Consulting and
Noncompetition Agreement in form and substance satisfactory to
Purchaser.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated
at any time prior to the Closing Date, whether before or after
approval by the stockholders of the Purchaser and the Company:
(a) by mutual consent of each of the Purchaser and the
Company;
(b) by either the Purchaser or the Company, so long as such
party has not breached any of its obligations hereunder (except
for such breaches as are clearly immaterial), if the Merger shall
not have been consummated on or before December 31, 1994 (the
"Termination Date");
(c) unilaterally by the Purchaser or the Company (i) if the
other (A) fails to perform any covenant or agreement in this
Agreement in any material respect, and does not cure the failure,
in all material respects within 15 business days after the
terminating party delivers written notice of the alleged failure
or (B) fails to fulfill or complete a condition to the
obligations of that party (which condition is not waived) by
reason of a breach by that party of its obligations hereunder,
(ii) if any condition to the obligations of that party is not
satisfied (other than by reason of a breach by that party of its
obligations hereunder), and it reasonably appears that the
condition cannot be satisfied prior to the Termination Date or
(iii) if the parties are unable to reach mutual agreement as to
the Exchange Ratio that may be required to be negotiated pursuant
to the proviso contained in Section 3.1(a)(i);
(d) unilaterally by the Purchaser if (i) the Company,
through its Board of Directors in the exercise of its fiduciary
duties to its stockholders, either fails to recommend to the
Company's stockholders the approval of this Agreement and the
transactions contemplated hereby or withdraws such recommendation
or (ii) the holders of more than 10% of the outstanding Company
Common Stock shall have qualified as Dissenting Stockholders;
(e) unilaterally by the Purchaser at any time following the
issuance of a Notice of Proposal or upon the occurrence of any
event that requires the Company to issue a Notice of Proposal to
the Purchaser;
(f) unilaterally by either the Purchaser or the Company
upon execution of a definitive agreement between the Company and
a Potential Acquiror as set forth in Section 6.3; and
(g) unilaterally by either the Purchaser or the Company
upon execution of a definitive agreement between the Purchaser
and any corporation, partnership, person or other entity or group
(a "Purchaser Acquiror") pursuant to which the Purchaser Acquiror
shall acquire all or substantially all of the business and
properties of the Purchaser, or capital stock of the Purchaser,
whether by merger, purchase of assets, tender offer or otherwise,
whether for cash, securities or any other consideration or
combination thereof (any of the foregoing hereinafter referred to
as "Purchaser Acquisition Transaction").
SECTION 9.2 Effect of Termination. In the event of
termination of this Agreement by either the Purchaser or the
Company, as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no further obligation on
the part of either the Purchaser, the Company or their respective
officers or directors (except as set forth in this Section 9.2
and in Sections 7.6, and 9.5 which shall survive such
termination). Nothing in this Section 9.2 shall relieve any
party from liability for any breach of this Agreement.
SECTION 9.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of
the parties hereto and in compliance with applicable law.
SECTION 9.4 Waiver. At any time prior to the Effective
Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any
agreement on the part of party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
SECTION 9.5 Expense Reimbursement; Liquidated Damages.
(a) In the event (i) the Purchaser terminates this
Agreement pursuant to Section 9.1(c)(i), (d)(i) or (f) hereof,
(ii) the Company terminates this Agreement pursuant to Section
9.1(f) hereof, (iii) prior to the termination of this Agreement
any person, corporation, partnership or other entity or "group"
(as defined in Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder), other than the Purchaser
or any of its Affiliates or a group of which any of the Purchaser
or any of its Affiliates is a member, becomes the "beneficial
owner" (as defined in Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) of more than twenty
percent of the then outstanding shares of Company Common Stock,
or (iv) the Company's stockholders shall not have approved the
Merger by December 31, 1994, or holders of less than the
requisite number of shares of Company Common Stock vote in favor
of the approval of the Merger, then the Company shall promptly
pay the Purchaser a termination fee in the amount of $3,750,000.
(b) In the event (i) the Company terminates this Agreement
pursuant to Sections 9.1(c)(i) or (g), (ii) the Purchaser
terminates this Agreement pursuant to Section 9.1(g) hereof,
(iii) prior to the termination of this Agreement any person,
corporation, partnership or other entity or "group," other than
the Company or any of its Affiliates or a group of which any of
the Company or any of its Affiliates is a member, becomes the
beneficial owner of more than twenty percent of the then
outstanding shares of Purchaser Common Stock, or (iv) the
Purchaser's stockholders shall not have approved the Merger by
December 31, 1994, or holders of less than the requisite number
of shares of Purchaser Common Stock vote in favor of the approval
of the Merger, then the Purchaser shall promptly pay the Company
a termination fee in the amount of $3,750,000; provided, however,
that upon a termination by the Company or the Purchaser pursuant
to Section 9.1(g) hereof, such termination fee will only be
payable by the Purchaser if the terms of the Purchaser
Acquisition Transaction expressly provide that the completion of
such transaction is conditioned upon the prior termination of
this Agreement.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations and
Warranties. All representations and warranties in this Agreement
shall not survive the Merger.
SECTION 10.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, sent via a recognized overnight courier
with delivery confirmed in writing or sent via facsimile to the
parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) If to the Purchaser to:
Omega Healthcare Investors, Inc.
905 W. Eisenhower Circle, Suite 110
Ann Arbor, Michigan 48103
Attention: Essel W. Bailey, Jr.
Fax: (313) 996-0020
with copies to:
Jones, Day, Reavis & Pogue
One Peachtree Center
Suite 3500
303 Peachtree Street
Atlanta, Georgia 30308-3242
Attention: Richard H. Miller, Esq.
Fax: (404) 581-8689
and:
Argue Pearson Harbison & Myers
801 South Flower Street
Suite 500
Los Angeles, California 90017
Attention: Don M. Pearson, Esq.
Fax: (213) 622-7575
(b) If to the Company, to:
Health Equity Properties Incorporated
915 West Fourth Street
Winston-Salem, North Carolina 27102
Attention: William G. Benton
Fax: (910) 724-6765
with a copy to:
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2696
Attention: James R. Tanenbaum, Esq.
Fax: (212) 806-6006
SECTION 10.3 Interpretation. The headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
SECTION 10.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) and the
Confidentiality Agreement (which shall survive the termination of
this Agreement) (i) constitute the entire agreement and supersede
all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the
subject matter hereof and thereof; (ii) shall not be assigned by
operation of law or otherwise; and (iii) shall be governed in all
respects, including validity, interpretation and effect, by the
laws of the State of Maryland (without giving effect to the
provisions thereof relating to conflicts of law).
SECTION 10.5 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same
agreement.
SECTION 10.6 Parties In Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
ATTEST: OMEGA HEALTHCARE INVESTORS,
INC.
\s\ NEILL R. SCHMEICHEL By:\s\ ESSEL W. BAILEY, JR.
Name: Neill R. Schmeichel Name: Essel W. Bailey, Jr.
Title: Chief Financial Officer Title: Chief Executive
Officer
ATTEST: HEALTH EQUITY PROPERTIES
INCORPORATED
\s\ SUSAN L. CHRISTIANSEN By:\s\ WILLIAM G. BENTON
Name: Susan L. Christiansen Name: William G. Benton
Title: General Counsel Title: Chairman of the Board
Glossary of Defined Terms
The following terms, when used in this Merger Agreement,
have the meanings ascribed to them in the corresponding sections
of this Merger Agreement listed below.
"Acquisition Transactions" - Section 6.3.
"Affiliate" - Section 4.14(b).
"Affiliate Agreement" - Section 7.4.
"Agreement" - Preamble.
"Closing" - Section 3.6.
"Closing Date" - Section 3.6.
"Code" - Section 4.12(a).
"Company" - Preamble.
"Company Certificates" - Section 3.3(a).
"Company Common Stock" - Section 3.1(a).
"Company Controlled Group Plans" - Section 4.13(b).
"Company Financial Statements" - Section 4.5(a).
"Company Lease" - Section 4.32.
"Company Mortgage" - Section 4.33.
"Company Mortgage Loan" - Section 4.34.
"Company Permitted Encumbrances" - Section 4.25.
"Company Plans" - Section 4.13(a).
"Company Property" - Section 4.25.
"Company Representatives" - Section 7.1.
"Company Required Statutory Approvals" - Section 4.4(c).
"Company SEC Reports" - Section 4.5(a).
"Company Stockholders' Approval" - Section 7.3.
"Company Subsidiaries" - Section 4.3.
"Company 10-K" - Section 4.5(a).
"Company 10-Q" - Section 4.5(a).
"Confidentiality Agreement" - Section 6.3.
"Consultants" - Section 7.12.
"Control" - Section 4.14(b).
"Dissenting Stockholder" - Section 3.5.
"Effective Time" - Section 1.2.
"ERISA" - Section 4.13(a).
"Exchange Act" - Section 4.4(c).
"Exchange Agent" - Section 3.3(a).
"Exchange Ratio" - Section 3.1(a).
"HSR Act" - Section 4.4(c).
"Hazardous Materials" - Section 4.27.
"IRS" - Section 4.12(a).
"Material" - Section 4.4(d).
"Merger" - Preamble.
"Merger Filing" - Section 1.2.
"MGCL" - Section 1.1.
"Multiemployer Plan" - Section 4.13(a).
"Multiple Employer Plan" - Section 4.13(a).
"NCBCA" - Section 1.1.
"Notice of Proposal" - Section 6.3.
"NYSE" - Section 3.1(a).
"Options" - Section 3.1(a).
"Other Rights" - Section 3.1(a).
"Permits" - Section 4.10.
"Person" - Section 4.14(b).
"Potential Acquiror" - Section 6.3.
"Proxy Statement" - Section 4.9.
"Proxy Statement/Prospectus" - Section 4.9.
"Purchaser" - Preamble.
"Purchaser Acquiror" - Section 9.1(g).
"Purchaser Acquisition Transaction" - Section 9.1(g).
"Purchaser Common Stock" - Section 3.1(a).
"Purchaser Controlled Group Plans" - Section 5.13(b).
"Purchaser Financial Statements" - Section 5.5.
"Purchaser Lease" - Section 5.31.
"Purchaser Mortgage" - Section 5.32.
"Purchaser Mortgage Loan" - Section 5.33.
"Purchaser Permitted Encumbrances" - Section 5.24.
"Purchaser Plans" - Section 5.13.
"Purchaser Property" - Section 5.24.
"Purchaser Representatives" - Section 7.1.
"Purchaser Required Statutory Approvals" - Section 5.4(c).
"Purchaser SEC Reports" - Section 5.5.
"Purchaser Stockholders' Approval" - Section 7.3.
"Purchaser 10-K" - Section 5.5.
"Purchaser 10-Q" - Section 5.5.
"Registration Statement" - Section 4.9.
"SEC" - Section 4.4(c).
"Securities Act" - Section 4.4(c).
"Stock Purchase Plan" - Section 3.1(a).
"Surviving Corporation" - Section 1.1.
"Tax Return" - Section4.12(e).
"Taxes" - Section 4.12(d).
"Termination Date" - Section 9.1(b).
"1993 Company Balance Sheet" - Section 4.12(a).
"1993 Purchaser Balance Sheet" - Section 5.12(a).
<PAGE>
EXHIBIT I
ARTICLES OF MERGER
Health Equity Properties Incorporated, a corporation of
the State of North Carolina (herein sometimes called "Merging
Company"), and Omega Healthcare Investors, Inc., a Maryland
corporation (herein sometimes called "Survivor") hereby certify
to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Merging Company and Survivor have agreed that
Merging Company shall be merged into Survivor.
SECOND: Survivor shall survive the merger under the
laws of the State of Maryland and shall continue under the name:
Omega Healthcare Investors, Inc.
THIRD: The names of the corporations parties to the
merger are Health Equity Properties Incorporated and Omega
Healthcare Investors, Inc. The Merging Company was incorporated
on March 13, 1991 under the general laws of the State of North
Carolina and is not registered or qualified to do business in
Maryland.
FOURTH: The Charter and Bylaws of Survivor, in effect
on the date of this merger, shall continue in full force and
effect as the Charter and Bylaws of the corporation surviving the
merger.
FIFTH: The principal office of the Merging Company is
located in Winston-Salem, North Carolina. The principal office
of the Survivor is located in Baltimore City, Maryland. The
Merging Company owns no properties in Maryland.
SIXTH: The total number of shares of stock of all
classes that the Merging Company has the authority to issue is
180,000,000 consisting of 100,000,000 shares of Common Stock, par
value $0.01 per share ("EQP Common Stock"), 30,000,000 shares of
Common Stock for which no par value has been set and 50,000,000
shares of Preferred Stock, for which no par value has been set.
The aggregate par value of all of the stock that the Merging
Company has the authority to issue is $1,000,000. The total
number of shares of stock of all classes that the Survivor has
the authority to issue is 60,000,000 consisting of 50,000,000
shares of Common Stock, par value $0.10 per shares ("Omega Common
Stock") and 10,000,000 shares of Preferred Stock, par value $1.00
per share. The aggregate par value of all of the stock that
Survivor has the authority to issue is $15,000,000.
SEVENTH: The manner and basis of converting the
outstanding shares of Common Stock of Merging Company into shares
of Common Stock of the Survivor shall be as follows:
Upon the effectiveness of the transactions contemplated
by the Merger Agreement, each issued and outstanding share of EQP
Common Stock shall, thereupon and without more, be converted into
the right to receive, and become exchangeable for .391 shares of
Omega Common Stock.
After the effective date of the merger, each holder of
an outstanding certificate or certificates theretofore
representing shares of EQP Common Stock shall surrender the same
to the Survivor and shall receive in exchange therefor a
certificate or certificates representing shares of Omega Common
Stock which the shares of EQP Common Stock shall have been
converted into as above provided. Until so surrendered, each
outstanding certificate for shares of EQP Common Stock shall be
deemed to evidence the ownership of shares of Omega Common Stock
into which such shares of EQP Common Stock shall have been
converted and the holders thereof shall be entitled to notice and
to vote such shares as if the certificates of Merging Company had
been surrendered; provided, however, that unless and until such
outstanding certificates shall have been so surrendered, no
dividend or other distribution, payable to the holders of record
of the Omega Common Stock as of a date subsequent to the
effective date of the merger, shall be paid to the holders of
such outstanding certificates until they have been surrendered to
the Survivor. No other shares of stock of the Merging Company
are issued and outstanding.
EIGHTH: Upon the effective date of the merger, the
separate existence of the Merging Company shall cease and the
Survivor shall own and possess all of the property, rights,
privileges and franchises of whatever nature and description of
the Merging Company without further act or deed. Notwithstanding
the foregoing, confirmatory deeds or other like instruments, when
deemed desirable to evidence such transfer, vesting or devolution
of any property, rights, privileges or franchises, may, at any
time or from time to time, be made and delivered in the name of
the Merging Company by the last acting officers thereof, or by
the corresponding officers of the Survivor.
Upon the effective date of the merger, the Survivor
shall be liable for all the debts and obligations of the Merging
Company and any claim existing or action or proceeding pending by
or against it may be prosecuted to judgment or decree as if the
merger had not taken place. The rights of creditors of the
Merging Company shall in no way be impaired by the merger.
NINTH: The Board of Directors of Merging Company, at a
meeting duly held on June 17, 1994, adopted resolutions declaring
that the merger was advisable and directing that the merger, upon
the terms set forth herein, be submitted for action thereon at a
meeting of the stockholders of Merging Company. The merger
described herein was duly advised by the Board of Directors of
Merging Company and approved by the stockholders of Merging
Company by the affirmative vote of the holders of a majority of
the shares of the EQP Common Stock outstanding and entitled to
vote at a meeting held on _________________. By such actions,
the merger was duly advised by the Board of Directors and
approved by the stockholders of Merging Company in the manner and
by the vote required by the laws of North Carolina and the
Charter of Merging Company.
The Board of Directors of Survivor, at a meeting held
on June 17, 1994, adopted resolutions declaring that this merger
was advisable and directing that the merger be submitted for
action thereon at a meeting of stockholders of Survivor. The
merger was approved by the stockholders of Survivor by the
affirmative vote of the holders of two-thirds of the shares of
the Omega Common Stock outstanding and entitled to vote at a
meeting held on ___________________. By such actions the merger
described herein was duly advised by the Board of Directors and
approved by the stockholders of Survivor in the manner and by the
vote required by the laws of Maryland and by the Charter of
Survivor.
TENTH: This merger shall become effective in
accordance with the laws of the State of Maryland when these
Articles have been accepted for record by the State Department of
Assessments and Taxation of Maryland and when similar articles,
in form appropriate for North Carolina, have been accepted for
record by the Secretary of State of North Carolina.
IN WITNESS WHEREOF, the corporations party to these
Articles of Merger have caused these presents to be signed in
their respective corporate names and on their behalf by their
respective Presidents or Vice Presidents and their corporate
seals to be hereunto affixed and attested by their respective
Secretaries or Assistant Secretaries, and each officer signing
these Articles acknowledges them to be the corporate act of his
or her respective corporation and that, to the best of his or her
knowledge, information and belief, all matters and facts set
forth therein with respect to the authorization and approval
thereof are true in all material respects and that this
verification is made under the penalties of perjury.
ATTEST: OMEGA HEALTHCARE INVESTORS, INC.
___________________________ By:_____________________________
Name: Name:
Title: Secretary of Omega Title: President
Healthcare Investors
Inc.
ATTEST: HEALTH EQUITY PROPERTIES
INCORPORATED
___________________________ By:_____________________________
Name: Name:
Title: Secretary of Health Title: President
Equity Properties
Incorporated
<PAGE>
EXHIBIT II
State of North Carolina
Department of the Secretary of State
ARTICLES OF MERGER OF HEALTH EQUITY PROPERTIES INCORPORATED
INTO OMEGA HEALTHCARE INVESTORS, INC.
Pursuant to Section 55-11-05 of the General Statutes of North Carolina,
the undersigned corporation as the surviving corporation in a
merger hereby submits the following Articles of Merger.
1. The name of the surviving corporation is OMEGA HEALTHCARE
INVESTORS, INC., a corporation organized under the laws of
Maryland; the name of the merged corporation is HEALTH EQUITY
PROPERTIES INCORPORATED, a corporation organized under the laws
of North Carolina.
2. Attached is a copy of the Merger Agreement and Plan of
Reorganization that was duly adopted in the manner prescribed by
law by the board of directors of each of the corporations
participating in the merger.
3. With respect to the surviving corporation (check either a or
b, whichever is applicable):
a. ___ Shareholder approval was not required for the
merger.
b. X Shareholder approval was required for the merger
and the merger was approved by the shareholders as required by
Chapter 55 of the North Carolina General Statutes.
4. With respect to the merged corporation (check either a or b,
whichever is applicable):
a. ___ Shareholder approval was not required for the
merger.
b. X Shareholder approval was required for the merger
and the merger was approved by the shareholders as required by
Chapter 55 of the North Carolina General Statutes.
5. These articles will be effective when (a) they have been
accepted for filing with the Secretary of State of North Carolina
and (b) the articles of merger, in respect of the merger of these
same corporations, have been accepted for filing by the State
Department of Assessments and Taxation of Maryland.
This ____ day of ____________, 1994.
OMEGA HEALTHCARE INVESTORS, INC.
By:
Name:
Title: President
<PAGE>
EXHIBIT III
OPINION OF ARGUE PEARSON HARBISON & MYERS
, 1994
Health Equity Properties Incorporated
915 West Fourth Street
Post Office Box 348
Winston-Salem, North Carolina 27102
Re: Merger of Dixon Corp. with and into Mason Corp.
Gentlemen:
We are general counsel to Omega Healthcare Investors, Inc.,
a Maryland corporation (the "Purchaser"), and have acted in such
capacity in connection with the merger of Health Equity
Properties Incorporated, a North Carolina corporation (the
"Company"), with and into the Purchaser pursuant to a Merger
Agreement and Plan of Reorganization (the "Agreement") dated June
17, 1994 by and between the Purchaser and the Company. This
opinion is being rendered pursuant to Section 8.2(b) of the
Agreement. Unless otherwise defined herein, terms used herein
that are defined in the Agreement shall have the meanings
ascribed to them in the Agreement.
In connection with our representation of the Purchaser, we
have reviewed the Agreement, the Registration Statement, the
Proxy Statement/Prospectus and the Purchaser SEC Reports. We
have also examined the Articles of Incorporation and Bylaws of
the Purchaser, the resolutions adopted by the Board of Directors
of the Purchaser and such other documents, certificates and
instruments as in our judgment were necessary or appropriate to
enable us to render the opinions expressed below.
The law covered by the opinions expressed herein is
limited to the federal law of the United States and the law of
the States of California, Maryland and North Carolina, provided
that with respect to any opinion regarding the law of the State
of Maryland we have relied solely, with your permission, on the
opinion of Venable, Baetjer and Howard, Maryland counsel to the
Purchaser, and that with respect to any opinion regarding the law
of the State of North Carolina we have relied solely, with your
permission, on the opinion of Stern, Graham & Klepfer, North
Carolina counsel to the Purchaser, copies of which have been
furnished to you.
Based upon and subject to the foregoing and subject to
the limitations and qualifications set forth below, we are of the
opinion that:
1. The Purchaser is duly incorporated, validly existing
and in good standing under the laws of the State of Maryland with
the corporate power and authority to own its properties and to
conduct its business as now conducted.
2. The Purchaser is duly qualified to do business as a
foreign corporation and is in good standing in the States of
Alabama, Arkansas, Indiana, Michigan, Missouri, Pennsylvania,
Tennessee and Texas.
3. The authorized capital stock of the Purchaser is as set
forth under the caption "Capitalization" in the Registration
Statement and all of the outstanding shares of Purchaser Common
Stock are validly issued and fully paid and nonassessable.
4. The certificate(s) evidencing the Purchaser Common
Stock to be delivered under the Agreement are in due and proper
form under Maryland law, and when duly countersigned by the
Purchaser's transfer agent and registrar, and delivered as
consideration for the Merger in accordance with the provisions of
the Agreement, the Purchaser Common Stock represented thereby
will be duly authorized and validly issued, fully paid and
nonassessable and will not have been issued in violation of, or
subject to, any preemptive rights.
5. Upon completion of the filings intended to effect the
merger of the Company into the Purchaser in accordance with the
Agreement and the laws of the States of North Carolina and
Maryland, respectively, the Company will be merged into the
Purchaser and the separate existence of the Company will cease.
6. The Purchaser has the corporate power and authority to
execute and deliver the Agreement, the Registration Statement and
the [other documents and instruments provided for therein to be
specified] (collectively, the "Agreements"). The execution,
delivery and performance of the Agreements have been authorized
by all requisite corporate action and the Agreements constitute
the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their
respective terms. The Agreement has been duly approved by the
Stockholders of the Purchaser. The filing of the Registration
Statement on behalf of the Purchaser with the Securities and
Exchange Commission (the "Commission") has been authorized by all
requisite corporate action.
7. The execution, delivery and performance of the
Agreements by the Purchaser will not (i) violate any provision of
the Articles of Incorporation or Bylaws of the Purchaser; (ii)
violate, result in a breach of or constitute a default under any
indenture, agreement or other instrument known to us to which the
Purchaser is a party or any of its property or assets are bound;
or (iii) violate any order, writ, judgment, injunction or decree
known to us of any court or other governmental agency or
instrumentality applicable to the Purchaser.
8. The Purchaser 10-K, Purchaser 10-Q and the Purchaser's
current reports on Form 8-K incorporated by reference in the
Proxy Statement/Prospectus complied as to form, when filed with
the Commission, in all material respects with all applicable
requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
10. The Purchaser is, and at all times during its existence
has been, organized and operated in a manner that qualifies it as
a "real estate investment trust" under the Code and the rules and
regulations thereunder and, assuming that the Company [has at all
times during its existence been/is at the Effective Time]
organized and operated in a manner that qualifies it as a "real
estate investment trust" under the Code and the rules and
regulations thereunder, the performance of the Agreement will not
jeopardize the status of the Purchaser as a "real estate
investment trust" under the Code and the rules and regulations
thereunder.
11. The statements contained in the Registration Statement
under the caption "Description of Capital Stock," insofar as they
purport to summarize the provisions of documents referred to
therein present fair summaries of such provisions.
While we have not verified, and are not passing upon and do
not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration
Statement or the Proxy Statement/Prospectus, we have participated
in conferences with officers and other representatives of the
Purchaser, counsel for the Purchaser, representatives of the
independent public accountants for the Purchaser, and your
representatives, at which the contents of the Registration
Statement and Proxy Statement/Prospectus and related matters were
discussed, and, on the basis of the foregoing (relying as to
materiality to a large extent upon the opinions of officers and
other representatives of the Purchaser), no facts have come to
our attention which lead us to believe that the Registration
Statement (except with respect to the financial statements and
schedules thereto and other financial or statistical information,
as to which we make no statement) at the time it became effective
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Proxy
Statement/Prospectus (except with respect to the financial
statements and schedules thereto and other financial or
statistical information, as to which we make no statement) on the
date thereof contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances in which
they were made, not misleading.
The opinions set forth herein are subject to the following
assumptions, qualifications and limitations:
a. We have assumed, with your permission and without
independent investigation: (i) that the signatures on all
documents examined by us are genuine and that where any such
signature purports to have been made in a corporate,
governmental, fiduciary or other capacity, the person who affixed
such signature to such document had authority to do so (other
than if such person is an officer of the Purchaser), (ii) the
authenticity of documents submitted to us as originals, and the
conformity to authentic original documents of all documents
submitted to us as certified, conformed or photostatic copies and
(iii) the correctness of public files, records and certificates
of, or furnished by, governmental or regulatory agencies or
authorities.
b. We have assumed, with your permission and without
independent investigation, that the Agreement and the agreements
contemplated therein have been duly authorized, executed and
delivered by each of the parties thereto (other than the
Purchaser) and constitute the valid and binding obligations of
such parties, enforceable against such parties in accordance with
their terms.
c. As to matters of fact we have relied upon and assumed
the accuracy of, with your permission, the statements of fact
contained in certificates of officers of the Purchaser, copies of
which have been delivered to your counsel, and have not made any
independent investigation or verification of the accuracy of the
factual statements contained therein.
d. In rendering the opinions set forth in paragraphs 1 and
2, as to the good standing of the Purchaser under the laws of the
jurisdiction of its incorporation or formation and the good
standing and due qualification of the Purchaser as a foreign
corporation in the specific jurisdictions listed, we have relied
exclusively upon certificates of public officials, copies of
which have been furnished to you.
e. In rendering the opinions set forth in paragraph 3, we
have assumed the correctness of, and are relying solely upon, the
statements set forth in certificates of officers of the
Purchaser, copies of which have been furnished to you previously,
without making any independent investigation or inquiry
whatsoever with respect to the accuracy of such statements, other
than a review of the relevant minute books and stock transfer
records.
f. In rendering the opinions set forth in paragraph 6 with
respect to the enforceability of the Agreement and the
agreements, documents and instruments contemplated therein, our
opinion is qualified to the extent that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
This opinion is furnished as of the date hereof by us, as
counsel for the Purchaser, to you solely with respect to the
Merger and with the understanding that we are not hereby assuming
any professional responsibility to any other person or entity
whatsoever.
Very truly yours,
ARGUE PEARSON HARBISON & MYERS
<PAGE>
EXHIBIT IV
OPINION OF JONES, DAY, REAVIS & POGUE
, 1994
Health Equity Properties Incorporated
915 West Fourth Street
Post Office Box 348
Winston-Salem, North Carolina 27102
Re: Merger of Dixon Corp. with and into Mason Corp.
Gentlemen:
We are special counsel to Omega Healthcare Investors, Inc.,
a Maryland corporation (the "Purchaser"), and have acted in such
capacity in connection with the merger of Health Equity
Properties Incorporated, a North Carolina corporation (the
"Company"), with and into the Purchaser pursuant to a Merger
Agreement and Plan of Reorganization (the "Agreement") dated June
17, 1994 by and between the Purchaser and the Company. This
opinion is being rendered pursuant to Section 8.2(b) of the
Agreement. Unless otherwise defined herein, terms used herein
that are defined in the Agreement shall have the meanings
ascribed to them in the Agreement.
In connection with our representation of the Purchaser, we
have reviewed the Agreement, the Registration Statement, the
Proxy Statement/Prospectus and the Purchaser SEC Reports. We
have also examined the Articles of Incorporation and Bylaws of
the Purchaser, the resolutions adopted by the Board of Directors
of the Purchaser and such other documents, certificates and
instruments as in our judgment were necessary or appropriate to
enable us to render the opinions expressed below.
The law covered by the opinions expressed herein is
limited to the federal law of the United States.
While we have not verified, and are not passing upon
and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Proxy Statement/Prospectus, we have
participated in conferences with officers and other
representatives of the Purchaser, counsel for the Purchaser,
representatives of the independent public accountants for the
Purchaser, and your representatives, at which the contents of the
Registration Statement and Proxy Statement/Prospectus and related
matters were discussed (the documents incorporated by reference
having been prepared by the Purchaser without our participation),
and, on the basis of the foregoing (relying as to materiality to
a large extent upon the opinions of officers and other
representatives of the Purchaser), no facts have come to our
attention which lead us to believe that the Registration
Statement (except with respect to the financial statements and
schedules thereto and other financial or statistical information,
as to which we make no statement) at the time it became effective
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Proxy
Statement/Prospectus (except with respect to the financial
statements and schedules thereto and other financial or
statistical information, as to which we make no statement) on the
date thereof contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances in which
they were made, not misleading.
The opinions set forth herein are subject to the following
assumptions, qualifications and limitations:
a. We have assumed, with your permission and without
independent investigation: (i) that the signatures on all
documents examined by us are genuine and that where any such
signature purports to have been made in a corporate,
governmental, fiduciary or other capacity, the person who affixed
such signature to such document had authority to do so (other
than if such person is an officer of the Purchaser), (ii) the
authenticity of documents submitted to us as originals, and the
conformity to authentic original documents of all documents
submitted to us as certified, conformed or photostatic copies,
and (iii) the correctness of public files, records and
certificates of, or furnished by, governmental or regulatory
agencies or authorities.
b. We have assumed, with your permission and without
independent investigation, that the Agreement and the agreements
contemplated therein have been duly authorized, executed and
delivered by each of the parties thereto and constitute the valid
and binding obligations of such parties, enforceable against such
parties in accordance with their terms.
c. As to matters of fact we have relied upon and assumed
the accuracy of, with your permission, the statements of fact
contained in certificates of officers of the Purchaser, copies of
which have been delivered to your counsel, and have not made any
independent investigation or verification of the accuracy of the
factual statements contained therein.
This opinion is furnished as of the date hereof by us, as
special counsel for the Purchaser, to you solely with respect to
the Merger and with the understanding that we are not hereby
assuming any professional responsibility to any other person or
entity whatsoever.
Very truly yours,
JONES, DAY, REAVIS & POGUE
<PAGE>
EXHIBIT V
OPINION OF STROOCK & STROOCK & LAVAN
, 1994
Omega Healthcare Investors, Inc.
905 W. Eisenhower Circle
Suite 110
Ann Arbor, Michigan 48103
Gentlemen:
We have acted as special counsel to Health Equity Properties
Incorporated, a North Carolina corporation (the "Company"), in
connection with a Merger Agreement and Plan of Reorganization
(the "Agreement") dated June 17, 1994 by and between the Company
and Omega Healthcare Investors, Inc., a Maryland corporation (the
"Purchaser"). This opinion is being rendered to you pursuant to
Section 8.3(b) of the Agreement. Terms defined in the Agreement
and not otherwise defined herein shall have the same meaning when
used herein.
As such counsel, we have examined the Agreement, the
Registration Statement, the Proxy Statement/Prospectus and the
Articles of Incorporation and Bylaws of the Company. We have
also examined originals or copies of such corporate minutes,
records, agreements and other instruments of the Company,
certificates of public officials, certificates of officers and
other representatives of the Company, and have made such
examinations of law, as we have deemed necessary to form the
basis of the opinions expressed below.
As to various matters of fact relevant to the opinions
hereinafter expressed, we have relied upon statements and
certificates of officers of the Company and the representations
and warranties of the Company contained in the Agreement.
In all examinations made by us in connection with this
opinion, we have assumed the genuineness of all signatures, the
completeness and authenticity of all records and documents
submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies thereof.
Attorneys involved in the preparation of this opinion are
admitted to practice law in the State of New York and we do not
purport to be experts on, or to express any opinion herein
concerning any law other than the laws of the State of New York
and the federal laws of the United States of America. To the
extent that the opinions expressed in paragraphs _____ involve
conclusions as to the laws of the State of North Carolina, we
have relied, with your permission, solely on the opinion of
_________________, copies of which have been furnished to you.
For purposes of our opinion in paragraph 6 below, we have
assumed, with your permission, that the Agreements (as defined
below) are governed by the laws of the State of New York.
Our opinion in paragraph 6 below is subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and court
decisions with respect thereto and we express no opinion with
respect to the application of equitable principles in any
proceeding whether at law or in equity.
In rendering the opinions set forth in paragraph 3, we have
assumed the correctness of, and are relying solely upon, the
statements set forth in certificates of officers of the Company,
copies of which have been furnished to you previously, without
making any independent investigation or inquiry whatsoever with
respect to the accuracy of such statements, other than a review
of the relevant minute books and stock transfer records.
When reference is made in this opinion to "knowledge" or to
what is "known to us," it means the actual knowledge attributable
to our representation of the Company of only those partners and
associates who have given substantive attention to the Agreement
and the preparation and negotiation thereof.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
North Carolina with the corporate power and authority to own its
properties and to conduct its business as now conducted.
2. The Company is qualified to do business as a foreign
corporation and is in good standing in the States of .
3. The authorized capital stock of the Company is as set
forth in the Registration Statement under the caption
"Capitalization" and all of the outstanding shares of Company
Common Stock are validly issued, fully paid and nonassessable.
4. To our knowledge, except as set forth in Schedule
4.2(b) to the Agreement, there are no outstanding subscriptions,
options, calls, contracts, commitments, understandings,
restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Company or
obligating the Company to grant, extend or enter into any such
agreement or commitment. There are no voting trusts, proxies or
other agreements or understandings known to us to which the
Company is a party or by which it is bound with respect to the
voting of any shares of capital stock of the Company.
5. Upon completion of the filings intended to effect the
merger of the Company into the Purchaser in accordance with the
Agreement and the laws of the States of North Carolina and
Maryland, respectively, the Company will be merged into the
Purchaser and the separate existence of the Company will cease.
In connection with the opinion set forth in this paragraph 5, we
have assumed that the laws of the State of Maryland (as to which
we express no opinion) are the same as the laws of the State of
North Carolina insofar as the Effective Time of the Merger will
be upon the completion of the Merger Filings or at such later
time as may be expressed in the Merger Filings.
6. The Company has the corporate power and authority to
execute and deliver the Agreement and the [other documents and
instruments provided for therein to be specified] (collectively,
the "Agreements"). The execution, delivery and performance of
the Agreements have been authorized by all requisite corporate
action, and the Agreements constitute the legal, valid and
binding obligations of the Company, enforceable against the
Company in accordance with their respective terms. The Agreement
has been duly approved by the Stockholders of the Company. The
filing of the Proxy Statement/Prospectus on behalf of the Company
with the Securities and Exchange Commission (the "Commission")
has been authorized by all requisite corporate action.
7. The execution, delivery and performance of the
Agreements by the Company will not (i) violate any provision of
the Articles of Incorporation or Bylaws of the Company or any
Company Subsidiary; (ii) violate, result in a breach of or
constitute a default under any indenture, agreement or other
instrument known to us to which the Company or a Company
Subsidiary is a party or any of their respective properties or
assets are bound; or (iii) violate any order, writ, judgment,
injunction or decree known to us of any court or other
governmental agency or instrumentality applicable to the Company
or any Company Subsidiary.
8. The Company 10-K, Company 10-Q and the Company's
current reports on Form 8-K incorporated by reference in the
Proxy Statement/Prospectus complied as to form, when filed with
the Commission, in all material respects with all applicable
requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
While we have not verified, and are not passing upon and do
not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration
Statement or the Proxy Statement/Prospectus, we have participated
in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the
independent public accountants for the Company, and your
representatives, at which the contents of the Registration
Statement and Proxy Statement/Prospectus and related matters were
discussed (the documents incorporated by reference having been
prepared by the Company without our participation), and, on the
basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers and other representatives of
the Company), no facts have come to our attention which lead us
to believe that the Registration Statement (except with respect
to the financial statements and schedules thereto and other
financial or statistical information, as to which we make no
statement) at the time it became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Proxy Statement/Prospectus
(except with respect to the financial statements and schedules
thereto and other financial or statistical information, as to
which we make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein,
in the light of the circumstances in which they were made, not
misleading.
This opinion is solely for the benefit of the addressee and
may not be relied upon in any manner by any other person or
entity.
Very truly yours,
STROOCK & STROOCK & LAVAN
<PAGE>
EXHIBIT VI
OPINION OF STROOCK & STROOCK & LAVAN
____________, 1994
Omega Healthcare Investors, Inc.
905 West Eisenhower Circle
Suite 110
Ann Arbor, Michigan 48103
Gentlemen:
This opinion is delivered in our capacity as special
counsel to Health Equity Properties Incorporated (the
"Corporation") pursuant to Section 8.3(b) of the Merger Agreement
and Plan of Reorganization dated June 17, 1994, by and between
the Corporation and Omega Healthcare Investors, Inc. (the
"Agreement"). Terms defined in the Agreement and not otherwise
defined herein shall have the same meaning ascribed to them when
used herein.
We do not serve as general counsel to the Corporation
and, other than in connection with the transaction contemplated
by the Agreement, have not represented the Corporation.
For purposes of this opinion, we have reviewed the
Closing Agreement on Final Determination Covering Specific
Matters (the "Closing Agreement") between the Corporation and the
Commissioner of Internal Revenue, dated June 14, 1994. We have
relied upon the written representations of Coopers & Lybrand,
accountants to the Corporation (the "Coopers Representations"),
that it has reviewed the organizational and ownership structure,
nature of income and distributions, composition of assets,
investments and operations of the Corporation, and copies of the
Corporation's federal income tax returns on Form 1120-REIT for
taxable years of the Corporation beginning with the taxable year
ended December 31, 1988, and has determined that (i) for all such
taxable years the Corporation satisfied the requirements under
Sections 856-860 of the Internal Revenue Code of 1986, as amended
(the "Code"), necessary to qualify as a REIT (other than the
shareholder demand requirement which is the subject of the
Closing Agreement), and (ii) the Corporation has satisfied
Section 2 of the Closing Agreement. We have not conducted any
independent inquiry or review of the organizational or ownership
structure, nature of income or distributions, composition of
assets, investments or operations of the Corporation.
Notwithstanding the foregoing, during the course of our
representation of the Corporation, nothing has come to our
attention that would cause us to believe that any of the Coopers
Representations contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
In rendering the opinions set forth herein, we have
assumed (i) the genuiness of all signatures on documents we have
examined, (ii) the authenticity of all documents submitted to us
as originals, (iii) the conformity to the original documents of
all documents submitted to us as copies, (iv) the authority and
capacity of the individual or individuals who executed any such
documents on behalf of any person, (v) the accuracy and
completeness of all documents made available to us, and (vi) the
accuracy of the Coopers Representations contained in that certain
certificate dated the date hereof from Coopers & Lybrand, a copy
of which is attached hereto.
Based upon the foregoing, we are of the opinion that
the Corporation has qualified as a REIT under the Code for all
taxable years beginning with its taxable year ended December 31,
1988 through the Effective Time of the Merger, and that the
Corporation qualifies as a REIT under the Code for its taxable
year which ends on the date on which the Merger is consummated.
We wish to point out that our opinion is not binding on
the Internal Revenue Service and, we note that there can be no
assurance that all of the requirements for qualification as a
REIT for any particular taxable year have in fact been met until
the return for such taxable year has been reviewed by the
Internal Revenue Service or the period for such review has
expired.
Very truly yours,
STROOCK & STROOCK & LAVAN
EXHIBIT 99.1
HEALTH EQUITY PROPERTIES
Post Office Box 348
915 West Fourth Street
Winston-Salem, NC 27102
FOR IMMEDIATE RELEASE
For more information, contact William G. Benton or Jody Ragan at
(910) 723-7580
HEALTH EQUITY PROPERTIES AND OMEGA HEALTHCARE INVESTORS
ANNOUNCE PLANNED MERGER OF HEALTH CARE REITS
(Winston-Salem, NC) June 17, 1994 - Health Equity Properties
(NYSE-EQP) and Omega Healthcare Investors (NYSE-OHI) today
jointly announced the signing of a definitive agreement to merge
the two health care REITS in a tax-free, stock-for-stock
transaction.
Under the terms of the merger agreement, unanimously
approved by the boards of both companies, Health Equity
Properties stockholders will receive 0.393 shares of Omega
Healthcare Investors common stock in exchange for each Health
Equity Properties share held. Following the merger, there will
be approximately 15,500,000 shares of Omega's common stock
outstanding. Revenue of the combined firm will total
approximately $48 million and equity capital will be
approximately $340 million.
Health Equity will be merged into Omega and the combined
portfolio of health care investments will include investments in
153 health care facilities in 19 states, operated by 17
independent health care operating companies. The merger is the
first of its kind between two publicly-held health care REITs and
will result in one firm with a market capitalization of
approximately $390 million.
(MORE)
In a joint statement, Essel W. Bailey, Jr., and William G.
Benton, Omega's and Health Equity's Chief Executive Officers,
respectively, noted that the benefits of the proposed merger of
the two companies offered significantly enhanced opportunities to
grow through greater financial resources and enhanced access to
capital, coupled with a low level of debt. "The combination will
provide our stockholders with a more balanced investment
portfolio, with no state and no single operator representing more
than 15% of investments or revenues. This combination will
further diversify our portfolio and build on existing knowledge,
as well as Omega's expertise in Indiana investments. It will
enable significant additional investments with middle market
operators of nursing homes and subacute facilities."
If the merger is consummated, Robert L. Parker and Essel W.
Bailey, Jr., will continue as the Chairman of the Board and Chief
Executive Officer, respectively, and the combined entities' board
of directors will consist of the current Omega directors.
The transaction is conditioned upon approval by the
stockholders of both companies. Stockholder meetings to vote on
the proposed merger transaction are anticipated during the third
quarter of 1994. NatWest Securities, Inc. and Bear, Stearns &
Co., Inc. are serving as financial advisors to Omega Healthcare
Investors and Equitable Securities Corporation is serving in the
same capacity to Health Equity Properties.
# # #
