<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------
AMENDMENT NO. 19
to
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13-2(a)
IRVINE APARTMENT COMMUNITIES, INC.
-----------------
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
---------------------------
(Title of Class of Securities)
463606-10
(CUSIP Number)
Michael D. McKee, Esq.
The Irvine Company
550 Newport Center Drive
Newport Beach, CA 92660
(714) 720-2333
----------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 1, 1999
--------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
Page 1 of 13 Pages
Exhibit Index is on Page 13
<PAGE> 2
<TABLE>
SCHEDULE 13D
<S> <C>
CUSIP NO. 463606-10 PAGE 2 OF 13 PAGES
-------------------- ---
- ----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
THE IRVINE COMPANY
13-3177751
- ----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working capital, bank loan,
etc.)]
- ----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ----------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of 28,077,118
Stock ------------------------------------------------------------------------------------------
Beneficially 8 SHARED VOTING POWER
Owned By -0- (SEE ITEM 5)
Each ------------------------------------------------------------------------------------------
Reporting 9 SOLE DISPOSITIVE POWER
Person 28,077,118
With ------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER -0- (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
28,077,118 (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- ----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
62.7% (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 3
<TABLE>
SCHEDULE 13D
<S> <C>
CUSIP NO. 463606-10 PAGE 3 OF 13 PAGES
-------------------- ---
- ----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC INVESTMENT COMPANY A
33-0713216
- ----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working capital, bank loan,
etc.)]
- ----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- ----------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0- (SEE ITEM 5)
Number of ------------------------------------------------------------------------------------------
Stock 8 SHARED VOTING POWER
Beneficially -0- (SEE ITEM 5)
Owned By ------------------------------------------------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0- (SEE ITEM 5)
Person ------------------------------------------------------------------------------------------
With 10 SHARED DISPOSITIVE POWER
-0- (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,502,105 (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- ----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.9% (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 4
<TABLE>
SCHEDULE 13D
<S> <C>
CUSIP NO. 463606-10 PAGE 4 OF 13 PAGES
-------------------- -----
- ----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC INVESTMENT COMPANY C
33-0713816
- ----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working capital, bank loan,
etc.)]
- ----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- ----------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0- (SEE ITEM 5)
Number of -------------------------------------------------------------------------------------------
Stock 8 SHARED VOTING POWER
Beneficially -0- (SEE ITEM 5)
Owned By -------------------------------------------------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0- (SEE ITEM 5)
Person -------------------------------------------------------------------------------------------
With 10 SHARED DISPOSITIVE POWER
-0- (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,034,105 (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- ----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.1% (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 5
<TABLE>
SCHEDULE 13D
<S> <C>
CUSIP NO. 463606-10 PAGE 5 OF 13 PAGES
-------------------- -----
- ----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC INVESTMENT COMPANY D
33-0713817
- ----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working capital, bank loan,
etc.)]
- ----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- ----------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0- (SEE ITEM 5)
Number of ------------------------------------------------------------------------------------------
Stock 8 SHARED VOTING POWER
Beneficially -0- (SEE ITEM 5)
Owned By ------------------------------------------------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0- (SEE ITEM 5)
Person ------------------------------------------------------------------------------------------
With 10 SHARED DISPOSITIVE POWER
-0- (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,185,333 (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- ----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6% (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 6
<TABLE>
SCHEDULE 13D
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CUSIP NO. 463606-10 PAGE 6 OF 13 PAGES
-------------------- --
- ----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DONALD L. BREN
###-##-####
- ----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working capital, bank loan,
etc.)]
- ----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- ----------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
183,325
Number of ------------------------------------------------------------------------------------------
Stock 8 SHARED VOTING POWER
Beneficially 0
Owned By ------------------------------------------------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting 183,325
Person ------------------------------------------------------------------------------------------
With 10 SHARED DISPOSITIVE POWER
0
- ----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
183,325 (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- ----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.9% (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 7
<TABLE>
SCHEDULE 13D
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CUSIP NO. 463606-10 PAGE 7 OF 13 PAGES
-------------------- --
- ----------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC ACQUISITION LLC
- ----------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- ----------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working capital, bank loan,
etc.)]
BK, AF
- ----------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
- ----------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ----------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
0(SEE ITEM 5)
Number of -------------------------------------------------------------------------------------------
Stock 8 SHARED VOTING POWER
Beneficially 0(SEE ITEM 5)
Owned By -------------------------------------------------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting 0(SEE ITEM 5)
Person -------------------------------------------------------------------------------------------
With 10 SHARED DISPOSITIVE POWER
0(SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- ----------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0 (SEE ITEM 5)
- ----------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- ----------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 8
This Amendment No. 19 to Schedule 13D amends the Schedule 13D
dated September 8, 1998, as previously amended (as so amended, the "Schedule
13D"). Unless otherwise indicated, all capitalized terms used herein shall have
the same meaning as provided in the Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended by deleting the final paragraph thereof
and inserting the following paragraph in its place:
"The aggregate amount of funds required to complete the Proposed
Business Combination (as defined in Item 4) is expected to be
approximately $685 million. TIC Acquisition has approximately $150
million in cash on hand. The remainder of the funds required to complete
the Proposed Business Combination are being obtained by TIC Acquisition
from capital contributions by TIC and ICDC. TIC has obtained a
commitment letter from Bank of America National Trust and Savings
Association for up to $350 million of its contribution and TIC and ICDC
are providing the balance of their contributions to TIC Acquisition from
cash on hand or existing financing sources. Bank of America National
Trust and Savings Association's commitment letter is attached hereto as
Exhibit 99.1."
Item 4. Purpose of Transaction.
Item 4 is hereby amended by inserting the following paragraphs
immediately before the final paragraph thereof:
"On February 1, 1999, TIC Acquisition and the Company entered
into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant
to which (subject to the satisfaction of certain conditions set forth in
the Merger Agreement) the Company will be merged with and into TIC
Acquisition, with TIC Acquisition as the surviving entity (the
"Merger"). In connection with the Merger, holders of all of the issued
and outstanding Shares will receive cash in the amount of $34.00 per
Share (the "Merger Consideration"). A copy of the Merger Agreement is
attached hereto as Exhibit 99.7 and is incorporated herein by reference.
A copy of the press release announcing the execution of the Merger
Agreement is attached hereto as Exhibit 99.8.
Upon the completion of the Merger, registration of the Shares
under the Exchange Act will be terminated and the Shares will no longer
be listed on the New York Stock Exchange."
Item 5. Interest in Securities of the Issuer.
Item 5(c) is hereby amended by deleting the first paragraph
thereof and inserting the following paragraph in its place:
8
<PAGE> 9
"Pursuant to the terms of the Merger Agreement, TIC Acquisition
has the right to acquire all 20.2 million issued and outstanding Shares.
The consummation of the Merger is subject to certain conditions beyond
the control of TIC Acquisition (See Item 6). The Merger is expected to
close late in the second quarter or early in the third quarter of 1999."
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Company.
Item 6 is hereby amended by inserting the following paragraphs
immediately before the final paragraph thereof:
"The following discussion of certain terms of the Merger
Agreement does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Merger Agreement, a
copy of which is attached hereto as Exhibit 99.7 and incorporated herein
by reference.
Pursuant to the terms of the Merger Agreement, the Company will
be merged with and into TIC Acquisition, with TIC Acquisition as the
surviving entity, and the holders of all of the issued and outstanding
Shares will be entitled to receive the Merger Consideration.
As set forth in the Merger Agreement, consummation of the Merger
is subject to the satisfaction of certain conditions, including but not
limited to the approval of the Merger Agreement by the affirmative vote
of the holders of (i) at least 66 2/3% of the issued and outstanding
Shares and (ii) a number of Shares (excluding the Shares held by TIC
Acquisition and its affiliates) representing a majority of the total
number of outstanding Shares. The Merger Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time (as
defined in the Merger Agreement), if, among other reasons set forth in
the Merger Agreement, (i) the requisite approval of the Company's
stockholders is not obtained, (ii) TIC Acquisition and the Company
mutually agree to terminate the Merger Agreement; or (iii) the Merger is
not consummated on or before October 1, 1999.
In connection with the Merger Agreement, TIC entered into a
letter agreement with the Company, dated as of February 1, 1999 (the
"Letter Agreement"), whereby TIC made certain representations,
warranties and covenants to the Company concerning, among other things,
(i) the ownership and capitalization of TIC Acquisition, (ii) that TIC
and its subsidiaries would not dispose of Shares which they currently
own and would vote such Shares in favor of the Merger, and (iii) that
TIC would cooperate with TIC Acquisition, and would cause TIC
Acquisition to comply with certain of its obligations, with respect to
9
<PAGE> 10
the Merger Agreement. A copy of the Letter Agreement is attached hereto
as Exhibit 99.9 and is incorporated herein by reference."
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby amended by inserting the following:
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
99.7 Agreement and Plan of Merger, dated as of February 1, 1999
between TIC Acquisition LLC and Irvine Apartment Communities,
Inc.
99.8 Press Release dated February 2, 1999.
99.9 Letter Agreement dated as of February 1, 1999 between The Irvine
Company and Irvine Apartment Communities, Inc.
</TABLE>
10
<PAGE> 11
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct. Date: February 1, 1999
THE IRVINE COMPANY
By: /s/ MICHAEL D. MCKEE
-------------------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY A
By: THE IRVINE COMPANY, its managing
general partner
By: /s/ MICHAEL D. MCKEE
------------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY C
By: THE IRVINE COMPANY, its managing
general partner
By: /s/ MICHAEL D. MCKEE
------------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY D
By: THE IRVINE COMPANY, its managing
general partner
By: /s/ MICHAEL D. MCKEE
-------------------------------
Name: Michael D. McKee
Title: Executive Vice President
DONALD L. BREN
By: /s/ MICHAEL D. MCKEE
-------------------------------------
Michael D. McKee as Attorney-in-fact
for Mr. Bren
11
<PAGE> 12
TIC ACQUISITION LLC
By: THE IRVINE COMPANY, its Managing
Member
By: /s/ MICHAEL D. MCKEE
------------------------------
Name: Michael D. McKee
Title: Executive Vice President
12
<PAGE> 13
EXHIBIT INDEX
The Exhibit Index is hereby amended to insert the following
Exhibit Description
- ------- -----------
99.7 Agreement and Plan of Merger, dated as of February 1, 1999
between TIC Acquisition LLC and Irvine Apartment Communities,
Inc.
99.8 Press Release dated February 2, 1999.
99.9 Letter Agreement dated as of February 1, 1999 between The Irvine
Company and Irvine Apartment Communities, Inc.
13
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 1, 1999
BETWEEN
TIC ACQUISITION LLC,
A DELAWARE LIMITED
LIABILITY COMPANY,
AND
IRVINE APARTMENT COMMUNITIES, INC.,
A MARYLAND CORPORATION
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I. THE MERGER.................................................................1
1.1. The Merger....................................................................1
1.2. Closing.......................................................................1
1.3. Effective Time................................................................2
1.4. Effects of the Merger.........................................................2
1.5. Certificate of Formation and Limited Liability Company Agreement..............2
1.6. Bylaws........................................................................2
1.7. Officers of Surviving Entity..................................................2
1.8. Tax Treatment.................................................................2
ARTICLE II. EFFECT OF THE MERGER ON THE OWNERSHIP INTERESTS IN THE CONSTITUENT
ENTITIES...................................................................3
2.1. Effect on Company Stock.......................................................3
2.2. Acquiror Interests............................................................3
2.3. Company Options and Restricted Stock Units....................................3
2.4. Surrender and Payment.........................................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES.............................................6
3.1. Representations and Warranties of the Company.................................6
3.2. Representations and Warranties of Acquiror...................................19
ARTICLE IV. CONDUCT OF BUSINESS PENDING THE MERGER....................................21
4.1. Covenants of the Company.....................................................21
4.2. Advice of Changes; Government Filings........................................24
ARTICLE V. ADDITIONAL AGREEMENTS.....................................................25
5.1. Preparation of Schedule 13E-3 and Proxy Statement; the Company
Stockholders Meeting.........................................................25
5.2. Access to Information........................................................26
5.3. Approvals and Consents; Cooperation..........................................26
5.4. Stock Options and Restricted Stock...........................................27
5.5. Acquisition Proposals........................................................27
5.6. [Intentionally Omitted]......................................................29
5.7. Withholding/Foreign Persons..................................................29
5.8. Public Announcements.........................................................29
5.9. Director and Officer Liability...............................................29
5.10. Payment of Dividends.........................................................29
5.11. Further Assurances...........................................................30
i
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI. CONDITIONS PRECEDENT......................................................30
6.1. Conditions to Each Party's Obligation to Effect the Merger...................30
6.2. Additional Conditions to Obligations of Acquiror.............................30
6.3. Additional Conditions to Obligations of the Company..........................31
ARTICLE VII. TERMINATION AND AMENDMENT.................................................32
7.1. Termination..................................................................32
7.2. Expenses.....................................................................33
7.3. Effect of Termination........................................................35
7.4. Amendment....................................................................35
7.5. Extension; Waiver............................................................35
ARTICLE VIII. GENERAL PROVISIONS........................................................36
8.1. Non-Survival of Representations, Warranties and Agreements; No Other
Representations and Warranties...............................................36
8.2. Notices......................................................................36
8.3. Interpretation...............................................................36
8.4. Counterparts.................................................................37
8.5. Entire Agreement; No Third Party Beneficiaries...............................37
8.6. Governing Law................................................................37
8.7. Severability.................................................................37
8.8. Assignment...................................................................38
8.9. Enforcement..................................................................38
8.10. Definitions..................................................................38
ii
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
GLOSSARY OF DEFINED TERMS
LOCATION OF
DEFINITION DEFINED TERM
<S> <C>
Acquisition Proposal...............................................................Section 5.5
Acquiror..............................................................................Preamble
Affiliate.........................................................................Section 8.10
Agreement.............................................................................Preamble
Alternative Transaction........................................................Section 7.2.(e)
Articles of Merger.................................................................Section 1.3
Board of Directors................................................................Section 8.10
Break-Up Fee....................................................................Section 7.2(f)
Business Day......................................................................Section 8.10
Certificate of Merger..............................................................Section 1.3
Certificates....................................................................Section 2.4(b)
Closing............................................................................Section 1.2
Closing Date.......................................................................Section 1.2
Code.........................................................................Section 3.1(i)(i)
Company...............................................................................Preamble
Company Affiliate.................................................................Section 8.10
Company Benefit Plans........................................................Section 3.1(n)(i)
Company Common Stock..................................................................Recitals
Company Disclosure Letter.........................................................Section 8.10
Company Permits.................................................................Section 3.1(g)
Company Properties..............................................................Section 3.1(k)
Company Stock Option Plans........................................................Section 8.10
Company Stockholders Meeting....................................................Section 5.1(c)
Company Sub.......................................................................Section 8.10
DLLCA.................................................................................Recitals
Effective Time.....................................................................Section 1.3
Encumbrances....................................................................Section 3.1(k)
Environmental Laws..............................................................Section 3.1(l)
ERISA........................................................................Section 3.1(n)(i)
Exchange Act...............................................................Section 3.1(d)(iii)
Exchange Agent..................................................................Section 2.4(a)
Expenses........................................................................Section 7.2(a)
GAAP.........................................................................Section 3.1(e)(i)
Governmental Entity........................................................Section 3.1(d)(iii)
HSR Act.....................................................................Section 3.1(d)(ii)
Indebtedness................................................................Section 3.1(m)(ii)
IRS..........................................................................Section 3.1(n)(i)
Knowledge.........................................................................Section 8.10
Liens.......................................................................Section 3.1(c)(ii)
Maryland Department................................................................Section 1.3
iii
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<PAGE> 5
<TABLE>
<S> <C>
Matching Transaction............................................................Section 5.5(b)
Material Adverse Effect...........................................................Section 8.10
Material Contract............................................................Section 3.1(m)(i)
Merger................................................................................Recitals
Merger Consideration...............................................................Section 2.1
MGCL..................................................................................Recitals
Non-Employee Option.............................................................Section 2.3(b)
NYSE.......................................................................Section 3.1(d)(iii)
OP...........................................................................Section 3.1(e)(i)
OP Units..........................................................................Section 8.10
Option.......................................................................Section 3.1(n)(v)
Organizational Documents..........................................................Section 8.10
Outside Date....................................................................Section 7.1(b)
Person............................................................................Section 8.10
Property Restrictions...........................................................Section 3.1(k)
Proxy Statement.................................................................Section 5.1(b)
REIT........................................................................Section 3.1(i)(ii)
Required Company Votes............................................................Section 8.10
Required Regulatory Approvals.....................................................Section 8.10
Restricted Stock Unit Agreement.............................................Section 3.1(n)(vi)
Retention Agreement.............................................................Section 2.3(a)
Schedule 13E-3..................................................................Section 5.1(a)
SEC.............................................................................Section 3.1(a)
SEC Reports..................................................................Section 3.1(e)(i)
Securities Act...............................................................Section 3.1(e)(i)
Special Committee.....................................................................Recitals
Stock Option Agreement.......................................................Section 3.1(n)(v)
Subsidiary........................................................................Section 8.10
Superior Proposal...............................................................Section 5.5(b)
Surviving Entity...................................................................Section 1.1
Tax...............................................................................Section 8.10
Taxable...........................................................................Section 8.10
Taxes.............................................................................Section 8.10
Tax Return........................................................................Section 8.10
Terminating Acquiror Breach.....................................................Section 7.1(h)
Terminating Company Breach......................................................Section 7.1(g)
The other party...................................................................Section 8.10
Third Party.......................................................................Section 8.10
TIC.............................................................................Section 3.1(q)
Trust........................................................................Section 3.1(e)(i)
Trust Shares......................................................................Section 8.10
Violation...................................................................Section 3.1(d)(ii)
iv
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<PAGE> 6
This AGREEMENT AND PLAN OF MERGER, dated as of February 1, 1999
(this "Agreement"), by and between TIC Acquisition LLC, a Delaware limited
liability company ("Acquiror"), and Irvine Apartment Communities, Inc., a
Maryland corporation (the "Company").
W I T N E S S E T H :
WHEREAS, (i) each of the Board of Directors of the Company and a
special committee thereof comprised entirely of non-management independent
directors not affiliated with the Acquiror or any of its Affiliates (the
"Special Committee") has determined that the Merger (as defined below) is
advisable and in the best interests of its stockholders and (ii) each of the
Board of Directors of the Company, the Special Committee and the Managing Member
of Acquiror have approved the Merger upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of Common Stock, par value $.01 per share, of the Company ("Company Common
Stock") will be converted into the right to receive cash;
WHEREAS, in order to effectuate the foregoing, the Company, upon
the terms and subject to the conditions of this Agreement and in accordance with
the Delaware Limited Liability Company Act (the "DLLCA") and the Maryland
General Corporation Law (the "MGCL"), will merge with and into Acquiror (the
"Merger"); and
WHEREAS, Acquiror and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DLLCA and the MGCL, the
Company shall be merged with and into Acquiror at the Effective Time (as defined
below). Following the Merger, the separate corporate existence of the Company
shall cease and Acquiror shall continue as the surviving entity (hereinafter
sometimes called the "Surviving Entity") in accordance with the DLLCA and the
MGCL.
1.2. CLOSING. The closing of the Merger (the "Closing") will take
place on the second Business Day after satisfaction or waiver (as permitted by
this Agreement and applicable law) of the conditions (excluding conditions that,
by their terms, cannot be satisfied until the Closing Date) set forth in Article
VI (the "Closing Date"), unless another time or date is agreed to in writing by
the parties hereto. The Closing shall be held at the offices of Latham &
Watkins,
<PAGE> 7
650 Town Center Drive, 20th Floor, Costa Mesa, California 92626, unless another
place is agreed to in writing by the parties hereto.
1.3. EFFECTIVE TIME. Upon the Closing, the parties shall (i) file with
the Secretary of State of the State of Delaware a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the DLLCA, (ii) file with the
Maryland State Department of Assessments and Taxation (the "Maryland
Department") the articles of merger or other appropriate documents (in any such
case, the "Articles of Merger") executed in accordance with the relevant
provisions of the MGCL and (iii) make all other filings, recordings or
publications required under the DLLCA and MGCL in connection with the Merger.
The Merger shall become effective at 5:00 p.m., New York City time, on the later
of the date of (i) the filing of the Certificate of Merger with the Delaware
Secretary of State in accordance with the DLLCA and (ii) the filing of the
Articles of Merger with, and the acceptance for record of such Articles of
Merger by, the Maryland Department in accordance with the MGCL, or at such other
time as the parties may agree and specify in such filings in accordance with
applicable law (the time the Merger becomes effective being the "Effective
Time").
1.4. EFFECTS OF THE MERGER. At the Effective Time, Acquiror shall
continue in existence as the Surviving Entity, and without further transfer,
succeed to and possess all of the rights, privileges and powers of the Company,
and all of the assets and property of whatever kind and character of the Company
shall vest in Acquiror without further act or deed; thereafter, Acquiror, as
Surviving Entity, shall be liable for all of the liabilities and obligations of
the Company (including the Retention Agreements), and any claim or judgment
against the Company may be enforced against Acquiror, as the Surviving Entity,
in accordance with the DLLCA and the MGCL. At and after the Effective Time, the
Merger will have the effects set forth in the DLLCA and the MGCL.
1.5. CERTIFICATE OF FORMATION AND LIMITED LIABILITY COMPANY AGREEMENT.
The certificate of formation and limited liability company agreement of Acquiror
as in effect immediately prior to the Effective Time shall be the certificate of
formation and limited liability company agreement of Surviving Entity until
thereafter changed or amended as provided therein or by applicable law.
1.6. BYLAWS. The bylaws of Acquiror as in effect at the Effective Time
shall be the bylaws of the Surviving Entity until thereafter changed or amended
as provided therein or by applicable law.
1.7. OFFICERS OF SURVIVING ENTITY. The officers of Acquiror shall be
the officers of the Surviving Entity, until the earlier of their resignation or
removal or otherwise ceasing to be an officer or until their respective
successors are duly appointed and qualified, as the case may be.
1.8. TAX TREATMENT. The parties intend that, for United States federal
and applicable state income tax purposes, the Merger shall be treated as if the
Company had transferred all of its assets and liabilities to Acquiror in a
taxable transaction in exchange for the Merger
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<PAGE> 8
Consideration and then completely liquidated. Acquiror and the Company shall
each report the Merger for federal and applicable state income tax purposes
consistently with the above described treatment.
ARTICLE II.
EFFECT OF THE MERGER ON THE OWNERSHIP INTERESTS
IN THE CONSTITUENT ENTITIES
2.1. EFFECT ON COMPANY STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock, each issued and outstanding share of Company Common Stock
shall be converted into the right to receive $34.00 in cash, without interest
(the "Merger Consideration"). As of the Effective Time, all shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive, upon the surrender of
such certificates, the Merger Consideration.
2.2. ACQUIROR INTERESTS. At and after the Effective Time, each
membership interest in Acquiror issued and outstanding immediately prior to the
Effective Time shall remain an issued and outstanding membership interest in
Acquiror and shall not be affected by the Merger. Each membership interest in
Acquiror that is issued but not outstanding shall remain an issued but not
outstanding membership interest in Acquiror and shall not be affected by the
Merger.
2.3. COMPANY OPTIONS AND RESTRICTED STOCK UNITS.
(a) The Company shall take all actions necessary to assure that,
prior to the Effective Time, each Option (other than the Options referred to
subsection 2.3(b)) and each Restricted Stock Unit Agreement (and any dividend
equivalents relating thereto) (and each right to any award under any Company
Stock Option Plan) shall be canceled in accordance with the terms of the letter
agreement dated as of January 22, 1999 between the Company and the holder
thereof (a "Retention Agreement").
(b) The Company shall take all actions necessary to assure that,
prior to the Effective Time, each outstanding Option (i) under the Company's
1993 Stock Option Plan for Directors or (ii) held by James Mead (a "Non-Employee
Option"), whether or not then exercisable or vested, shall be canceled, and, in
consideration of such cancellation, the Company shall pay the holder of such
Non-Employee Option an amount in cash in respect thereof equal to the product of
(x) the excess (if any) of the Merger Consideration over the exercise price
thereof, and (y) the number of shares of Company Common Stock with respect to
which such Non-Employee Option is then exercisable and vested (such payment to
be net of withholding taxes applicable thereto). Each Non-Employee Option shall
be canceled with respect to all shares of Company Common Stock subject to such
Non-Employee Option, including shares of Company Common Stock with respect to
which such Non-Employee Option is not then exercisable or vested.
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<PAGE> 9
(c) The Company shall take all actions necessary to assure that,
on and after the date of this Agreement, (i) no awards are granted under any
Company Stock Option Plan, (ii) except as provided in the Retention Agreements,
no Option or Restricted Stock Unit Agreement (or any dividend equivalents
relating thereto) is amended, modified or terminated, and (iii) except as
provided in the Retention Agreements, no other actions are taken that accelerate
the vesting or exercisability of any Option or Restricted Stock Unit Agreement
(or any dividend equivalents relating thereto) or otherwise change the rights of
the holder of any Option or Restricted Stock Unit Agreement (or any dividend
equivalents relating thereto), and (iv) that there are no options, warrants or
other rights to acquire stock from the Company (other than the Options and
Restricted Stock Unit Agreements (and dividend equivalents relating thereto) set
forth on Schedules 3.1(n)(v) and 3.1(n)(vi) to the Company Disclosure Letter.
2.4. SURRENDER AND PAYMENT.
(a) Exchange Agent. Prior to the Effective Time, pursuant to an
agreement in form and substance reasonably acceptable to the Special Committee,
Acquiror shall appoint an agent, who shall be reasonably acceptable to the
Special Committee (the "Exchange Agent"), for the purpose of exchanging
certificates representing shares of Company Common Stock for the Merger
Consideration. Acquiror will make available to the Exchange Agent, as needed,
the Merger Consideration (in immediately available funds) to be paid in respect
of the shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Acquiror may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Acquiror, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration,
without interest thereon, and the Certificate so surrendered shall forthwith be
canceled. If any portion of the Merger Consideration is to paid to a Person
other than the registered holder of the shares represented by the Certificate or
Certificates surrendered in exchange therefor, it shall be a condition to such
payment that the Certificate or Certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such shares of Company Common Stock or establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not payable. Until
surrendered as contemplated by this Section 2.4, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration.
4
<PAGE> 10
(c) No Further Ownership Rights in Company Common Stock. All
Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates, subject, however, to the
Surviving Entity's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by the Company on such shares of Company Common Stock (i) on or
after the date of this Agreement in a manner that does not violate the terms of
this Agreement or (ii) prior to the date of this Agreement and which, in either
case, remain unpaid at the Effective Time, and, from and after the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of the Surviving Entity of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Entity or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by law.
(d) Unclaimed Funds. Any portion of the Merger Consideration made
available to the Exchange Agent pursuant to Section 2.4(a) that remains
unclaimed by holders of the Certificates for six months after the Effective Time
shall be delivered to Acquiror, upon demand, and any holders of Certificates who
have not theretofore complied with this Article II shall thereafter look only to
Acquiror for payment of their claim for Merger Consideration.
(e) No Liability. None of Acquiror, the Company or the Exchange
Agent shall be liable to any Person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to seven years after the Effective Time or immediately prior to such
earlier date on which any Merger Consideration in respect of such Certificate
would otherwise escheat to or become the property of any Governmental Entity (as
defined below), any such Merger Consideration in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the
Surviving Entity, free and clear of all claims or interest of any Person
previously entitled thereto.
(f) Investment of Funds. The Exchange Agent shall invest any
Merger Consideration made available to the Exchange Agent pursuant to Section
2.4(a), as directed by Acquiror, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Acquiror.
(g) Lost Certificates. In the event that any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Acquiror, the posting by such Person of a bond in such
reasonable amount as Acquiror may direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration with respect to such Certificate, to which such Person is entitled
pursuant hereto.
5
<PAGE> 11
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Acquiror as follows:
(a) Organization, Standing and Power. The Company has been duly
incorporated and is validly existing and in good standing under the laws of the
State of Maryland. The Company is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to so qualify would not, either individually or in the
aggregate, have a Material Adverse Effect on the Company. The copies of the
Organizational Documents of the Company filed with the Securities and Exchange
Commission (the "SEC") are true, complete and correct copies of such documents
as amended and in effect on the date of this Agreement.
(b) Company Subsidiaries. Schedule 3.1(b) to the Company
Disclosure Letter sets forth each Subsidiary of the Company and the ownership
interest therein of the Company. Each Company Sub that is a corporation is duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted. Each of the Company Subs that is a
partnership, limited partnership, limited liability company or trust is duly
organized and validly existing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its business
as now being conducted. Each Company Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed would not, either individually or in the aggregate,
have a Material Adverse Effect on the Company. True, complete and correct copies
of the partnership agreement and trust declaration, as applicable, of the
Company Subs, each as amended to the date of this Agreement, have been
previously delivered or made available to Acquiror.
(c) Capital Structure.
(i) As of the date of this Agreement, the authorized stock
of the Company consists of (A) 150,000,000 shares of Company Common
Stock, of which 20,163,642 shares are outstanding, (B) 160,000,000
shares of excess stock, par value $.01 per share, of which no shares are
outstanding, and (C) 10,000,000 shares of preferred stock, par value
$1.00 per share, of which no shares are outstanding. All issued and
outstanding shares of stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, and, except as disclosed in
Schedule 3.1(c)(i) to the Company Disclosure Letter, no class of stock
of the Company is entitled to preemptive rights. As of the date of this
Agreement, there are no outstanding options, warrants or other rights to
acquire stock from the Company other than (1) Options representing in
the aggregate the right to purchase 671,333 shares of Company Common
Stock under the Company Stock
6
<PAGE> 12
Option Plans, (2) Restricted Stock Units outstanding under the Company
Stock Plans which may, in the Company's discretion, be settled by the
delivery of an aggregate of 202,000 shares of Company Common Stock
granted under the Company Stock Option Plans, and (3) as set forth on
Schedule 3.1(c)(i) to the Company Disclosure Letter. There are no stock
appreciation rights relating to the stock of the Company. Except as
disclosed in Schedule 3.1(c)(i) to the Company Disclosure Letter, as of
the date of this Agreement, no bonds, debentures, notes or other
indebtedness of the Company having the right to vote on any matters on
which stockholders may vote are issued or outstanding.
(ii) Schedule 3.1(c)(ii) to the Company Disclosure Letter
sets forth the equity ownership of each Company Sub (it being understood
that such representation with respect to securities held by any entity
other than the Company or any Company Sub is made only to the extent of
the Knowledge of the Company). Except as set forth on Schedule
3.1(c)(ii) to the Company Disclosure Letter, (A) all of the outstanding
shares of stock of each Company Sub that is a corporation have been duly
authorized, validly issued, fully paid and nonassessable, and are owned
by the Company free and clear of all liens, claims, encumbrances,
restrictions, preemptive rights or any other claims of any thirty party
("Liens") and (B) all equity interests in each Company Sub that is a
partnership, limited partnership, joint venture, limited liability
company or trust are owned by the Company or one or more Company Subs
free and clear of all Liens. Except as set forth on Schedule 3.1(c)(ii)
to the Company Disclosure Letter, there are no outstanding options,
warrants or other rights to acquire ownership interests from the Company
Subs. Except as disclosed in Schedule 3.1(c)(ii) to the Company
Disclosure Letter, as of the date of this Agreement, no bonds,
debentures, notes or other indebtedness of the Company Subs having the
right to vote on any matters on which holders of equity in the Company
Subs are entitled to vote are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.1(c)
or in Schedule 3.1(c)(i) or 3.1(c)(ii) to the Company Disclosure Letter,
as of the date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or the Company Subs is a
party or by which any of them is bound obligating the Company or the
Company Subs to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of stock or other voting securities of the
Company or the Company Subs or obligating the Company or the Company
Subs to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
As of the date of this Agreement, other than as set forth in Schedule
3.1(c)(i) or 3.1(c)(ii) to the Company Disclosure Letter, there are no
outstanding obligations of the Company or the Company Subs to
repurchase, redeem or otherwise acquire any shares of stock of the
Company or shares of stock or other ownership interests of the Company
Subs.
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<PAGE> 13
(d) Authority; No Conflicts.
(i) The Company has all requisite corporate power and
corporate authority to enter into this Agreement and, subject to the
adoption of this Agreement by the requisite vote of the holders of
Company Common Stock, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company,
subject in the case of the consummation of the Merger to the approval of
this Agreement by the stockholders of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes a valid
and binding agreement of the Company, enforceable against it in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors generally and by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) Except as set forth in Schedule 3.1(d)(ii) to the
Company Disclosure Letter, the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or constitute a
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit under,
or the creation of a lien, pledge, security interest, charge or other
encumbrance on any assets (any such conflict, violation, default, right
of termination, amendment, cancellation or acceleration, loss or
creation, a "Violation") pursuant to: (A) any provision of the
Organizational Documents of the Company or the Company Subs or (B)
except as would not have a Material Adverse Effect on the Company and,
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the
Company, the Company Subs or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national,
state, municipal or local government, any instrumentality, subdivision,
court, administrative agency or commission or other authority thereof,
or any quasi-governmental or private body exercising any regulatory,
taxing, or other governmental or quasi-governmental authority (a
"Governmental Entity"), is required by or with respect to the Company or
the Company Subs in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for (x) those required under or
in relation to (A) the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (B) the DLLCA and the MGCL with respect to the filing
and recordation of appropriate merger documents, (C) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and (D) rules and
8
<PAGE> 14
regulations of the New York Stock Exchange (the "NYSE"), and (y) such
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to make or obtain would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(e) Reports and Financial Statements.
(i) Each of the Company, Irvine Apartment Communities,
L.P., a Delaware limited partnership (the "OP"), and IAC Capital Trust,
a Delaware business trust (the "Trust"), has filed all required reports,
schedules, forms, statements and other documents required to be filed by
it with the SEC since, in each case, the later of (i) January 1, 1996
and (ii) its formation (collectively, including all exhibits thereto,
the "SEC Reports"). No other Company Sub is required to file any form,
report or other document with the SEC. None of the SEC Reports, as of
their respective dates (and, if amended or superseded by a filing prior
to the date of this Agreement or of the Closing Date, then on the date
of such filing), 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 made therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the SEC
Reports presents fairly, in all material respects, (i) the consolidated
financial position and consolidated results of operations and cash flows
of the Company and the OP and (ii) the financial position and results of
operations and cash flows of the Trust, as of the respective dates or
for the respective periods set forth therein, all in conformity with
United States generally accepted accounting principles ("GAAP")
consistently applied during the periods involved except as otherwise
noted therein, and subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments that have not been
and are not expected to be material in amount. All of such SEC Reports,
as of their respective dates (and as of the date of any amendment to the
respective SEC Report), complied as to form in all material respects
with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act and the rules and
regulations promulgated thereunder.
(ii) Except for liabilities and obligations referred to in
any of the SEC Reports (including, without limitation, the financial
statements included therein) filed prior to the date of this Agreement,
and except for liabilities and obligations incurred in the ordinary
course of business since September 30, 1998, neither the Company nor any
Company Sub has any liabilities or obligations of any nature which,
individually or in the aggregate, would have a Material Adverse Effect
on the Company.
(f) Schedule 13E-3; Proxy Statement.
(i) None of the information supplied or to be supplied by
the Company for inclusion or incorporation by reference in the Schedule
13E-3 (except for information about Acquiror or any of its Affiliates)
will, on the date the Schedule 13E-3 is first mailed to the Company's
stockholders or at the time of the Company Stockholders
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<PAGE> 15
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to the
Effective Time any event with respect to the Company should occur and is
required to be described in an amendment of, or a supplement to, the
Schedule 13E-3, the Company shall promptly furnish Acquiror with a
description of such event. For purposes of this subsection 3.1(f)(i),
any statement which is made or incorporated by reference in the Schedule
13E-3 shall be deemed modified or superseded to the extent any later
filed document incorporated by reference in the Schedule 13E-3 or any
statement included in the Schedule 13E-3 modifies or supersedes such
earlier statement.
(ii) None of the information supplied or to be supplied by
the Company for inclusion or incorporation by reference in the Proxy
Statement (except for information about Acquiror or any of its
Affiliates furnished by Acquiror or any of its Affiliates to the
Company) will, on the date the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to the
Effective Time any event (other than an event with respect to the
Acquiror or any of its Affiliates) should occur and is required to be
described in an amendment of, or a supplement to, the Proxy Statement,
such event shall be so described, and such amendment or supplement shall
be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company. If at any time prior to the Effective
Time any event with respect to the Acquiror or any of its Affiliates
should occur and is required to be described in an amendment of, or a
supplement to, the Proxy Statement, upon receipt of a description of
such event from Acquiror or any of its Affiliates, such amendment or
supplement shall be promptly filed by the Company with the SEC and, as
required by law, disseminated to the stockholders of the Company. The
Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
SEC thereunder. For purposes of this subsection 3.1(f)(ii), any
statement which is made or incorporated by reference in the Proxy
Statement shall be deemed modified or superseded to the extent any later
filed document incorporated by reference in the Proxy Statement or any
statement included in the Proxy Statement modifies or supersedes such
earlier statement
(g) Compliance with Applicable Laws; Regulatory Matters. Except
as disclosed in any of the SEC Reports, the Company and the Company Subs hold,
and are in compliance with the terms of, all permits, licenses, certificates,
franchises, registrations, variances, exemptions, orders and approvals of all
Governmental Entities which are material to the operation of their businesses,
taken as a whole (the "Company Permits"), except where the failure so to hold or
comply, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. Except as disclosed in any of the SEC Reports, the
businesses of the Company and the Company Subs are not being and have not been
conducted in violation of any law, ordinance, regulation, judgment, decree,
injunction, rule or order of any Governmental
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<PAGE> 16
Entity, except for violations which, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. As of the date of this Agreement,
except as disclosed in any SEC Report, no investigation by any Governmental
Entity with respect to the Company or the Company Subs is pending or, to the
Knowledge of the Company, threatened, other than investigations which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
(h) Litigation. Except as disclosed in any of the SEC Reports or
in Schedule 3.1(h) to the Company Disclosure Letter, there is no litigation,
arbitration, claim, suit, action, investigation or proceeding pending (it being
understood that such representation with respect to any litigation, arbitration,
claim, suit, action, investigation or proceeding being handled by
representatives of the Acquiror or its Affiliates on behalf of the Company is
made only to the extent of the Knowledge of the Company) or, to the Knowledge of
the Company, threatened, against or affecting the Company or the Company Subs
which, individually or in the aggregate, would have a Material Adverse Effect on
the Company, nor is there any judgment, award, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against the Company or the
Company Subs which, individually or in the aggregate, would have a Material
Adverse Effect on the Company. As of the date hereof, except as set forth in
Schedule 3.1(h) to the Company Disclosure Letter, (i) there is no litigation,
arbitration, claim, suit, action, investigation or proceeding pending against or
affecting the Company or its Directors relating to this Agreement or the
transactions contemplated hereby, and (ii) to the Knowledge of the Company,
there is no injunction, judgment, order, decree, ruling or charge in effect
against the Company, any of the Directors of the Company or any Company Sub
which would (A) prevent consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, or (C) materially adversely affect the
right of Acquiror or any of its Subsidiaries to own its or the Company's or any
Company Sub's assets and to operate its or the Company's or any Company Sub's
businesses (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect).
(i) Taxes.
(i) Each of the Company and each Company Sub has (A) filed
on a timely basis all Tax Returns required to be filed by it (after
giving effect to any filing extension properly granted by a Governmental
Entity having authority to do so) and all such Tax Returns are accurate
and complete in all material respects; and (B) paid (or the Company has
paid on its behalf) all Taxes shown on such returns and reports as
required to be paid by it, and, except as disclosed in any of the SEC
Reports or in Schedule 3.1(i)(i) to the Company Disclosure Letter, the
most recent financial statements contained in any of the SEC Reports
reflect an adequate reserve for all material Taxes payable by the
Company (and by those Company Subs whose financial statements are
contained therein) for all taxable periods and portions thereof through
the date of such financial statements. The accruals and reserves for
Taxes (including deferred Taxes) reflected in the books and records of
the Company (and such Company Subs) as of the last day of the Company's
most recently completed fiscal month end are in all material
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<PAGE> 17
respects adequate to cover Taxes required to be accrued through such
date (including Taxes being contested) in accordance with GAAP applied
on a consistent basis with the financial statements contained in any of
the SEC Reports. True, correct and complete copies of all federal,
state, local and foreign Tax Returns for the Company and each Company
Sub, and all written communications relating thereto, have been
delivered or made available to representatives of Acquiror. Since
January 1, 1998, the Company has not incurred and does not expect to
incur any liability for taxes under Section 857(b), 860(c) or 4981 of
the Internal Revenue Code of 1986, as amended (the "Code"), and neither
the Company nor any Company Sub has incurred any material liability for
Taxes other than in the ordinary course of business. The Company has not
elected and will not elect to pay tax on any capital gain recognized on
or after January 1, 1998, including but not limited to gain recognized
as a result of the Merger. To the Knowledge of the Company, no event has
occurred, and no condition or circumstance exists, which presents a
material risk that any material Tax described in the preceding two
sentences will be imposed upon the Company. Except as set forth on
Schedule 3.1(i)(i) to the Company Disclosure Letter, to the Knowledge of
the Company, no deficiencies for any Taxes have been proposed, asserted
or assessed against the Company or any of the Company Subs, and no
requests for waivers of the time to assess any such Taxes are pending.
To the Knowledge of the Company, Schedule 3.1(i)(i) to the Company
Disclosure Letter sets forth (i) the taxable years of the Company and
the Company Subs as to which the respective statutes of limitations for
assessment of federal, state and foreign income or franchise Taxes have
not expired, and (ii) with respect to such taxable years, those years
for which examinations have been completed, those years for which
examinations are presently being conducted, those years for which
examinations have not yet been initiated and those years for which
extensions to file Tax Returns have been requested and such Tax Returns
have not yet been filed.
(ii) The Company (A) for all taxable years commencing
with 1993 through the most recent December 31, has been subject to
taxation as a real estate investment trust (a "REIT") within the meaning
of the Code and has satisfied all requirements to qualify as a REIT for
such years, (B) has operated, and will continue to operate, in such a
manner as to qualify as a REIT for the tax year ending upon the Closing
Date, and (C) has not taken or omitted to take any action which would
reasonably be expected to result in a challenge to its status as a REIT,
and to the Company's Knowledge, no such challenge is pending or
threatened. The OP and each other Company Sub that is a partnership has
been since its formation and continues to be treated for federal income
tax purposes as a partnership and not as a corporation or an association
or publicly traded partnership taxable as a corporation. The Trust (W)
for its taxable year ended December 31, 1998 has been organized and has
operated in conformity with the requirements for REIT qualification
under the Code, (X) will, in a timely fashion, elect to be treated as a
REIT for the taxable year ended December 31, 1998, (Y) during the
portion of its taxable year from January 1, 1999 through the date hereof
has been organized and has operated, and through the Closing Date will
continue to be organized and to operate, in conformity with the
requirements for REIT qualification under the Code, and (Z) has not
taken or omitted to take any action which
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<PAGE> 18
would reasonably be expected to result in a challenge to its status as a
REIT and, to the Company's Knowledge, no such challenge is pending or
threatened. Each other Company Sub has been since its formation, and
continues to be treated for federal income tax purposes as a "qualified
REIT subsidiary" as defined in Section 856(i) of the Code. To the
Knowledge of the Company, neither the Company nor any Company Sub holds
any asset (A) the disposition of which would be subject to rules similar
to Section 1374 of the Code as a result of an election under IRS Notice
88-19 or (B) that is subject to a consent filed pursuant to Section
341(f) of the Code and the regulations thereunder.
(j) No Payments to Employees, Officers or Directors. Except as
set forth on Schedule 3.1(j) to the Company Disclosure Letter or as otherwise
specifically provided for in this Agreement, there is no employment or severance
contract, or other agreement requiring payments to be made or increasing any
amounts payable thereunder on a change of control or otherwise as a result of
the consummation of the Merger, with respect to any employee, officer or
director of the Company or any Company Sub.
(k) Properties. Except as provided in Schedule 3.1(k) to the
Company Disclosure Letter, the Company or one of the Company Subs owns fee
simple or leasehold, as applicable, title to each of the real properties
identified (as to fee simple property or leasehold property) in Schedule 3.1(k)
to the Company Disclosure Letter (the "Company Properties"). The Company
Properties are not subject to liens, mortgages or deeds of trust, claims against
title, charges which are liens, security interests or other encumbrances on
title ("Encumbrances") and which could cause, individually or in the aggregate,
a Material Adverse Effect on the Company. The Company Properties (other than the
Company Properties under development) are not subject to any rights of way,
written agreements, laws, ordinances and regulations affecting building use or
occupancy, or reservations of an interest in title (collectively, "Property
Restrictions"), except for (i) Encumbrances and Property Restrictions set forth
in Schedule 3.1(k) to the Company Disclosure Letter, (ii) Property Restrictions
imposed or promulgated by law or any governmental body or authority with respect
to real property, including zoning regulations, provided they do not materially
adversely affect the current use of any Company Property (other than the Company
Properties under development), (iii) Encumbrances and Property Restrictions
disclosed on existing title reports, existing title policies or existing surveys
(in either case copies of which title reports, title policies and surveys have
been delivered or made available to Acquiror; provided, however, that platting
of development land will not be shown on existing title reports or existing
title policies) and (iv) mechanics', carriers', workmen's, repairmen's liens and
other Encumbrances, Property Restrictions and other limitations of any kind, if
any, which, individually or in the aggregate, are not substantial in amount, do
not materially detract from the value of or materially interfere with the
current use of any of the Company Properties subject thereto or affected
thereby, and would not otherwise have a Material Adverse Effect on the Company.
Except as provided in
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<PAGE> 19
Schedule 3.1(k) to the Company Disclosure Letter, valid policies of title
insurance have been issued insuring the Company's or the applicable Company
Sub's fee simple or leasehold, as applicable, title to the Company Properties in
amounts at least equal to the purchase price (or in the case of leasehold
properties, imputed value) thereof, subject only to the matters disclosed above,
and such policies are, at the date hereof, in full force and effect and no
material claim has been made against any such policy. Except as provided in
Schedule 3.1(k) to the Company Disclosure Letter, (i) the Company has no
Knowledge that any material certificate, permit or license from any governmental
authority having jurisdiction over any of the Company Properties (other than the
Company Properties under development) or any agreement, easement or other right
which is necessary to permit the current use of the buildings and improvements
on any of the Company Properties (other than the Company Properties under
development) or which is necessary to permit the current use of all driveways,
roads, and other means of egress and ingress to and from any of the Company
Properties (other than the Company Properties under development) has not been
obtained and is not in full force and effect, or of any pending threat of
modification or cancellation of any of same, in each case which would materially
detract from the value of or materially interfere with the current use of any of
the Company Properties; (ii) the Company has not received written notice of any
material violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any of the Company Properties
issued by any governmental authority; (iii) the Company has no Knowledge of any
structural defects relating to the Company Properties which would materially
detract from the value of or materially interfere with the current use of any of
the Company Properties; (iv) the Company has no Knowledge of any Company
Properties whose building systems are not in working order in any material
respect; (v) the Company has no Knowledge of any physical damage to any Company
Property in excess of $50,000 for which there is no insurance in effect covering
the cost of the restoration; and (vi) the Company has no Knowledge of any
current renovation or restoration (not including recurring capital expenditures)
to any Company Property the remaining cost of which exceeds $50,000. The Company
has no Knowledge of any Property Restrictions on any Company Property under
development that are likely to materially detract from the value of or
materially interfere with the proposed use of such Company Property (other than
Property Restrictions which the Company has no reason to believe it will be
unable to have removed prior to the proposed occupancy of the Company Property).
The Company has no Knowledge that any governmental authority having jurisdiction
over any Company Property under development has denied or rejected any
application by the Company for a certificate, permit or license with respect to
such Company Property, which denial or rejection is likely to materially detract
from the value of or materially interfere with the proposed use of such Company
Property. The Company has received no notice of any material violation of any
zoning, building or similar law, code, ordinance or regulation which applies to
the Company Properties under development. Neither the Company nor any of the
Company Subs has received any notice to the effect that (A) any condemnation or
adverse rezoning proceedings are pending or threatened with respect to any of
the Company Properties or (B) any zoning, building or similar law, code,
ordinance or regulation is or will be violated by the continued maintenance,
operation or use of any buildings or other improvements on any of the Company
Properties (other than the Company Properties under development) or by the
continued maintenance, operation or use of the parking areas except where such
proceedings or violations could not have, individually or in the aggregate, a
Material Adverse Effect on the Company. All material work to be performed,
material payments to be made and material actions to be taken by the Company or
the Company Subs prior to the date hereof pursuant to any agreement entered into
with a governmental body or authority in connection with a site approval, zoning
reclassification or other similar action relating to the Company Properties has
been performed, paid or taken, as the case may be, in all material respects.
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(l) Environmental Liability. Except as disclosed in any of the
SEC Reports or as set forth in Schedule 3.1(l) to the Company Disclosure Letter,
there are no legal, administrative, arbitral or other proceedings, claims,
actions, causes of action, private environmental investigations or remediation
activities or governmental investigations of any nature seeking to impose, or
that would result in the imposition, on the Company or the Company Subs, of any
liability or obligation arising under common law standards relating to
environmental protection, human health or safety, or under any local, state or
federal environmental statute, regulation or ordinance, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (collectively, "Environmental Laws"), pending
or, to the Knowledge of the Company, threatened, against the Company or any of
the Company Subs, which liability or obligation would have a Material Adverse
Effect on the Company. To the Knowledge of the Company, except as disclosed in
any of the SEC Reports or in Schedule 3.1(l) to the Company Disclosure Letter,
during or, with respect to Company Properties not located within that certain
area of Orange County, California commonly known as the Irvine Ranch, prior to
the period of (i) its or any of the Company Sub's ownership or operation of any
of their respective current properties, (ii) its or any of the Company Sub's
participation in the management of any property, or (iii) its or any of the
Company Sub's holding of a security interest or other interest in any property,
there were no releases or threatened releases (which release would represent a
violation of, or is likely to lead to liability under, any Environmental Law) of
hazardous, toxic, radioactive or dangerous materials or other materials
regulated under Environmental Laws in, on, under or affecting any such property
which would, individually or in the aggregate, have a Material Adverse Effect on
the Company. Neither the Company nor any of the Company Subs is subject to any
written agreement, order, judgment, decree, letter or memorandum by or with any
Governmental Entity or third party imposing any material liability or obligation
pursuant to or under any Environmental Law that would have a Material Adverse
Effect on the Company.
(m) Contracts; Debt Instruments.
(i) To the Knowledge of the Company, neither the Company
nor any Company Sub is in violation of or in default under (nor does
there exist any condition which upon the passage of time or the giving
of notice or both would cause such a violation of or default under) any
material loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other material
contract, agreement, arrangement or understanding (each, a "Material
Contract") to which it is a party or by which it or any of its
properties or assets is bound, except as set forth in Schedule 3.1(m)(i)
to the Company Disclosure Letter. To the Knowledge of the Company, a
true, complete and correct copy of each Material Contract that has not
been filed as an exhibit to any of the SEC Reports has been previously
delivered or made available to Acquiror, and a list of all Material
Contracts that have not been filed as an exhibit to any of the SEC
Reports is set forth on Schedule 3.1(m)(i) to the Company Disclosure
Letter.
(ii) Except for any of the following disclosed in any of
the SEC Reports, Schedule 3.1(m)(ii) to the Company Disclosure Letter
sets forth (x) a list of all
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<PAGE> 21
loan or credit agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any Indebtedness of the
Company or any of the Company Subs in an aggregate principal amount of
in excess of $100,000 per item is outstanding or may be incurred and (y)
the respective principal amounts of all material Indebtedness of the
Company or any Company Sub (categorized to a level of specificity that
the Acquiror acknowledges is sufficient) outstanding on December 31,
1998. For purposes of this Section 3.1(m)(ii), "Indebtedness" shall
mean, with respect to any Person, without duplication, (A) all
indebtedness of such Person for borrowed money, whether secured or
unsecured, (B) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such
Person, (C) all capitalized lease obligations of such Person, (D) all
obligations of such Person under interest rate or currency hedging
transactions (valued at the termination value thereof) and (E) all
guarantees of such Person of any such Indebtedness of any other Person.
(n) Employee Benefit Plans; Labor Matters.
(i) With respect to each employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), any Company Stock
Option Plan and any bonus, deferred compensation, stock bonus, stock
purchase, restricted stock, stock option, employment, termination,
change in control and severance plan, program, arrangement and
contract), to which the Company or any Company Sub is a party, which is
maintained, administered or contributed to by the Company or any Company
Sub or Company Affiliate which the Company or any Company Sub or Company
Affiliate has maintained, administered or contributed to, or with
respect to which the Company or any Company Sub or Company Affiliate has
or could incur liability under the Code or ERISA (the "Company Benefit
Plans"), the Company has made available to Acquiror a true and complete
copy of (A) such Company Benefit Plan, (B) the most recent annual report
(Form 5500) filed with the Internal Revenue Service (the "IRS"), (C)
each trust or other funding arrangement relating to such Company Benefit
Plan, (D) the most recent summary plan description related to each
Company Benefit Plan for which a summary plan description is required,
(E) the most recent actuarial report (if applicable) relating to an
Company Benefit Plan and (F) the most recent determination letter, if
any, issued by the IRS with respect to any Company Benefit Plan
qualified under Section 401(a) of the Code.
(ii) Each of the Company Benefit Plans that is an
"employee pension benefit plan" within the meaning of Section 3(2) of
ERISA and that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the IRS, and the
Company is not aware of any circumstances likely to result in the
revocation of any such favorable determination letter that would have a
Material Adverse Effect on the Company.
(iii) Each of the Company Benefit Plans has been
administered and operated in accordance with the terms thereof and has
complied, in form and in operation,
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<PAGE> 22
with ERISA, the Code and any other applicable law, except to the extent
any failure to so comply, individually or in the aggregate, would not
have a Material Adverse Effect on the Company.
(iv) With respect to the Company Benefit Plans, no event
has occurred and, to the Knowledge of the Company, there exists no
condition or set of circumstances, in connection with which the Company
or any Company Sub could be subject to any liability under the terms of
such Company Benefit Plans, ERISA, the Code or any other applicable law
which, individually or in the aggregate, would have a Material Adverse
Effect on the Company.
(v) Schedule 3.1(n)(v) to the Company Disclosure Letter
sets forth with respect to each Option (an "Option") to purchase shares
of Company Common Stock under any Company Stock Option Plan, whether or
not then exercisable or vested, that is outstanding on the date of this
Agreement: (i) the name of the holder of such Option, (ii) the number of
shares of Company Common Stock with respect to which such Option is then
exercisable and vested, (iii) the grant date of each Option and a
listing of each Option which was granted pursuant to a Stock Option
Agreement (each, a "Stock Option Agreement") which is not in the form of
Stock Option Agreement previously provided to Acquiror, and (iv) the per
share exercise price of such Option.
(vi) Schedule 3.1(n)(v) to the Company Disclosure Letter
sets forth with respect to each Restricted Stock Unit Agreement
(including any dividend equivalents relating thereto) (a "Restricted
Stock Unit Agreement") under any Company Stock Option Plan, whether or
not then vested, that is outstanding on the date of this Agreement: (i)
the name of the holder of such Restricted Stock Unit Agreement, (ii) the
number of Restricted Stock Units subject to such Restricted Stock Unit
Agreement, and (iii) the grant date of each award of Restricted Stock
Units and a listing of each award which was granted pursuant to a
Restricted Stock Unit Agreement which is not in the form of Restricted
Stock Unit Award Agreement previously provided to Acquiror.
(vii) Except for the Options and Restricted Stock Unit
Agreements (including any dividend equivalents relating thereto)
disclosed in Schedule 3.1(n)(v) or 3.1(n)(vi) to the Company Disclosure
Letter, as of the date of this Agreement, (i) there are no outstanding
awards under any Company Stock Option Plan, and (ii) there are no
outstanding options, warrants or other rights to acquire stock from the
Company.
(viii) Schedule 3.1(j) to the Company Disclosure Letter
sets forth a list of each Retention Agreement.
(ix) There is no pending labor dispute, strike or work
stoppage against the Company or any Company Sub which may interfere with
the respective business activities of the Company or any Company Sub,
except where such dispute, strike or work stoppage would not have a
Material Adverse Effect on the Company. There is no pending charge or
complaint against the Company or any Company Sub by the National
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<PAGE> 23
Labor Relations Board or any comparable state agency, except where such
unfair labor practice, charge or complaint would not have a Material
Adverse Effect on the Company.
(o) Absence of Certain Changes or Events. Except as disclosed in
any of the SEC Reports or in Schedule 3.1(o) to the Company Disclosure Letter,
since September 30, 1998 through the date of this Agreement, (A) each of the
Company and the Company Subs has conducted its business in the ordinary course
and has not incurred any material liability, except in the ordinary course of
their respective businesses; and (B) there has not been any change in the
business, financial condition or results of operations of the Company or the
Company Subs that has had, or will have, a Material Adverse Effect on the
Company.
(p) Vote Required. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock in favor of the
Merger is the only vote of the holders of any class or series of the Company's
stock required by the Organizational Documents of the Company or any Company Sub
or applicable law to approve, on behalf of the Company, this Agreement, the
Merger and the other transactions contemplated by this Agreement.
(q) Related Party Transactions. Set forth in Schedule 3.1(q) to
the Company Disclosure Letter is a list of all material arrangements, agreements
and contracts (other than arrangements, agreements and contracts to which The
Irvine Company, a Delaware corporation ("TIC"), or a wholly-owned subsidiary of
TIC is a party and other than any such arrangement, agreement or contract filed
as an exhibit to any SEC Report, substantially identical in form to any such
exhibit or substantially identical in form to the forms of option agreement,
restricted stock unit agreement and performance award agreement previously
provided to Acquiror) entered into by the Company or any of the Company Subs, on
the one hand, and any Person who is an officer, director or affiliate of the
Company or any of the Company Subs, any relative of any of the foregoing or any
entity of which any of the foregoing is an affiliate, on the other hand. Copies
of all such documents have previously been delivered or made available to
Acquiror.
(r) State Takeover Laws. The Board of Directors of the Company
has taken all such action required to be taken by it to provide that this
Agreement and the transactions contemplated hereby shall be exempt from the
requirements of any "moratorium," "control share," "fair price" or other
anti-takeover laws or regulations of any state. Title 3, Subtitles 6 and 7 of
the MGCL do not apply to the Merger or to any other business combination (as
defined in the MGCL) between the Company (or any affiliate thereof) and the
Acquiror (or any affiliate thereof) or to limit the voting rights of the
Acquiror as a holder of Company Common Stock.
(s) Brokers or Finders. Other than Morgan Stanley & Co.
Incorporated, no agent, broker, investment banker, financial advisor or other
firm or Person is or will be entitled to any broker's or finder's fee or any
other similar commission or fee in connection with any of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any Company Sub.
(t) Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Morgan Stanley & Co. Incorporated dated the
date of this
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<PAGE> 24
Agreement, to the effect that, as of such date, the Merger Consideration is
fair, from a financial point of view, to the holders of Company Common Stock
(other than Acquiror and its Affiliates).
3.2. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror represents and
warrants to the Company as follows:
(a) Organization, Standing and Power. Acquiror has been duly
organized and is validly existing and in good standing under the laws of the
State of Delaware. Acquiror is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure so to qualify would not, either individually or in the
aggregate, have a Material Adverse Effect on Acquiror. Acquiror was organized on
December 1, 1998. A true, correct and complete copy of the Limited Liability
Company Operating Agreement of Acquiror has previously been delivered or made
available to the Company. Since the date of its organization, Acquiror has not
engaged in any activities other than in connection with arranging any financing
required to consummate the transactions contemplated hereby.
(b) Authority; No Conflicts.
(i) Acquiror has all requisite limited liability company
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate or limited
liability company action on the part of Acquiror. This Agreement has
been duly executed and delivered by Acquiror and constitutes a valid and
binding agreement of Acquiror, enforceable against Acquiror in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors generally, or by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not
or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation of:
(A) any provision of the Organizational Documents of Acquiror or (B)
except as would not have a Material Adverse Effect on Acquiror and
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Acquiror or its properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Acquiror in connection with the execution
and delivery of this Agreement by Acquiror or the consummation by
Acquiror of the transactions contemplated hereby, except for
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(A) the consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to clauses (A),
(B) or (C) of Section 3.1(d)(iii) and (B) such consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to make or obtain would not have a Material Adverse
Effect on Acquiror or impair or delay the ability of Acquiror to
consummate the transactions contemplated hereby.
(c) Available Funds. Acquiror has, and will maintain until the
Effective Time, cash or cash equivalents on hand in the amount of not less than
$150 million. Acquiror has or will have available, prior to the Effective Time,
sufficient funds to enable it to consummate the Merger and the other
transactions contemplated hereby and to pay all related fees and expenses.
(d) Schedule 13E-3; Proxy Statement.
(i) None of the information supplied or to be supplied by
Acquiror or any of its Affiliates for inclusion or incorporation by
reference in the Schedule 13E-3 (except for (A) information about the
Company furnished by the Company to Acquiror and (B) information in the
Proxy Statement which is incorporated by reference in the Schedule 13E-3
(except for the information in the Proxy Statement about Acquiror or any
of its Affiliates furnished by Acquiror or any of its Affiliates to the
Company)) will, on the date the Schedule 13E-3 is first mailed to the
Company's stockholders or at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to the
Effective Time any event (other than an event with respect to the
Company) should occur and is required to be described in an amendment
of, or a supplement to, the Schedule 13E-3, such event shall be so
described, and such amendment or supplement shall be promptly filed by
Acquiror with the SEC and, as required by law, disseminated to the
stockholders of the Company. If at any time prior to the Effective Time
any event with respect to the Company should occur and is required to be
described in an amendment of, or a supplement to, the Schedule 13E-3,
upon receipt of a description of such event from the Company, such
amendment or supplement shall be promptly filed by Acquiror with the SEC
and, as required by law, disseminated to the stockholders of the
Company. The Schedule 13E-3 will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this subsection
3.2(d)(i), any statement which is made or incorporated by reference in
the Schedule 13E-3 shall be deemed modified or superseded to the extent
any later filed document incorporated by reference in the Schedule 13E-3
or any statement included in the Schedule 13E-3 modifies or supersedes
such earlier statement.
(ii) None of the information about the Acquiror or any of
its Affiliates supplied or to be supplied by Acquiror or any of its
Affiliates for inclusion or incorporation by reference in the Proxy
Statement will, on the date it is first mailed to the
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<PAGE> 26
Company's stockholders or at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to the
Effective Time any event with respect to Acquiror or any of its
Affiliates should occur and is required to be described in an amendment
of, or a supplement to, the Proxy Statement, a description of such event
shall be promptly furnished by Acquiror or its Affiliate(s) to the
Company. For purposes of this subsection 3.2(d)(ii), any statement which
is made or incorporated by reference in the Proxy Statement shall be
deemed modified or superseded to the extent any later filed document
incorporated by reference in the Proxy Statement or any statement
included in the Proxy Statement modifies or supersedes such earlier
statement.
(e) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee from the Company or a
Company Sub as a result of Acquiror being a party hereto or consummating any of
the transactions contemplated by this Agreement.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that Acquiror shall
otherwise consent in writing):
(a) Ordinary Course. The Company and the Company Subs shall carry
on their respective businesses in the usual, regular and ordinary course in all
material respects, in accordance with past practice, and shall use all
reasonable efforts to preserve intact their present business organizations and
preserve their relationships with customers, suppliers and others having
business dealings with them; provided, however, that no action by the Company or
the Company Subs with respect to matters specifically addressed by any other
provision of this Section 4.1 shall be deemed a breach of this Section 4.1(a)
unless such action would constitute a breach of one or more of such other
provisions.
(b) Dividends; Changes in Share Capital. The Company shall not,
and shall not permit any Company Sub to, and shall not propose to: (i) adjust,
split, combine or reclassify any stock; (ii) make, declare or pay any dividend
or make any other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its stock or any securities or obligations
convertible into or exchangeable for any shares of its stock, voting securities
or other ownership interests, or grant any stock appreciation rights or grant
any individual, corporation or other entity any right, warrant or option to
acquire any shares of its stock, voting securities or other ownership interests,
except for: (A) distributions on Trust Shares not to exceed the greater of (1)
the rate required by the terms thereof and (2) the minimum rate required for the
Trust to maintain its status as a REIT; (B) regular quarterly distributions on
preferred OP Units at the rates required by the terms thereof; (C) regular
quarterly distributions on common OP Units at
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the rates recently paid by the OP; (D) regular quarterly distributions on
Company Common Stock not to exceed the greater of (1) $.385 per share and (2)
the minimum rate required for the Company to maintain its status as a REIT;
provided that the record dates for the 1999 second and third quarter
distributions shall not be earlier than June 15, 1999 and September 15, 1999,
respectively; and (E) payment of dividend equivalents with respect to Restricted
Stock Units; or (iii) repurchase, redeem or otherwise acquire any shares of its
stock or any stock, voting securities or ownership interests in any Company Sub.
(c) Issuance of Equity Securities. Except as disclosed on
Schedule 4.1(c) to the Company Disclosure Letter, the Company shall not and
shall cause the Company Subs not to issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any equity securities of the Company
or any Company Sub, or enter into any agreement with respect to any of the
foregoing and shall not amend any equity-related awards issued pursuant to the
Company Benefit Plans, other than (i) the issuance of Company Common Stock upon
the exercise of Options outstanding as of the date of this Agreement as
disclosed in Section 3.1(c); provided any such issuance must be consistent with
past practice and in accordance with the terms of the Company Stock Option Plans
as in effect on the date of this Agreement, and no issuances shall be made with
respect to any Option which is amended, accelerated or otherwise modified in
violation of Section 4.1(i), (ii) issuances of Company Common Stock to holders
of common limited partner interests in the OP upon exchange of common limited
partner interests in the OP and (iii) issuances of excess stock of the Company
in accordance with the terms of, and subject to the limits set forth in, the
Organizational Documents of the Company upon transfers of Company Common Stock.
(d) Organizational Documents. Except to the extent required to
comply with their respective obligations hereunder, required by law or required
by the rules and regulations of the NYSE, the Company and the Company Subs shall
not amend or propose to amend their respective Organizational Documents.
(e) Properties. Except as set forth on Schedule 4.1(e) to the
Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to sell, transfer, mortgage, lease, pledge, encumber or otherwise
dispose of any Company Properties or assets to any individual, corporation or
other entity other than a direct or indirect wholly owned Company Sub, or
cancel, release or assign any indebtedness to any such Person or any claims held
by any such Person, in each case that is material to such party, except (i)
pursuant to contracts or agreements in force at the date of this Agreement in
accordance with the terms of such contract or agreement as in effect on the date
of this Agreement, (ii) as reasonably necessary to protect REIT qualification,
(iii) pursuant to leases of apartment units in the ordinary course of business
or (iv) pursuant to sales, transfers, mortgages, leases, pledges, encumbrances
or other dispositions of assets other than Company Properties in the ordinary
course of business.
(f) Mergers and Acquisitions. Except as set forth on Schedule
4.1(f) to the Company Disclosure Letter, the Company shall not, and shall not
permit any Company Sub to merge or consolidate with any entity, make any
acquisition or investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchases of any property or
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assets of any other individual, corporation or other entity, except transactions
which are reasonably necessary to protect REIT qualifications.
(g) Contracts. Except as set forth on Schedule 4.1(g) to the
Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to, except for transactions which are reasonably necessary to
protect REIT qualification, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts, other
than renewals of contracts and leases without materially adverse changes of
terms thereof.
(h) Indebtedness. Except as set forth on Schedule 4.1(h) to the
Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to, (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any Company Sub or guarantee any
debt securities of other Persons, (ii) make any loans, advances or capital
contributions to, or investments in, any other Person, or (iii) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than in the case of clauses (ii)
and (iii), loans, advances, capital contributions, investments, payments,
discharges or satisfactions that are incurred or committed to in the ordinary
course of business consistent with past practice and that do not exceed $250,000
individually or $1 million in the aggregate.
(i) Benefit Plans. The Company shall not, and shall not permit
any Company Sub to, (i) increase the compensation payable or to become payable
to any of its executive officers or employees or (ii) take any action with
respect to the grant of any severance or termination pay, or stay, bonus or
other incentive arrangement (other than pursuant to benefit plans and policies
(including the Retention Agreements) in effect on the date of this Agreement),
except any such increases or grants made in the ordinary course of business and
in accordance with past practice. The Company shall take all actions necessary
to assure that (i) no awards shall be granted under any Company Stock Option
Plan, or (ii) the terms and conditions of any award under any Company Stock
Option Plan will not be amended, accelerated, or otherwise modified, and no
other action will be taken with respect to any award under any Company Stock
Option Plan, except as provided in Section 2.3 or otherwise in accordance with
the contractual obligations of the Company in respect of any such awards.
(j) Tax Election. The Company shall not, and shall not permit any
Company Sub to, make any material Tax election (unless required by law or
necessary to preserve the Company's status as a REIT or the status of any
Company Sub as a partnership for federal tax purposes, as a REIT or as a
"qualified REIT subsidiary" under Section 856(i) of the Code, as the case may
be).
(k) Accounting Principles and Taxes. The Company shall not, and
shall not permit any Company Sub to, (i) change in any material manner any of
its methods, principles or practices of accounting in effect at September 30,
1998, or (ii) make or rescind any express or deemed election relating to Taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except in
the case of
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settlements or compromises relating to taxes on real property in an amount not
to exceed, individually or in the aggregate, $100,000, or change any of its
methods of reporting income or deductions for federal income tax purposes from
those employed in the preparation of its federal income tax return for the most
recently completed taxable year except, in the case of clause (i), as may be
required by the SEC, applicable law or GAAP.
(l) Liabilities. Except as set forth on Schedule 4.1(l) to the
Company Disclosure Letter, the Company shall not, and shall not permit any
Company Sub to, pay, discharge, settle or satisfy any claims, liabilities or
objections (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business consistent with past practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereof) of the Company
included in any of the SEC Reports or incurred in the ordinary course of
business consistent with past practice.
(m) Other Actions. The Company shall not, and shall not permit
any Company Sub to, take any action that would result in (i) any of the
representations or warranties of the Company set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the Merger set forth in
Article VI not being satisfied.
4.2. ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall (a)
confer on a regular and frequent basis with the other, (b) report (to the extent
permitted by law, regulation and any applicable confidentiality agreement) on
operational matters, consistent with past practice, and (c) promptly advise the
other orally and in writing of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect, (ii) the
failure by it (A) to comply with or satisfy in any respect any covenant,
condition or agreement required to be complied with or satisfied by it under
this Agreement that is qualified as to materiality or (B) to comply with or
satisfy in any material respect any covenant, condition or agreement required to
be complied with or satisfied by it under this Agreement that is not so
qualified as to materiality or (iii) any change, event or circumstance that has
had or would have a Material Adverse Effect on the Company or materially
adversely affect any party's ability to consummate the Merger in a timely
manner; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement. The Company,
the Company Subs and Acquiror shall file all reports required to be filed by
each of them with the SEC (and all other Governmental Entities) between the date
of this Agreement and the Effective Time and shall (to the extent permitted by
law or regulation or any applicable confidentiality agreement) deliver to the
other party copies of all such reports promptly after the same are filed,
consistent with past practice. Subject to applicable laws relating to the
exchange of information, each of the Company and Acquiror shall have the right
to review in advance, and to the extent practicable each will consult with the
other, with respect to all the information relating to the other party and each
of their respective Subsidiaries, which
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appears in any filings, announcements or publications made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party agrees that, to the extent practicable, it
will keep the other party apprised of the status of matters relating to
completion of the transactions contemplated hereby.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1. PREPARATION OF SCHEDULE 13E-3 AND PROXY STATEMENT; THE COMPANY
STOCKHOLDERS MEETING.
(a) Acquiror will, as promptly as practicable, prepare and file
with the SEC, and will cause its Affiliates to cooperate, to the extent
necessary, in such preparation and filing, a Rule 13e-3 Transaction Statement on
Schedule 13E-3 (the "Schedule 13E-3"). Acquiror will use all reasonable efforts,
and will cause its Affiliates to cooperate, to the extent necessary, to cause
the Schedule 13E-3 to be mailed to stockholders of the Company at the earliest
practicable date.
(b) The Company will, as promptly as practicable, prepare and
file with the SEC a proxy statement in connection with the vote of the Company's
stockholders with respect to the Merger and this Agreement (such proxy
statement, together with any amendments thereof or supplements thereto, in each
case in the form or forms mailed to the Company's stockholders, are herein
called the "Proxy Statement"). The Company will use all reasonable efforts to
cause the Proxy Statement to be mailed to stockholders of the Company at the
earliest practicable date.
(c) The Company shall (i) as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Company Stockholders Meeting") for the purpose of
obtaining the Required Company Votes, and (ii) through its Board of Directors
and the Special Committee, recommend to its stockholders that they approve the
transactions contemplated by this Agreement and shall not withdraw, modify or
change such recommendation, or recommend any other offer or proposal, at any
time prior to the conclusion of the Company Stockholders Meeting.
Notwithstanding clause (ii) of the immediately preceding sentence of this
subsection 5.1(c), the Special Committee or the Board of Directors of the
Company (with the concurrence of the Special Committee) may at any time prior to
the Effective Time withdraw, modify or change any recommendation regarding this
Agreement or the Merger, or recommend any other offer or proposal, if the
Special Committee or the Board of Directors of the Company (with the concurrence
of the Special Committee) after consultation with its counsel, determines that
taking any such action is required in accordance with its legal duties to the
Company's stockholders under applicable law; provided, such withdrawal,
modification, change or recommendation shall not affect or excuse the
performance, or cure any breach, of, any obligation of the Company hereunder
(other than that set forth in clause (ii) of the immediately preceding sentence
of this subsection 5.1(c)), including, but not limited to, the requirements in
clause (i) of the immediately preceding sentence of this subsection 5.1(c) and
the requirements in Section 5.5.
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5.2. ACCESS TO INFORMATION. Upon reasonable notice, the Company shall
(and shall cause the Company Subs, to the extent permitted by the Organizational
Documents or other pertinent agreements of such entity, to) afford to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Acquiror reasonable access during normal business hours,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, the Company shall
(and shall cause the Company Subs, to the extent permitted by the Organizational
Documents or other pertinent agreements of such entity, to) furnish promptly to
Acquiror (a) a copy of each report, schedule, registration statement and other
document filed, published, announced or received by it during such period
pursuant to the requirements of Federal or state securities laws, as applicable
(other than reports or documents which such party is not permitted to disclose
under applicable law) and (b) consistent with its legal obligations, all other
information concerning its business, properties and personnel as Acquiror may
reasonably request.
5.3. APPROVALS AND CONSENTS; COOPERATION. Each of the Company and
Acquiror shall cooperate with each other and use (and shall take all reasonable
steps to cause each of their respective Subsidiaries to use) its reasonable
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on their part under this Agreement and
applicable laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
(i) preparing and filing as promptly as practicable all documentation to effect
all necessary applications, notices, petitions, filings, and other documents and
to obtain as promptly as practicable all consents, waivers, licenses, orders,
registrations, approvals, permits, tax rulings and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement and (ii) taking all reasonable steps as may be necessary to
obtain all such consents, waivers, licenses, registrations, permits,
authorizations, tax rulings, orders and approvals. Without limiting the
generality of the foregoing, each of the Company and Acquiror agrees to make all
necessary filings in connection with the Required Regulatory Approvals as
promptly as practicable after the date of this Agreement, and to use its
reasonable efforts to furnish or cause to be furnished, as promptly as
practicable, all information and documents requested with respect to such
Required Regulatory Approvals and shall otherwise cooperate with the applicable
Governmental Entity in order to obtain any Required Regulatory Approvals in as
expeditious a manner as possible. Each of the Company and Acquiror shall use its
reasonable efforts to resolve such objections, if any, as any Governmental
Entity may assert with respect to this Agreement and the transactions
contemplated hereby in connection with the Required Regulatory Approvals. In the
event that a suit is instituted by a Person or Governmental Entity challenging
this Agreement and the transactions contemplated hereby as violative of
applicable antitrust or competition laws, each of the Company and Acquiror shall
use its reasonable efforts to resist or resolve such suit. With respect to any
action, suit, or proceeding pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (iii) affect adversely the right of any of Acquiror or its
Affiliates to
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own its assets and to operate its businesses or (iv) cause the Company, the
Company Sub, Acquiror or any of their Affiliates to pay damages in connection
with claims related to the transactions contemplated by this Agreement, the
Company and Acquiror (x) shall confer and cooperate with one another in the
defense thereof and (y) shall not, without the written consent of the other (not
to be unreasonably withheld), enter into any settlement, or consent to the entry
of any judgment, relating thereto; provided that neither party may withhold its
consent to any settlement or judgment which would not have the effects described
in clauses (i)-(iv) of this sentence and pursuant to which it would be fully and
unconditionally released from liability. The Company and Acquiror each shall,
upon request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and such other
matters as may reasonably be necessary or advisable in connection with the
Schedule 13E-3 or the Proxy Statement or any other statement, filing, tax ruling
request, notice or application made by or on behalf of the Company, Acquiror or
any of their respective Subsidiaries to any third party and/or any Governmental
Entity in connection with the Merger or the other transactions contemplated by
this Agreement.
5.4. STOCK OPTIONS AND RESTRICTED STOCK. The Company and each Company
Sub shall take all actions as may be necessary under the Company Stock Option
Plans to effect the cancellations described in Section 2.3 and shall comply with
all requirements regarding tax withholding in connection therewith. In addition
to the foregoing and subject to the terms of the Company Stock Option Plans and
applicable law, the Company shall take all actions necessary to cause the
Company Stock Option Plans to be terminated at or prior to the Effective Time,
and to satisfy Acquiror that no holder of Options, Restricted Stock Units or
other awards under such Plans, or participant in any Company Stock Option Plans,
will have any right to acquire any interest in the Company or Acquiror as a
result of the exercise of Options, Restricted Stock Units or other awards or
rights pursuant to such Company Stock Option Plans at or after the Effective
Time.
5.5. ACQUISITION PROPOSALS.
(a) Unless and until this Agreement shall have been terminated by
either party pursuant to Article VII hereof, the Company shall not take or
cause, directly or indirectly, any of the following actions with any party other
than Acquiror or its designees: (i) solicit, knowingly encourage, initiate or
participate in any negotiations, inquiries or discussions with respect to any
offer or proposal to acquire all or any part of its business, assets or capital
shares whether by merger, consolidation, other business combination, purchase of
assets, tender or exchange offer or otherwise (each of the foregoing, an
"Acquisition Proposal"); (ii) disclose, in connection with an Acquisition
Proposal, any information or provide access to its properties, books or records,
except as required by law or pursuant to a governmental request for information;
(iii) enter into or execute any agreement relating to an Acquisition Proposal;
or (iv) make or authorize any public statement, recommendation or solicitation
in support of any Acquisition Proposal other than with respect to the Merger.
(b) Notwithstanding the foregoing, in response to a bona fide,
unsolicited, written Acquisition Proposal from a Third Party (that does not
result from a breach of this
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Section 5.5), the Special Committee may, and may authorize and permit the
Company's officers, directors, employees, financial advisors, representatives,
or agents to, provide such Third Party with nonpublic information, otherwise
facilitate any effort or attempt by such Third Party to make or implement such
Acquisition Proposal, agree to or recommend or endorse any such Acquisition
Proposal with or by any Third Party, and participate in discussions and
negotiations with such Third Party relating to such Acquisition Proposal, if (i)
the Special Committee believes in good faith (after consultation with its
financial advisor) that such Acquisition Proposal (A) provides or is likely to
provide for higher per share value to the stockholders of the Company, (B) is
capable of being fully financed and performed and (C) is not subject or is not
likely to be subject to any material conditions to which the Merger is not
subject (a "Superior Proposal"), (ii) the Special Committee, after having
consulted with and considered the advice of outside counsel, has reasonably
determined in good faith that the failure to do so would cause the members of
such Special Committee to breach their legal duties to the stockholders of the
Company under applicable law and (iii) the Third Party has entered into a
confidentiality agreement pertaining to nonpublic information regarding the
Company containing customary terms and conditions. The Company agrees, if so
requested by Acquiror in its sole and absolute discretion (such request must to
be made within five business days after receipt by Acquiror of notice of the
Superior Proposal from the Company in accordance with Section 5.5(c)), to enter
into an agreement to consummate a transaction with Acquiror or its designee on
terms providing equivalent value for the Company's stockholders to the value
provided by the terms contained in the Superior Proposal, including without
limitation on the same terms contained in the Superior Proposal (a "Matching
Transaction"). If Acquiror does not timely request to consummate a Matching
Transaction following the Company's receipt of a Superior Proposal, the Special
Committee (on behalf of the Company) may terminate this Agreement under Section
7.1(f) and accept such Superior Proposal, and the Special Committee may make or
authorize any public statement, recommendation or solicitation in support of
such Superior Proposal.
(c) The Company shall notify Acquiror reasonably promptly after
receipt by the Company (or any of their advisors) of any Acquisition Proposal or
any request for nonpublic information in connection with an Acquisition Proposal
or for access to the Company's properties, books or records by any person or
entity that informs the Company that it is considering making, or has made, an
Acquisition Proposal. Such notice shall be made orally and in writing and shall
indicate in reasonable detail the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact. If the Acquisition Proposal is
believed by the Special Committee to be a Superior Proposal, the Company shall
reasonably promptly furnish to Acquiror all of the terms of such proposal and
copies of any proposed agreement relating thereto. The Company shall continue to
keep Acquiror informed, on a reasonably prompt basis, of the status of any
discussions or negotiations of any Acquisition Proposal and the terms being
discussed or negotiated.
(d) The provisions of this Section 5.5 shall not constitute a
waiver or limitation or in any way affect the rights of Acquiror or its
Affiliates under the Organizational Documents of the Company or otherwise.
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(e) The provisions of this Section 5.5 shall not be deemed to
affect any rights or claims in tort or otherwise of Acquiror or its Affiliates
against any Person not affiliated with a party to this Agreement with respect to
any attempt to interfere with, cause the termination of, or cause Acquiror or
its Affiliates to lose any benefits under, this Agreement.
5.6. [INTENTIONALLY OMITTED].
5.7. WITHHOLDING/FOREIGN PERSONS. The Company shall promptly take all
steps necessary to ensure compliance, and shall comply, with all withholding
obligations with respect to any foreign stockholders of the Company in
connection with the payment of the Merger Consideration.
5.8. PUBLIC ANNOUNCEMENTS. The Company and Acquiror shall use all
reasonable efforts to develop a joint communications plan and each party shall
use all reasonable efforts (i) to ensure that all press releases and other
public statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange, to consult with each other before
issuing any press release or otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby.
5.9. DIRECTOR AND OFFICER LIABILITY. For six years after the Effective
Time, Acquiror will cause the Surviving Entity to indemnify and hold harmless
the present and former officers and directors of the Company in respect of acts
or omissions occurring prior to the Effective Time to the extent provided under
the Company's Organizational Documents in effect on the date hereof; provided
that such indemnification shall be subject to any limitation imposed from time
to time by applicable law. For six years after the Effective Time, Acquiror will
cause the Surviving Entity to provide officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the Effective Time
covering each such person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date hereof.
5.10. PAYMENT OF DIVIDENDS. Prior to the Effective Time, the Company
shall pay any and all dividends or make any other distributions with respect to
the Company Common Stock which have been declared or made by the Company as
permitted by this Agreement. The record date and amount of any dividends or any
other distributions with respect to the Company Common Stock which have been
declared or made by the Company prior to the date of this Agreement and which
remain unpaid as of the date of this Agreement are set forth on Schedule 5.10 to
the Company Disclosure Letter.
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5.11. FURTHER ASSURANCES. In case at any time after the Effective Time
any further action is reasonably necessary to carry out the purposes of this
Agreement, the proper officers of the Company and Acquiror shall take any such
reasonably necessary action.
ARTICLE VI.
CONDITIONS PRECEDENT
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of the Company and Acquiror to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions (it being understood that, in the case of the Company, any
determination as to the satisfaction or waiver of any of the following
conditions shall be made only by the Special Committee on behalf of the
Company):
(a) Required Company Votes. The Company shall have obtained the
Required Company Votes.
(b) No Injunctions or Restraints, Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger; provided, however, that the provisions of this
Section 6.1(b) shall not be available to any party whose failure to fulfill its
obligations pursuant to Section 5.3 shall have been the cause of, or shall have
resulted in, such order or injunction.
(c) HSR Act. If applicable, the waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligations
of Acquiror to effect the Merger are subject to the satisfaction of, or waiver
by Acquiror, on or prior to the Closing Date, of the following additional
conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Company set forth in this Agreement that is qualified as
to materiality shall have been true and correct when made and shall be true and
correct on and as of the Closing Date as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date), and each of the
representations and warranties of the Company that is not so qualified shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects on and as of the Closing Date as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date).
(b) Performance of Obligations of the Company. The Company shall
have performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality and shall have performed or complied in all material
respects with all other agreements and covenants required
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to be performed by it under this Agreement at or prior to the Closing Date that
are not so qualified as to materiality.
(c) REIT Tax Opinion. Acquiror shall have received an opinion of
Davis Polk & Wardwell, counsel to the Company, in form and substance reasonably
satisfactory to Acquiror, dated as of the Effective Time, substantially to the
effect that (i) commencing with the taxable year ended December 31, 1993, the
Company has been organized and has operated in conformity with the requirements
for qualification as a REIT within the meaning of the Code, (ii) commencing with
its taxable year ended December 31, 1998, the Trust has been organized and has
operated in conformity with the requirements for qualification as a REIT within
the meaning of the Code and (iii) the OP and each other Company Sub which is a
partnership has been, at all times since it has been a Company Sub, and
continues to be, treated for federal income tax purposes as a partnership and
not as an association or publicly traded partnership taxable as a corporation
(in each case with customary exceptions, conditions, assumptions and
qualifications).
(d) Cancellation of Options and Restricted Stock Units. All
Options and Restricted Stock Units under any Company Stock Option Plan shall be
canceled in accordance with Section 2.3, and no holder of Options, Restricted
Stock Units (or dividend equivalents relating thereto) or other awards under any
Company Stock Option Plan or any other incentive compensation plans of the
Company or any Company Sub shall have any further rights thereunder or any right
or interest in the Company or Acquiror on or after the Effective Time, except as
provided in the Retention Agreements. There shall be (i) no outstanding awards
under any Company Stock Option Plan and (ii) no outstanding options, warrants or
other rights to acquire stock or other forms of equity from the Company.
6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are subject to the satisfaction
of, or waiver by the Company on or prior to the Closing Date of the following
additional conditions (it being understood that any determination as to the
satisfaction or waiver of any of the following conditions shall be made only by
the Special Committee on behalf of the Company):
(a) Representations and Warranties. Each of the representations
and warranties of Acquiror set forth in this Agreement that is qualified as to
materiality shall have been true and correct when made and shall be true and
correct on and as of the Closing Date as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date), and each of the
representations and warranties of Acquiror that is not so qualified shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects on and as of the Closing Date as if made on and
as of such date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct in all material
respects as of such certain date).
(b) Performance of Obligations of Acquiror. Acquiror shall have
performed or complied with all agreements and covenants required to be performed
by it under this
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<PAGE> 37
Agreement at or prior to the Closing Date that are qualified as to materiality
and shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this Agreement at
or prior to the Closing Date that are not so qualified as to materiality.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1. TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, by action taken or authorized by the Special Committee
(on behalf of the Company) or the Managing Member (on behalf of the Acquiror),
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company:
(a) By mutual written consent of Acquiror and the Special
Committee (on behalf of the Company), by action of the Managing Member of the
Acquiror and the Special Committee (on behalf of the Company);
(b) By either the Special Committee (on behalf of the Company) or
Acquiror if the Merger shall not have been consummated by the date which is
eight months from the date of this Agreement (the "Outside Date"); provided that
the right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
occur on or before such date;
(c) By either the Special Committee (on behalf of the Company) or
Acquiror if any Governmental Entity shall have issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action the
parties shall have used their reasonable efforts to resist, resolve or lift, as
applicable, subject to the provisions of Section 5.3) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable;
(d) By either Acquiror or the Special Committee (on behalf of the
Company) if the Required Company Votes shall not have been obtained at a duly
held meeting of stockholders or at any adjournment thereof; provided that the
right to terminate this Agreement under this Section 7.1(d) shall not be
available to the Company if it fails to fulfill its obligations under Section
5.1 and Section 5.5;
(e) By Acquiror, if (i) after the receipt by the Company of an
Acquisition Proposal, the Special Committee or the Board of Directors of the
Company (including a majority of the members of the Special Committee) shall
have withdrawn or modified its recommendation of this Agreement or the Merger,
(ii) after the receipt by the Company of an Acquisition Proposal (which
Acquisition Proposal is public), Acquiror requests in writing that the Special
Committee or the Board of Directors of the Company publicly reconfirm its
recommendation of this Agreement and the Merger to the stockholders of the
Company and the Special Committee or the Board of Directors of the Company
(including a majority of the members of the Special
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<PAGE> 38
Committee), as applicable, fails to do so within 5 business days after its
receipt of Acquiror's request; (iii) the Special Committee or the Board of
Directors of the Company (including a majority of the members of the Special
Committee) shall have recommended to the stockholders of the Company an
Alternative Transaction; (iv) a tender offer or exchange offer for 20% or more
of the outstanding shares of Company Common Stock is commenced (other than by
the Company or an Affiliate of the Company) and the Special Committee or the
Board of Directors of the Company (including a majority of the members of the
Special Committee) recommends that the stockholders of the Company tender their
shares in such tender or exchange offer; or (v) the Company fails to call and
hold the Company Stockholders Meeting by the Outside Date in breach of Section
5.1(c).
(f) By the Special Committee (on behalf of the Company), prior to
the approval of this Agreement by the stockholders of the Company, if the
Company and the Special Committee have complied in all respects with Section
5.5, and the Special Committee has determined to accept a Superior Proposal;
provided, however, that no termination shall be effective pursuant to this
Section 7.1(f) under circumstances in which a Break-Up Fee is payable by the
Company pursuant to Section 7.2(c)(iii), unless concurrently with such
termination, such Break-Up Fee is paid in full by the Company in accordance with
Section 7.2(c)(iii), as applicable;
(g) By Acquiror, upon a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement, or if (i) any
representation or warranty of the Company that is qualified as to materiality
shall have become untrue or (ii) any representation or warranty of the Company
that is not so qualified shall have become untrue in any material respect, in
each case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied (a "Terminating Company Breach"); provided, however,
that, if such Terminating Company Breach is capable of being cured by the
Company prior to the Effective Time, for so long as the Company continues in
good faith to attempt to cure such breach, Acquiror may not terminate this
Agreement under this Section 7.1(g); or
(h) By the Special Committee (on behalf of the Company), upon a
material breach of any covenant or agreement on the part of Acquiror set forth
in this Agreement, or if (i) any representation or warranty of Acquiror that is
qualified as to materiality shall have become untrue or (ii) any representation
or warranty of Acquiror that is not so qualified shall have become untrue in any
material respect, in each case such that the conditions set forth in Section
6.3(a) or Section 6.3(b) would not be satisfied ("Terminating Acquiror Breach");
provided, however, that, if such Terminating Acquiror Breach is capable of being
cured by Acquiror prior to the Effective Time, for so long as Acquiror continues
in good faith to attempt to cure such breach, the Company may not terminate this
Agreement under this Section 7.1(h).
7.2. EXPENSES
(a) Except as otherwise provided in this Section 7.2, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses. As used
in this Agreement, "Expenses" includes all reasonable
33
<PAGE> 39
out-of-pocket expenses (including, without limitation, all reasonable fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby, including the preparation, printing, filing and mailing of the Schedule
13E-3 and Proxy Statement and the solicitation of stockholder approvals and all
other matters related to the transactions contemplated hereby.
(b) Notwithstanding the foregoing, if (i) the Special Committee
or the Board of Directors of the Company (including a majority of the members of
the Special Committee) withdraw, modify or change any recommendation regarding
this Agreement or the Merger, or recommend any other offer or proposal, as
contemplated in Section 5.1(c) and (ii) the condition set forth in Section
6.1(a) is not satisfied, then the Company shall pay all of the Expenses incurred
by Acquiror.
(c) The Company shall pay Acquiror a Break-Up Fee upon the
earliest to occur of the following events:
(i) the termination of this Agreement by either Acquiror
or the Company pursuant to Section 7.1(d), if a proposal for an
Alternative Transaction involving the Company shall have been publicly
announced prior to the Company Stockholders' Meeting and either a
definitive agreement for an Alternative Transaction is entered into, or
such Alternative Transaction (or another Alternative Transaction with
the proponent of such transaction or an Affiliate) is consummated,
within eighteen months of such termination;
(ii) the termination of this Agreement by Acquiror
pursuant to Section 7.1(e); or
(iii) the termination of this Agreement by the Special
Committee (on behalf of the Company) pursuant to Section 7.1(f).
The Company's payment of a Break-Up Fee pursuant to this subsection shall be the
sole and exclusive remedy of Acquiror against the Company and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment; provided that this limitation shall not apply in the event of a
willful breach of this Agreement by the Company.
(d) The Break-Up Fee payable pursuant to Section 7.2(c) shall be
paid concurrently with the first to occur of the events described in Section
7.2(c)(i), (ii) or (iii).
(e) As used in this Agreement, "Alternative Transaction" means
either (i) a transaction pursuant to which any Third Party acquires more than
20% of the outstanding shares of Company Common Stock pursuant to a tender offer
or exchange offer or otherwise, (ii) a merger or other business combination
involving the Company pursuant to which any Third Party (or the stockholders of
a Third Party) acquires more than 20% of the outstanding shares of
34
<PAGE> 40
Company Common Stock or the entity surviving such merger or business
combination, or (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this purpose the outstanding equity
securities of Subsidiaries of the Company and the entity surviving any merger or
business combination including any of them) of the Company having a fair market
value (as determined by the Special Committee of the Company in good faith)
equal to more than 20% of the fair market value of all the assets of the Company
and its Subsidiaries, taken as a whole, immediately prior to such transaction.
(f) The "Break-Up Fee" shall be an amount equal to $19,250,000.
7.3. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Acquiror as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Acquiror or the Company or their respective officers,
members or directors except (i) with respect to Section 5.6 and (ii) with
respect to any liabilities or damages incurred or suffered by a party as a
result of the breach by the other party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement.
7.4. AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken or authorization of the Special Committee (on behalf of the
Company) and the Managing Member of Acquiror, at any time before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company, but, after any such approval, no amendment shall be
made which by law or in accordance with the rules of the NYSE requires further
approval by such stockholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
7.5. EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorization of the Special Committee (on
behalf of the Company) and the Managing Member of Acquiror, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other party 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 a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. No delay on the part of any party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. Unless
otherwise provided, the rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies which the parties hereto may
otherwise have at law or in equity. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
35
<PAGE> 41
ARTICLE VIII.
GENERAL PROVISIONS
8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO
OTHER REPRESENTATIONS AND WARRANTIES. None of the representations, warranties,
covenants and other agreements in this Agreement or in any instrument delivered
pursuant to this Agreement, including any rights arising out of any breach of
such representations, warranties, covenants and other agreements, shall survive
the Effective Time, except for those covenants and agreements contained herein
and therein that by their terms apply or are to be performed in whole or in part
after the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither of the
Company nor Acquiror makes any other representations or warranties, and each
hereby disclaims any other representations and warranties made by itself or any
of its officers, directors, members, employees, agents, financial and legal
advisors or other representatives, with respect to the execution and delivery of
this Agreement, the documents and the instruments referred to herein, or the
transactions contemplated hereby or thereby, notwithstanding the delivery or
disclosure to the other party or the other party's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
8.2. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, (b) on the first Business Day following the date of
dispatch if delivered by a nationally recognized next-day courier service, (c)
on the fifth Business Day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid or (d)
if sent by facsimile transmission, with a copy mailed on the same day in the
manner provided in (a) or (b) above, when transmitted and receipt is
acknowledged. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
(a) if to Acquiror, to TIC Acquisition LLC, 550 Newport Center
Drive, Suite 900, Newport Beach, California 92660, Attention: Michael D. McKee,
Facsimile No. (949) 720-2599, with copies to Thomas W. Dobson, Latham & Watkins,
633 West Fifth Street, Suite 4000, Los Angeles, California 90071, Facsimile No.
(213) 891-8763, and William J. Cernius, 650 Town Center Drive, Suite 2000, Costa
Mesa, California 92626, Facsimile No. (714) 755-8290;
(b) if to the Company, to Irvine Apartment Communities, Inc.,
Attention: President, Facsimile No. (949) 720-5503, with a copy to Jeffrey
Small, Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017,
Facsimile No. (212) 450-4800.
8.3. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes"
36
<PAGE> 42
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the content requires otherwise. It is
understood and agreed that neither the specifications of any dollar amount in
this Agreement nor the inclusion of any specific item in the Schedules or
Exhibits is intended to imply that such amounts or higher or lower amounts, or
the items so included or other items, are or are not material, and neither party
shall use the fact of setting of such amounts or the fact of the inclusion of
such item in the Schedules or Exhibits in any dispute or controversy between the
parties as to whether any obligation, item or matter is or is not material for
purposes hereof.
8.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement (including the Schedules and Exhibits)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
except for Sections 2.1, 2.3 and 5.9, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
8.6. GOVERNING LAW. Except to the extent that the MGCL shall govern
the Merger, this Agreement shall be governed and construed in accordance with
the laws of the State of Delaware, without regard to the laws that might be
applicable under conflicts of laws principles.
8.7. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. Any provision of this Agreement held invalid or
unenforceable only in part, degree or certain jurisdictions will remain in full
force and effect to the extent not held invalid or unenforceable. To the extent
permitted by applicable law, each
37
<PAGE> 43
party waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
8.8. ASSIGNMENT. This Agreement and the rights, interests and
obligations hereunder shall not be assigned, except by Acquiror to a party
which, in a written instrument shall agree to assume all of Acquiror's
obligations hereunder and be bound by all of the terms and conditions of this
Agreement; provided, however, that no such assignment shall relieve the Acquiror
of its obligations hereunder. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
8.9. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.10. DEFINITIONS. As used in this Agreement:
(a) "Affiliate" means an affiliate, as defined in Rule 405
promulgated under the Securities Act; provided, that the Company and the Company
Subs shall not be deemed Affiliates of Acquiror or its members or their
Affiliates for purposes of this Agreement. For the avoidance of doubt, for
purposes of this Agreement, TIC shall be an Affiliate of Acquiror.
(b) "Board of Directors" means the Board of Directors of any
specified Person and any properly serving and acting committees thereof.
(c) "Business Day" means any day on which banks are not required
or authorized to close in the City of New York.
(d) "Company Affiliate" shall mean any entity which is (or at any
relevant time was) treated as a single employer with the Company or any Company
Sub under Section 414 of the Code or Section 4001(b)(11) of ERISA.
(e) "Company Disclosure Letter" means the letter previously
delivered to Acquiror by the Company disclosing certain information in
connection with this Agreement.
(f) "Company Stock Option Plans" means the Company's 1993 Stock
Option Plan for Directors, 1993 Long-Term Stock Incentive Plan and 1996
Long-Term Stock Incentive Plan, each as amended.
(g) "Company Sub" means a Subsidiary of the Company (excluding
any Subsidiary of the Company which is inactive, has no business operations and
has no liabilities).
(h) "Knowledge" means the actual knowledge after reasonable
investigation of the executive officers of the applicable entity.
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<PAGE> 44
(i) "Material Adverse Effect" means, with respect to any Person,
any adverse change, circumstance or effect that, individually or in the
aggregate with all other adverse changes, circumstances and effects, would be
materially adverse to the business, operations, financial condition or results
of operations of such Person and its Subsidiaries taken as a whole; provided
that, with respect to Section 3.1(o) only, in no event shall any change,
circumstance or effect relating to or arising out of (i) the fact or terms of
this Agreement or the Merger; (ii) general economic or market conditions; or
(iii) the real estate development industry generally constitute a Material
Adverse Effect.
(j) "OP Units" shall mean any of (i) limited partnership units of
the OP, (ii) general partnership units of the OP, (iii) Series A Preferred
Limited Partner Units of the OP and (iv) Series B Preferred Limited Partner
Units of the OP.
(k) "Organizational Documents" means, with respect to any entity,
the charter, certificate of incorporation, bylaws, partnership agreement,
declaration of trust or other governing documents of such entity, including any
documents designating or certifying the terms of any security of such entity.
(l) "Person" means an individual, corporation, partnership,
limited partnership, limited liability company association, trust,
unincorporated organization, entity or group (as defined in the Exchange Act).
(m) "Required Company Votes" means (i) the affirmative vote of
the holders of two-thirds of the total number of outstanding shares of Company
Common Stock in favor of this Agreement and the Merger and (ii) the affirmative
vote of a number of shares of Company Common Stock (excluding the shares held by
Acquiror and its Affiliates) representing a majority of the total number of
outstanding shares of Company Common Stock.
(n) "Required Regulatory Approvals" means all authorizations,
consents, orders and approvals of, and declarations and filings with, and all
expirations of waiting periods imposed by, any Governmental Entity which, if not
obtained in connection with the consummation of the transactions contemplated
hereby, would have a Material Adverse Affect on TIC or the Company.
(o) "Subsidiary" when used with respect to any party means any
corporation, partnership, limited partnership, limited liability company or
other organization, whether incorporated or unincorporated, any equity interests
of which are owned by such party or by a Subsidiary of such party, or which is
consolidated with such party for financial reporting purposes.
(p) (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in
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<PAGE> 45
respect of such penalties and additions to tax, and (ii) "Tax Return" means all
returns and reports (including elections, claims, declarations, disclosures,
schedules, estimates, computations and information returns) required to be
supplied to a Tax authority in any jurisdiction.
(q) "the other party" means, with respect to the Company,
Acquiror and means, with respect to Acquiror, the Company.
(r) "Third Party" shall mean any Person other than the Company,
Acquiror and their respective Affiliates.
(s) "Trust Shares" shall mean Series A Preferred Securities of
the Trust.
40
<PAGE> 46
IN WITNESS WHEREOF, the Company and Acquiror have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of February 1, 1999.
TIC ACQUISITION LLC,
a Delaware limited liability company
By: /s/ MICHAEL D. MCKEE
------------------------------------
Michael D. McKee
Authorized Signatory
IRVINE APARTMENT COMMUNITIES, INC.,
a Maryland corporation
By: /s/ WILLIAM H. MCFARLAND
------------------------------------
William H. McFarland
President
<PAGE> 1
FOR RELEASE
February 2, 1999
Contact:
Shawn Howie
Interim Chief Financial Officer
Irvine Apartment Communities
(949) 720-5570
or
Larry Thomas, Corporate Communications
The Irvine Company
(949) 720-3232
SUBSIDIARY OF THE IRVINE COMPANY TO ACQUIRE
IRVINE APARTMENT COMMUNITIES FOR $34 PER SHARE
NEWPORT BEACH, CA, February 2, 1999--Irvine Apartment Communities, Inc.
(NYSE:IAC) and TIC Acquisition LLC, a wholly owned subsidiary of The Irvine
Company, today announced that they have entered into a definitive merger
agreement providing for the acquisition of all the common shares of Irvine
Apartment Communities by TIC Acquisition LLC at a price per share of $34 in
cash. The total purchase price, excluding the shares already owned by The Irvine
Company, is approximately $569 million.
The nine-member board of directors of Irvine Apartment Communities,
including all six directors not affiliated with The Irvine Company, unanimously
approved the merger agreement yesterday. The transaction, which is subject to
the approval of the holders of at least two-thirds of the outstanding common
shares of IAC and other customary conditions, is expected to be completed late
in the second quarter or early in the third quarter of 1999. Morgan Stanley Dean
-more-
<PAGE> 2
-2-
Witter is serving as financial advisor to IAC. NationsBanc Montgomery Securities
is serving as financial advisor to TIC Acquisition LLC.
The board of IAC yesterday declared a regular quarterly dividend of
$0.385 per share payable on February 26, 1999 to holders of record on February
12, 1999. If the merger has not previously closed, the record date for the next
quarterly dividend will be June 15, 1999.
The acquisition price represents a 24.2% premium to IAC's closing price
of $27.375 on December 1, 1998, the day that TIC Acquisition made its initial
acquisition proposal to IAC's board of directors. The purchase price also
exceeds the all-time high closing price of $33.50 for IAC's stock since its
initial public offering in December 1993.
"We are pleased with the terms of the merger agreement, which delivers
superior value to all IAC shareholders," said William H. McFarland, chief
executive officer and a director of IAC. "We are proud of IAC, its management
and employees, whose collective efforts built the value that made this
attractive transaction possible."
Michael D. McKee, chief financial officer of The Irvine Company, said,
"This agreement allows us to deliver substantial return on investment to IAC's
shareholders while enhancing the company's long-term prospects. We believe a
private company structure is best suited to take the risks and secure the
capital required for commercial apartment development in today's real estate
environment."
There are currently 20.2 million common shares outstanding. The Irvine
Company is the largest current stockholder, holding 3.4 million shares,
approximately 17% of the total shares
-more-
<PAGE> 3
-3-
outstanding. The Irvine Company also owns approximately 55% of the partnership
interests of Irvine Apartment Communities, L.P., of which IAC is a 45% general
partner.
Irvine Apartment Communities, a Southern California-based real estate
investment trust, is the dominant owner and operator of apartment properties on
the Irvine Ranch, the nation's largest master-planned community. The company
also is active in the Silicon Valley, San Diego County and Los Angeles. At
December 31, 1998, IAC owned or had under development 65 apartment communities
with 19,478 units.
The Irvine Company is a century old, privately held real estate
investment company primarily engaged in the long-term development of its land in
Orange County, California, and elsewhere in California. Following a
comprehensive master plan created in the 1960s, The Irvine Company is building a
series of large-scale communities on the Irvine Ranch.
####
<PAGE> 1
THE IRVINE COMPANY
550 Newport Center Drive
Newport Beach, CA 92660
February 1, 1999
Irvine Apartment Communities, Inc.
550 Newport Center Drive
Newport Beach, CA 92660
Gentlemen:
In connection with that certain Agreement and Plan of Merger,
dated as of February 1, 1999 (the "Merger Agreement"), between TIC Acquisition
LLC ("Acquiror") and Irvine Apartment Communities, Inc. (the "Company"), you
have requested that The Irvine Company ("TIC") make certain representations,
warranties and covenants. In order to facilitate the transactions contemplated
by the Merger Agreement, TIC hereby makes the representations, warranties and
covenants set forth in this letter agreement. All capitalized terms not defined
herein shall have the meanings set forth in the Merger Agreement.
1. Ownership of Acquiror/Availability of Funds. All of Acquiror's
membership interests are owned by TIC and a wholly-owned Subsidiary of TIC. TIC
is the sole managing member of Acquiror. TIC shall take no action that would
cause Acquiror not to have a minimum of $150 million of cash on hand from the
date of the Merger Agreement through the earlier of (i) the Effective Time and
(ii) sixty (60) days following the termination of the Merger Agreement pursuant
to the terms thereof. Prior to the earlier of (i) the Effective Time and (ii)
sixty (60) days following the termination of the Merger Agreement pursuant to
the terms thereof, TIC shall not permit Acquiror to engage in any business or
transaction other than business or transactions related to the transactions
contemplated by the Merger Agreement.
2. Ownership of Stock. From the date hereof to the earlier of (i)
the Effective Time and (ii) the termination of the Merger Agreement pursuant to
the terms thereof, TIC shall not, and shall not permit any of its Subsidiaries
to, sell or otherwise dispose of any of the shares of Company Common Stock owned
by them. At the Company Stockholders Meeting, or any adjournment thereof, TIC
shall, and shall cause its Subsidiaries to, vote the shares of Company Common
Stock owned by them in favor of the Merger.
3. Cooperation. TIC shall take all actions necessary to cooperate
with Acquiror, and shall take all actions necessary to cause Acquiror to comply
with its obligations, in connection with Sections 5.1(a), 5.8 and 5.9 (insofar
as it pertains to insurance only) of the Merger Agreement; provided that with
respect to Section 5.9 of the Merger Agreement, TIC shall be deemed to have
satisfied its obligations hereunder (and the obligations of Acquiror under the
<PAGE> 2
Merger Agreement) by causing Acquiror to purchase an appropriate policy of
insurance. TIC agrees to cooperate with Acquiror and the Company in connection
with the Merger Agreement and to use reasonable efforts to cause Acquiror to
consummate the Merger; provided that TIC shall have no obligation to contribute
any funds to Acquiror in connection with the Merger.
The rights and obligations of the parties to this letter
agreement shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflicts of law principles.
This letter agreement constitutes the full and complete
understanding and agreement of the parties hereto and supersedes all prior
understandings and agreements with respect to the subject matter hereof. Any
waiver, modification or amendment of any provision of this letter agreement
shall be effective only if in writing and signed by the parties hereto.
[Signature Page Follows]
2
<PAGE> 3
If the foregoing reflects your understanding of our agreement
concerning the matters set forth herein, please sign a copy of this letter
agreement where indicated below and return it to me.
Very truly yours,
The Irvine Company
By: /s/ MICHAEL D. MCKEE
-------------------------------
Michael D. McKee
Chief Financial Officer
The terms and conditions of the preceding letter agreement are accepted and
agreed to by the following:
Irvine Apartment Communities, Inc.
By: /s/ WILLIAM H. MCFARLAND
-------------------------------
William H. McFarland
Chief Executive Officer
3
