<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 24, 1999
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<CAPTION>
Maryland 1-12592 75-2506197
<S> <C> <C>
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
5080 Spectrum Drive, Suite 1000 E, Dallas, Texas 75248
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 788-0510
Not applicable
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
Walden Residential Properties, Inc. (the "Company"), Oly Hightop
Corporation, a Maryland corporation ("Newco"), and Oly Hightop Parent, L.P., a
Delaware limited partnership ("Parent"), have entered into an Agreement and
Plan of Merger, dated as of September 24, 1999 (the "Merger Agreement").
Pursuant to the Merger Agreement, the Company will be merged with and
into Newco with Newco as the surviving corporation (the "Merger") and (i) each
share of common stock, par value $.01 per share ("Company Common Stock"), of
the Company issued and outstanding immediately prior to the time of
consummation of the Merger (the "Effective Time") will be converted into the
right to receive $23.25 in cash, and (ii) each share of 9.16% Series B
Convertible Redeemable Preferred Stock, par value $.01 per share ("Company
Convertible Preferred Stock"), of the Company issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive an amount in cash equal to the sum of (A) the product of (1) $23.25 and
(2) the number of shares of Company Common Stock into which such share of
Company Convertible Preferred Stock would have been convertible immediately
prior to the Effective Time and (B) accrued and unpaid dividends on the Company
Convertible Preferred Stock, up to, but excluding, the closing date of the
Merger.
Holders of common partnership interests in two partnerships controlled
by Walden will be given the choice of either receiving $23.25 per interest in
cash or participating through a new security in the new entity as a limited
partner. Preferred interests in such partnerships will be given the option of
accepting $19.00 per interest in cash or participating through a new
partnership security which will include a 10% coupon and a put option granting
the holder the right to receive $25.00 per interest beginning 5-1/2 years after
completion of the transaction.
If the Merger is approved and adopted by the affirmative vote (the
"Preferred Stock Vote") of both (i) the holders of at least two-thirds of the
outstanding shares of 9.20% Senior Preferred Stock, par value $.01 per share
("Company Senior Preferred Stock"), of the Company entitled to vote thereon and
(ii) the holders of at least two-thirds of the outstanding shares of 9.0%
Redeemable Preferred Stock, par value $.01 per share ("Company Redeemable
Preferred Stock"), of the Company entitled to vote thereon, then (a) each share
of Company Senior Preferred Stock issued and outstanding immediately prior to
the Effective Time will be converted into one unit of senior preferred limited
partnership interest in Parent, (b) each share of Company Redeemable Preferred
Stock issued and outstanding immediately prior to the Effective Time will be
converted into one unit of redeemable preferred limited partnership interest in
Parent and (c) each holder of Company Senior Preferred Stock and Company
Redeemable Preferred Stock will become a limited partner of Parent.
If the Preferred Stock Vote is not obtained, then each share of
Company Senior Preferred Stock issued and outstanding immediately prior to the
Effective Time will be converted into one share of 9.20% Senior Preferred Stock
of Newco and each share of Company Redeemable Preferred Stock issued and
outstanding immediately prior to the Effective Time will be
1
<PAGE> 3
converted into one share of 9.0% Redeemable Preferred Stock of Newco, in each
case with rights and preferences that are substantially identical to the
existing rights and preferences of such series of preferred stock.
The per share purchase price of $23.25 is subject to adjustments
estimated to be $5 million in the aggregate, which will be allocated among all
common equity holders in the Company and the two partnerships.
The transactions contemplated by the Merger Agreement are subject to
certain conditions, including, without limitation, the approval by the common
stockholders of the Company. The Company anticipates that the Merger will be
consummated in the first quarter of 2000.
In conjunction with the Merger Agreement, the Company, Newco and
Parent have agreed to take several steps to facilitate the completion of the
Merger, including entering into voting agreements (the "Voting Agreements")
with certain stockholders of the Company pursuant to which each such
stockholder will agree to vote all shares of capital stock of the Company owned
by such stockholder, together with any shares of capital stock of the Company
subsequently acquired by such stockholder, in favor of the transactions
contemplated by the Merger Agreement.
Copies of the Merger Agreement and the form of the Voting Agreement
are filed as exhibits to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
2.1 Agreement and Plan of Merger, dated September 24, 1999, among
Walden Residential Properties, Inc., Oly Hightop Corporation
and Oly Hightop Parent, L.P.
4.1 Amendment No. 1 to Rights Agreement, dated as of September
24, 1999, between Walden Residential Properties, Inc. and
BankBoston, N.A., as Rights Agent.
99.1 Form of Voting Agreement, dated September 24, 1999, among
Walden Residential Properties, Inc., Oly Hightop Parent,
L.P., Oly Hightop Corporation and certain stockholders of
Walden Residential Properties, Inc.
2
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 30, 1999
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Mark S. Dillinger
-----------------------------------
Mark S. Dillinger
Executive Vice President and Chief
Financial Officer
3
<PAGE> 5
WALDEN RESIDENTIAL PROPERTIES, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated September 24, 1999, among
Walden Residential Properties, Inc., Oly Hightop Corporation
and Oly Hightop Parent, L.P.
4.1 Amendment No. 1 to Rights Agreement, dated as of September
24, 1999, between Walden Residential Properties, Inc. and
BankBoston, N.A., as Rights Agent.
99.1 Form of Voting Agreement, dated September 24, 1999, among
Walden Residential Properties, Inc., Oly Hightop Parent,
L.P., Oly Hightop Corporation and certain stockholders of
Walden Residential Properties, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
WALDEN RESIDENTIAL PROPERTIES, INC.,
OLY HIGHTOP CORPORATION
AND
OLY HIGHTOP PARENT, L.P.
DATED AS OF SEPTEMBER 24, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I -- THE MERGER .........................................................................................2
1.1 The Merger; Effective Time of the Merger.......................................................2
1.2 Closing........................................................................................3
1.3 Effect of the Merger...........................................................................3
1.4 Organizational Documents.......................................................................3
1.5 Directors and Officers of Newco................................................................3
1.6 Approval of Stockholder of Newco...............................................................3
ARTICLE II -- EFFECT OF THE MERGER ON THE STOCK OF
THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES.............................................4
2.1 Effect of the Merger on Stock of Constituent Entities..........................................4
(a) Stock of Newco........................................................................4
(b) Company Common Stock and Company Convertible Preferred Stock..........................4
(c) Company Senior Preferred Stock and Company Redeemable Preferred Stock.................5
(d) Company Warrants......................................................................6
(e) Treatment of Company Stock Options....................................................6
(f) Treatment of Company Restricted Stock.................................................7
(g) Reduction in Merger Consideration.....................................................7
2.2 Payment for Securities/Exchange of Certificates................................................7
(a) Exchange Agent........................................................................7
(b) Exchange Procedures...................................................................8
(c) Distributions with Respect to Unexchanged Shares.....................................10
(d) No Further Ownership Rights..........................................................10
(e) Termination of Exchange Fund.........................................................11
(f) No Liability.........................................................................11
(g) Lost, Stolen, or Destroyed Certificates..............................................12
(h) Payment Procedures for Company Stock Options.........................................12
(i) Payment Procedures for Company Warrants.............................................12
(j) Withholding of Tax...................................................................13
2.3 Appraisal Rights..............................................................................13
</TABLE>
i
<PAGE> 3
Table of Contents -- Cont'd.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE III -- REPRESENTATIONS AND WARRANTIES...................................................................13
3.1 Representations and Warranties of the Company.................................................13
(a) Organization, Standing and Power.....................................................13
(b) Capital Structure....................................................................14
(c) Authority; No Violations; Consents and Approvals.....................................17
(d) SEC Documents........................................................................20
(e) Information Supplied.................................................................21
(f) Absence of Certain Changes or Events.................................................21
(g) No Undisclosed Material Liabilities..................................................22
(h) No Default...........................................................................22
(i) Compliance with Applicable Laws......................................................23
(j) Litigation...........................................................................23
(k) Taxes................................................................................23
(l) Pension and Benefit Plans; ERISA.....................................................26
(m) Labor and Employment Matters.........................................................29
(n) Intangible Property..................................................................30
(o) Environmental Matters................................................................31
(p) Properties...........................................................................33
(q) Insurance............................................................................35
(r) Opinion of Financial Advisor.........................................................35
(s) Vote Required........................................................................35
(t) Beneficial Ownership of Company Common Stock.........................................36
(u) Brokers..............................................................................36
(v) Investment Company Act of 1940.......................................................36
(w) Amendment to Rights Agreement; State Takeover Laws...................................36
(x) Contracts............................................................................37
(y) Stock Purchase Plan..................................................................39
(z) Deferred Compensation Plan...........................................................39
(aa) Company Options......................................................................39
(bb) Company Warrants.....................................................................40
</TABLE>
ii
<PAGE> 4
Table of Contents -- Cont'd.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(cc) Rule 16b-3...........................................................................40
(dd) Information Systems..................................................................40
(ee) Drever Partners, Inc. Stock Purchase Agreement.......................................40
3.2 Representations and Warranties of Parent and Newco............................................41
(a) Organization, Standing and Power.....................................................41
(b) Capital Structure....................................................................41
(c) Authority; No Violations, Consents and Approvals.....................................42
(d) Information Supplied.................................................................43
(e) Litigation...........................................................................44
(f) Brokers..............................................................................44
(g) Sufficient Funds.....................................................................44
(h) Interim Operations of Parent and Newco...............................................45
ARTICLE IV COVENANTS RELATING TO CONDUCT.................................................................45
OF BUSINESS PENDING THE MERGER................................................................45
4.1 Conduct of Business by the Company Pending the Merger.........................................45
(a) Ordinary Course......................................................................46
(b) Dividends; Changes in Stock..........................................................46
(c) Issuance of Securities...............................................................46
(d) Governing Documents..................................................................47
(e) No Acquisitions......................................................................47
(f) No Dispositions......................................................................47
(g) No Dissolution, Etc..................................................................47
(h) Accounting...........................................................................48
(i) Affiliate Transactions...............................................................48
(j) Insurance............................................................................48
(k) Tax Matters..........................................................................48
(l) Certain Employee Matters.............................................................48
(m) Indebtedness.........................................................................49
(n) WROP Merger and WDOP Merger..........................................................49
(o) Company Rights under Rights Agreement................................................49
(p) Contracts............................................................................49
</TABLE>
iii
<PAGE> 5
Table of Contents -- Cont'd.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(q) Discharge of Liabilities.............................................................49
(r) Drever Partners Stock Purchase Agreement.............................................50
(s) Agreements...........................................................................50
4.2 No Solicitation by the Company................................................................50
ARTICLE V -- ADDITIONAL AGREEMENTS..............................................................................52
5.1 Preparation of S-4, Proxy Statement/Prospectus and Conversion Solicitation Documents..........52
5.2 Letter of the Company's Accountants...........................................................53
5.3 Access to Information.........................................................................53
5.4 Stockholders Meeting..........................................................................53
5.5 Approvals.....................................................................................54
5.6 Agreements of Rule 145 Affiliates.............................................................55
5.7 Employee Matters..............................................................................55
5.8 Stock Options.................................................................................56
5.9 Company Warrants..............................................................................56
5.10 Deferred Compensation Plan....................................................................56
5.11 Directors' and Officers' Indemnification and Insurance........................................56
5.12 Agreement to Defend...........................................................................57
5.13 Public Announcements..........................................................................58
5.14 Other Actions.................................................................................58
5.15 Advice of Changes; SEC Filings................................................................58
5.16 Conveyance Taxes..............................................................................58
5.17 WDOP Merger and WROP Merger...................................................................59
5.18 Employee Loans................................................................................59
5.19 Dividends.....................................................................................60
5.20 Assistance....................................................................................60
5.21 [INTENTIONALLY OMITTED].......................................................................61
5.22 Proxy Solicitor...............................................................................61
5.23 Drever Partners Stock Purchase Agreement......................................................61
5.24 Company Properties............................................................................61
</TABLE>
iv
<PAGE> 6
Table of Contents -- Cont'd.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.25 Extraordinary Payments Amount.................................................................61
5.26 Environmental Matters.........................................................................61
ARTICLE VI -- CONDITIONS PRECEDENT..............................................................................61
6.1 Conditions to Each Party's Obligation to Effect the Merger....................................62
(a) Company Stockholder Approval.........................................................62
(b) Other Approvals......................................................................62
(c) S-4..................................................................................62
(d) No Injunctions or Restraints.........................................................62
(e) HSR Act..............................................................................62
6.2 Conditions to Obligations of Newco to Effect the Merger.......................................62
(a) Representations and Warranties of the Company........................................63
(b) Performance of Obligations of the Company............................................63
(c) Consents Under Agreements............................................................63
(d) WDOP Merger and WROP Merger..........................................................63
(e) Financing............................................................................63
(f) Material Adverse Change or Effect....................................................63
(g) Drever Partners Stock Purchase Agreement.............................................64
(h) Legal Opinion........................................................................64
6.3 Conditions to Obligations of the Company to Effect the Merger.................................64
(a) Representations and Warranties of Newco and Parent...................................64
(b) Performance of Obligations of the Company............................................64
ARTICLE VII -- TERMINATION AND AMENDMENT........................................................................65
7.1 Termination...................................................................................65
7.2 Effect of Termination.........................................................................68
7.3 Amendment.....................................................................................72
7.4 Extension; Waiver.............................................................................72
7.5 Procedure for Termination, Amendment, Extension or Waiver.....................................72
ARTICLE VIII -- GENERAL PROVISIONS..............................................................................73
8.1 Payment of Expenses...........................................................................73
8.2 Nonsurvival of Representations, Warranties and Agreements.....................................73
</TABLE>
v
<PAGE> 7
Table of Contents -- Cont'd.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
8.3 Notices.......................................................................................73
8.4 Interpretation................................................................................74
8.5 Counterparts..................................................................................74
8.6 Entire Agreement; No Third Party Beneficiaries................................................75
8.7 Governing Law.................................................................................75
8.8 No Remedy in Certain Circumstances............................................................75
8.9 Assignment....................................................................................75
8.10 Specific Performance..........................................................................75
8.11 No Affiliate Liability........................................................................76
8.12 Schedule Definitions..........................................................................76
</TABLE>
EXHIBITS:
Exhibit A WDOP Merger Agreement
Exhibit B WROP Merger Agreement
Exhibit C Form of Voting Agreement
Exhibit D-1 WDOP Election and Consent Form (Class B Common Unitholders)
Exhibit D-2 WDOP Election and Consent Form (Class B Preferred Unitholders)
Exhibit D-3 WROP Election and Consent Form (Class C Common Unitholders)
Exhibit D-4 WROP Election and Consent Form (Class D Common Unitholders)
Exhibit E Agreement of Limited Partnership of Parent
Exhibit F Articles Supplementary for Newco Senior Preferred Stock
Exhibit G Articles Supplementary for Newco Redeemable Preferred Stock
Exhibit H Drever Partners Stock Purchase Agreement
Exhibit I Form of Rule 145 Agreement
Exhibit J Form of Option Surrender Agreement, Release and Waiver
Exhibit K Form of Second Amended and Restated Limited Partnership
Agreement of WDOP
Exhibit L Form of Second Amended and Restated Limited Partnership
Agreement of WROP
Exhibit M Form of Loan Repayment Agreement
Exhibit N Form of Legal Opinion of Locke Liddell & Sapp LLP
DISCLOSURE SCHEDULES:
Schedule A Stockholders with Voting Agreements
Schedule B Class B Common Unitholders with WDOP Election and Consent Forms
Schedule C Class B Preferred Unitholders with WDOP Election and Consent
Forms
vi
<PAGE> 8
Schedule D Class C Common Unitholders with WROP Election and Consent Forms
Schedule E Class D Common Unitholders with WROP Election and Consent Forms
COMPANY DISCLOSURE SCHEDULE:
Schedule 3.1(a) Company Subsidiaries
Schedule 3.1(b) Company Capital Structure
Schedule 3.1(c) Company Conflicts/Consents
Schedule 3.1(f) Company Certain Changes or Events
Schedule 3.1(g) Company Undisclosed Liabilities
Schedule 3.1(j) Company Litigation
Schedule 3.1(k) Company Tax Information
Schedule 3.1(l) Company Pension and Benefit Plan and Related Information
Schedule 3.1(m) Company Labor Matters
Schedule 3.1(o) Company Environmental Matters
Schedule 3.1(p) Company Properties
Schedule 3.1(q) Company Insurance
Schedule 3.1(x) Company Contracts
Schedule 3.1(dd) Company Information Systems
Schedule 4.1 Company Conduct of Business
PARENT/NEWCO DISCLOSURE SCHEDULE:
Schedule 3.2(g) Parent/Newco Financing Commitments
Schedule 5.5(b) Parent/Newco Transaction Consents
Schedule 5.25 Extraordinary Scheduled Payments
vii
<PAGE> 9
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined on Page #
-----------------
<S> <C>
Definition
Acquiring Person........................................................................................31
Affiliate...............................................................................................41
Agreement................................................................................................1
Articles of Merger.......................................................................................2
Base Amount.............................................................................................59
Break Up Fee............................................................................................58
Cash Merger Consideration................................................................................4
CERCLA..................................................................................................28
Certificate..............................................................................................7
Closing..................................................................................................2
Closing Date.............................................................................................3
Company..................................................................................................1
Company 1994 Option Plan.................................................................................6
Company Acquisition Proposal............................................................................43
Company Bylaws...........................................................................................3
Company Charter..........................................................................................3
Company Common Stock.....................................................................................3
Company Convertible Preferred Stock......................................................................4
Company Deferred Compensation Plan......................................................................33
Company Disclosure Schedule.............................................................................11
Company Employee Benefit Plans..........................................................................23
Company ERISA Affiliate.................................................................................22
Company Incentive Plans..................................................................................6
Company Intangible Property.............................................................................26
Company Junior Preferred Stock..........................................................................13
Company Litigation......................................................................................20
Company LTIP.............................................................................................6
Company Officers or Directors...........................................................................48
Company Order...........................................................................................20
Company Partnership.....................................................................................54
Company Pension Plans...................................................................................22
Company Permits.........................................................................................19
Company Properties......................................................................................29
Company Redeemable Preferred Stock.......................................................................3
Company Rights..........................................................................................31
Company Rights Agreement................................................................................31
Company SEC Documents...................................................................................17
Company Senior Preferred Stock...........................................................................4
Company Series A Warrants................................................................................5
Company Series B Warrants................................................................................5
Company Special Committee................................................................................1
Company Stock Option.....................................................................................6
</TABLE>
viii
<PAGE> 10
<TABLE>
<S> <C>
Company Stock Purchase Plan..............................................................................6
Company Superior Proposal...............................................................................44
Company Warrants.........................................................................................5
Confidentiality Agreement...............................................................................45
Constituent Entities.....................................................................................2
Conversion Solicitation Documents.......................................................................18
Distribution Date.......................................................................................31
Drever Partners Stock Purchase Agreement................................................................34
Effective Time...........................................................................................2
Encumbrances............................................................................................14
Environmental Laws......................................................................................26
EPA.....................................................................................................28
ERISA...................................................................................................22
Exchange Act............................................................................................17
Exchange Agent...........................................................................................6
Exchange Fund............................................................................................7
Extraordinary Capital Expenditures Payments.............................................................52
Extraordinary Consent Payments..........................................................................52
Extraordinary Payments Amount...........................................................................52
Financing Commitments...................................................................................38
GAAP....................................................................................................17
Governmental Entity.....................................................................................16
Governmental Payments...................................................................................52
Hazardous Materials.....................................................................................27
Holding.................................................................................................35
HSR Act.................................................................................................17
Information Systems.....................................................................................34
Injunction..............................................................................................53
Investment Company Act..................................................................................31
Knowledge...............................................................................................20
Letter of Transmittal....................................................................................7
Liquidated Damages Base Amount..........................................................................60
Material Adverse Change.................................................................................12
Material Adverse Effect.................................................................................12
Material Breach.........................................................................................56
Material Contracts......................................................................................33
Merger...................................................................................................1
Merger Vote.............................................................................................30
MGCL.....................................................................................................2
Net Cash Flow...........................................................................................12
Net Operating Income....................................................................................12
Newco....................................................................................................1
Newco Common Stock.......................................................................................3
Newco Redeemable Preferred Stock.........................................................................5
Newco Senior Preferred Stock.............................................................................5
</TABLE>
ix
<PAGE> 11
<TABLE>
<S> <C>
NYSE....................................................................................................17
OP Transaction Documents.................................................................................1
OP Transactions..........................................................................................1
Option Consideration.....................................................................................6
Parent...................................................................................................1
Parent Affiliate........................................................................................65
Parent Partnership Agreement.............................................................................4
Parent Redeemable Preferred Unit.........................................................................4
Parent Senior Preferred Unit.............................................................................4
Parent/Newco Disclosure Schedule........................................................................35
Parent/Newco Litigation.................................................................................37
Parent/Newco Order......................................................................................38
Preferred Stock Vote.....................................................................................4
Property Restrictions...................................................................................29
Proxy Statement/Prospectus..............................................................................17
Qualifying Income.......................................................................................59
REIT....................................................................................................21
REIT Requirements.......................................................................................60
Release.................................................................................................27
Released Claims.........................................................................................61
Remedial Action.........................................................................................27
Required Consents.......................................................................................46
Rule 145 Affiliates.....................................................................................47
S-4.....................................................................................................18
SDAT.....................................................................................................2
SEC.....................................................................................................17
Securities Act..........................................................................................17
Series A Warrant Agreement...............................................................................5
Shares Acquisition Date.................................................................................31
Stockholders Meeting....................................................................................45
Subsidiary..............................................................................................12
Surviving Entity.........................................................................................2
Takeover Statute........................................................................................31
Tax Protection Agreement................................................................................22
Taxes...................................................................................................21
Termination Date........................................................................................56
Termination Expenses....................................................................................59
Termination Tax Opinion.................................................................................60
Transaction Documents...................................................................................15
Voting Agreement.........................................................................................2
Voting Debt.............................................................................................14
Warrant Agent...........................................................................................11
Warrant Agreements.......................................................................................5
Warrant Consideration....................................................................................6
WDN Properties..........................................................................................13
WDOP.....................................................................................................1
</TABLE>
x
<PAGE> 12
<TABLE>
<S> <C>
WDOP Class B Common Units...............................................................................13
WDOP Class B Preferred Units............................................................................13
WDOP Merger..............................................................................................1
WDOP Merger Agreement....................................................................................1
WDOP Merger Sub..........................................................................................1
WROP.....................................................................................................1
WROP Class C Common Units...............................................................................14
WROP Class D Common Units...............................................................................14
WROP Merger..............................................................................................1
WROP Merger Agreement....................................................................................1
WROP Merger Sub..........................................................................................1
Year 2000 Data..........................................................................................34
</TABLE>
xi
<PAGE> 13
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 24, 1999 (this
"Agreement"), among Walden Residential Properties, Inc., a Maryland corporation
(the "Company"), Oly Hightop Corporation, a Maryland corporation ("Newco"), and
Oly Hightop Parent, L.P., a Delaware limited partnership ("Parent");
WHEREAS, the Board of Directors of the Company, upon the
recommendation of a duly authorized special committee of independent directors
(such committee, including any later reconstitution of such committee, the
"Company Special Committee"), and the Board of Directors of Newco have approved
and declared advisable this Agreement and the merger of the Company with and
into Newco, with Newco being the surviving corporation, upon the terms and
subject to the conditions of this Agreement (the "Merger"), and the general
partner of Parent, the sole stockholder of Newco, has approved the Merger;
WHEREAS, concurrently with the execution of this Agreement, the
Company, WDOP Merger, L.P., a Delaware limited partnership ("WDOP Merger Sub"),
and Walden/Drever Operating Partnership, L.P., a Delaware limited partnership
("WDOP"), are entering into an Agreement and Plan of Merger (the "WDOP Merger
Agreement"), a copy of which is attached as Exhibit A hereto, in connection
with which (i) the limited partners of WDOP will (A) receive cash or (B) elect
to receive new securities or a combination of new securities and cash and
consent to the Second Amended and Restated Limited Partnership Agreement of
WDOP by delivery of a WDOP Election and Consent Form (as hereinafter defined),
and (ii) immediately prior to the Merger, WDOP Merger Sub will merge with and
into WDOP (the "WDOP Merger"), with WDOP as the surviving entity;
WHEREAS, concurrently with the execution of this Agreement, Walden
Operating, Inc., a Delaware corporation, WROP Merger, L.P., a Delaware limited
partnership ("WROP Merger Sub"), and Walden Residential Operating Partnership,
L.P., a Delaware limited partnership ("WROP"), are entering into an Agreement
and Plan of Merger (the "WROP Merger Agreement"), a copy of which is attached
as Exhibit B hereto, in connection with which (i) the limited partners of WROP
will (A) receive cash or (B) elect to receive new securities or a combination
of new securities and cash and consent to the Second Amended and Restated
Limited Partnership Agreement of WROP by delivery of a WROP Election and
Consent Form (as hereinafter defined), and (ii) immediately prior to the
Merger, WROP Merger Sub will merge with and into WROP (the "WROP Merger"), with
WROP as the surviving entity (such WROP Merger Agreement, WDOP Merger
Agreement, WDOP Election and Consent Forms, WROP Election and Consent Forms,
Second Amended and Restated Limited Partnership Agreement of WDOP, Second
Amended and Restated Limited Partnership Agreement of WROP and all other
documents to be executed by the Company, Parent, Newco or their respective
Affiliates in connection with the transactions contemplated thereby, shall be
hereinafter referred to as the "OP Transaction Documents," and the transactions
contemplated thereby shall be hereinafter referred to as the "OP
Transactions");
<PAGE> 14
WHEREAS, concurrently with the execution of this Agreement, certain
holders of the Company's stock named in Schedule A hereto are entering into
agreements, each substantially in the form of Exhibit C hereto (each, a "Voting
Agreement"), with Parent, Newco and the Company providing, among other things,
that each such stockholder will vote, or cause to be voted at the Stockholders
Meeting (as hereinafter defined) contemplated hereby, all of the shares of the
Company's stock entitled to vote upon the Merger owned by each such stockholder
at such time in favor of this Agreement, the Merger and the transactions
contemplated hereby;
WHEREAS, concurrently with the execution of this Agreement, certain
limited partners of WDOP named in Schedule B and Schedule C hereto have agreed
with Parent to execute and deliver WDOP Election and Consent Forms (as
hereinafter defined), and certain limited partners of WROP named in Schedule D
and Schedule E hereto have agreed with Parent to execute and deliver WROP
Election and Consent Forms (as hereinafter defined), in each case providing,
among other things, that each such limited partner has approved the WDOP Merger
or the WROP Merger, as applicable, and has elected to receive new securities of
WDOP or WROP, as applicable, or a combination of new securities and cash, as of
the effective time of the WDOP Merger, in the case of such limited partners of
WDOP, and as of the effective time of the WROP Merger, in the case of such
limited partners of WROP; and
WHEREAS, the Company, Newco and Parent desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the OP Transactions and also to prescribe various conditions to the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties to this Agreement agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger; Effective Time of the Merger. Upon the terms and subject to
the conditions of this Agreement, at the Effective Time (as hereinafter
defined), the Company shall be merged with and into Newco in accordance with
the Maryland General Corporation Law (the "MGCL"), the separate corporate
existence of the Company shall cease, and Newco shall continue as the surviving
entity (Newco and the Company are sometimes referred to herein as the
"Constituent Entities," and Newco is sometimes referred to herein as the
"Surviving Entity"). As soon as practicable at or after the closing of the
Merger (the "Closing") pursuant to Section 1.2 and Article 6, Newco and the
Company shall file articles of merger prepared and executed in accordance with
the relevant provisions of the MGCL (the "Articles of Merger") with the State
Department of Assessments and Taxation of Maryland ("SDAT"). The Merger shall
become effective upon the filing of the Articles of Merger with, and acceptance
for record of the Articles of Merger by, the SDAT, or at such later time (but
not to exceed 30 days after the
2
<PAGE> 15
Articles of Merger are accepted for record by the SDAT) specified in the
Articles of Merger (the "Effective Time").
1.2 Closing. The Closing shall take place at 9:30 a.m., Central time, on a
date to be specified by the parties, which shall be no later than the twelfth
business day after satisfaction (or waiver in accordance with this Agreement)
of the latest to occur of the conditions set forth in Article 6 (the "Closing
Date"), at the offices of Vinson & Elkins L.L.P., 3700 Trammell Crow Center,
2001 Ross Avenue, Dallas, Texas 75201, unless another date or place is agreed
to in writing by the parties.
1.3 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and the applicable provisions of the MGCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises of the Company
shall vest in the Surviving Entity, and all debts, liabilities, obligations and
duties of the Company shall become the debts, liabilities, obligations and
duties of the Surviving Entity.
1.4 Organizational Documents. At the Effective Time, the charter (as
defined in Section 1-101 of the MGCL) (the "Company Charter") and the Restated
Bylaws (the "Company Bylaws") of the Company in effect immediately prior to the
Effective Time shall be the charter and bylaws of the Surviving Entity, until
thereafter amended in accordance with their respective terms and applicable
law.
1.5 Directors and Officers of Newco. From and after the Effective Time,
the directors and officers of Newco shall be the initial directors and officers
of the Surviving Entity, and such directors and officers shall serve until
their successors have been duly elected or appointed (in the case of officers)
and qualified or until their death, resignation or removal from office in
accordance with the Surviving Entity's charter and bylaws.
1.6 Approval of Stockholder of Newco. By its execution and delivery of
this Agreement, Parent hereby consents (in its capacity as the sole stockholder
of Newco) to the Merger, this Agreement and the consummation of the
transactions contemplated hereby and agrees that Parent will not (in its
capacity as the sole stockholder of Newco) withdraw, revoke, rescind or alter
such consent in any way without the prior written consent of the Company;
provided, however, that nothing set forth in this Section 1.6 shall limit or
otherwise qualify the rights of Parent or Newco to terminate this Agreement
pursuant to the terms and subject to the conditions set forth in Article 7.
3
<PAGE> 16
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF
THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES
2.1 Effect of the Merger on Stock of Constituent Entities. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of common stock, par value $0.01 per share, of Newco
("Newco Common Stock"), or common stock, par value $0.01 per share ("Company
Common Stock"), of the Company, 9.0% Redeemable Preferred Stock, par value
$0.01 per share ("Company Redeemable Preferred Stock"), of the Company, 9.16%
Series B Convertible Redeemable Preferred Stock, par value $0.01 per share
("Company Convertible Preferred Stock"), of the Company or 9.20% Senior
Preferred Stock, par value $0.01 ("Company Senior Preferred Stock"), of the
Company:
(a) Stock of Newco. The shares of Newco Common Stock issued
and outstanding immediately prior to the Effective Time shall not be
converted or otherwise affected by the Merger and shall remain
outstanding after the Merger as fully paid and nonassessable shares of
common stock, par value $0.01 per share, of the Surviving Entity.
(b) Company Common Stock and Company Convertible Preferred
Stock. Other than any shares of stock of the Company which are held by
the Company or any of its Subsidiaries (as hereinafter defined) or by
Parent or any of its Subsidiaries, which shares shall be canceled and
no consideration shall be received in exchange therefor, and subject
to reduction pursuant to Section 2.1(g), (i) each share of Company
Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive $23.25 in cash, and
(ii) each share of Company Convertible Preferred Stock issued and
outstanding immediately prior to the Effective Time shall be converted
into the right to receive an amount in cash equal to the sum of (A)
the product of (1) $23.25 and (2) the number of shares of Company
Common Stock into which such share of Company Convertible Preferred
Stock would have been convertible immediately prior to the Effective
Time and (B) accrued and unpaid dividends on the Company Convertible
Preferred Stock to but excluding the Closing Date (the per share
consideration described in clauses (i) and (ii), subject to reduction
pursuant to Section 2.1(g), is referred to herein as the "Cash Merger
Consideration"). Any amount payable to a holder of Company Convertible
Preferred Stock will be rounded up to the nearest penny. All such
shares of Company Common Stock and Company Convertible Preferred
Stock, when so converted, 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 shall cease
to have any rights with respect
4
<PAGE> 17
thereto, except the right to receive the Cash Merger Consideration to
be paid in consideration therefor upon the surrender of such
certificates in accordance with Section 2.2, without interest.
(c) Company Senior Preferred Stock and Company Redeemable
Preferred Stock.
(i) If the Merger is approved and adopted by the
affirmative vote of both (A) the holders of at least
two-thirds of the outstanding shares of Company Senior
Preferred Stock entitled to vote thereon and (B) the holders
of at least two-thirds of the outstanding shares of Company
Redeemable Preferred Stock entitled to vote thereon, voting
as separate classes (such affirmative votes, together, the
"Preferred Stock Vote"), then (1) each share of Company
Senior Preferred Stock issued and outstanding immediately
prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable unit of senior
preferred limited partnership interest in Parent ("Parent
Senior Preferred Unit") having the rights and preferences set
forth in the Agreement of Limited Partnership of Parent, a
form of which is attached hereto as Exhibit E (the "Parent
Partnership Agreement"), (2) each share of Company Redeemable
Preferred Stock issued and outstanding immediately prior to
the Effective Time shall be converted into one validly
issued, fully paid and nonassessable unit of redeemable
preferred limited partnership interest ("Parent Redeemable
Preferred Unit") having the rights and preferences set forth
in the Parent Partnership Agreement, and (3) each holder of
Company Senior Preferred Stock and Company Redeemable
Preferred Stock shall become a limited partner of Parent and
shall be bound by the terms of the Parent Partnership
Agreement. All such shares of Company Senior Preferred Stock
and Company Redeemable Preferred Stock, when so converted,
shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each
holder shall cease to have any rights with respect thereto
except the right to receive the Parent Senior Preferred Units
or Parent Redeemable Preferred Units, as the case may be,
into which these shares are converted; or
(ii) (A) If the Preferred Stock Vote is not
obtained, then each share of Company Senior Preferred Stock
issued and outstanding immediately prior to the Effective
Time shall be converted into one validly issued,
5
<PAGE> 18
fully paid and nonassessable share of 9.20% Senior Preferred
Stock of Newco ("Newco Senior Preferred Stock") having the
rights and preferences set forth in the Articles
Supplementary designating the 9.20% Senior Preferred Stock of
Newco attached as Exhibit F hereto (which rights and
preferences are substantially identical to the existing
rights and preferences of the Company Senior Preferred
Stock), and (B) each share of Company Redeemable Preferred
Stock issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued,
fully paid and nonassessable share of 9.0% Redeemable
Preferred Stock of Newco ("Newco Redeemable Preferred Stock")
having the rights and preferences set forth in the Articles
Supplementary designating the 9.0% Redeemable Preferred Stock
of Newco attached as Exhibit G hereto (which rights and
preferences are substantially identical to the existing
rights and preferences of the Company Redeemable Preferred
Stock). All such shares of Company Senior Preferred Stock and
Company Redeemable Preferred Stock, when so converted, 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 shall cease to have
any rights with respect thereto, except the right to receive
a certificate or certificates representing the shares of
Newco Senior Preferred Stock or Newco Redeemable Preferred
Stock, as applicable, into which those shares are converted,
and any unpaid dividends or distributions that such holder
has the right to receive pursuant to Section 2.2(c), in each
case to be issued in consideration therefor upon the
surrender of such certificates in accordance with Section
2.2, without interest.
(d) Company Warrants. Subject to their earlier expiration in
accordance with their respective terms, each warrant to purchase
Company Common Stock then outstanding under (i) that certain Series A
Warrant Agreement (the "Series A Warrant Agreement") dated as of
December 27, 1996 between the Company and The First National Bank of
Boston (the "Company Series A Warrants") and (ii) that certain Series
B Warrant Agreement (together with the Series A Warrant Agreement, the
"Warrant Agreements") dated as of October 1, 1997 between the Company
and the First National Bank of Boston (the "Company Series B Warrants"
and, together with the Company Series A Warrants, the "Company
Warrants"), shall automatically be canceled and cease to exist and
shall thereafter represent the right to receive for each share of
Company Common Stock subject to such Company Warrant an amount in cash
equal to the difference between (A) the amount of Cash Merger
Consideration payable in respect of a share of Company Common Stock
and (B) the per share exercise price of such Company Warrants, as
adjusted pursuant to Section 5.9, to the extent such Cash Merger
Consideration exceeds such per share exercise price (such amount in
cash as described above being hereinafter referred to as the "Warrant
Consideration"). The Warrant Consideration shall be paid pursuant to
the procedures set forth in Section 2.2(i)
(e) Treatment of Company Stock Options. Each outstanding
option (each, a "Company Stock Option") to purchase Company Common
Stock that has been granted under the Company's Amended and Restated
1994 Stock Option Plan (the "Company 1994 Option Plan"), the Company's
Long-Term Incentive Plan (the "Company LTIP") or the Company's 1998
Non-Qualified Employee Stock Purchase Plan (the "Company Stock
Purchase Plan" and, collectively with the Company 1994 Option Plan and
the Company LTIP, the "Company Incentive Plans"), whether or not then
vested or exercisable, shall become fully vested and exercisable as of
the Effective Time and shall automatically be
6
<PAGE> 19
canceled and cease to exist as of the Effective Time and shall be
converted into the right to receive an amount in cash, if positive,
equal to the number of shares of Company Common Stock subject to such
Company Stock Option multiplied by the excess of (ii) the per share
Cash Merger Consideration minus (ii) the exercise price of such
Company Stock Option (such product, the "Option Consideration"). No
cash payment will be due in respect of such Company Stock Option or
its termination if the amount set forth in clause (ii) exceeds the
amount set forth in clause (i). The Option Consideration shall be paid
pursuant to the procedures set forth in Section 2.2(h).
(f) Treatment of Company Restricted Stock. The Company shall
take all actions necessary to provide that, as of the Effective Time,
(i) all restrictions upon each outstanding share of restricted stock
that has been granted under the Company LTIP shall terminate, (ii)
each such share of restricted stock shall be converted into the right
to receive the per share Cash Merger Consideration, and (iii) each
share of restricted stock shall be canceled.
(g) Reduction in Merger Consideration. (i) The amount,
$23.25, used in Section 2.1(b)(i) will be reduced by a per share
amount equal to the amount that is (A) 79.89% of the Extraordinary
Payments Amount (as hereinafter defined) divided by (B) the aggregate
number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time; and
(i) The amount, $23.25, used in Section 2.1(b)(ii)
will be reduced by a per share amount equal to the amount
that is (A) 6.12% of the Extraordinary Payments Amount
divided by (B) the aggregate number of shares of Company
Convertible Preferred Stock issued and outstanding
immediately prior to the Effective Time.
2.2 Payment for Securities/Exchange of Certificates
(a) Exchange Agent. (i) Immediately after the Effective Time,
the Surviving Entity or Newco shall deposit with a bank or trust
company designated by Newco and reasonably acceptable to the Company
(the "Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock, Company Convertible Preferred Stock, Company
Senior Preferred Stock and Company Redeemable Preferred Stock, as
applicable, for payment or exchange in accordance with this Article 2,
through the Exchange Agent, (A) cash in an amount sufficient to pay
the aggregate Cash Merger Consideration and (B) if the Preferred Stock
Vote has not been obtained, certificates representing the shares of
Newco Senior Preferred Stock and Newco Redeemable Preferred Stock
(such cash and such shares of Newco Senior Preferred Stock and Newco
7
<PAGE> 20
Redeemable Preferred Stock, as the case may be, together with any
dividends or distributions with respect thereto pursuant to Section
2.2(c), being hereinafter referred to as the "Exchange Fund"), in each
case payable or issuable pursuant to Section 2.1 in exchange for
outstanding shares of Company Common Stock, Company Convertible
Preferred Stock, Company Senior Preferred Stock and Company Redeemable
Preferred Stock, as applicable.
(i) As soon as reasonably practicable after the
Effective Time, the Exchange Agent, pursuant to irrevocable
instructions, shall deliver the aggregate Cash Merger
Consideration and the Newco Senior Preferred Stock and the
Newco Redeemable Preferred Stock, as the case may be,
together with any dividends or distributions with respect
thereto pursuant to Section 2.2(c), in each case contemplated
to be paid and issued pursuant to Section 2.1 out of the
Exchange Fund. The Exchange Fund shall not be used for any
other purpose.
(b) Exchange Procedures. (i) As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates which,
immediately prior to the Effective Time represented outstanding shares
of Company Common Stock, Company Convertible Preferred Stock, Company
Senior Preferred Stock and Company Redeemable Preferred Stock (each, a
"Certificate"), which holder's (A) shares of Company Common Stock or
Company Convertible Preferred Stock were converted into the right to
receive the Cash Merger Consideration, (B) shares of Company Senior
Preferred Stock were converted either into the right to receive shares
of Newco Senior Preferred Stock, if the Preferred Stock Vote was not
obtained, or into the right to receive Parent Senior Preferred Units,
if the Preferred Stock Vote was obtained, and (C) shares of Company
Redeemable Preferred Stock were converted into the right to receive
shares of Newco Redeemable Preferred Stock, if the Preferred Stock
Vote was not obtained, or into the right to receive Parent Redeemable
Preferred Units, if the Preferred Stock Vote was obtained, in each
case as set forth in Section 2.1: (1) a letter of transmittal ("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 (except with
respect to holders entitled to receive Parent Senior Preferred Units
or Parent Redeemable Preferred Units, which holders shall
automatically be admitted as limited partners as of the Effective
Time), and shall be in such form and have such other provisions as the
Surviving Entity may reasonably specify, and (3) instructions for use
in effecting the surrender of the Certificates in exchange for the
Cash Merger Consideration or certificates representing shares of Newco
Senior Preferred Stock or Newco Redeemable Preferred Stock, as
applicable, together with any dividends or distributions with respect
thereto pursuant to Section 2.2(c).
8
<PAGE> 21
(i) If the Preferred Stock Vote is not obtained,
upon surrender of a Certificate for cancellation to the
Exchange Agent, together with the Letter of Transmittal, duly
executed, and any other documents reasonably required by the
Exchange Agent or the Surviving Entity, (A) the holder of a
Certificate formerly representing shares of (1) Company
Common Stock or Company Convertible Preferred Stock shall be
entitled to receive in exchange therefor the applicable
amount of Cash Merger Consideration, (2) Company Senior
Preferred Stock shall be entitled to receive in exchange
therefor, a certificate representing that number of whole
shares of Newco Senior Preferred Stock and any unpaid
dividends and distributions that such holder has the right to
receive pursuant to Section 2.2(c), and (3) Company
Redeemable Preferred Stock shall be entitled to receive in
exchange therefor a certificate representing that number of
whole shares of Newco Redeemable Preferred Stock and any
unpaid dividends and distributions that such holder has the
right to receive pursuant to Section 2.2(c), in each case
which such holder has the right to receive pursuant to the
provisions of this Article 2; and (B) the Certificate so
surrendered shall forthwith be canceled. If the Preferred
Stock Vote has been obtained, (x) the holders of Company
Senior Preferred Stock shall receive Parent Senior Preferred
Units and shall be admitted as limited partners of Parent
effective as of the Effective Time and (y) the holders of
Company Redeemable Preferred Stock shall receive Parent
Redeemable Preferred Units and shall be admitted as limited
partners of Parent as of the Effective Time.
(ii) In the event of a transfer of ownership of
Company Common Stock, Company Convertible Preferred Stock,
Company Senior Preferred Stock or Company Redeemable
Preferred Stock, which is not registered in the transfer
records of the Company, the appropriate amount of Cash Merger
Consideration, if any, or a certificate representing the
appropriate number of shares of Newco Senior Preferred Stock
or Newco Redeemable Preferred Stock, as the case may be, may
be paid and issued to a transferee if the Certificate
representing such Company Common Stock, Company Convertible
Preferred Stock, Company Senior Preferred Stock or Company
Redeemable Preferred Stock is presented to the Exchange Agent
properly endorsed or accompanied by appropriate stock powers
and otherwise in proper form for transfer and accompanied by
all documents reasonably required by the Exchange Agent to
evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each such
Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such
surrender (A) the appropriate amount of Cash Merger
Consideration, in the case of a certificate representing
Company Common Stock or Company Convertible Preferred Stock,
as the case may be, or (B) the certificate representing
shares of Newco Senior Preferred Stock or a limited partner
interest in Parent, as the case may be, in the case of a
certificate representing Company Senior Preferred Stock, and
any unpaid dividends and
9
<PAGE> 22
distributions that such holder has the right to receive
pursuant to Section 2.2(c) or (C) the certificate
representing shares of Newco Redeemable Preferred Stock or a
limited partner interest in Parent, as the case may be, in
the case of a certificate representing shares of Company
Redeemable Preferred Stock, and any unpaid dividends and
distributions that such holder has the right to receive
pursuant to Section 2.2(c). The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with
respect to Newco Senior Preferred Stock held by it from time
to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with
respect thereto for the account of persons entitled thereto.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Newco Senior
Preferred Stock or Newco Redeemable Preferred Stock, as the case may
be, declared or made after the Effective Time with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the right to receive, if the Preferred
Stock Vote has not been obtained, shares of Newco Senior Preferred
Stock or Newco Redeemable Preferred Stock, as the case may be,
represented thereby until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to
the holder thereof, without interest: (A) at the time of such
surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to
such whole shares of Newco Senior Preferred Stock or Newco Redeemable
Preferred Stock, as the case may be; and (B) at the appropriate
payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such
whole shares of Newco Senior Preferred Stock or Newco Redeemable
Preferred Stock, as the case may be.
(d) No Further Ownership Rights. (i) All Cash Merger
Consideration and, if the Preferred Stock Vote is not obtained, all
shares of Newco Senior Preferred Stock or Newco Redeemable Preferred
Stock, as the case may be, issued upon the surrender for exchange of
shares of Company Common Stock, Company Convertible Preferred Stock,
Company Senior Preferred Stock or Company Redeemable Preferred Stock
in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, Company Convertible Preferred Stock, Company
Senior Preferred Stock or Company Redeemable Preferred Stock, 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 that may have been declared or made by the Company on such shares
of Company Common Stock, Company Convertible Preferred Stock, Company
Senior Preferred Stock or Company Redeemable Preferred Stock in
accordance with the terms of this Agreement and which remain unpaid at
the Effective Time, 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
10
<PAGE> 23
Common Stock, Company Convertible Preferred Stock, Company Senior
Preferred Stock or Company Redeemable Preferred Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Entity for
any reason, they shall be canceled and exchanged as provided in this
Article 2.
(i) If the Preferred Stock Vote is obtained, all
Parent Senior Preferred Units or Parent Redeemable Preferred
Units, as the case may be, issued upon the surrender for
exchange of shares of Company Senior Preferred Stock or
Company Redeemable Preferred Stock in accordance with the
terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of
Company Senior Preferred Stock or Company Redeemable
Preferred Stock, subject, however, to Parent's obligation to
pay any dividends or make any other distributions with a
record date prior to the Effective Time that may have been
declared or made by the Company on such shares of the Company
Senior Preferred Stock or Company Redeemable Preferred Stock
in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time, and after the Effective
Time there shall be no further registration of transfers on
the stock transfer books of Parent of the shares of Company
Senior Preferred Stock or Company Redeemable Preferred Stock
that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are
presented to Parent or the Surviving Entity for any reason,
they shall be canceled and exchanged as provided in this
Article 2.
(e) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the former stockholders of the
Company on the six month anniversary of the Effective Time shall be
delivered to the Surviving Entity upon demand, and any stockholders of
the Company who have not theretofore received any applicable Cash
Merger Consideration, Newco Senior Preferred Stock or Newco Redeemable
Preferred Stock, and any other dividends or distributions to which
they are entitled under this Article 2 shall thereafter look only to
Surviving Entity for payment of their claims with respect thereto and
only as general creditors thereof.
(f) No Liability. None of Parent, the Surviving Entity or the
Company shall be liable to any holder of shares of Company Common
Stock, Company Convertible Preferred Stock, Company Senior Preferred
Stock or Company Redeemable Preferred Stock, as the case may be, for
any part of the Cash Merger Consideration or for dividends or
distributions with respect thereto delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Any amounts remaining unclaimed by holders of any such shares five
years after the Effective Time or at such earlier date as is
immediately prior to the time at which such amounts would otherwise
escheat to or become property of any governmental entity, shall, to
the extent permitted by applicable law, become the property of the
Surviving Entity free and clear of any
11
<PAGE> 24
claims or interest of any such holders or their successors, assigns or
personal representatives previously entitled thereto.
(g) Lost, Stolen, or Destroyed Certificates. If any
Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by the Surviving
Entity the posting by such person of a bond in such reasonable amount
as the Surviving Entity may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the appropriate amount of Cash Merger Consideration
payable in respect of shares of Company Common Stock or Company
Convertible Preferred Stock and that number of whole shares of Newco
Senior Preferred Stock or Newco Redeemable Preferred Stock, which such
holder has the right to receive pursuant to the provisions of this
Article 2, and any unpaid dividends and distributions that such holder
has the right to receive pursuant to Section 2.2(c).
(h) Payment Procedures for Company Stock Options. Upon the
later of the Effective Time and the surrender by the holder of a
Company Stock Option by delivery of an Option Release Agreement (as
hereinafter defined), the Surviving Entity shall pay to such holder
the Option Consideration in respect thereof. No interest shall be paid
or accrued on the Option Consideration. Until settled in accordance
with the provisions of this Section 2.2, each Company Stock Option
shall be deemed at any time after the Effective Time to represent for
all purposes only the right to receive the Option Consideration. The
surrender of a Company Stock Option in exchange for the Option
Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Company Stock Option.
(i) Payment Procedures for Company Warrants. Pursuant to
Section 5.9, the First National Bank of Boston (or its successor), as
Warrant Agent (the "Warrant Agent"), shall deliver to the holders of
Company Warrants notice of the Merger, which notice shall specify the
reduced exercise price of the Company Warrants and the date as of
which the holders of stock or other securities of the Company may
exchange their shares of stock or other securities for property upon
the Merger and shall specify that delivery shall be effected and risk
of loss and title to the Company Warrants shall pass only upon
delivery of the certificates representing the Company Warrants to the
Warrant Agent. The notice shall include instructions for surrendering
such certificates in exchange for the Warrant Consideration that such
holder is entitled to receive pursuant to Section 2.1(d), which the
Warrant Agent shall instruct the Company to transfer promptly to or
upon the written order of such holder. No interest shall be paid or
accrued on the Warrant Consideration. Any amount payable to a holder
of Company Warrants will be rounded up to the nearest penny.
12
<PAGE> 25
(j) Withholding of Tax. The Surviving Entity shall be
entitled to deduct and withhold from the Cash Merger Consideration and
any dividends or distributions otherwise payable pursuant to this
Agreement to any holder of a Certificate, if any, or from any Option
Consideration or Warrant Consideration payable pursuant to this
Agreement to any holder of Company Stock Options or Company Warrants,
such amount as the Surviving Entity (or any Affiliate thereof, as such
term is defined in Section 4.1(i)) or the Exchange Agent is required
to deduct and withhold with respect to the making of such payment
under federal, state, local or foreign tax law. To the extent that
amounts are so withheld by the Surviving Entity, such withheld amounts
shall be treated for all purposes of this Agreement as having been
paid to the former holder of a Certificate, Company Stock Option or
Company Warrant in respect of which such deduction and withholding was
made by the Surviving Entity.
2.3 Appraisal Rights. The holders of shares of Company Common Stock,
Company Convertible Preferred Stock, Company Senior Preferred Stock and Company
Redeemable Preferred Stock shall not be entitled to appraisal rights.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Newco as follows (in each case as
qualified by matters reflected on the disclosure schedule dated as of the date
of this Agreement and delivered by the Company to Parent on or prior to the
date of this Agreement (the "Company Disclosure Schedule") and made a part
hereof by reference):
(a) Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland, and each of its Subsidiaries
(as defined below) is a corporation, limited liability company or
partnership duly organized, validly existing and in good standing
under the laws of its state of incorporation or organization, and each
of the Company and each of its Subsidiaries has all requisite power
and authority to own, lease and operate its properties and to carry on
its business as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the business it
is conducting, or the operation, ownership or leasing of its
properties, makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not have a
Material Adverse Effect (as defined below) on the Company. The Company
has heretofore delivered to Parent complete and correct copies of the
Company Bylaws and the charter, bylaws or other organizational
documents of each of the Company's Subsidiaries. All
13
<PAGE> 26
Subsidiaries of the Company and their respective jurisdictions of
incorporation or organization are identified on Schedule 3.1(a) of the
Company Disclosure Schedule. Each owner and the respective amount of
such owner's equity interest in each such Subsidiary is set forth on
Schedule 3.1(a) of the Company Disclosure Schedule. Schedule 3.1(a) of
the Company Disclosure Schedule sets forth a list of each jurisdiction
in which the Company or a Company Subsidiary is qualified or licensed
to do business and each assumed name under which any of them conducts
business in any jurisdiction. As used in this Agreement, "Material
Adverse Change" or "Material Adverse Effect" means, when used in
connection with the Company, any change, event or effect, whether or
not foreseeable or known as of the date of this Agreement, that,
individually or in the aggregate with any such other changes, events
or effects, is, or could reasonably be expected to be (whether or not
such change, event or effect has, at the time in question, manifested
itself in the Company's historical financial statements), materially
adverse to the historical or near-term or long-term projected (a)
business, (b) assets, (c) liabilities, (d) financial condition or (e)
results of operations (including, but not limited to, Net Operating
Income (as defined below) and Net Cash Flow (as defined below)), in
each case, of the Company and its Subsidiaries taken as a whole. For
purposes of this Agreement, Material Adverse Change and Material
Adverse Effect shall be determined in light of Parent's initial
capital structure for the Surviving Entity, which capital structure is
set forth in the letter of even date herewith from Parent to the
Company. As used in this Agreement, "Net Operating Income" means
rental and other property income minus property management and
operating expenses and general and administrative expenses, and "Net
Cash Flow" means Net Operating Income minus debt service payments of
principal and interest, capital expenditures and other non-operating
expenses. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which: (i) such party or any other
Subsidiary of such party is a general partner; (ii) at least a
majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation
or other organization is, directly or indirectly, owned or controlled
by such party or by any one or more of its Subsidiaries, or by such
party and any one or more of its Subsidiaries; (iii) such party and/or
any other Subsidiary of such party beneficially owns, directly or
indirectly, at least 25% of the equity interests; or (iv) such party
and/or any other Subsidiary of such party has a direct or indirect
investment of $10 million or more in equity or indebtedness.
(b) Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of (i) 50,000,000 shares of
Company Common Stock and (ii) 10,000,000 shares of preferred stock,
par value $0.01 per share, of which (A) 4,000,000 shares have been
designated as Company Senior Preferred Stock, (B) 1,800,000 shares
have been designated as Company Convertible Preferred Stock, (C)
2,000,000 shares have been designated as Company Redeemable Preferred
Stock and (D) 350,000 shares have been designated as Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Company
Junior Preferred Stock"). As of the date hereof: (1) 25,460,322
14
<PAGE> 27
shares of Company Common Stock (including one Company Right, as
hereinafter defined, for each outstanding share of Company Common
Stock) are issued and outstanding; (2) 4,000,000 shares of Company
Senior Preferred Stock are issued and outstanding; (3) 1,709,182
shares of Company Convertible Preferred Stock are issued and
outstanding; (4) 1,568,275 shares of Company Redeemable Preferred
Stock are issued and outstanding; (5) 500,000 shares of Company Common
Stock are reserved for issuance pursuant to the Company Incentive
Plans, of which 112,899 shares of Company Common Stock are issued but
not yet vested under restricted stock grants; (6) 345,709 shares of
Company Common Stock were issued under the Associates Loan Program and
106,600 shares were issued pursuant to the Company LTIP in connection
with officer loans; (7) 2,983,620 shares of Company Common Stock are
subject to issuance upon the exercise of options or awards granted to
officers, directors or employees of Company and its Subsidiaries under
the Company LTIP or the Company 1994 Option Plan; (8) 4,000,000
Company Series A Warrants are issued and outstanding, and 5,233,247
Company Series B Warrants are issued and outstanding; (9) 1,949,493
shares of Company Common Stock are reserved for issuance upon
conversion of the Company Convertible Preferred Stock; (10) 350,000
shares of Company Junior Preferred Stock are reserved for issuance
under the Company Rights Agreement (as hereinafter defined); (11)
1,333,333-1/3 shares of Company Common Stock are subject to issuance,
and are also reserved for issuance, upon exercise of the Company
Series A Warrants that are issued and outstanding, and 2,222,121
shares of Company Common Stock are subject to issuance, and are also
reserved for issuance, upon exercise of the Company Series B Warrants
that are issued and outstanding; (12) 3,611,483 shares of Company
Common Stock are subject to issuance, and are also reserved for
issuance, upon the exchange of WDOP Class B Common Units (as defined
below); (13) 429,938 shares of Company Redeemable Preferred Stock are
subject to issuance, and are also reserved for issuance, upon the
exchange of WDOP Class B Preferred Units (as defined below); (14)
810,128 shares of Company Common Stock are subject to issuance, and
are also reserved for issuance, upon the exchange of WROP Class C
Common Units (as defined below); (15) 38,876 shares of Company Common
Stock are subject to issuance, and are also reserved for issuance,
upon the exchange of WROP Class D Common Units (as defined below); and
(16) no Voting Debt (as defined below) is issued and outstanding in
the Company or any Subsidiary of the Company. The Company is the sole
general partner of WDOP and holds a one percent general partnership
interest in WDOP. WDN Properties, Inc., a New York corporation and
wholly owned Subsidiary of the Company ("WDN Properties"), holds a
53.95% limited partnership interest in WDOP. As of the date hereof,
Class A limited partnership interests representing a 63.6070% interest
in WDOP, 3,611,483 units of Class B limited partnership interest in
WDOP ("WDOP Class B Common Units"), constituting an interest of
17.3086% in WDOP; Class C limited partnership interests representing a
3.5900% interest in WDOP; Class D limited partnership interests
representing a 14.4754% interest in WDOP; and 429,938 units of Class B
preferred limited partnership interest in WDOP ("WDOP Class B
Preferred Units") are validly issued and outstanding, fully paid and
nonassessable and not subject to preemptive rights. Each WDOP Class B
Common Unit is exchangeable for one share of Company Common Stock.
Each WDOP Class B Preferred Unit is exchangeable for
15
<PAGE> 28
one share of Company Redeemable Preferred Stock and 3 1/3 Company
Series B Warrants. Schedule 3.1(b) of the Company Disclosure Schedule
sets forth the name, number and class of WDOP units of partnership
interest and the percentage interest of each partner in WDOP. Walden
Operating, Inc., a Delaware corporation and wholly owned Subsidiary of
the Company, is the sole general partner of WROP and holds a one
percent general partnership interest in WROP. WDN Properties holds a
77.3784% limited partnerships interest in WROP. As of the date hereof,
Class A limited partnership interests representing an 83.2781%
interest in WROP; 810,128 units of Class C limited partnership
interest in WROP ("WROP Class C Common Units"), constituting an
interest of 14.992% in WROP; and 38,876 units of Class D limited
partnership interest in WROP ("WROP Class D Common Units"),
constituting an interest of 0.7299% in WROP, are validly issued and
outstanding, fully paid and nonassessable and not subject to
preemptive rights. Each WROP Class C Common Unit and WROP Class D
Common Unit is exchangeable for one share of Company Common Stock.
Schedule 3.1(b) of the Company Disclosure Schedule sets forth the
name, number and class of WROP units of partnership interest and the
percentage interest of each partner in WROP. The term "Voting Debt"
means bonds, debentures, notes or other indebtedness having the right
to vote (or convertible into securities having the right to vote) on
any matters on which holders of equity interests in the Company or any
Subsidiary of the Company or Parent and Newco, as applicable, may
vote. All outstanding shares of Company Common Stock, Company Senior
Preferred Stock, Company Convertible Preferred Stock, and Company
Redeemable Preferred Stock are validly issued, fully paid and
nonassessable and are not subject to preemptive rights. Other than as
set forth in the applicable organizational documents or under
applicable securities law and except as set forth on Schedule 3.1(b)
of the Company Disclosure Schedule, all outstanding equity interests
of the Subsidiaries of the Company owned by the Company, or a direct
or indirect wholly owned Subsidiary of the Company, are free and clear
of all liens, pledges, charges, encumbrances, claims, mortgages, deeds
of trust, security interests, restrictions, rights of first refusal,
defects in title, or other burdens, options or encumbrances of any
kind ("Encumbrances"). Set forth in Schedule 3.1(b) of the Company
Disclosure Schedule is a true and complete list of the following: (i)
each outstanding qualified or non-qualified option to purchase Company
Common Stock granted under the Company Incentive Plans or otherwise,
the name of each holder of each such option and the exercise price and
the number of shares subject to each such option; (ii) each grant of
Company Common Stock to employees which is subject to any risk of
forfeiture, the name of each holder of such restricted stock and the
number of shares of such restricted stock held by each holder; (iii)
each outstanding Company Series A Warrant to purchase Company Common
Stock and each outstanding Company Series B Warrant to purchase
Company Common Stock and in each case, the name of each holder of such
warrants and the number of warrants held by such holder; (iv) any
obligation of the Company to issue Company Common Stock as a result of
the transactions contemplated hereby and the total thereof; and (v)
each loan made by the Company with respect to the purchase of Company
Common Stock and the recipient, amount and principal terms thereof.
Except as set forth in this Section 3.1(b) or on Schedule 3.1(b) of
the Company Disclosure Schedule, there are issued and outstanding or
reserved for issuance: (x) no shares of
16
<PAGE> 29
stock, Voting Debt or other voting securities of the Company; (y) no
securities of the Company or any Subsidiary of the Company or
securities or assets of any other entity convertible into or
exchangeable for shares of stock, Voting Debt or other voting
securities of the Company or any Subsidiary of the Company; and (z) no
options, warrants, calls, rights (including preemptive rights),
commitments or agreements to which the Company or any Subsidiary of
the Company is a party or by which it is bound in any case obligating
the Company or any Subsidiary of the Company to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of stock or any
Voting Debt or other voting securities of the Company or of any
Subsidiary of the Company, or obligating the Company or any Subsidiary
of the Company to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Except for the
Transaction Documents (as hereinafter defined) and the OP Transaction
Documents, there are not as of the date hereof, and there will not be
at the Effective Time, any stockholder agreements, voting trusts or
other agreements or understandings to which the Company or any
Subsidiary of the Company is a party or by which it is bound relating
to the voting of any shares of the stock of the Company or partnership
interests in WDOP or WROP that will limit in any way the solicitation
of proxies or consents from, or the casting of votes by, the
stockholders of the Company or the partners of WROP or WDOP with
respect to the Merger or the other transactions contemplated by the OP
Transaction Documents. Except as set forth in the applicable
organizational documents of any Subsidiary of the Company or as
imposed and required by lenders in connection with bankruptcy remote
or special purpose entities that are Subsidiaries, there are no
restrictions on the Company's ability to vote the equity interests of
any of its Subsidiaries. Except as set forth on Schedule 3.1(b) to the
Company Disclosure Schedule, all dividends or distributions on
securities of the Company that have been declared or authorized prior
to the date of this Agreement have been paid in full.
(c) Authority; No Violations; Consents and Approvals.
(i) The Board of Directors of the Company and the
Company Special Committee have approved and declared
advisable the Merger and this Agreement, and have directed
that the Merger and this Agreement be submitted for
consideration at a special meeting of the stockholders of the
Company. The directors of the Company have advised the
Company and Parent and Newco that they intend to vote or
cause to be voted all of the shares of Company Common Stock,
Company Senior Preferred Stock and Company Redeemable
Preferred Stock beneficially owned by them and their
Affiliates in favor of approval of the Merger and this
Agreement. The general partner of WDOP has approved the WDOP
Merger and the WDOP Merger Agreement, and the general partner
of WROP has approved the WROP Merger and the WROP Merger
Agreement. The Company has all requisite power and authority
to enter into this Agreement, the Loan Repayment Agreements
(as hereinafter defined), the Voting Agreements and
17
<PAGE> 30
all other documents to be executed by the Company in
connection with the transactions contemplated hereby and
thereby (collectively, the "Transaction Documents") and,
subject, with respect to the consummation of the Merger, to
receipt of the Merger Vote (as hereinafter defined), to
consummate the transactions contemplated hereby and thereby.
Each Subsidiary that is a party to any OP Transaction
Document has all requisite power and authority to enter into
such OP Transaction Document and to consummate the
transactions contemplated thereby. The execution and delivery
of the Transaction Documents and the OP Transaction Documents
and the consummation of the transactions contemplated hereby
or thereby have been duly authorized by all necessary action
on the part of the Company and each applicable Subsidiary,
subject, with respect to the consummation of the Merger, to
receipt of the Merger Vote. The Transaction Documents and the
OP Transaction Documents have been duly executed and
delivered by the Company and each applicable Subsidiary and,
subject, with respect to the consummation of the Merger, to
receipt of the Merger Vote, and assuming the Transaction
Documents to which Parent and Newco are parties constitute
the valid and binding obligation of Parent and Newco,
constitute valid and binding obligations of the Company and
each applicable Subsidiary, enforceable in accordance with
their terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors'
rights and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(ii) Except as set forth on Schedule 3.1(c) of the
Company Disclosure Schedule or on Schedule 5.5(b) to the
Parent/Newco Disclosure Schedule, the execution and delivery
of the Transaction Documents or the OP Transaction Documents
by the Company or each applicable Subsidiary do not, and the
consummation of the transactions contemplated hereby or
thereby, and compliance with the provisions hereof or
thereof, will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to
the loss of a material benefit under, or give rise to a right
of purchase under, result in the creation of any Encumbrance
upon any of the properties or assets of the Company or any of
its Subsidiaries under, require the consent or approval of
any third party or otherwise result in a material detriment
to the Company or any of its Subsidiaries under, any
provision of (A) the Company Charter or Company Bylaws or any
provision of the comparable charter or organizational
documents of any of the Company's Subsidiaries, (B) any loan
or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its
Subsidiaries or their respective properties or assets or any
guarantee by the Company or any of its Subsidiaries of any of
the foregoing, (C) any joint venture or other ownership
arrangement or (D) assuming the consents, approvals,
18
<PAGE> 31
authorizations or permits and filings or notifications
referred to in Section 3.1(c)(iii) are duly and timely
obtained or made and the approval of the Merger by the
stockholders of the Company entitled to vote thereon has been
obtained, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or
any of its Subsidiaries or any of their respective properties
or assets, other than, in the case of clauses (B), (C) and
(D), any such conflicts, violations, defaults, rights,
Encumbrances or detriments that, individually or in the
aggregate, (1) have not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Company,
or (2) would not, or could not reasonably be expected to,
materially impair the ability of the Company or any of its
Subsidiaries to perform its obligations hereunder or
thereunder or prevent the consummation of any of the
transactions contemplated hereby or thereby. The Required
Consents (as hereinafter defined) that are listed on such
Schedule 3.1(c) are indicated by an asterisk, it being
understood that additional Required Consents are listed on
Schedule 5.5(b) of the Parent/Newco Disclosure Schedule.
(iii) Except as set forth on Schedule 3.1(c) of the
Company Disclosure Schedule or as set forth in documents
evidencing the tax-exempt bond indebtedness of the Company or
any of its Subsidiaries, which documents have previously been
made available to Parent and Newco, no consent, approval,
order or authorization of, or registration, declaration or
filing with, or permit from any court, governmental,
regulatory or administrative agency or commission or other
governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with
respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of the Transaction
Documents or OP Transaction Documents by the Company or each
of its applicable Subsidiaries or the consummation by the
Company or its applicable Subsidiaries of the transactions
contemplated hereby or thereby, except for: (A) the filing
with the Securities and Exchange Commission (the "SEC") of
(1) a proxy statement in preliminary and definitive form
relating to the meetings of the stockholders of the Company
to be held in connection with the Merger (the "Proxy
Statement/Prospectus") and (2) such reports under Section
13(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and such other compliance with the Exchange
Act and the rules and regulations thereunder, as may be
required in connection with the Transaction Documents or the
OP Transaction Documents and the transactions contemplated
hereby or thereby; (B) the filing of the Articles of Merger
with, and the acceptance for record of the Articles of Merger
by, the State Department of Assessments and Taxation of
Maryland; (C) the filing of certificates of merger with the
Delaware Secretary of State in connection with the WDOP
Merger and the WROP Merger; (D) filings with the New York
Stock Exchange (the "NYSE"); (E) such filings and approvals
as may be required by any applicable state securities, "blue
sky" or takeover laws, or environmental laws; (F) such
filings and approvals as may be required by any foreign
premerger notification, securities, corporate or other law,
rule or
19
<PAGE> 32
regulation; (G) the filing, if applicable, of a pre-merger
notification and report by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the expiration or termination of
the applicable waiting period thereunder; and (H) any such
consent, approval, order, authorization, registration,
declaration, filing, or permit that the failure to obtain or
make (1) has not had, and could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect on the Company, or (2) would not, or could not
reasonably be expected to, materially impair the ability of
the Company to perform its obligations hereunder or prevent
the consummation of any of the transactions contemplated
hereby.
(d) SEC Documents. The Company has made available to Parent
and Newco a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by the
Company with the SEC since January 1, 1997 and prior to or on the date
of this Agreement (the "Company SEC Documents"), which are all the
documents (other than preliminary material) that the Company was
required to file with the SEC between January 1, 1997 and the date of
this Agreement. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Company SEC Documents, and none of
the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
has no outstanding and unresolved comments from the SEC with respect
to any of the Company SEC Documents. The financial statements of the
Company included in the Company SEC Documents complied as to form in
all material respects with the published rules and regulations of the
SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly presented in
accordance with applicable requirements of GAAP (subject, in the case
of the unaudited statements, to normal, recurring adjustments, none of
which are material) the consolidated financial position of the Company
and its consolidated Subsidiaries as of their respective dates and the
consolidated statements of income and the consolidated cash flows of
the Company and its consolidated Subsidiaries for the periods
presented therein. Except as disclosed in the Company SEC Documents,
there are no agreements, arrangements or understandings between the
Company and any party who is at the date of this Agreement or was at
any time prior to the date hereof but after January 1, 1997 an
Affiliate of the Company that are required to be disclosed in the
Company SEC Documents. The books of account and other financial
records of the Company are true, complete and correct in all material
respects and are accurately reflected in all material respects in the
financial statements included in the Company SEC Documents.
20
<PAGE> 33
(e) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by
reference in the Registration Statement on Form S-4 to be filed with
the SEC by Parent and Newco in connection with the issuance of shares
of Newco Senior Preferred Stock and Newco Redeemable Preferred Stock
or Parent Senior Preferred Units and Parent Redeemable Preferred
Units, as the case may be, in the Merger (the "S-4"), or in the
solicitation documents to be distributed to the limited partners of
WDOP and WROP in connection with the OP Transactions (the "Conversion
Solicitation Documents") will, at the time the S-4 becomes effective
under the Securities Act (with respect to the S-4), at the time of
mailing of the Conversion Solicitation Documents (with respect to the
Conversion Solicitation Documents) or at the Effective Time contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, and none of the information supplied or to be supplied by
the Company and included or incorporated by reference in the Proxy
Statement/Prospectus or Conversion Solicitation Documents will, at the
date mailed to stockholders of the Company or limited partners of WDOP
and WROP, as applicable, or at the time of the meeting of such
stockholders to be held in connection with the Merger or at the
Effective Time 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 are made, not misleading. If at any time prior to the
Effective Time any event with respect to the Company or any of its
Subsidiaries, or with respect to other information supplied by the
Company for inclusion in the Proxy Statement/Prospectus, S-4 or
Conversion Solicitation Documents, shall occur which is required to be
described in an amendment of, or a supplement to, the S-4, the Proxy
Statement/Prospectus or Conversion Solicitation Documents, such event
shall be so described, and the Company shall reasonably cooperate with
Parent and Newco to cause such amendment or supplement to be promptly
filed (if required to be filed) with the SEC and disseminated to the
stockholders of the Company or limited partners of WDOP and WROP, as
applicable. The Proxy Statement/Prospectus and Conversion Solicitation
Documents, insofar as they relate to the Company or its Subsidiaries
or other information supplied by the Company for inclusion or
incorporation by reference therein, will comply as to form in all
material respects with the provisions of the Exchange Act and the
rules and regulations thereunder and other applicable law.
(f) Absence of Certain Changes or Events. Except as set forth
on Schedule 3.1(f) of the Company Disclosure Schedule or as disclosed
in or reflected in the Company SEC Documents, and except as
contemplated by this Agreement, since the date of the most recent
audited financial statements included in the Company SEC Documents to
the date hereof, nothing has occurred that would have been prohibited
by Section 4.1(a), (b), (c) (but, with respect to (c), only after June
30, 1999), (h), (i), (k), (l)(iii) or (iv) if the terms of such
subsections had been in effect as of and after such date of such
financial statements, and there has not been: (i) any declaration,
setting aside or payment
21
<PAGE> 34
of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's stock; (ii) any
amendment of any term of any outstanding equity security of the
Company or any Subsidiary of the Company; (iii) any repurchase,
redemption or other acquisition by the Company or any Subsidiary of
the Company of any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, the Company or any
Subsidiary of the Company; (iv) any material change in any method of
accounting or accounting practice or any tax method, practice or
election by the Company or any Subsidiary of the Company; (v) any
amendment of any employment, consulting, severance, retention or any
other agreement between the Company and any officer or director of the
Company; or (vi) any change, event or effect that has had, or could
reasonably be expected to have, a Material Adverse Effect on the
Company.
(g) No Undisclosed Material Liabilities. Except as set forth
on Schedule 3.1(g) of the Company Disclosure Schedule or as disclosed
in the Company SEC Documents, as of the date hereof, there are no
liabilities of the Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute or determined, other
than: (i) liabilities adequately provided for on the balance sheet of
the Company dated as of June 30, 1999 (including the notes thereto)
contained in the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999; (ii) liabilities incurred in the ordinary
course of business subsequent to June 30, 1999 which have not had,
individually or in the aggregate, and could not reasonably be expected
to have a Material Adverse Effect on the Company; and (iii)
liabilities under this Agreement.
(h) No Default. Neither the Company nor any of its
Subsidiaries is in default or violation (and no event has occurred
which, with notice or the lapse of time or both, would constitute a
default or violation) of any term, condition or provision of (i) the
Company Charter or Company Bylaws or the comparable charter or
organizational documents of any of the Company's Subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license to which the Company or any of its Subsidiaries is now a party
or by which the Company or any of its Subsidiaries or any of their
respective properties or assets is bound or (iii) any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company or any of its Subsidiaries, except in the case of (ii) and
(iii) for defaults or violations which in the aggregate have not had
and could not reasonably be expected to have a Material Adverse Effect
on the Company.
(i) Compliance with Applicable Laws. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions,
orders, franchises and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the
"Company Permits"), except where the failure so to hold has not had,
and could not
22
<PAGE> 35
reasonably be expected to have, a Material Adverse Effect on the
Company. The Company and its Subsidiaries are in compliance with the
terms of the Company Permits, except where the failure so to comply
has not had, and could not reasonably be expected to have, a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC
Documents, the businesses of the Company and its Subsidiaries are not
being conducted in violation of any law, ordinance or regulation of
any Governmental Entity, except for possible violations which have not
had, and could not reasonably be expected to have, a Material Adverse
Effect on the Company. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to the
Company or any of its Subsidiaries is pending and of which the Company
has knowledge (as hereinafter defined) or, to the knowledge of the
Company as of the date hereof, is threatened, other than those the
outcome of which has not had, and could not reasonably be expected to
have, a Material Adverse Effect on the Company. For purposes of this
Agreement, "knowledge" means the actual knowledge of the executive
officers of Parent, Newco or the Company, as applicable.
(j) Litigation. Except as disclosed in the Company SEC
Documents or on Schedule 3.1(j) of the Company Disclosure Schedule and
except for Company Litigation (as hereinafter defined) that both (i)
is not covered by insurance and (ii) does not involve potential
liability to the Company or any of its Subsidiaries in excess of
$50,000, as of the date of this Agreement there is no suit, action or
proceeding pending, or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary of the Company
("Company Litigation"), and, as of the date of this Agreement, the
Company and its Subsidiaries have no knowledge of any facts that are
likely to give rise to any Company Litigation, nor as of the date of
this Agreement is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against the
Company or any Subsidiary of the Company ("Company Order"). Except for
Company Litigation that both (i) is not covered by insurance and (ii)
does not involve potential liability to the Company or any of its
Subsidiaries in excess of $50,000, Schedule 3.1(j) of the Company
Disclosure Schedule contains an accurate and complete list, as of the
date hereof, of all Company Litigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries.
(k) Taxes. Except as set forth on Schedule 3.1(k) of the
Company Disclosure Schedule:
(i) Each of the Company and its Subsidiaries (A) has
filed all Tax returns and reports 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 returns and reports are accurate and complete in all
material respects, and (B) has paid (or the Company has paid
on its behalf) all Taxes (as defined
23
<PAGE> 36
below) shown on such returns and reports as required to be
paid by it. The most recent financial statements contained in
the Company SEC Documents reflect an adequate reserve for all
material Taxes payable by the Company and its Subsidiaries
for all taxable periods and portions thereof through the date
of such financial statements. The Company and each Subsidiary
of the Company has established (and until the Closing Date
shall continue to establish and maintain) on its books and
records reserves that are adequate for the payment of all
Taxes not yet due and payable. Since June 30, 1999, the
Company has incurred no liability for Taxes under Sections
857(b), 860(c) or 4981 of the Code, including without
limitation any Tax arising from a prohibited transaction
described in Section 857(b)(6) of the Code, and neither the
Company nor any of its Subsidiaries has incurred any material
liability for Taxes other than in the ordinary course of
business. No material deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or any of
its Subsidiaries, including claims by any taxing authority in
a jurisdiction where the Company or any Subsidiary of the
Company do not file Tax returns but in which any of them is
or may be subject to taxation, and no requests for waivers of
the time to assess any such Taxes are pending. As used in
this Agreement, "Taxes" includes all federal, state, local
and foreign income, property, sales, use, franchise,
employment, payroll, excise, environmental and other taxes,
tariffs or governmental charges of any nature whatsoever,
together with penalties, interest or additions to Tax with
respect thereto.
(ii) The Company (A) for all taxable years
commencing with the year ended December 31, 1993 through
December 31, 1998, has been subject to taxation as a real
estate investment trust within the meaning of Section 856 of
the Code (a "REIT") and has satisfied all requirements to
qualify as a REIT for such years, (B) will qualify as a REIT
for the taxable year ending December 31, 1999 and the taxable
year ending at the Effective Time, and (C) to the Company's
knowledge, no challenge to the Company's status as a REIT is
pending or threatened. Each Subsidiary of the Company which
is a partnership, joint venture or limited liability company
has been since its formation and continues to be treated for
federal income tax purposes as a partnership and not as a
corporation.
(iii) All Taxes which the Company or the Company
Subsidiaries are required by law to withhold or collect,
including Taxes required to have been withheld in connection
with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party and
sales, gross receipts and use taxes, have been duly withheld
or collected and, to the extent required, have been paid over
to the proper Governmental Entities or are held in separate
bank accounts for such purpose. There are no liens for Taxes
upon the assets of the Company or the Company's Subsidiaries
except for statutory liens for Taxes not yet due.
24
<PAGE> 37
(iv) The Tax returns of the Company and the Company
Subsidiaries are not being and have not been examined or
audited by any taxing authority for any past year or periods.
(v) Neither the Company nor the Company Subsidiaries
(A) has filed a consent under Section 341(f) of the Code
concerning collapsible corporations, or (B) is a party to any
Tax allocation or sharing agreement.
(vi) The Company does not have any liability for the
Taxes of any person other than the Company and the Company
Subsidiaries and the Company Subsidiaries do not have any
liability for the Taxes of any person other than the Company
and the Company Subsidiaries (A) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or
foreign law), (B) as a transferee or successor, (C) by
contract, or (D) otherwise.
(vii) Neither the Company nor the Company
Subsidiaries has made any payments, is obligated to make any
payments, or is a party to an agreement that could obligate
it to make any payments that will not be deductible under
Section 280G of the Code. The Company and the Company
Subsidiaries have disclosed to the IRS all positions taken on
its federal income Tax returns which could give rise to a
substantial understatement of Tax under Section 6662 of the
Code.
(viii) Neither the Company nor any Company
Subsidiary has entered into or is subject, directly or
indirectly, to any "Tax Protection Agreements," except as
disclosed in Schedule 3.1(k), true and correct copies of
which have been made available to Parent and Newco. As used
herein, a "Tax Protection Agreement" is an agreement, oral or
written, (A) that has as one of its purposes to permit a
person or entity to take the position that such person or
entity could defer federal taxable income that otherwise
might have been recognized upon a transfer of property to any
Subsidiary of the Company that is treated as a partnership
for federal income tax purposes, and (B) that (i) prohibits
or restricts in any manner the disposition of any assets of
the Company or any of its Subsidiaries (including, without
limitation, requiring the Company or any of its Subsidiaries
to indemnify any person for any tax liabilities resulting
from any such disposition), (ii) requires that the Company or
any of its Subsidiaries maintain, or put in place, or
replace, indebtedness, whether or not secured by one or more
of the Company Properties (as hereinafter defined), or (iii)
requires that the Company or any of its Subsidiaries offer to
any person or entity at any time the opportunity to guarantee
or otherwise assume, directly or indirectly, the risk of loss
for federal income tax
25
<PAGE> 38
purposes for indebtedness or other liabilities of the Company
or any of its Subsidiaries.
(l) Pension and Benefit Plans; ERISA. Except as set forth on
Schedule 3.1(l) of the Company Disclosure Schedule or in the Company
SEC Documents:
(i) All "employee pension benefit plans," as defined
in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), maintained by the Company
or any of its Subsidiaries or any trade or business (whether
or not incorporated) which is under common control, or which
is treated as a single employer, with the Company under
Section 414(b), (c), (m) or (o) of the Code ("Company ERISA
Affiliate") or to which the Company or any of its
Subsidiaries or any Company ERISA Affiliate contributed or is
obligated to contribute thereunder within six years prior to
the Effective Time (the "Company Pension Plans") intended to
qualify under Section 401 of the Code so qualify and have
been determined by the IRS to be qualified under Section 401
of the Code and, to the knowledge of the Company as of the
date hereof, nothing has occurred with respect to the
operation of the Company Pension Plans that could reasonably
be expected to cause the loss of such qualification or the
imposition of any material liability, penalty or tax under
ERISA or the Code.
(ii) No Company Pension Plan is subject to Title IV
of ERISA.
(iii) There is no material violation of ERISA with
respect to (A) the filing of applicable reports, documents,
and notices with the Secretary of Labor and the Secretary of
the Treasury regarding all "employee benefit plans," as
defined in Section 3(3) of ERISA, the Company Pension Plans
and all other material employee compensation and benefit
arrangements or payroll practices, including, without
limitation, severance pay, sick leave, vacation pay, salary
continuation for disability, consulting or other compensation
agreements, retirement, deferred compensation, bonus
(including, without limitation, any retention bonus plan),
long-term incentive, stock option, stock purchase,
hospitalization, medical insurance, life insurance and
scholarship programs maintained by the Company or any of its
Subsidiaries or with respect to which the Company or any of
its Subsidiaries has any liability (all such plans, other
than the Company Pension Plans, being hereinafter referred to
as the "Company Employee Benefit Plans") or (B) the
furnishing of such documents to the participants or
beneficiaries of the Company Employee Benefit Plans or
Company Pension Plans.
26
<PAGE> 39
(iv) Each Company Employee Benefit Plan and Company
Pension Plan, related trust (or other funding or financing
arrangement) and all amendments thereto is listed on Schedule
3.1(l), true and complete copies of which have been made
available to Parent, as have the most recent summary plan
descriptions, administrative service agreements, Form 5500s
and, with respect to any Company Pension Plan intended to be
qualified pursuant to Section 401 of the Code, a current
determination letter.
(v) The Company Employee Benefit Plans and Company
Pension Plans have been maintained, in all material respects,
in accordance with their terms and with all provisions of
ERISA (including rules and regulations thereunder) and other
applicable Federal and state law, there is no material
liability for breaches of fiduciary duty in connection with
the Company Employee Benefit Plans and Company Pension Plans,
and neither the Company nor any of its Subsidiaries or any
"party in interest" or "disqualified person" with respect to
the Company Employee Benefit Plans and the Company Pension
Plans has engaged in a material "prohibited transaction"
within the meaning of Section 4975 of the Code or Section 406
of ERISA.
(vi) As of the date of this Agreement, there are no
material actions, suits or claims pending (other than routine
claims for benefits) or, to the knowledge of the Company,
threatened against, or with respect to, the Company Employee
Benefit Plans or the Company Pension Plans or their assets.
(vii) Except as described on Schedule 3.1(l) of the
Company Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (A) result in any
payment (including any retention bonuses or noncompetition
payments) becoming due to any employee or group of employees
of the Company or any of its Subsidiaries; (B) increase any
benefits otherwise payable under any Company Employee Benefit
Plan or Company Pension Plan; or (C) result in the
acceleration of the time of payment or vesting of any such
benefits. Except as described on Schedule 3.1(l) of the
Company Disclosure Schedule, there are no severance
agreements, noncompetition agreements or employment
agreements between the Company or any of its Subsidiaries and
any employee of the Company or such Subsidiary, and such
schedule sets forth the amounts of any such severance or
noncompetition obligation triggered by the transactions
contemplated by the Transaction Documents or the OP
Transaction Documents and the identity of the person to whom
such obligation is owed. True and complete copies of all
severance agreements and employment agreements described on
Schedule 3.1(l) of the Company Disclosure Schedule have been
provided to Parent and Newco.
27
<PAGE> 40
(viii) Neither the Company nor any of its
Subsidiaries has any consulting agreement or arrangement with
any person involving compensation in excess of $100,000
except as are terminable upon one month's notice or less.
(ix) Neither the Company nor any of its Subsidiaries
nor any Company ERISA Affiliate contributes to, or has an
obligation to contribute to, and has not within six years
prior to the Effective Time contributed to, or had an
obligation to contribute to, a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(x) No stock or other security issued by the Company
or any of its Subsidiaries forms or has formed a material
part of the assets of any Company Employee Benefit Plan or
Company Pension Plan.
(xi) The Company and its ERISA Affiliates have
materially complied with the requirements of Section 4980B of
the Code and Parts 6 and 7 of Subtitle B of Title I of ERISA
regarding health care coverage under the Company Employee
Benefit Plans.
(xii) No amount has been paid by the Company or any
of its ERISA Affiliates, and no amount is expected to be paid
by the Company or any of its ERISA Affiliates, which would be
subject to the provisions of 162(m) of the Code such that all
or a part of such payments would not be deductible by the
payor.
(xiii) As to any Company Pension Plan intended to be
qualified pursuant to Section 401(a) of the Code there has
been no termination or partial termination of the plan within
the meaning of Section 411(d)(3) of the Code.
(xiv) No act, omission or transaction has occurred
which would result in the imposition on the Company or any
Subsidiary of the Company of breach of fiduciary duty
liability damages pursuant to Section 409 of ERISA, a civil
penalty pursuant to Section 502 of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code.
(xv) To the knowledge of the Company or any
Subsidiary of the Company, there is no matter pending with
respect to any Company Pension Plan or Company Employee
Benefit Plan before the Internal Revenue Service, the
Department of Labor or the Pension Benefit Guaranty
Corporation.
28
<PAGE> 41
(xvi) Each Company Employee Benefit Plan may be
unilaterally amended or terminated in its entirety by the
Company without liability except as to benefits accrued
thereunder prior to amendment or termination.
(m) Labor and Employment Matters. Except as set forth on
Schedule 3.1(m) of the Company Disclosure Schedule or in the Company
SEC Documents:
(i) Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or other
current labor agreement with any labor union or organization,
and there is no current union representation question
involving employees of the Company or any of its
Subsidiaries, nor does the Company or any of its Subsidiaries
know of any activity or proceeding of any labor organization
(or representative thereof) or employee group (or
representative thereof) to organize any such employees.
(ii) As of the date hereof, there is no unfair labor
practice charge or grievance arising out of a collective
bargaining agreement or other grievance procedure pending,
or, to the knowledge of the Company or any of its
Subsidiaries, threatened against the Company or any of its
Subsidiaries.
(iii) As of the date hereof, there is no complaint,
lawsuit or proceeding in any forum by or on behalf of any
present or former employee, any applicant for employment or
any classes of the foregoing alleging breach of any express
or implied contract of employment, any law or regulation
governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection
with the employment relationship pending, or, to the
knowledge of the Company or any of its Subsidiaries,
threatened against the Company or any of its Subsidiaries.
(iv) There is no strike, slowdown, work stoppage or
lockout pending, or, to the knowledge of the Company or any
of its Subsidiaries, threatened, against or involving the
Company or any of its Subsidiaries.
(v) Employees of the Company and its Subsidiaries
are lawfully authorized to work in the United States
according to federal immigration laws, except for such lack
of authorization that does not have, and could not reasonably
be expected to have, a Material Adverse Effect on the
Company.
29
<PAGE> 42
(vi) The Company and each of its Subsidiaries are in
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment,
wages, hours of work and occupational safety and health,
except for non-compliance that does not have, and could not
reasonably be expected to have, a Material Adverse Effect on
the Company.
(vii) As of the date hereof, there is no proceeding,
claim, suit, action or governmental investigation pending or,
to the knowledge of the Company or any of its Subsidiaries,
threatened, in respect to which any current or former
director, officer, employee or agent of the Company or any of
its Subsidiaries is or may be entitled to claim
indemnification from the Company or any of its Subsidiaries
pursuant to the Company Charter or Company Bylaws or any
provision of the comparable charter or organizational
documents of any of the Company's Subsidiaries, as provided
in any indemnification agreement to which the Company or any
Subsidiary of the Company is a party or pursuant to
applicable law.
(n) Intangible Property. The Company and its Subsidiaries
own, possess or have adequate rights to use all material trademarks,
trade names, patents, service marks, brand marks, brand names,
computer programs, databases, industrial designs and copyrights
necessary for the operation of the businesses of each of the Company
and its Subsidiaries (collectively, the "Company Intangible
Property"), except where the failure to possess or have adequate
rights to use such properties has not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Company. All of the
Company Intangible Property is owned or licensed by the Company or its
Subsidiaries free and clear of any and all liens, claims or
encumbrances, except those that have not had, and could not reasonably
be expected to have, a Material Adverse Effect on the Company, and
neither the Company nor any such Subsidiary has forfeited or otherwise
relinquished any Company Intangible Property which forfeiture has
resulted, or could reasonably be expected to result, in a Material
Adverse Effect on the Company. To the knowledge of the Company, the
use of the Company Intangible Property by the Company or its
Subsidiaries does not, in any material respect, conflict with,
infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including,
without limitation, any intellectual property right, trademark, trade
name, patent, service mark, brand mark, brand name, computer program,
database, industrial design, copyright or any pending application
therefor, of any other person, and there have been no claims made, and
neither the Company nor any of its Subsidiaries has received any
notice of any claim or otherwise knows that any of the Company
Intangible Property is invalid or conflicts with the asserted rights
of any other person or has not been used or enforced or has failed to
have been used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of any of the Company
Intangible Property, except for any such conflict, infringement,
violation, interference, claim,
30
<PAGE> 43
invalidity, abandonment, cancellation or unenforceability that has not
had and could not reasonably be expected to have a Material Adverse
Effect on the Company.
(o) Environmental Matters. For purposes of this Agreement:
"Environmental Laws" means all federal, state and local laws
(including common laws), rules, regulations, ordinances, orders and
decrees of any Governmental Entity or other legal requirements,
whether now in existence or hereafter enacted and in effect at the
time of Closing, relating to pollution or the protection of human
health or the environment or natural resources of any jurisdiction in
which the applicable party hereto owns or operates assets or conducts
business or owned or operated assets or conducted business (whether or
not through a predecessor entity) (including, without limitation,
ambient air, surface water, groundwater, land surface, subsurface
strata, natural resources or wildlife), including, without limitation,
laws and regulations relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of solid waste or Hazardous Materials, and any similar
laws, rules, regulations, ordinances, orders and decrees of any
foreign jurisdiction in which the applicable party hereto owns or
operates assets or conducts business;
"Hazardous Materials" means (i) any petroleum or petroleum
products, radioactive materials (including naturally occurring
radioactive materials), asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, polychlorinated biphenyls
or transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls, (ii) any chemicals, materials or
substances which are now defined as or included in the definition of
"solid wastes," "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances" or "toxic pollutants," or words of similar
import, under any Environmental Law and (iii) any other chemical,
material, substance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a jurisdiction in
which the Company or any of its Subsidiaries operates).
"Release" means any spill, effluent, emission, leaking,
pumping, pouring, emptying, escaping, dumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, or into or out of any property owned, operated
or leased by the applicable party or its Subsidiaries; and
"Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a Governmental
Entity or required under any Environmental Law, or voluntarily
undertaken to (i) clean up, remove, treat, or in any other way
ameliorate or address any Hazardous Materials or other substance in
the indoor or outdoor environment; (ii) prevent the Release or threat
of Release, or minimize the
31
<PAGE> 44
further Release of any Hazardous Material so it does not endanger or
threaten to endanger the public or employee health or welfare of the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations or post-remedial monitoring and care pertaining or
relating to a Release; or (iv) bring the applicable party into
compliance with any Environmental Law.
Except as disclosed on Schedule 3.1(o) of the Company
Disclosure Schedule:
(i) The operations of the Company and its
Subsidiaries have been conducted, are and, as of the Closing
Date, will be, in compliance with all Environmental Laws, in
all material respects;
(ii) The Company and its Subsidiaries have obtained
and, until the Closing Date, will maintain all material
permits, licenses and registrations, or applications relating
thereto, and have made and, until the Closing Date, will make
all material filings, reports and notices required under
applicable Environmental Laws for the continued operations of
their respective businesses;
(iii) The Company and its Subsidiaries are not
subject to any outstanding material written orders issued by,
or material contracts with, any Governmental Entity or other
person respecting (A) Environmental Laws, (B) Remedial
Action, (C) any Release or threatened Release of a Hazardous
Material or (D) an assumption of responsibility for
environmental liabilities of another person;
(iv) As of the date of this Agreement, the Company
and its Subsidiaries have not received any written
communication alleging, with respect to any such party, the
violation of or liability under any Environmental Law;
(v) Neither the Company nor any of its Subsidiaries
has any material contingent liability in connection with the
Release of any Hazardous Material into the indoor or outdoor
environment (whether on-site or off-site) or employee or
third party exposure to Hazardous Materials;
(vi) The operations of the Company and its
Subsidiaries involving the generation, transportation,
treatment, storage or disposal of hazardous or solid waste,
as defined and regulated under 40 C.F.R. Parts 260-270 (in
effect as of the date of this Agreement) or any applicable
state equivalent, are in material compliance with applicable
Environmental Laws;
32
<PAGE> 45
(vii) There is not now on or in any property of the
Company or its Subsidiaries or any property for which the
Company or its Subsidiaries is potentially liable any of the
following: (A) any underground storage tanks or surface
impoundments or (B) any on-site disposal of Hazardous
Material;
(viii) No Company Property (as hereinafter defined)
is included or, to the knowledge of the Company, proposed for
inclusion on the National Priorities List issued pursuant to
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") by the United
States Environmental Protection Agency (the "EPA") or on the
Comprehensive Environmental Response, Compensation, and
Liability Information System database maintained by the EPA,
and the Company has no knowledge that any Company Property
has otherwise been identified in a published writing by the
EPA as a potential CERCLA removal, remedial or response site
or, to the knowledge of the Company, proposed for inclusion
on any similar list of potentially contaminated sites
pursuant to any other Environmental Law; and
(ix) The existence of possible environmental
problems on sites adjacent to Trinity Oaks Apartments
(Dallas, Texas), Riverwalk Apartments (Conroe, Texas),
Reflections of Highpoint (Dallas, Texas) and Casa Verde
(Phoenix, Arizona) has not had, and could not reasonably be
expected to have, a material adverse impact on such Company
Properties. The Company shall use its commercially reasonable
efforts to comply with the recommendations set forth in
Schedule 3.1(o) to manage or remedy environmental concerns
described therein.
(p) Properties.
(i) The Company or one of the Company's Subsidiaries
owns fee simple title (or where indicated, leasehold estate)
to each of the real properties identified in Schedule 3.1(p)
to the Company Disclosure Schedule (the "Company
Properties"), which are all of the real estate properties
owned or leased by them, in each case (except as provided
below) free and clear of Encumbrances. The Company Properties
are not subject to any rights of way, written agreements,
laws, ordinances and regulations affecting building or land
use, occupancy, or development (collectively, "Property
Restrictions"), except for (A) Encumbrances and Property
Restrictions relating to tax-exempt bond financing set forth
on Schedule 3.1(p) to the Company Disclosure Schedule, (B)
Property Restrictions imposed or promulgated by law or any
governmental body or authority with respect to real property,
including zoning regulations, provided that they do not
materially adversely affect the currently intended use of any
Company Property, (C) Encumbrances and Property Restrictions
disclosed on existing title reports or existing surveys (in
either case copies of which title reports or surveys have
been
33
<PAGE> 46
delivered or made available to Parent), and (D) mechanics',
carriers', workmen's, repairmen's and materialmen's liens and
other Encumbrances, Property Restrictions and other
limitations of any kind, if any, which, individually or in
the aggregate, do not materially detract from the value of or
materially interfere with the present use of any of the
Company Properties subject thereto or affected thereby, and
do not, or could not reasonably be expected to, otherwise
have a Material Adverse Effect on the Company. Except as
provided on Schedule 3.1(p) to the Company Disclosure
Schedule, valid policies of title insurance have been issued,
insuring the Company's or the applicable Company Subsidiary's
fee simple title or leasehold estate to the Company
Properties in amounts at least equal to the value of such
Company Properties at the time of the issuance of such
policy, subject only to the matters disclosed above and on
the Company Disclosure Schedule, and such policies are, at
the date hereof, in full force and effect and no material
claim has been made against any such policy. An on-the-ground
survey of each of the Company Properties made prior to the
Effective Time and prepared in accordance with ALTA/ACSM (or
Texas equivalent) standards would not disclose any
Encumbrance, Property Restriction or other matter affecting
title which is not currently shown on an existing survey of
such Company Property and which could materially adversely
affect the value or operation of such Company Property or the
ability to obtain mortgage financing on such Company
Property.
(ii) Each Company Property (A) complies with the
Property Restrictions or, to the extent that such Company
Property does not comply, a written waiver therefor exists
and may be relied upon by Parent, (B) each improvement on
each Company Property lies outside of any flood plain or, if
any such improvement lies within a flood plain, adequate
insurance therefor is in full force and effect, and (C) each
Company Property has access to and from a dedicated public
right-of-way.
(iii) All properties currently under development or
construction by the Company or the Company Subsidiaries and
all properties currently proposed for acquisition,
development or commencement of construction prior to the
Effective Time by the Company and the Company Subsidiaries
are listed as such on Schedule 3.1(p) to the Company
Disclosure Schedule. All executory agreements entered into by
the Company or any Company Subsidiary relating to the
development or construction of multifamily residential or
other real estate properties (other than agreements for
architectural, engineering, planning, accounting, legal or
other professional services or agreements for material or
labor) are listed on Schedule 3.1(p) to the Company
Disclosure Schedule. Copies of such agreements, all of which
have previously been delivered or made available to Parent
and Newco are listed on the Company Disclosure Schedule and
are true and correct.
34
<PAGE> 47
(q) Insurance. Schedule 3.1(q) of the Company
Disclosure Schedule sets forth an insurance schedule of the
Company's and each of its Subsidiaries' directors' and
officers' liability insurance. The Company and each of its
Subsidiaries maintains insurance with financially responsible
insurers in such amounts and covering such risks as are in
accordance with normal industry practice for companies
engaged in businesses similar to those of the Company and
each of its Subsidiaries (taking into account the cost and
availability of such insurance). Except as set forth on
Schedule 3.1(q), neither the Company nor any Company
Subsidiary has received any notice of cancellation or
termination with respect to any existing material insurance
policy of the Company or any Company Subsidiary.
(r) Opinion of Financial Advisor. The Company has
received the written opinion of J.P. Morgan Securities Inc.
to the effect that, as of the date hereof, on the basis of
and subject to the assumptions set forth therein, the cash
consideration to be paid to the holders of the Company Common
Stock and cash consideration to be offered to the holders of
common limited partnership interests in WDOP and WROP in the
transactions contemplated hereby is fair from a financial
point of view to such holders. A copy of the written opinion
described above has been delivered to Parent.
(s) Vote Required. The affirmative vote of the
holders of at least a majority of the outstanding shares of
Company Common Stock entitled to vote thereon is the only
vote of the holders of any class or series of the Company's
stock necessary to approve the Merger (the "Merger Vote") if
shares of Newco Senior Preferred Stock or Newco Redeemable
Preferred Stock are issued in the Merger. The Merger Vote and
the Preferred Stock Vote are the only votes of the holders of
any class or series of the Company's stock necessary to
approve the Merger if Parent Senior Preferred Units and
Parent Redeemable Preferred Units are issued in the Merger.
(t) Beneficial Ownership of Company Common Stock.
Neither the Company nor its Subsidiaries "beneficially owns"
(as defined in Rule 13d-3 under the Exchange Act) any of the
outstanding Company Common Stock or any of the Company's
outstanding debt securities.
(u) Brokers. Except for the fees and expenses
payable to J.P. Morgan Securities Inc., which fees are
reflected in such firm's engagement letter with the Company
(copies of which have been delivered to Parent), no broker,
investment banker, or other person is entitled to any
broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by the
Transaction Documents or the OP Transaction Documents based
upon arrangements made by or on behalf of the Company.
35
<PAGE> 48
(v) Investment Company Act of 1940. Neither the
Company nor any of its Subsidiaries is, or at the Effective
Time will be, required to be registered as an investment
company under the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(w) Amendment to Rights Agreement; State Takeover
Laws.
(i) The Board of Directors of the Company
has adopted a resolution approving an amendment to
the Rights Agreement dated as of March 26, 1998
between the Company and BankBoston, N.A. (the
"Company Rights Agreement") to provide that (A) the
Company Rights Agreement shall terminate and the
rights to purchase Company Junior Preferred Stock
under the Company Rights Agreement (the "Company
Rights") shall be canceled upon the consummation of
the Merger and that (B) none of the execution and
delivery of this Agreement, the conversion of shares
of Company Common Stock or Company Convertible
Preferred Stock into the right to receive the Cash
Merger Consideration in accordance with Article 2 of
this Agreement, the issuance of Newco Senior
Preferred Stock or Newco Redeemable Preferred Stock
or Parent Senior Preferred Units or Parent
Redeemable Preferred Units, as the case may be, the
consummation of the Merger or any other transaction
contemplated by the Transaction Documents or the OP
Transaction Documents will cause (x) the Company
Rights to be exercisable under the Company Rights
Agreement, (y) Parent, Newco or any of their
respective Subsidiaries or any of their respective
stockholders or holders of partnership interests to
be deemed an "Acquiring Person" (as defined in the
Company Rights Agreement), or (z) any such event to
be deemed a "Distribution Date" (as defined in the
Company Rights Agreement) or the "Shares Acquisition
Date" (as defined in the Company Rights Agreement).
(ii) The Company (A) has taken all action
necessary to exempt the transactions contemplated by
the Transaction Documents and the OP Transaction
Documents from (x) the operation of any "fair
price," "moratorium," "control share acquisition,"
"business combination," or any other anti-takeover
statute or similar statute enacted under the state
or federal laws of the United States or similar
statute or regulation (a "Takeover Statute") and (y)
any ownership restrictions or limitations set forth
in the Company Charter or Company Bylaws or the
organizational documents of any Subsidiary of the
Company and (B) has delivered to Parent true and
complete copies of all resolutions of the Board of
Directors of the Company, any amendments to the
Company Bylaws and any other documents necessary to
exempt such transactions pursuant to clause (A)
above.
36
<PAGE> 49
(x) Contracts.
(i) Except as disclosed in the Company SEC Documents
or on Schedule 3.1(x) to the Company Disclosure Schedule,
there is no contract or agreement that purports to limit in
any material respect the names or the geographic location in
which the Company or any Company Subsidiary may conduct its
business.
(ii) Schedule 3.1(x) sets forth each interest rate
cap, interest rate collar, interest rate swap, currency
hedging transaction, and any other agreement relating to a
similar transaction to which the Company or any Company
Subsidiary is a party or an obligor with respect thereto.
(iii) Except as set forth on Schedule 3.1(x),
neither the Company nor any of the Company Subsidiaries is
party to any agreement which would restrict any of them from
prepaying any of their indebtedness without penalty or
premium at any time or which requires any of them to maintain
any amount of indebtedness with respect to any of the Company
Properties.
(iv) Neither the Company nor any Company
Subsidiaries is a party to any agreement relating to the
management of any of the Company Properties which is not
terminable by the Company or the Company Subsidiary without
penalty on less than 30 days notice except the agreements
described on Schedule 3.1(x).
(v) Schedule 3.1(x) lists all agreements entered
into by the Company or any of the Company Subsidiaries
providing for the sale of, or option to sell, any Company
Properties or the purchase of, or option to purchase, any
real estate which are currently in effect.
(vi) Except as set forth on Schedule 3.1(x), neither
the Company nor any Company Subsidiary has any continuing
contractual liability (A) for indemnification or otherwise
under any agreement relating to the sale of real estate
previously owned (other than non-material indemnification
obligations relating to brokerage commissions, ordinary and
customary title warranties, post-closing adjustments and
customary contractual indemnification for pre-closing events
upon sales of properties by the Company or any of its
Subsidiaries), (B) to pay any additional purchase price for
any of the Company Properties, or (C) to make any prorations
or adjustments to prorations involving
37
<PAGE> 50
an amount in excess of $50,000 (other than real estate taxes)
that may previously have been made with respect to any
property currently or formerly owned by the Company.
(vii) Except as set forth on Schedule 3.1(x), there
are no material outstanding contractual obligations of the
Company or any Company Subsidiary to provide any funds to, or
make any investment (in the form of an advance, loan,
extension of credit, capital contribution or otherwise) in,
or which provide for the direct or indirect guarantee by the
Company or any Subsidiary (including by means of a
take-or-pay or keepwell agreement) of the indebtedness,
liabilities, obligations or financial condition of, any
Company Subsidiary or any other person.
(viii) Except as set forth on Schedule 3.1(x), there
are no indemnification agreements entered into by and between
the Company and any director or officer of the Company or any
of its Subsidiaries.
(ix) Except as set forth on Schedule 3.1(x), there
are no contracts, agreements, commitments or arrangements
that (A) create a material partnership, joint venture or
similar arrangement, (B) require payments to be made in
excess of $100,000 per year for goods and services or with
respect to any licenses granted to or by the Company or any
of its Subsidiaries, (C) grant any Encumbrance upon any
material asset of the Company or any of its Subsidiaries or
(D) were not made in the ordinary course of business and are
material to the Company and its Subsidiaries, taken as a
whole, in each of the cases set forth in clauses (A), (B),
(C) and (D) which are not subject to termination within 30
days after the date of the execution and delivery thereof
without penalty or payment by the Company (all such
contracts, arrangements or agreements listed on Schedule
3.1(x) pursuant to clauses (i) through (ix), the "Material
Contracts").
(y) Stock Purchase Plan. The Company has taken all action
necessary, including (without limitation) causing its Board of
Directors (or a committee thereof) to adopt resolutions, to provide
that (i) the Company Stock Purchase Plan shall be suspended effective
as of the last day of the Purchase Period (as defined in the Company
Stock Purchase Plan) that commenced before the date of this Agreement
and ends on or after the date of this Agreement, which Purchase Period
begins on the first day of a calendar quarter and ends on the last day
of such calendar quarter, so as to terminate temporarily the Company
Stock Purchase Plan during all Purchase Periods, if any, occurring
after such date until the Effective Time; (ii) the Company Stock
Purchase Plan shall terminate permanently as of the Effective Time, at
which time the number of whole shares of Company Common Stock which
such participant would otherwise be entitled to
38
<PAGE> 51
purchase under the Company Stock Purchase Plan shall be converted into
the right to receive the Option Consideration to which such
participant is entitled pursuant to Section 2.1(e), and cash in the
amount of any remaining account balance; and (iii) if the last day of
a Purchase Period does not occur prior to the Closing Date, the
Closing Date shall be deemed to be the last day of such Purchase
Period for purposes of determining the purchase price of the Company
Common Stock with respect to such Purchase Period.
(z) Deferred Compensation Plan. The Company has taken all
actions necessary, including (without limitation) causing its Board of
Directors (or a committee thereof) to adopt resolutions, to provide
that the Company's Non-Qualified Deferred Compensation Plan (the
"Company Deferred Compensation Plan") shall terminate, effective as of
the Effective Time, and all vested and unvested account balances shall
be distributed to such participants in accordance with the terms of
such plan and the corresponding Trust Agreement dated as of October 1,
1998 between the Company and Delaware Charter and Guarantee Trust
Company.
(aa) Company Options. The Company has taken all actions
necessary, including (without limitation) causing its Board of
Directors (or a committee thereof) to adopt resolutions, to provide
that the Company Stock Options shall be automatically canceled as of
the Effective Time and shall thereafter represent the right to receive
the Option Consideration as set forth in Section 2.1 and to ensure
that, following the Effective Time, no participant in the Company
Incentive Plans or any other plans, programs or arrangements shall
have any right thereunder to acquire or otherwise receive any capital
stock of, or other equity or similar interests in, the Company, the
Surviving Entity or any Affiliate thereof.
(bb) Company Warrants. The Company has taken all necessary
action, including (without limitation) causing its Board of Directors
(or a committee thereof) to adopt resolutions, to reduce the exercise
price of the Company Warrants to an exercise price per share equal to
$23.24, effective immediately prior to the Effective Time.
(cc) Rule 16b-3. The Company has taken all necessary action,
including (without limitation) causing its Board of Directors to adopt
resolutions authorizing and approving the Merger, this Agreement and
the transactions contemplated hereby, to exempt such transactions
under Rule 16b-3 of the Exchange Act from the provisions of Section
16(b) of the Exchange Act.
(dd) Information Systems. The Company has formulated a plan
in order to address the ability of the Company's information systems
to process date and time data from, into and beyond the year 2000
("Year 2000 Data"), and the ability of such systems
39
<PAGE> 52
to interact with third parties' systems and with or through electrical
power, telecommunications and other utilities and services. Schedule
3.1(dd) of the Company Disclosure Schedule identifies the Company's
and its Subsidiary's information systems that are material to the
operations of the Company and its Subsidiaries (the "Information
Systems") and identifies for each such Information System (i) whether
such Information System has been identified by the Company as being
able to accurately process such Year 2000 Data, and (ii) if such
Information System has not been identified by the Company as being
able to accurately process Year 2000 Data, the plan and target date
for replacing, updating or upgrading such Information System in order
to be able to accurately process such data. Such plans are proceeding
as scheduled and are being implemented at costs which do not exceed
the costs expected by the Company and its Subsidiaries to be incurred
with respect to their management information systems to enable them to
function in the ordinary course of business. The Company is not aware
of any facts or circumstances that create a reasonable basis for the
Company to believe that, if the scheduled replacements, updates or
upgrades continue to be made in accordance with the plans identified
on Schedule 3.1(dd), the Company's Information Systems will be unable
to accurately process such Year 2000 Data as of and after December 31,
1999. No client, customer, supplier or vendor, and no electric,
telecommunications or other utility with whom the Company's or any
Subsidiary's Information Systems interact, has notified the Company or
such Subsidiary that the Information Systems, when used in combination
with any information system of such person, will be unable to
accurately process such Year 2000 Data.
(ee) Drever Partners, Inc. Stock Purchase Agreement.
Concurrently with the execution of this Agreement, WDOP, Marshall B.
Edwards, Mark S. Dillinger, Michael E. Masterson and Drever Partners,
Inc. have executed and delivered that certain Stock Purchase Agreement
of even date herewith, a copy of which is attached hereto as Exhibit H
(the "Drever Partners Stock Purchase Agreement").
3.2 Representations and Warranties of Parent and Newco. Parent and
Newco represent and warrant, jointly and severally, to the Company as follows
(in each case as qualified by matters reflected on the disclosure schedule
dated as of the date of this Agreement and delivered by Parent and Newco to the
Company on or prior to the date of this Agreement (the "Parent/Newco Disclosure
Schedule") and made a part hereof by reference):
(a) Organization, Standing and Power. Newco is a corporation
duly formed and validly existing under the MGCL and is in good
standing with the State Department of Assessments and Taxation of
Maryland, and Parent is a limited partnership duly formed and validly
existing under the Delaware Revised Uniform Limited Partnership Act
and is in good standing with the Delaware Secretary of State. As of
the date hereof and as of the Closing Date, neither Newco nor Parent
has any Subsidiaries, except that Newco is a wholly owned Subsidiary
of Parent and except for any newly created subsidiaries pursuant to
Section 5.20. Newco has heretofore delivered to the Company
40
<PAGE> 53
complete and correct copies of its charter and Bylaws, and Parent has
delivered to the Company complete and correct copies of its
Certificate of Limited Partnership and Agreement of Limited
Partnership.
(b) Capital Structure. As of the date hereof, Oly Hightop
Holding, L.P., a Delaware limited partnership ("Holding"), is the sole
limited partner of Parent, and Oly Hightop Parent GP, LLC, a Delaware
limited liability company and wholly owned subsidiary of Holding, is
the sole general partner of Parent. As of the date hereof, the
partnership interests of Parent consist of a .01% general partner
interest held by Holding and a 99.99% limited partnership interest
held by Oly Hightop Parent GP, LLC. As of the date hereof, Parent has
designated a class of partnership interests as Senior Preferred Units,
the precise number of which shall equal the number of issued and
outstanding shares of Company Senior Preferred Stock immediately prior
to the Effective Time, and has designated a class of Redeemable
Preferred Units, the precise number of which shall equal the number of
issued and outstanding shares of Company Redeemable Preferred Stock
immediately prior to the Effective Time, and no Parent Senior
Preferred Units or Parent Redeemable Preferred Units are issued and
outstanding. As of the date hereof, the authorized stock of Newco
consists of 1,000 shares of Newco Common Stock. As of the date hereof,
(A) 100 shares of Newco Common Stock are issued and outstanding; (B)
no shares of Newco Senior Preferred Stock are issued and outstanding,
and no shares of Newco Redeemable Preferred Stock are issued and
outstanding; and (C) no Voting Debt is issued and outstanding. Except
as set forth in this Section 3.2(b), there are outstanding: (1) no
equity interests, Voting Debt or other voting securities of Parent or
Newco; (2) no securities of Parent, Newco or any Subsidiary of Parent
or Newco or securities or assets of any other entity convertible into
or exchangeable for equity interests, capital stock, Voting Debt or
other voting securities of Parent or Newco or any Subsidiary of Parent
or Newco; and (3) no options, warrants, calls, rights (including
preemptive rights), commitments or agreements to which Parent or Newco
or any Subsidiary of Parent or Newco is a party or by which it is
bound in any case obligating Parent or Newco or any Subsidiary of
Parent or Newco to issue, deliver, sell, purchase, redeem or acquire,
or cause to be issued, delivered, sold, purchased, redeemed or
acquired, additional equity interests, capital stock or any Voting
Debt or other voting securities of Parent or Newco or of any
Subsidiary of Parent or Newco, or obligating Parent or Newco or any
Subsidiary of Parent or Newco to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. When issued in
accordance with this Agreement, the shares of Newco Senior Preferred
Stock and Newco Redeemable Preferred Stock or Parent Senior Preferred
Units and Parent Redeemable Preferred Units, as the case may be,
issued pursuant to the Merger will be duly authorized and validly
issued, fully paid and nonassessable and not subject to preemptive (or
similar) rights.
(c) Authority; No Violations, Consents and Approvals.
41
<PAGE> 54
(i) Each of Parent and Newco has all requisite power and
authority to enter into the Transaction Documents and to consummate
the transactions contemplated hereby or thereby. The execution and
delivery of the Transaction Documents and the consummation of the
transactions contemplated hereby or thereby have been duly authorized
by all necessary action on the part of Parent and Newco. The
Transaction Documents to which Parent or Newco is a party have been
duly executed and delivered by each of Parent and Newco, as the case
may be, and assuming this Agreement constitutes the valid and binding
obligation of the Company, constitutes a valid and binding obligation
of each of Parent and Newco enforceable in accordance with its terms,
subject as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles
of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(ii) The execution and delivery of the Transaction Documents
to which it is a party do not, and the consummation of the
transactions contemplated hereby or thereby, and compliance with the
provisions hereof or thereof, will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation
or acceleration of any material obligation or to the loss of a
material benefit under, or give rise to a right of purchase under,
result in the creation of any Encumbrance upon any of the properties
or assets of Parent or Newco or any of their Subsidiaries under,
require the consent or approval of any third party lender or otherwise
result in a material detriment to Parent or Newco or any of their
Subsidiaries under, any provision of (A) the Agreement of Limited
Partnership of Parent, the Articles of Incorporation or Bylaws of
Newco or any provision of the comparable charter or organizational
documents of any of its Subsidiaries, (B) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to
Parent or Newco or any of their Subsidiaries or their respective
properties or assets or any guarantee by Parent or Newco or any of
their Subsidiaries of the foregoing, (C) any joint venture or other
ownership arrangement or (D) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
Section 3.2(c)(iii) are duly and timely obtained or made, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or Newco or any of their Subsidiaries or any of
their respective properties or assets, other than, in the case of
clauses (B), (C) and (D), any such conflicts, violations, defaults,
rights, Encumbrances or detriments that, individually or in the
aggregate, would not, or could not reasonably be expected to,
materially impair the ability of Parent or Newco to perform its
obligations hereunder or thereunder or prevent the consummation of any
of the transactions contemplated hereby or thereby.
42
<PAGE> 55
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any
Governmental Entity is required by or with respect to Parent or Newco
or any of their Subsidiaries in connection with the execution and
delivery by Parent or Newco of the Transaction Documents to which
Parent or Newco is a party or the consummation by Parent or Newco of
the transactions contemplated hereby or thereby, except for: (A) the
filing with the SEC of the S-4, such reports under Section 13(a) of
the Exchange Act and such other compliance with the Securities Act and
the Exchange Act and the rules and regulations thereunder as may be
required in connection with this Agreement and the transactions
contemplated hereby, and the obtaining from the SEC of such orders as
may be so required; (B) the filing of the Articles of Merger with, and
acceptance for record of the Articles of Merger by, the SDAT; (C) such
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws or environmental laws; (D)
filings under the HSR Act, if applicable; and (E) any such consent,
approval, order, authorization, registration, declaration, filing, or
permit that the failure to obtain or make would not, or could not
reasonably be expected to, materially impair the ability of Parent or
Newco to perform its obligations hereunder or prevent the consummation
of any of the transactions contemplated hereby.
(d) Information Supplied. None of the information supplied or to be
supplied by Parent or Newco for inclusion or incorporation by reference in the
S-4 or the Conversion Solicitation Documents will, at the time the S-4 becomes
effective under the Securities Act, with respect to the S-4, at the time of
mailing of the Conversion Solicitation Documents, with respect to the
Conversion Solicitation Documents, or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and none of the
information supplied or to be supplied by Parent or Newco and included or
incorporated by reference in the Proxy Statement/Prospectus or Conversion
Solicitation Documents will, at the date mailed to stockholders of the Company,
at the time of the meeting of such stockholders to be held in connection with
the Merger, at the date mailed to limited partners of WDOP and WROP or at the
Effective Time, 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 are
made, not misleading. If at any time prior to the Effective Time any event with
respect to Parent or Newco or any of their Subsidiaries, or with respect to
other information supplied by Parent or Newco for inclusion in the Proxy
Statement/Prospectus, the S-4 or the Conversion Solicitation Documents, shall
occur which is required to be described in an amendment of, or a supplement to,
the S-4, the Proxy Statement/Prospectus or the Conversion Solicitation
Documents, such event shall be so described, and such amendment or supplement
shall be promptly filed (if required to be filed) with the SEC. The Proxy
Statement/Prospectus and Conversion Solicitation Documents, insofar as they
43
<PAGE> 56
relate to Parent or Newco or other Subsidiaries of Parent or Newco or other
information supplied by Parent or Newco for inclusion or incorporation by
reference therein, will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
(e) Litigation. As of the date of this Agreement there is no suit,
action or proceeding pending, or, to the knowledge of Parent or Newco,
threatened against or affecting Parent or Newco or any Subsidiary of Parent or
Newco ("Parent/Newco Litigation") and, as of the date of this Agreement, none
of Parent, Newco or its Subsidiaries have knowledge of any facts that are
likely to give rise to any Parent/Newco Litigation, nor as of the date of this
Agreement is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Parent, Newco or any
Subsidiary of Parent or Newco ("Parent/Newco Order").
(f) Brokers. Except for fees and expenses incurred in connection with
the financing arrangements, fees and expenses payable to BancBoston Robertson
Stephens, which fees are reflected in its engagement letter with Oly Hightop,
LLC (a copy of which has been delivered to the Company), and the agreement
regarding fee and expense sharing agreement between Oly Hightop, LLC, Westdale
Asset Management, Ltd. and Westdale Properties America I, Ltd., which fees will
be paid by Newco, no broker, investment banker or other person is entitled to
any broker's, finder's or other similar fee or commission in connection with
the transactions contemplated by the Transaction Documents based upon
arrangements made by or on behalf of Parent or Newco.
(g) Sufficient Funds. After giving effect to the equity financing
commitments of Holding, the equity financing commitment of Parent, the equity
financing commitment of Newco, and the debt financing commitments of Parent or
its Affiliates (collectively, including any such commitment the expiration date
of which is extended, the "Financing Commitments"), all as described on
Schedule 3.2(g) of the Parent/Newco Disclosure Schedule, and assuming that the
gross proceeds from all debt financing commitments are at least $1,075,000,000,
the Surviving Entity will have sufficient funds available to:
(i) assuming all Required Consents relating to the assumption
of indebtedness have been obtained, refinance or repay in cash all
indebtedness for borrowed money of the Company or any Subsidiary of
the Company that will become due as a result of the transactions
contemplated by this Agreement or the WDOP Merger Agreement or the
WROP Merger Agreement plus unpaid interest accrued thereon, and any
prepayment, breakage or other costs associated with the repayment or
refinancing, as the case may be;
44
<PAGE> 57
(ii) pay all amounts required to be paid pursuant to
this Agreement and the WDOP Merger Agreement and the WROP
Merger Agreement in connection with the closing of the
transactions contemplated thereby; and
(iii) pay all fees, costs and expenses incurred by
Parent and Newco in connection with this Agreement, the WDOP
Merger Agreement and the WROP Merger Agreement and the other
transactions contemplated herein and therein.
(h) Interim Operations of Parent and Newco. Each of Parent
and Newco was formed by Holding solely for the purpose of engaging in
the transactions contemplated hereby and, as of the date hereof and as
of the Effective Time, except for obligations or liabilities incurred
in connection with its incorporation or organization and the
transactions, agreements and arrangements contemplated by this
Agreement, has engaged in no other business or activities, has
incurred no other obligations or liabilities, has no assets and has
conducted its operations only as contemplated hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT
OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by the Company Pending the Merger. Prior to
the Effective Time, the Company agrees as to itself and its Subsidiaries that
(except as described on Schedule 4.1 to the Company Disclosure Schedule or as
expressly contemplated or permitted by this Agreement, or to the extent that
Parent and Newco shall otherwise consent in writing):
(a) Ordinary Course. The Company and each of its Subsidiaries
shall carry on its businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and
shall use all commercially reasonable efforts to preserve intact its
present business organization, keep available the services of its
current officers and employees and endeavor to preserve its
relationships with customers, suppliers and others having business
dealings with it to the end that its goodwill and ongoing business
shall not be impaired in any material respect at the Effective Time.
The Company will promptly notify Parent of any Material Adverse Change
or of any litigation having potential liability to the Company or any
of its Subsidiaries in excess of $50,000 or any governmental
complaints, investigations or hearings involving the Company.
45
<PAGE> 58
(b) Dividends; Changes in Stock. Except as contemplated by
this Agreement and for transactions solely among the Company and its
direct or indirect or wholly owned Subsidiaries, the Company shall not
and it shall not permit any of its Subsidiaries to: (i) authorize,
declare or pay any dividends on or make other distributions in respect
of any of its equity interests, capital stock or partnership
interests, except for (A) the authorization, declaration and payment
of (1) regular quarterly cash dividends on Company Common Stock for
the third quarter of the Company's 1999 fiscal year not to exceed
$0.4825 per share (which dividend is payable in the fourth quarter),
with usual record and payment dates, and (2) any regular quarterly
dividend thereafter, but only in the minimum amount necessary to avoid
(x) jeopardizing the Company's status as a REIT under the Code and (y)
having positive real estate investment trust taxable income for the
taxable year ending at the Effective Time, in either case, after
notice to and consultation with Parent, (B) the payment of regular
quarterly cash dividends on the Company Convertible Preferred Stock,
the Company Senior Preferred Stock and the Company Redeemable
Preferred Stock in accordance with their respective terms, with usual
record and payment dates, (C) the payment of any distributions to the
partners of any limited partnerships that are Subsidiaries of the
Company made in accordance with the requirements of the existing
organizational documents of such Subsidiary limited partnerships and
(D) the payment of regular quarterly cash dividends to stockholders of
any corporations that are preferred stock Subsidiaries of the Company,
with usual record and payment dates; (ii) split, combine or reclassify
any of its equity interests or shares of capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for the Company's or a Subsidiary's
equity interests or capital stock; or (iii) repurchase, redeem or
otherwise acquire, or permit any of its Subsidiaries to purchase,
redeem or otherwise acquire, any equity interests or capital stock.
(c) Issuance of Securities. The Company shall not, and it
shall not permit any of its Subsidiaries to, issue, deliver or sell,
or authorize or propose to issue, deliver or sell, any of its equity
interests or capital stock of any class, any Voting Debt or other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, Voting Debt, other
voting securities or convertible securities, other than: (i) the
issuance of Company Common Stock upon the exercise of (A) stock
options that are outstanding on the date hereof granted under the
Company Incentive Plans, (B) Company Warrants that are outstanding on
the date hereof and (C) Company Series B Warrants issued pursuant to
clause (ii), and (ii) issuances of Company Common Stock, Company
Redeemable Preferred Stock and/or Company Series B Warrants by the
Company to partners of limited partnership Subsidiaries of the Company
in accordance with the requirements of the existing organizational
documents of such Subsidiaries, (iii) issuances by a wholly owned
Subsidiary of the Company of such Subsidiary's capital stock or equity
interests to its parent, and (iv) the issuance of Company Common Stock
upon the conversion of shares of Company Convertible Preferred Stock
in accordance with its terms.
46
<PAGE> 59
(d) Governing Documents. Except as contemplated hereby or in
connection herewith, the Company shall not amend or propose to amend
the Company Charter or Company Bylaws and, except in connection with
the OP Transactions, the Company shall cause its Subsidiaries not to
amend or propose to amend any partnership agreement or other
organizational documents of such Subsidiaries.
(e) No Acquisitions. Other than as described on Schedule 4.1
of the Company Disclosure Schedule or as requested pursuant to Section
5.20, the Company shall not, and it shall not permit any of its
Subsidiaries to, acquire (or agree to acquire by merging or
consolidating with, or by purchasing any equity interests in or any of
the assets of, or by any other manner) any business, corporation,
partnership, association or other business organization or division
thereof, or any assets, in each case having a purchase price or
consideration payable in excess of $50,000; provided, however, that
the aggregate purchase price or consideration payable with respect to
such acquisitions shall not exceed $500,000, in the aggregate.
(f) No Dispositions. Other than as described on Schedule 4.1
of the Company Disclosure Schedule or as requested pursuant to Section
5.20, the Company shall not, and it shall not permit any of its
Subsidiaries to, sell or otherwise dispose of, or agree to sell or
otherwise dispose of, any Company Properties or any of its material
assets.
(g) No Dissolution, Etc. Except as otherwise permitted or
contemplated by this Agreement, including as requested pursuant to
Section 5.20, the Company shall not authorize, recommend, propose or
announce an intention to adopt a plan of complete or partial
liquidation or dissolution of the Company or any of its Subsidiaries.
(h) Accounting. The Company shall not, nor shall the Company
permit any of its Subsidiaries to, make any changes in its accounting
methods which would be required to be disclosed under the rules and
regulations of the SEC, except as required by law, rule, regulation or
GAAP.
(i) Affiliate Transactions. Except for any transaction
contemplated by the Transaction Documents or the OP Transaction
Documents, the Company shall not, nor shall the Company permit any of
its Subsidiaries to, enter into any agreement or arrangement with any
of their respective Affiliates (as such term is defined in Rule 405
under the Securities Act, an "Affiliate"), other than with wholly
owned Subsidiaries of the Company.
(j) Insurance. The Company shall, and shall cause its
Subsidiaries to, use all commercially reasonable efforts to maintain
with financially responsible insurance
47
<PAGE> 60
companies insurance in such amounts and against such risks and losses
as are customary for companies engaged in their respective businesses.
(k) Tax Matters. The Company shall not (i) make or rescind
any material express or deemed election relating to Taxes (except as
required by law or necessary to preserve the Company's status as a
REIT or the status of any of the Company's Subsidiaries as a
partnership for federal income tax purposes or as a qualified REIT
subsidiary under Section 856(i) of the Code) unless it is reasonably
expected that such action will not materially and adversely affect the
Company, including elections for any and all joint ventures,
partnerships, limited liability companies or other investments where
the Company has the capacity to make such binding election, (ii)
settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to Taxes, except where such settlement or compromise will not
materially and adversely affect the Company and except any settlement
or compromise relating to contests or protests relating to property
tax valuations undertaken by the Company in the ordinary course of
business, or (iii) change in any material respect 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 Returns
that have been filed for prior taxable years, except as may be
required by applicable law or except for changes that are reasonably
expected not to materially and adversely affect the Company.
(l) Certain Employee Matters. The Company shall not and it
shall not permit any of its Subsidiaries to: (i) hire or terminate any
employee or consultant if the aggregate annual compensation of such
employee or consultant exceeds $75,000; (ii) grant any increases in
the compensation of, or pay any bonuses or noncompetition payments to,
any of its directors, trustees, officers or employees; (iii) pay or
agree to pay to any director, officer or employee, whether past or
present, any pension, retirement or other employee benefit not
required or contemplated by any of the existing Company Employee
Benefit Plans or Company Pension Plans, as applicable, in each case as
in effect on the date hereof; (iv) enter into any new, or amend any
existing, employment or severance or termination agreement with any
director, officer or employee; or (v) become obligated under any new
Company Employee Benefit Plan or Company Pension Plan, which was not
in existence or approved by the Board of Directors of the Company
prior to the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect
of materially enhancing any benefits thereunder; provided, however,
that nothing in this Section 4.1(l) shall prohibit the Company from
making the severance payments, retention bonuses and noncompetition
payments set forth in Schedule 3.1(l) of the Company Disclosure
Schedule.
(m) Indebtedness. The Company shall not, nor shall it permit
any of its Subsidiaries to, (i) incur any indebtedness for borrowed
money (except regular
48
<PAGE> 61
borrowings under credit facilities made in the ordinary course of the
Company's cash management practices), forgive any indebtedness, or
guarantee any indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or
any of its Subsidiaries or guarantee any debt securities of others or
(ii) except in connection with the acquisitions listed on Schedule
4.1, create any mortgages, liens, security interests or similar other
encumbrances on the property of the Company or any of its Subsidiaries
in connection with any indebtedness thereof.
(n) WROP Merger and WDOP Merger. The Company shall not, nor
shall it permit any of its Subsidiaries to, agree to amend, waive,
modify or terminate any provision of the WDOP Merger Agreement or the
WROP Merger Agreement or any other OP Transaction Document.
(o) Company Rights under Rights Agreement. The Company shall
not redeem any of the Company Rights prior to the Effective Time
unless required to do so by a court of competent jurisdiction.
(p) Contracts. The Company shall not, nor shall it permit any
of its Subsidiaries to, materially amend or terminate, or waive
compliance with the terms of or breaches under, any Material Contract,
including (without limitation) the Company Rights Agreement, and shall
not, nor shall it permit any of its Subsidiaries to, enter into a new
contract, agreement or arrangement that, if entered into prior to the
date of this Agreement, would have been required to be listed on
Schedule 3.1(x).
(q) Discharge of Liabilities. The Company shall not, nor
shall it permit any of its Subsidiaries to, pay, discharge, settle or
satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in the ordinary course
of business consistent with past practice or in accordance with their
terms, of claims, liabilities or obligations recognized or disclosed
in the most recent financial statements of the Company included in the
Company SEC Documents.
(r) Drever Partners Stock Purchase Agreement. The Company
shall not, nor shall it permit any of its Subsidiaries to, agree to
amend, waive, modify or terminate any provision of the Drever Partners
Stock Purchase Agreement.
(s) Agreements. The Company shall not, nor shall it permit
any of its Subsidiaries to, agree in writing or otherwise to take any
action inconsistent with any of the foregoing.
49
<PAGE> 62
4.2 No Solicitation by the Company.
(a) Prior to the Effective Time, the Company agrees that:
(i) neither it nor any of its Subsidiaries shall initiate,
solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to
a merger, acquisition, tender offer, exchange offer, consolidation,
sale of assets or similar transaction involving, or any purchase of,
10% or more of the assets or any equity securities of the Company or
any of the Company's Subsidiaries, other than the transactions
contemplated by this Agreement (any such inquiry, proposal or offer
being hereinafter referred to as a "Company Acquisition Proposal"), or
engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person
relating to a Company Acquisition Proposal, or terminate or waive any
provision of any confidentiality agreement with any person or
otherwise take any action designed or reasonably likely to facilitate
any effort or attempt to make or implement a Company Acquisition
Proposal;
(ii) it will direct and cause its officers, directors,
employees, agents, attorneys, accountants, financial advisors or other
representatives not to engage in any of the activities in Section
4.2(a)(i), except to the extent expressly permitted in Section
4.2(b)(i);
(iii) it will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing and will
take the necessary steps to inform the individuals or entities
referred to in Section 4.2(a)(ii) of the obligations undertaken in
this Section 4.2; and
(iv) it will notify Parent promptly if the Company receives
any such inquiries or proposals, or any requests for such information,
or if any such negotiations or discussions are sought to be initiated
or continued with it.
(b) Notwithstanding the foregoing, nothing contained in Section 4.2(a)
shall prohibit the Board of Directors of the Company from the following
actions:
50
<PAGE> 63
(i) furnishing information to, or entering into discussions
or negotiations with, any person or entity that makes an unsolicited
Company Acquisition Proposal if, and only to the extent that, (A) the
Board of Directors of the Company determines in good faith, following
consultation with and after considering the advice of its legal and
financial advisors, that such action could reasonably be expected to
result in a Company Superior Proposal (as hereinafter defined), (B)
prior to furnishing such information to, or entering into discussions
or negotiations with, such person or entity, the Company provides both
oral and written notice to Parent to the effect that it is furnishing
information to, or entering into discussions with, such person or
entity, the material terms and conditions of such Company Acquisition
Proposal and the identity of the person making such Company
Acquisition Proposal and (C) upon any material change in the details
(including amendments or proposed amendments) of any such Company
Acquisition Proposal, the Company immediately informs Parent of such
change orally and in writing, and
(ii) to the extent applicable, taking and disclosing to its
stockholders a position as contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act or from making any disclosure to
the Company's stockholders with regard to a Company Acquisition
Proposal if, in the good faith judgment of the Company's Board of
Directors, after consultation with outside counsel, failure so to
disclose would be inconsistent with applicable law;
provided, however, that neither the Board of Directors of the Company nor the
Company Special Committee shall, except as specifically permitted pursuant to
this Section 4.2, withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or this Agreement or approve or recommend,
or propose to approve or recommend, a Company Acquisition Proposal. Nothing in
this Section 4.2 shall (x) permit the Company to enter into an agreement with
respect to a Company Acquisition Proposal during the term of this Agreement (it
being agreed that during the term of this Agreement, the Company shall not
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement with any person that provides for, or in any way
facilitates, a Company Acquisition Proposal) or (y) affect any other obligation
of the Company under this Agreement; provided, however, that the Board of
Directors of the Company may approve and recommend a Company Superior Proposal
and, in connection therewith, withdraw or modify its approval or recommendation
of this Agreement and the Merger. As used herein, a "Company Superior Proposal"
means an unsolicited bona fide Company Acquisition Proposal made by a third
party which a majority of the members of the Board of Directors of the Company
(or a duly constituted committee thereof charged with considering Company
Acquisition Proposals) determines in good faith to be more favorable to the
Company's stockholders from a financial point of view than the Merger (based on
advice from the Company's independent financial advisor of nationally
recognized reputation that the value of the consideration provided for in such
proposal is superior to the value of the consideration provided for in the
Merger), for which any required financing is then committed or
51
<PAGE> 64
which, in the good faith reasonable judgment of the Board of Directors of the
Company (or any such committee), based on advice from the Company's independent
financial advisor, is reasonably capable of being financed by such third party
(if financing is required), and for which the Board of Directors of the Company
determines, in its good faith reasonable judgment, is reasonably capable of
being consummated without undue delay.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of S-4, Proxy Statement/Prospectus and Conversion
Solicitation Documents. The Company shall promptly prepare and file with the
SEC the Proxy Statement/Prospectus, and the Company, Parent and Newco shall
prepare and file with the SEC the S-4 in which the Proxy Statement/Prospectus
will be included as a prospectus in each case in form and substance reasonably
satisfactory to each of the Company, Parent and Newco. Each of the Company,
Parent and Newco shall use its commercially reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing and to keep such S-4 effective as long as necessary to consummate
the Merger. The Company shall agree to date the Proxy Statement/Prospectus as
of the approximate date of mailing to its stockholders and shall use its
commercially reasonable efforts to cause the Proxy Statement/Prospectus to be
mailed to its stockholders at the earliest practicable date. Parent and the
Company shall cooperate to prepare the Conversion Solicitation Documents for
use in connection with the OP Transactions. The Company shall agree to date the
Conversion Solicitation Documents as of the approximate date of mailing to the
limited partners of WDOP and WROP and shall use its commercially reasonable
efforts to cause the Conversion Solicitation Documents to be mailed to such
limited partners at the earliest practicable date after the SEC has cleared the
Proxy Statement/Prospectus. Newco shall use its commercially reasonable efforts
to obtain all necessary state securities laws or "blue sky" permits, approvals
and registrations in connection with the issuance of Newco Senior Preferred
Stock and Newco Redeemable Preferred Stock in the Merger, and Parent shall use
its commercially reasonable efforts to obtain all necessary state securities
laws or "blue sky" permits, approvals and registrations in connection with the
issuance of Parent Senior Preferred Units and Parent Redeemable Preferred Units
by Parent.
5.2 Letter of the Company's Accountants. The Company shall use its
commercially reasonable efforts to cause to be delivered to Parent a letter of
Deloitte & Touche LLP, the Company's independent public accountants, dated a
date within two business days before the date on which the S-4 shall become
effective and addressed to the Company, Parent and Newco, in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
52
<PAGE> 65
5.3 Access to Information. Upon reasonable notice, the Company shall
(and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financing sources and other representatives of
Parent or Newco, access, during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records, as well as to its officers and employees and, during such period, the
Company shall (and shall cause its Subsidiaries to) furnish promptly to Parent
and Newco all other information concerning its business, properties and
personnel as Parent or Newco may reasonably request. Each of Parent and Newco
agrees that it will not, and will cause its respective representatives not to,
use any information obtained pursuant to this Section 5.3 for any purpose
unrelated to the consummation of the transactions contemplated by the
Transaction Documents or the OP Transaction Documents. The Confidentiality
Agreement for Representatives dated July 2, 1999 between the Company and
Olympus Real Estate Corporation (the "Confidentiality Agreement") relating to
the Confidentiality Agreement dated June 9, 1999 by Westdale Properties America
I, Ltd. shall apply with respect to information furnished thereunder or
hereunder and any other activities contemplated thereby.
5.4 Stockholders Meeting. The Company shall call a meeting of its
stockholders (the "Stockholders Meeting") to be held as promptly as practicable
after the date hereof, but no sooner than 20 business days following the date
that the Proxy Statement/Prospectus is mailed to stockholders of the Company,
for the purpose of voting upon the Merger. Subject to the provisions of Section
4.2(b), the Company Special Committee and the Board of Directors of the Company
shall recommend to the Company's stockholders entitled to vote thereon the
approval of the Merger and this Agreement and not rescind such recommendation,
and the Company shall use all commercially reasonable efforts to obtain
approval of the Merger and this Agreement by its stockholders entitled to vote
thereon. The Company shall use all commercially reasonable efforts to hold such
meeting as soon as practicable, but no sooner than 20 business days following
the date that the Proxy Statement/Prospectus is mailed to stockholders of the
Company, after the date upon which the S-4 becomes effective.
5.5 Approvals.
(a) Each party hereto shall cooperate and use all
commercially reasonable efforts to promptly prepare and file all
necessary documentation to effect all necessary applications, notices,
petitions, filings and other documents, and use all commercially
reasonable efforts to obtain (and will cooperate with each other in
obtaining) any consent, acquiescence, authorization, order or approval
of, or any exemption or nonopposition by, any Governmental Entity
required to be obtained or made by the Company or by Parent or Newco,
or any of their respective Subsidiaries, in connection with the
Merger, the WDOP Merger and the WROP Merger or the taking of any other
action contemplated by the Transaction Documents or the OP Transaction
Documents.
53
<PAGE> 66
(b) For purposes of this Agreement, (i) all consents
indicated by an asterisk on Schedule 3.1(c) of the Company Disclosure
Schedule, (ii) all consents set forth on Schedule 5.5(b) of the
Parent/Newco Disclosure Schedule, (iii) any other consent that is
required by any lender to consummate the transactions contemplated by
the Transaction Documents, the OP Transaction Documents and the
Financing Commitments and to which such lender is legally entitled and
(iv) any other consent required by any third party (including credit
enhancers, bond issuers, insurers, servicers or trustees) in
connection with the financing, refinancing or assumption of
indebtedness and changes in ownership or control contemplated in the
Transaction Documents, the OP Transaction Documents and the Financing
Commitments, are collectively referred to herein as the "Required
Consents." Subject to the terms and conditions herein provided, each
of the Company, Parent and Newco shall: (A) cooperate with one another
in (1) determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time
from, governmental or regulatory authorities of the United States, the
several states and foreign jurisdictions and any third parties in
connection with the execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby and (2) timely
making all such filings and timely seeking all such consents
(including, without limitation, the Required Consents), approvals,
permits and authorizations, (B) use all commercially reasonable
efforts to obtain in writing any consents (including, without
limitation, the Required Consents) or waivers required from third
parties to effectuate the transactions contemplated by the Transaction
Documents and the OP Transaction Documents, such consents or waivers
to be in form reasonably satisfactory to Parent and the Company, and
to (C) take, or cause to be taken, all other action and do, or cause
to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by the
Transaction Documents and the OP Transaction Documents, including the
WROP Merger and the WDOP Merger; provided, however, that in connection
with obtaining any consents, the Company will consult with Parent
throughout the process of seeking such third party consent, including
(without limitation), consulting Parent with respect to any payment
that may be required to obtain such consent. If, at any time after the
Effective Time, any further action is necessary or desirable to carry
out the purpose of this Agreement, the proper officers and directors
of the Company, Parent or Newco shall take all such necessary action
that is commercially reasonable. Notwithstanding the foregoing,
neither Parent nor Newco shall be required to make any payment or
grant any concession to extend the term of any Financing Commitment
beyond the expiration date set forth in such Financing Commitment.
5.6 Agreements of Rule 145 Affiliates. Prior to the Effective Time,
the Company shall cause to be prepared and delivered to Parent a list
identifying all persons who, at the time of the Stockholders Meeting, may be
deemed to be "affiliates" of the Company, as that term is used in paragraphs
(c) and (d) of Rule 145 under the Securities Act (the "Rule 145 Affiliates").
The Company shall use all commercially reasonable efforts to cause each person
who is identified as a Rule 145 Affiliate in such list to deliver to Parent, at
or prior to the Effective Time, a written
54
<PAGE> 67
agreement, in substantially the form attached as Exhibit I hereto, that such
Rule 145 Affiliate will not sell, pledge, transfer or otherwise dispose of any
shares of Newco Senior Preferred Stock or Newco Redeemable Preferred Stock or
Parent Senior Preferred Units or Parent Redeemable Preferred Units, as the case
may be, issued to such Rule 145 Affiliate pursuant to the Merger, except
pursuant to an effective registration statement or in compliance with Rule 145
or an exemption from the registration requirements of the Securities Act. The
Company and the Rule 145 Affiliates shall be relieved of this obligation under
the foregoing provisions of this Section 5.6 and such written agreements if,
and to the extent, such Rule 145 is amended not to require such written
agreements or any of the covenants contained therein.
5.7 Employee Matters. (a) The Company, Parent and Newco agree that all
employees of the Company immediately prior to the Effective Time shall be
employed by either Parent or Newco immediately after the Effective Time, it
being understood that neither Parent nor Newco, as the case may be, shall have
any obligations to continue employing such employees for any length of time
thereafter.
(b) For a period of three months after the Effective Time,
Newco or Parent (or any of their Affiliates), as the case may be,
shall provide those employees of the Company and its Subsidiaries
covered by the Company Employee Benefit Plans with benefits that are
comparable, in the aggregate, to the benefits provided to such
employees by the Company during the year prior to the Closing Date
(excluding equity compensation plans and arrangements). Parent and
Newco further agree that any present employees of the Company shall be
credited for their service with the Company for purposes of
eligibility, entitlement to benefits, and vesting in any plans
provided by Parent, Newco (or any of their Affiliates), as the case
may be, and all pre-existing conditions and exclusions shall be waived
and expenses incurred by any employee for deductibles and co-payments
in the portion of the year prior to the date an employee first became
a participant in such plan shall be credited to the benefit of such
employee under such plan in the year in which such employee's
participation commenced.
(c) At the Effective Time, the Surviving Entity shall assume
and perform each of the severance obligations described on Schedule
3.1(l) to the Company Disclosure Schedule.
5.8 Stock Options. The Company shall use all commercially reasonable
efforts to obtain, prior to the Effective Time, an executed Option Surrender
Agreement, Release and Waiver from all holders of outstanding Company Stock
Options in substantially the form attached as Exhibit J hereto.
55
<PAGE> 68
5.9 Company Warrants. The Company (a) shall deliver to the Warrant
Agent, a certificate of a firm of independent public accountants describing the
reduction in the exercise price of the Company Warrants set forth in Section
3.1(bb) and (b) at the earliest practicable time but not less than 30 days
before the Closing Date, shall deliver to the Warrant Agent notice of the
Merger, in each case in accordance with the provisions of the Warrant
Agreements. The Company shall cause the Warrant Agent to promptly deliver
notice of such adjustment in the exercise price of the Company Warrants and
notice of the Merger to each holder of Company Warrants in accordance with the
provisions of the Warrant Agreements at the earliest practicable time but not
less than 20 days before the Closing Date.
5.10 Deferred Compensation Plan. After the Effective Time, Parent or
Newco shall use its commercially reasonable efforts to cause all vested account
balances of participants in the Company Deferred Compensation Plan to be
distributed to such participants in accordance with the terms of the plan and
the corresponding Trust Agreement dated as of October 1, 1998 between the
Company and Delaware Charter and Guarantee Trust Company.
5.11 Directors' and Officers' Indemnification and Insurance.
(a) From and after the Effective Time, Parent shall provide
exculpation and indemnification for each person who is now or has been
at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any
Subsidiary of the Company (the "Company Officers or Directors") that
is the same as the exculpation and indemnification provided to the
Company Officers or Directors by the Company (including advancement of
expenses, if so provided) immediately prior to the Effective Time in
the Company Charter or Company Bylaws, in any separate indemnification
agreements between the Company and its directors or officers or in any
other Company Employee Benefit Plan or Company Pension Plan as in
effect on the date hereof; provided, that such exculpation and
indemnification covers actions or omissions on or prior to the
Effective Time, including, without limitation, all transactions
contemplated by this Agreement. Parent shall obtain and maintain in
effect at the Effective Time and continuing until the sixth
anniversary thereof "run-off" directors and officers liability
insurance with a coverage amount and other terms and conditions no
less favorable in the aggregate to the Company Officers or Directors
than under the Company's current directors and officers liability
insurance policy covering the directors and officers of the Company
with respect to their service as such prior to the Effective Time;
provided, however, that in no event shall Parent be required to pay a
premium for such insurance in excess of 150% of the last annual
premium paid by the Company prior to the date hereof, but if the
premium required to obtain such coverage would exceed such maximum
amount, Parent shall purchase as much coverage as possible for such
maximum amount.
56
<PAGE> 69
(b) The provisions of this Section 5.11 are intended to be
for the benefit of, and shall be enforceable by, each Company Officer
or Director, his or her heirs and his or her personal representatives
and shall be binding on all successors and assigns of Parent and the
Company. Parent agrees to pay all costs and expenses (including fees
and expenses of counsel) that may be incurred by any Company Officer
or Director, his or her heirs or his or her personal representatives
in successfully enforcing the indemnity or other obligations of Parent
under this Section 5.11. The provisions of this Section 5.11 shall
survive the Merger and are in addition to any other rights to which a
Company Officer or Director may be entitled.
(c) In the event that Parent or any of its respective
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then,
and in each such case, the successors and assigns of such entity shall
assume expressly or by operation of law the obligations set forth in
this Section 5.11, which obligations are expressly intended to be for
the irrevocable benefit of, and shall be enforceable by, each Company
Officer or Director.
5.12 Agreement to Defend. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages
in connection therewith, the parties hereto agree to cooperate and use their
commercially reasonable efforts to defend against and respond thereto.
5.13 Public Announcements. The parties hereto will consult with each
other before issuing, and provide each other with the reasonable opportunity to
review and comment upon, any press release or otherwise making any public
statements with respect to the transactions contemplated by the Transaction
Documents or the OP Transaction Documents, and shall not issue any such press
release or make any such public statement without the reasonable consent of the
other party, except as may be required by applicable law, by court process or
by obligations pursuant to any listing agreement with any national securities
exchange or transaction reporting system so long as the other party is notified
promptly by the disclosing party of such press release or public statement. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement will be in the form agreed to by
the parties hereto prior to the execution of the Agreement.
5.14 Other Actions. Except as contemplated by this Agreement, none of
the Company, Parent or Newco shall, nor shall the Company, Parent or Newco
permit any of its Subsidiaries to, take or agree or commit to take any action
that is reasonably likely to result in any of its respective representations or
warranties hereunder being untrue in any material respect or in any
57
<PAGE> 70
of the conditions to the Merger set forth in Article 6 not being satisfied. Each
of the parties agrees to use its commercially reasonable efforts to satisfy the
conditions to the Closing set forth in this Agreement.
5.15 Advice of Changes; SEC Filings. The Company shall confer with
Parent on a regular basis, report on Company operational matters and promptly
advise Parent orally and in writing of any change or event which has, or could
reasonably be expected to have, a Material Adverse Effect on the Company. The
Company or Parent, as the case may be, shall promptly provide each other (or
their respective counsel) copies of all filings made by such party or its
Subsidiaries with the SEC or any other state or federal Governmental Entity in
connection with the Transaction Documents or the OP Transaction Documents and
the transactions contemplated hereby or thereby.
5.16 Conveyance Taxes. The Company, Parent and Newco will (a)
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees and any similar
taxes which become payable in connection with the transactions contemplated by
the Transaction Documents or the OP Transaction Documents that are required or
permitted to be filed on or before the Effective Time, (b) cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any applicable exemptions to any such tax or fee,
and (c) each pay any such tax or fee which becomes payable by it on or before
the Effective Time.
58
<PAGE> 71
5.17 WDOP Merger and WROP Merger.
(a) The Company shall take all necessary action (i) to cause
the WROP Merger and the WDOP Merger to be consummated immediately
prior to the Effective Time (but on the Closing Date), which actions
shall include the actions set forth in Section 5.1 and the
distribution of election and consent forms to the holders of WDOP
Class B Common Units and WDOP Class B Preferred Units, each
substantially in the form of Exhibit D-1 and Exhibit D-2 hereto,
respectively (each such form, a "WDOP Election and Consent Form"), and
to the holders of WROP Class C Common Units and WROP Class D Common
Units, each substantially in the form of Exhibit D-3 and Exhibit D-4
hereto, respectively (each such form, a "WROP Election and Consent
Form") and (ii) thereafter, to cause the Second Amended and Restated
Limited Partnership Agreement of WDOP and the Second Amended and
Restated Limited Partnership Agreement of WROP to take effect and to
cause any conversion of the limited partners' interests in WDOP and
WROP, as applicable, in accordance therewith and with the other OP
Transaction Documents. Each party agrees that the Second Amended and
Restated Limited Partnership Agreement of WDOP shall be substantially
in the form attached as Exhibit K hereto, and the Second Amended and
Restated Limited Partnership of WROP shall be substantially in the
form attached as Exhibit L hereto; provided, however, that no party
shall object to any nonsubstantive changes to such partnership
agreements requested by any other party hereto prior to the Effective
Time.
(b) The parties acknowledge that if a limited partner of WDOP
or WROP does not (i) represent that such limited partner is an
"accredited investor" as such term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act and (ii) execute and
deliver a WDOP Election and Consent Form or a WROP Election and
Consent Form, as applicable, then such limited partner shall be
entitled to receive only cash in the WDOP Merger or the WROP Merger,
as applicable, and shall not be entitled to elect to receive new
securities.
5.18 Employee Loans. As of the date hereof, the Company has delivered
to Parent a Loan Repayment Agreement in substantially the form attached as
Exhibit M hereto executed by each officer and director of the Company who has
any outstanding loan from, or other debt obligation to, the Company, which loan
was made, or debt obligation incurred, for the purpose of purchasing Company
Common Stock. Prior to the Effective Time, the Company shall cause any of its
other employees who has any outstanding loan from, or other debt obligations
to, the Company, to execute and deliver a Loan Repayment Agreement in
substantially the form attached as Exhibit M hereto. With respect to any loan
from the Company to any of its employees that is outstanding on the date of
this Agreement, the Company shall be entitled to forgive an amount of accrued
interest on such loan equal to an amount determined by subtracting (a)
dividends on the Company Common Stock (that was purchased with the proceeds of
such
59
<PAGE> 72
loan) which are authorized and declared for any period after the third quarter
of the Company's 1999 fiscal year (which dividend is payable in the fourth
quarter) from (b) interest accrued on such loan after the payment of such third
quarter dividend.
5.19 Dividends. The Company shall authorize, declare and pay the
minimum amount of preclosing dividends on Company Common Stock necessary to
avoid (a) jeopardizing its status as a "real estate investment trust" under the
Code and (b) having positive real estate investment trust taxable income for
the taxable year ending at the Effective Time (provided that the foregoing
shall not be deemed to limit the amount of dividends that are otherwise payable
by the Company or Newco under the terms of this Agreement). In addition, the
Company shall authorize, declare and pay any accrued and unpaid dividends to
holders of Company Senior Preferred Stock and Company Redeemable Preferred
Stock immediately prior to the Effective Time.
5.20 Assistance. If Parent requests, the Company and its Subsidiaries
shall cooperate, and shall use its commercially reasonable efforts to cause the
Company's accountants to cooperate, in all reasonable respects in connection
with any financing efforts (including, without limitation, the refinancing or
assumption of existing indebtedness) of Parent or its Affiliates (including
providing reasonable assistance in the preparation of one or more offering
circulars, private placement memoranda, registration statements or other
offering documents relating to debt and/or equity financing) and any other
filings that may be made by Parent or its Affiliates with the SEC, all at the
sole expense of Parent (or its Affiliates). If Parent requests, the Company
shall create new subsidiaries and effect mergers among wholly owned
Subsidiaries at the direction of Parent and, immediately prior to the Effective
Time, shall transfer any assets and/or liabilities to such entities at the
direction of Parent. In connection with the financing efforts of Parent and its
Affiliates, the Company shall, and shall cause each of its Subsidiaries to, (i)
furnish to its independent accountants (or, if requested by Parent, to Parent's
independent public accountants), such customary management representation
letters as its accountants may reasonably require of the Company or its
Subsidiaries as a condition to its execution of any required accountants'
consents necessary in connection with the delivery of any "comfort" letters
requested by financing sources of Parent or its Affiliates and (ii) furnish to
Parent all financial statements (audited and unaudited) and other information
in the possession of the Company or its Subsidiaries or their representatives
or agents as Parent shall reasonably determine are required in connection with
such financing. At the request of Parent, the Company shall use its
commercially reasonable efforts to cause its accountants to deliver to Parent's
accountants the work papers relating to the preparation of the Company's
financial statements or other financial calculations. The Company shall
cooperate with Parent and Newco in obtaining surveys, title commitments and/or
policies, engineering reports, environmental reports and appraisals with
respect to the Company Properties.
60
<PAGE> 73
5.21 [INTENTIONALLY OMITTED].
5.22 Proxy Solicitor. If requested by Parent, the Company shall engage,
at the Company's expense, a proxy solicitor reasonably acceptable to Parent to
assist in the solicitation of proxies from stockholders relating to the Merger
Vote.
5.23 Drever Partners Stock Purchase Agreement. The Company shall use
its commercially reasonable efforts to cause the transactions contemplated by
the Drever Partners Stock Purchase Agreement to be consummated at or
immediately prior to the Effective Time in accordance with the Drever Partners
Stock Purchase Agreement.
5.24 Company Properties. To the extent of any noncompliance, the
Company shall cause each Company Property to comply with the representations
and warranties contained in Section 3.1(p) on or before the Closing or shall
cause written waivers of compliance, upon which the Parent may rely with
respect to any noncompliance, to be issued by appropriate parties in interest.
5.25 Extraordinary Payments Amount. Prior to the Closing, the Company
will make the expenditures set forth in paragraph 1 of Schedule 5.25 of the
Parent/Newco Disclosure Schedule (the "Governmental Payments") and paragraph 3
of Schedule 5.25 of the Parent/Newco Disclosure Schedule (the "Extraordinary
Capital Expenditures Payments"). The sum of the Governmental Payments, the
Extraordinary Capital Expenditures Payments, the Extraordinary Gross-Up
Payments (as defined in paragraph 2 of such Schedule 5.25) and any payments
made in connection with obtaining any consents contemplated by Section 5.5(b)
in excess of $2,500,000, including (without limitation) the Required Consents
(the "Extraordinary Consent Payments"), shall be referred to as the
"Extraordinary Payments Amount."
5.26 Environmental Matters. As promptly as practicable after the date
of this Agreement, the Company shall develop and implement an operation and
maintenance program at sites with asbestos-containing materials, lead paint or
other conditions for which an operation and maintenance program is recommended
as set forth in Schedule 3.1(o) and for any other material matters identified
by environmental reports delivered after the date of this Agreement. Neither
the Company nor its Affiliates shall engage in repairs, renovations or cause
any disturbances at any of the sites set forth in Schedule 3.1(o) with respect
to which sampling prior to any disturbance is recommended in Schedule 3.1(o).
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
61
<PAGE> 74
(a) Company Stockholder Approval. The Merger and all other
actions contemplated hereby that require the approval of holders of
the Company Common Stock shall have been approved and adopted by the
affirmative vote of the holders of a majority of the outstanding
shares of Company Common Stock entitled to vote thereon.
(b) Other Approvals. All consents, approvals, permits and
authorizations required to be obtained prior to the Effective Time
from any Governmental Entity as indicated in Section 3.1(c) or
Schedule 3.1(c) to the Company Disclosure Schedule or Section 3.2(c)
or Schedule 3.2(c) to the Parent/Newco Disclosure Schedule in
connection with the execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated hereby
or thereby shall have been made or obtained (as the case may be).
Unless otherwise agreed to by the Company and Newco (which agreement
shall not be unreasonably withheld), no such governmental consent,
approval, permit or authorization shall then be subject to appeal.
(c) S-4. The S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction, no order of any Governmental
Entity having jurisdiction over any party hereto, and no other legal
restraint or prohibition shall be in effect (an "Injunction")
preventing or making illegal the consummation of the Merger.
(e) HSR Act. If an HSR filing was required in connection with
the transactions contemplated by this Agreement, the waiting period
(and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or shall have expired, and no restrictive
order or other requirements shall have been placed on the Company,
Parent or Newco in connection therewith.
6.2 Conditions to Obligations of Newco to Effect the Merger. The
obligations of Newco to effect the Merger are subject to the satisfaction of
the following conditions, any or all of which may be waived in whole or in part
by Newco:
(a) Representations and Warranties of the Company. Each of
the representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects (provided
that any representation or warranty of the Company contained herein
that is modified by a materiality or Material Adverse Effect
qualifier(s) shall not be further qualified hereby) as of the date of
this Agreement and
62
<PAGE> 75
(except to the extent such representations and warranties speak
expressly as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date, and Parent shall have received a
certificate to such effect signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the
Company.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received a certificate to such effect
signed on behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company.
(c) Consents Under Agreements. Parent shall have been
furnished with evidence reasonably satisfactory to it of the receipt
of all Required Consents, and such Required Consents shall be in form
and substance reasonably satisfactory to Parent.
(d) WDOP Merger and WROP Merger. The conditions precedent to
the consummation of both the WDOP Merger and the WROP Merger set forth
in the WDOP Merger Agreement and in the WROP Merger Agreement,
respectively, shall have been satisfied (or waived), and both the WDOP
Merger and the WROP Merger shall have been consummated.
(e) Financing. The debt and equity financing for the
transactions contemplated hereby shall have been received on terms
substantially as outlined in the Financing Commitments (excluding from
this condition the failure to receive equity financing due to the
breach of any equity Financing Commitment by Parent or an Affiliate of
Parent).
(f) Material Adverse Change or Effect. Since the date of this
Agreement, no change, event or effect shall have occurred that shall
have caused, or could reasonably be expected to cause, a Material
Adverse Change or Material Adverse Effect with respect to the Company,
and Parent shall have received a certificate to such effect from the
Chief Executive Officer and Chief Financial Officer of the Company.
(g) Drever Partners Stock Purchase Agreement. The sale of the
outstanding shares of common stock of Drever Partners, Inc. pursuant
to the Drever Partners Stock Purchase Agreement shall have been
consummated.
(h) Legal Opinion. Locke Liddell & Sapp LLP, counsel to the
Company, shall have delivered a legal opinion in the form attached as
Exhibit N hereto, dated the Closing
63
<PAGE> 76
Date and addressed to the Company, Parent and Newco, to the effect
that (A) the Company has qualified to be taxed as a real estate
investment trust pursuant to the Code for each of its taxable years
ending December 31, 1993 through December 31, 1999, and the short
taxable year beginning January 1, 2000 and ending when the Closing
occurs, and (B) each Company Partnership (as defined below) is
properly treated as a partnership and not as a "publicly traded
partnership" for federal income taxes. For purposes of this Agreement,
the term "Company Partnership" shall include all Company Subsidiaries
that are organized as partnerships included in Schedule 3.1(a) of the
Company Disclosure Schedule. In rendering such opinions, Locke Liddell
& Sapp LLP may rely upon (and the Company shall be required to make)
representations requested of the Company by Locke Liddell & Sapp LLP.
6.3 Conditions to Obligations of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is subject to the satisfaction
of the following conditions, any or all of which may be waived in whole or in
part by the Company:
(a) Representations and Warranties of Newco and Parent. Each
of the representations and warranties of Newco and Parent set forth in
this Agreement shall be true and correct in all material respects
(provided that any representation or warranty of Newco and Parent
contained herein that is modified by a materiality or Material Adverse
Effect qualifier(s) shall not be further qualified hereby) as of the
date of this Agreement and (except to the extent such representations
and warranties speak expressly as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, and the
Company shall have received a certificate to such effect signed on
behalf of Newco by the Chief Executive Officer and the Chief Financial
Officer of Newco and signed on behalf of Parent by its general
partner.
(b) Performance of Obligations of the Company. Each of Newco
and Parent shall have performed in all material respects all
obligations required to be performed by each of them under this
Agreement at or prior to the Closing Date, and the Company shall have
received a certificate to such effect signed on behalf of Newco by the
Chief Executive Officer and the Chief Financial Officer of Newco and
signed on behalf of Parent by its general partner.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the
64
<PAGE> 77
matters presented in connection with the Merger by the stockholders of the
Company entitled to vote thereon:
(a) by mutual written consent of the Company, Parent and
Newco, or by mutual action of their respective Boards of Directors or
general partner, as applicable;
(b) by either the Company, Parent or Newco:
(i) if (A) any Governmental Entity shall have issued
any Injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the
consummation of the Merger, the WDOP Merger or the WROP
Merger, and such Injunction or other action shall have become
final and nonappealable; or (B) the Merger Vote shall not
have been obtained upon a vote held at a duly held meeting of
stockholders, or at any adjournment thereof, or (C) unless
(1) prohibited by an event described in clause (A) or (2)
resulting from any act or omission of Parent or Newco or
their Affiliates, as of the day immediately prior to the
Termination Date, either (x) no meeting of the Company's
stockholders shall have been held pursuant to Section 5.4 or
(y) if held, no vote shall have been taken in respect of
Merger;
(ii) if the Merger shall not have been consummated
by June 30, 2000 (the "Termination Date"); provided, however,
that the right to terminate this Agreement under this Section
7.1(b)(ii) shall not be available to any party whose breach
of any representation or warranty or failure to fulfill any
covenant or agreement under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or
before such date; or
(iii) in the event of a breach by the Company, on
the one hand, or Parent or Newco, on the other hand, of any
representation, warranty, covenant or other agreement
contained in this Agreement which (A) would give rise to the
failure of a condition set forth in Section 6.2(a) or (b) or
Section 6.3(a) or (b), as applicable, and (B) cannot be cured
or, if curable, has not been cured within 30 days after the
giving of written notice to the breaching party of such
breach (a "Material Breach"); provided that in no event shall
such 30-day period extend beyond the Termination Date; and
provided, further, that the parties agree that a breach of
the second sentence of Section 5.4 or the obligations of the
Company under Section 4.2 cannot be cured and shall be deemed
a "willful breach" for the purposes of Section 7.2(a)
(provided that the terminating party is not then in Material
Breach of any representation, warranty, covenant or other
agreement contained in this Agreement);
65
<PAGE> 78
(c) by Parent or Newco if, prior to the Stockholders
Meeting, (i) the Company Special Committee or the Board of
Directors of the Company shall have withdrawn or modified, in
any manner which is adverse to Parent or Newco, its
recommendation or approval of the Merger, this Agreement or
the transactions contemplated hereby, or shall have resolved
to do so, or (ii) the Board of Directors of the Company shall
have recommended to the stockholders of the Company any
Company Acquisition Proposal or any transaction described in
the definition of Company Acquisition Proposal, or shall have
resolved to do so;
(d) by the Company if, prior to the Stockholders
Meeting, (i) the Company Special Committee or the Board of
Directors of the Company shall have determined to withdraw or
modify, in any manner which is adverse to Parent or Newco,
its recommendation or approval of the Merger and this
Agreement and the transactions contemplated hereby pursuant
to Section 4.2, (ii) the Company shall have given notice to
Parent advising Parent that the Company has received a
Company Superior Proposal from a third party, specifying the
material terms and conditions of such Company Superior
Proposal (including the identity of the third party), and
advising Parent that the Company intends to terminate this
Agreement in accordance with this Section 7.1(d), and (iii)
either (A) Parent and Newco shall not have revised their
acquisition proposal within five business days after the date
on which such notice is deemed to have been given to them, or
(B) if Parent and Newco within such period shall have revised
their acquisition proposal, the Board of Directors of the
Company, after consultation with the Company's financial
advisor, shall have determined in its good faith reasonable
judgment that the third party's Company Acquisition Proposal
is superior to the Company's revised acquisition proposal;
provided that the Company may not effect such termination
pursuant to this Section 7.1(d) unless the Company has
contemporaneously with such termination tendered payment to
Parent, or its designee, of the Break Up Fee pursuant to
Section 7.2(b) and the Termination Expenses of Parent and
Newco pursuant to Section 7.2(d)(i) and the five business day
period has expired (it being understood that any amendment to
the price or material terms of a Company Superior Proposal
shall require an additional notice under clause (ii) above
and an additional period of five business days under clause
(iii) above);
(e) by Parent or Newco if, after the date of this
Agreement, a change, event or effect shall have caused or
could reasonably be expected to cause a Material Adverse
Change or Material Adverse Effect with respect to the
Company;
(f) pursuant to Section 8.8;
66
<PAGE> 79
(g) by Parent or Newco, if any Financing Commitment
expires or otherwise terminates pursuant to its terms;
provided, however, that (i) no termination pursuant to this
Section 7.1(g) shall be effective unless Parent or Newco
shall have given written notice to the Company of such
termination no later than 30 days after such expiration or
termination of such Financing Commitment, and (ii) if Parent
or Newco does not exercise such right to terminate this
Agreement within such 30-day period, then the condition to
Newco's obligation to effect the Merger under Section 6.2(e)
shall automatically be deleted from this Agreement after the
end of such 30-day period;
(h) by Parent or Newco if, on the scheduled Closing
Date, the providers of debt financing under the debt
Financing Commitments (excluding the Financing Commitment of
The Chase Manhattan Bank) are willing to provide debt
financing pursuant to the terms of such Financing
Commitments, but the aggregate gross proceeds available from
such debt financing are less than $825,000,000;
(i) by Parent or Newco if, on the scheduled Closing
Date, the condition to Newco's obligation to effect the
Merger set forth in Section 6.2(e) has not been satisfied;
(j) by the Company if, on the scheduled Closing
Date, (i) neither Parent nor Newco has the right to terminate
this Agreement pursuant to Section 7.1, (ii) all of the
conditions to Newco's obligation to effect the Merger under
Section 6.1 and Section 6.2 have been satisfied, and (iii)
Newco fails or refuses to effect the Merger. The Company
agrees that it shall not be entitled to terminate this
Agreement pursuant to Section 7.1(b)(iii) under the
circumstances set forth in the immediately preceding sentence
of this Section 7.1(j);
(k) by the Company if, on the scheduled Closing
Date, the sum of the Extraordinary Capital Expenditures
Payments, the Extraordinary Gross-Up Payments and the
Extraordinary Consent Payments exceeds Five Million Dollars
($5,000,000); or
(l) by Parent or Newco if the retention bonuses,
severance payments and noncompetition payments set forth on
Schedule 3.1(l) of the Company Disclosure Schedule exceed
$11,203,500.
A terminating party shall provide written notice of
termination to the other parties specifying with particularity the
reason for such termination. If more than one provision in this
Section 7.1 is available to a terminating party in connection with a
termination, a terminating party may rely on only one provision in
this Section 7.1 for any such termination.
67
<PAGE> 80
7.2 Effect of Termination.
(a) In the event of termination of this Agreement by any
party hereto as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on
the part of any party hereto except with respect to this Section 7.2,
the second and third sentences of Section 5.3, Section 5.13 and
Article 8; provided, however, that if such termination results from a
willful breach (except as provided in Section 8.8 and excluding from
being deemed a willful breach any termination by the Company pursuant
to Section 7.1(j)) by a party hereto of any of its representations or
warranties or of any of its covenants or agreements contained in this
Agreement, the breaching party shall be fully liable for such breach
notwithstanding the termination of this Agreement (it being understood
that such liability shall be reduced by any payments made under
Section 7.2(d)).
(b) If (i) Parent or Newco terminates this Agreement pursuant
to Section 7.1(c) or (ii) the Company terminates this Agreement
pursuant to Section 7.1(d), then the Company shall, on the day of, and
as a condition to the effectiveness of, such termination, pay Parent
or its designee a fee in cash equal to Twenty-Six Million Seven
Hundred Fifty Thousand Dollars ($26,750,000) (such fee is referred to
as the "Break Up Fee"), by wire transfer of immediately available
funds to an account designated by Parent.
(c) If (i) this Agreement is terminated by either Parent,
Newco or the Company pursuant to clauses (B) or (C) of Section
7.1(b)(i) because the stockholders of the Company shall not have
approved the Merger at the Stockholders Meeting referred to in Section
5.4 or because no meeting was held or no vote taken, (ii) at the time
of such Stockholders Meeting (or, in the case where no meeting was
held, at any time within 30 days prior to the date of termination)
there shall have been pending a Company Acquisition Proposal and (iii)
within 12 months after the date of termination the Company agrees to
or consummates a Company Acquisition Proposal (whether or not such
Company Acquisition Proposal is the same Company Acquisition Proposal
pending at the time of such meeting or, in the case where no meeting
was held, pending at any time within 30 days prior to the date of such
termination), then at the closing or other consummation of such
Company Acquisition Proposal the Company shall pay Parent or its
designee an amount equal to the Break Up Fee by wire transfer of
immediately available funds to an account designated by Parent.
(d) (i) In addition to any other amounts that may be payable
pursuant to this Section 7.2, if this Agreement is terminated for any
reason pursuant to Section 7.1 (other than (A) pursuant to Section
7.1(a), (B) by the Company pursuant to Section 7.1(b)(iii) because
Parent or Newco is in Material Breach of this Agreement, (C) by
68
<PAGE> 81
Parent or Newco pursuant to Section 7.1(h) or (D) by Parent or Newco
pursuant to Section 7.1(i) if, on the scheduled Closing Date, the
condition to Newco's obligation to effect the Merger set forth in
Section 6.2(e) has not been satisfied solely due to the failure of The
Chase Manhattan Bank to provide debt financing under its Financing
Commitment), then the Company shall, on the date of such termination,
pay to Parent the Termination Expenses (as defined below) of Parent and
Newco payable hereunder in cash by wire transfer of immediately
available funds to an account designated by Parent. The Termination
Expenses of Parent payable hereunder shall be an amount equal to the
lesser of Twelve Million Dollars ($12,000,000) or the total Termination
Expenses of Parent and Newco.
(ii) In addition to any other amounts that may be
payable pursuant to this Section 7.2, if this Agreement is
terminated by the Company pursuant to Section 7.1(b)(iii)
because Parent or Newco is in Material Breach of this
Agreement, Parent shall, on the date of such termination, pay
to the Company the Termination Expenses of the Company payable
hereunder in cash by wire transfer of immediately available
funds to an account designated by the Company. The Termination
Expenses of the Company payable hereunder shall be an amount
equal to the lesser of Two Million Dollars ($2,000,000) or the
total Termination Expenses of the Company (such lesser amount,
the "Base Amount").
(iii) As used herein, "Termination Expenses" shall
mean such amount as may be required to reimburse a party and
its Affiliates for all reasonable out-of-pocket fees, costs
and expenses incurred by any of them in connection with their
(or any of their agent's or consultant's) due diligence
efforts or the transactions contemplated by the Transaction
Documents and the OP Transaction Documents, including,
without limitation, (A) fees, costs and expenses of
accountants, counsel (including a reasonable allocation of
the time of any in-house counsel engaged on the transactions
contemplated hereby), financial advisors and other similar
advisors, (B) fees paid to any Governmental Entity and (C)
fees, costs and expenses paid or payable to third parties
under any financing commitments or similar arrangements or in
connection with financing transactions or efforts, including,
without limitation, any purchaser or underwriter's discounts
relating to the sale of the debt or equity financing (except
for the principal amount payable in connection therewith, but
including all accrued interest payable in connection
therewith), the making of any repurchase offer in respect of
such financing, costs in connection with interest rate
hedging or protection agreements, or any fees paid or payable
to financing sources upon the termination of this Agreement,
and (D) any fees, costs and expenses incurred in connection
with the performance or receipt of environmental studies and
reports, title commitments, property surveys, market surveys,
termite reports, property appraisals, and engineering reports
(environmental and structural) as part of the due diligence
conducted in connection with the transactions contemplated by
the Transaction Documents and the OP Transaction Documents.
Notwithstanding the foregoing, in the case of the
69
<PAGE> 82
Company, the Termination Expenses shall be an amount equal to
the lesser of (i) the Base Amount and (ii) the sum of (A) the
maximum amount that can be paid to the Company without
causing it to fail to meet the requirements of Section
856(c)(2) and (3) of the Code determined as if the payment of
such amount did not constitute income described in Sections
856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code
("Qualifying Income"), as determined by independent
accountants to the Company and (B) in the event the Company
receives an opinion from outside counsel (the "Termination
Tax Opinion") to the effect that the receipt by the Company
of the Base Amount would either constitute Qualifying Income
or would be excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code (the "REIT
Requirements") or that receipt by the Company of the
remaining balance of the Base Amount following the receipt of
and pursuant to such opinion would not be deemed
constructively received prior thereto, the Base Amount less
the amount payable under clause (A) above. In the event that
the Company is not able to receive the full Base Amount,
Parent shall place the unpaid amount in escrow and shall not
release any portion thereof to the Company unless and until
the Company receives any one or combination of the following:
(x) a letter from its independent accountants indicating the
maximum amount that can be paid at that time without causing
it to fail to meet the REIT Requirements or (y) a Termination
Tax Opinion, in which event Parent shall pay to the Company
the lesser of the unpaid Base Amount or the maximum amount
stated in the letter referred to in the immediately preceding
clause (x) above or, as applicable, the Termination Tax
Opinion.
(e) Any Break Up Fee or Termination Expenses of Parent or
Newco shall be paid by the Company without reservation of rights or
protests, and the Company (and its Affiliates) upon making such
payment shall be deemed to have released and waived any and all rights
that it may have to recover such amounts. Any Termination Expenses of
the Company shall be paid by Parent without reservation of rights or
protests, and Parent (and its Affiliates) upon making such payment
shall be deemed to have released and waived any and all rights that it
may have to recover such amounts. Nothing contained in this Section
7.2(e) shall be deemed to override or effect the parenthetical at the
end of Section 7.2(a).
(f) (i) If this Agreement is terminated by the Company under
Section 7.1(j), the parties agree and acknowledge that the Company
will suffer damages that are not practicable to ascertain, and Parent
and Newco agree to pay the Company as liquidated damages a fee in cash
(the "Liquidated Damages Base Amount") equal to Five Million Dollars
($5,000,000), by wire transfer of immediately available funds to an
account designated by the Company within five days after such
termination. The parties agree that the foregoing liquidated damages
are reasonable considering all the circumstances existing as of the
date hereof and constitute the parties' good faith estimate of the
actual damages reasonably expected to result from such termination of
this
70
<PAGE> 83
Agreement by the Company. The Company agrees that, to the fullest
extent permitted by law, the Company's right to terminate this
Agreement and the Company's right to receive payment of the liquidated
damages described above as provided in this Section 7.2(f) shall be
the Company's sole and exclusive right and remedy if the Closing does
not occur with respect to any damages whatsoever that the Company may
suffer or allege to suffer as a result of any claim or cause of action
asserted by the Company relating to or arising from the Transaction
Documents and the OP Transaction Documents and the transactions
contemplated hereby or thereby, and no other damages (including,
without limitation, the payment of any Termination Expenses of the
Company) shall be payable by Parent, Newco or any Parent Affiliate (as
hereinafter defined) in connection with such termination.
Notwithstanding the foregoing, the liquidated damages shall be an
amount equal to the lesser of (i) the Liquidated Damages Base Amount
and (ii) the sum of (A) the maximum amount that can be paid to the
Company without causing it to fail to meet the requirements of Section
856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute Qualifying Income, as determined by
independent accountants to the Company, and (B) in the event the
Company receives the Termination Tax Opinion to the effect that the
receipt by the Company of the Liquidated Damages Base Amount would
either constitute Qualifying Income or would be excluded from gross
income within the meaning of the REIT Requirements or that receipt by
the Company of the remaining balance of the Liquidated Damages Base
Amount following the receipt of and pursuant to such opinion would not
be deemed constructively received prior thereto, the Liquidated
Damages Base Amount less the amount payable under clause (A) above. In
the event that the Company is not able to receive the full Liquidated
Damages Base Amount, Parent shall place the unpaid amount in escrow
and shall not release any portion thereof to the Company unless and
until the Company receives any one or combination of the following:
(x) a letter from its independent accountants indicating the maximum
amount that can be paid at that time without causing it to fail to
meet the REIT Requirements or (y) a Termination Tax Opinion, in which
event Parent shall pay to the Company the lesser of the unpaid
Liquidated Damages Base Amount or the maximum amount stated in the
letter referred to in the immediately preceding clause (x) above or,
as applicable, the Termination Tax Opinion.
(ii) As a condition of payment, and upon receipt of
such amount as liquidated damages under this Section 7.2(f),
the Company hereby irrevocably and unconditionally releases,
acquits, and forever discharges Parent, Newco and all Parent
Affiliates of and from any and all Released Claims (as
defined below), including without limitation, all Released
Claims arising out of, based upon, resulting from or relating
to the negotiation, execution, performance, breach or
otherwise related to or arising out of the Transaction
Documents or any agreement entered into in connection
therewith or related thereto and any transaction contemplated
by any Transaction Documents or any such other agreement.
"Released Claims" as used herein shall mean any and all
charges, complaints, claims, causes of action, promises,
agreements, rights to payment, rights to any equitable
remedy, rights to any equitable subordination, demands,
debts,
71
<PAGE> 84
liabilities, express or implied contracts, obligations of
payment or performance, rights of offset or recoupment,
accounts, damages, costs, losses or expenses (including
attorneys' and other professional fees and expenses) held by
any party hereto, whether known or unknown, matured or
unmatured, suspected or unsuspected, liquidated or
unliquidated, absolute or contingent, direct or derivative.
7.3 Amendment. Subject to Section 7.5, this Agreement may be amended
by the parties hereto at any time before or after approval of the matters
presented in connection with the Merger by the stockholders of the Company
entitled to vote thereon; provided, however, that after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without first obtaining such further approval. Subject to Section
7.5, this Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. Subject to Section 7.5, at any time prior to
the Effective Time, the parties hereto may, to the extent legally allowed: (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto; (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(c) waive compliance with any of the agreements or conditions contained herein.
Subject to Section 7.5, 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.
7.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require (i) in the case of the Company,
action by its Board of Directors and the Company Special Committee, (ii) in the
case of Newco, action by its Board of Directors, and (iii) in the case of
Parent, action by its general partner.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Payment of Expenses. Except as otherwise expressly provided in
this Agreement or by law, if the Closing does not occur, each party hereto
shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby, except that the Company and Parent shall share equally the
expenses incurred by the Company and Parent in connection with the printing and
mailing of the Proxy Statement/Prospectus and all filing fees paid in
connection with the S-4 to the SEC and provided that this Section 8.1 shall in
no way affect the rights and obligations of the parties under
72
<PAGE> 85
Article 7. Notwithstanding the foregoing, if the Closing does occur, then the
Company shall pay or reimburse Parent or Newco for all costs and expenses
incurred by them or their Affiliates in connection with the transactions
contemplated by the Transaction Documents or the OP Transaction Documents.
8.2 Nonsurvival of Representations, Warranties and Agreements. Subject
to the remaining provisions of this Section 8.2, the representations,
warranties and agreements in this Agreement shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
other party hereto, any person controlling any such party or any of their
officers, directors, representatives or agents whether prior to or after the
execution of this Agreement. None of the representations, warranties and
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time, and any liability for breach or
violation thereof shall terminate absolutely and be of no further force and
effect at and as of the Effective Time, except for the agreements that by their
terms contemplate performance after the Effective Time. The Confidentiality
Agreement shall survive the execution and delivery of this Agreement, and the
provisions of the Confidentiality Agreement shall apply to all information and
material delivered hereunder.
8.3 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received (a) when so delivered personally, (b)
upon receipt of an appropriate electronic answer back or confirmation when so
delivered by telegraph or telecopy (to such number specified below or another
number or numbers as such person may subsequently designate by notice given
hereunder), or (c) five business days after the date of mailing to the
following address or to such other address or addresses as such person may
subsequently designate by notice given hereunder, if so delivered by mail:
(i) if to the Company, to:
Walden Residential Properties, Inc.
5080 Spectrum Drive, Suite 1000 East
Addison, Texas 75001
Telecopy: (972) 490-2781
Attention: General Counsel
73
<PAGE> 86
with a copy (which shall not constitute notice) to:
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Telecopy: (214) 740-8800
Attention: Kenneth L. Betts
and (b) if to Parent or Newco, to:
Oly Hightop Parent, L.P.
Oly Hightop Corporation
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Telecopy: (214) 740-7340
Attention: General Counsel
with copies to:
Vinson & Elkins L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Telecopy: (214) 220-7716
Attention: Michael D. Wortley
8.4 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of 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 word "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Unless the
context otherwise requires, "or" is disjunctive but not necessarily exclusive,
and words in the singular include the plural and in the plural include the
singular.
8.5 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 parties, it being understood that all
parties need not sign the same counterpart.
8.6 Entire Agreement; No Third Party Beneficiaries. This Agreement
(together with the Confidentiality Agreement and any other documents and
instruments referred to herein) 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. The provisions of
74
<PAGE> 87
Sections 5.7, 5.11 and 8.11 are intended to be for the benefit of, and shall be
enforceable by, the persons referred to therein and their respective heirs and
representatives; provided, however, that this Agreement (including such
provisions) shall be enforceable only against the parties hereto. Except as
provided in the immediately preceding sentence, this Agreement is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
8.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland, without giving effect to
the principles of conflicts of law thereof.
8.8 No Remedy in Certain Circumstances. Each party agrees that, should
any court or other competent authority hold any provision of this Agreement or
part hereof to be null, void or unenforceable, or order any party to take any
action inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any way
be affected or impaired thereby, unless the foregoing inconsistent action or
the failure to take an action constitutes a Material Breach of this Agreement
or makes this Agreement impossible to perform, in which case this Agreement
shall terminate. Except as otherwise contemplated by this Agreement, to the
extent that a party hereto took an action inconsistent herewith or failed to
take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent authority, such party shall not incur
any liability or obligation unless such party breached its obligations under
the Confidentiality Agreement or did not in good faith seek to resist or object
to the imposition or entering of such order or judgment.
8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding solely upon, inure to the sole benefit of and be enforceable
solely by the parties and their respective successors and assigns.
8.10 Specific Performance. The Company hereby acknowledges and agrees
that the failure of the Company to perform its obligations under the
Transaction Documents and the OP Transaction Documents in accordance with their
specific terms or to otherwise comply with such obligations, including its
failure to take all actions as are necessary on its part to the consummation of
the Merger, the WDOP Merger and the WROP Merger will cause irreparable injury
to Parent and Newco for which damages, even if available, will not be an
adequate remedy. Accordingly, the Company hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of the Company's obligations, including an injunction to prevent breaches, and
to the granting by any such court of the remedy of specific performance of the
terms and conditions of the Transaction Documents and the OP Transaction
Documents.
75
<PAGE> 88
8.11 No Affiliate Liability. Each of the following is herein referred
to as a "Parent Affiliate:" (a) any direct or indirect holder of any equity
interests or securities in Parent or Newco (whether limited or general
partners, members, stockholders or otherwise), (b) any Affiliate of Parent or
Newco, or (c) any director, officer, employee, representative or agent of (iii)
Parent or Newco, (iv) any Affiliate of Parent or Newco or (v) any such holder
of equity interests or securities referred to in clause (a) above. No Parent
Affiliate shall have any liability or obligation of any nature whatsoever in
connection with or under the Transaction Documents or the OP Transaction
Documents or the transactions contemplated hereby or thereby, and the Company
hereby waives and releases all claims of any such liability and obligation, it
being understood that no such person or entity (other than Parent or Newco)
shall be liable for or in respect of the Transaction Documents and the OP
Transaction Documents or the transactions contemplated hereby or thereby.
8.12 Schedule Definitions. All capitalized terms in the Company
Disclosure Schedule or Parent/Newco Disclosure Schedule shall have the meanings
ascribed to them herein, unless the context otherwise requires or as otherwise
defined.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
76
<PAGE> 89
IN WITNESS WHEREOF, each party has caused this Agreement to be signed
by its respective officer thereunto duly authorized, all as of the date first
written above.
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By: /s/ MARSHALL B. EDWARDS
------------------------------------------
Name: Marshall B. Edwards
Title: President and Chief Executive Officer
OLY HIGHTOP CORPORATION,
a Maryland corporation
By: /s/ DAVID B. DENIGER
-----------------------------------------
Name: David B. Deniger
Title: President
OLY HIGHTOP PARENT, L.P.,
a Delaware limited partnership
By: Oly Hightop Parent GP, LLC,
its general partner
By: /s/ DAVID B. DENIGER
------------------------------------
Name: David B. Deniger
----------------------------------
Title: President
---------------------------------
S-1
<PAGE> 1
EXHIBIT 4.1
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment"), dated as
of September 24, 1999, is between Walden Residential Properties, Inc., a
Maryland corporation (the "Company"), and BankBoston, N.A., as Rights Agent
(the "Rights Agent").
R E C I T A L S
WHEREAS, the Company and the Rights Agent are parties to the Rights
Agreement dated as of March 26, 1998 (the "Rights Agreement");
WHEREAS, Oly Hightop Parent, L.P., a Delaware limited partnership
("Parent"), Oly Hightop Corporation, a Maryland corporation ("Newco"), and the
Company propose to enter into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which the Company will merge with and into Newco (the
"Merger"), which Merger Agreement and Merger have been approved by the Board of
Directors of the Company; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Board of
Directors of the Company has determined that an amendment to the Rights
Agreement as set forth herein is necessary and desirable in connection with the
foregoing, and the Company and the Rights Agent desire to evidence such
amendment in writing.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Amendment of Section 1(a). Section 1(a) of the Rights Agreement is
amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
none of Parent or Newco or any of their respective
Affiliates, Associates or Subsidiaries shall be deemed to be
an Acquiring Person by virtue of (i) the execution of the
Merger Agreement or any other Transaction Document or (ii)
the consummation of the Merger or any other transaction
contemplated by the Transaction Documents."
2. Amendment of Section 1. Section 1 of the Rights Agreement is
amended to add the following at the end thereof:
(ff) "Loan Repayment Agreements" shall mean the loan
repayment agreements to be executed by employees of
the Company pursuant to the Merger Agreement in
substantially the form attached as an exhibit
thereto.
(gg) "Merger" shall mean the merger of the Company with
and into Newco pursuant to the Merger Agreement.
1
<PAGE> 2
(hh) "Merger Agreement" shall mean that certain Agreement
and Plan of Merger, dated as of September 24, from
time to time.
(ii) "Newco" shall mean Oly Hightop Corporation, a
Maryland corporation.
(jj) "Parent" shall mean Oly Hightop Parent, L.P., a
Delaware limited partnership.
(kk) "Transaction Documents" shall mean the Merger
Agreement, the Loan Repayment Agreements, the Voting
Agreements and all other documents to be executed by
the Company in connection with the transactions
contemplated thereby.
(ll) "Voting Agreements" shall mean the voting agreements
executed pursuant to the Merger Agreement by and
among the Company, Parent, Newco and the holders of
the Company's stock named in Schedule A to the
Merger Agreement.
3. Amendment of Section 3(b). Section 3(b) of the Rights Agreement is
hereby amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
a Distribution Date shall not be deemed to have occurred
solely as the result of (i) the execution of the Merger
Agreement or any other Transaction Document or (ii) the
consummation of the Merger or any other transaction
contemplated by the Transaction Documents."
4. Effectiveness. This Amendment shall be deemed effective as of the
date first written above, as if executed on such date. Except as amended
hereby, the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.
5. Miscellaneous. This Amendment shall be deemed to be a contract made
under the laws of the State of Maryland and for all purposes shall be governed
by and construed in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state. This Amendment
may be executed in any number of counterparts, each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument. If any provision, covenant
or restriction of this Amendment is held by a court of competent jurisdiction
or other authority to be invalid, illegal or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Amendment shall
remain in full force and effect and shall in no way be effected, impaired or
invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be fully executed, all as of the date and year first above
written.
2
<PAGE> 3
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Marshall B. Edwards
---------------------------------------------
Name:
----------------------------------------
Marshall B. Edwards
Title: President and Chief Executive Officer
---------------------------------------
BANKBOSTON, N.A.
By: /s/ Joshua P. McGinn
---------------------------------------------
Name:
----------------------------------------
Joshua P. McGinn
Title: Senior Account Manager
---------------------------------------
3
<PAGE> 1
EXHIBIT 99.1
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of September 24, 1999,
among Walden Residential Properties, Inc., a Maryland corporation (the
"Company"), Oly Hightop Parent, L.P., a Delaware limited partnership
("Parent"), Oly Hightop Corporation, a Maryland corporation and wholly-owned
subsidiary of Parent ("Newco"), and _______________________________ (the
"Stockholder").
WHEREAS, the Company, Parent and Newco are entering into an Agreement
and Plan of Merger of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") providing for the merger of the Company
with and into Newco (the "Merger"), upon the terms and subject to the
conditions set forth in the Merger Agreement;
WHEREAS, all of the shares of Common Stock, $0.01 par value, of the
Company ("Common Stock"), 9.20% Senior Preferred Stock of the Company ("Senior
Preferred Stock") and 9.0% Redeemable Preferred Stock of the Company
("Redeemable Preferred Stock") that are held of record as of the date hereof by
the Stockholder or over which the Stockholder has the power to direct the vote,
together with any shares of capital stock of the Company acquired by the
Stockholder after the date hereof and during the term of this Agreement,
including upon exercise of any option or warrant or conversion of any limited
partnership interest in any subsidiary of the Company, are collectively
referred to herein as the "Subject Shares" and are set forth opposite the
Stockholder's name on the signature pages hereto; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Newco have requested that the Stockholder enter into this
Agreement in order to increase the likelihood that the Company will obtain the
Merger Vote and the Preferred Stock Vote (as such terms are defined in the
Merger Agreement).
NOW, THEREFORE, to induce Parent and Newco to enter into, and in
consideration of their entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and
agreements contained herein, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent and Newco as follows:
(a) Authority; Noncontravention. (i) If such Stockholder is an
individual: Such Stockholder has full power and authority to enter into
this Agreement and to assume and perform such Stockholder's obligations
hereunder. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance
with the terms hereof (including Section 3 of this Agreement) will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any
trust agreement, loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
<PAGE> 2
franchise, license, judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to such Stockholder or to such
Stockholder's property or assets.
(i) If such Stockholder is an entity: The execution
and delivery of this Agreement by such Stockholder, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary action on the part of such Stockholder.
This Agreement has been duly authorized, executed and delivered by such
Stockholder and constitutes a valid and binding obligation of such
Stockholder enforceable in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof
(including Section 3 of this Agreement) will not, conflict with, or
result in any violation of, or default (with or without notice or lapse
of time or both) under any provision of, the organizational documents
of such Stockholder, any trust agreement, loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to such
Stockholder or to the Stockholder's property or assets.
(b) The Subject Shares. The Stockholder is the record or
beneficial owner of, and has good and marketable title to, the Subject
Shares, free and clear of any claims, liens, encumbrances and security
interests whatsoever other than those set forth on Schedule I hereto.
Such Stockholder has the sole right to vote the Subject Shares and to
grant to Parent an irrevocable proxy to vote the Subject Shares. None
of the Subject Shares is subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting of the
Subject Shares as required by this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO. Parent and Newco
hereby represent and warrant to the Stockholders that Parent and Newco have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Newco and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Parent and Newco. This Agreement has been duly executed and delivered by
Parent and Newco and constitutes a valid and binding obligation of Parent and
Newco enforceable in accordance with its terms. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time or
both) under any provision of, the charter or bylaws of Newco or the Agreement of
Limited Partnership of Parent or any trust agreement, loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to Parent or Newco or to the property
or assets of Parent or Newco.
3. COVENANTS OF THE STOCKHOLDER. Until the termination of this
Agreement in accordance with Section 7, the Stockholder agrees as follows:
2
<PAGE> 3
(a) At any meeting of stockholders of the Company called to
vote upon the approval and adoption of the Merger or the Merger
Agreement or at any adjournment thereof or in any other circumstances
upon which a vote, consent or other approval (including by written
consent) with respect to the Merger or the Merger Agreement is sought,
the Stockholder shall vote (or cause to be voted) the Subject Shares in
favor of such proposals and any of the other transactions contemplated
by the Merger Agreement.
(b) At any meeting of the stockholders of the Company or at
any adjournment thereof, or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares
against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any other takeover
proposal or Acquisition Proposal as such term is defined in Section 4.2
of the Merger Agreement (an "Acquisition Proposal") or (ii) any
amendment of the Company's charter or bylaws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any
of the other transactions contemplated by the Merger Agreement or
change in any manner the voting rights of the Common Stock, the Senior
Preferred Stock or the Redeemable Preferred Stock of the Company. The
Stockholder further agrees not to commit or agree to take any action
inconsistent with the foregoing.
(c) Except as provided in the immediately succeeding sentence
of this Section 3(c), the Stockholder agrees not to (i) sell, transfer,
pledge, assign or otherwise dispose of (including by gift)
(collectively, the "Transfer"), or enter into any contract, option or
other arrangement (including any profit sharing agreement) with respect
to the Transfer of, the Subject Shares to any person other than
pursuant to the terms of the Merger Agreement, or (ii) enter into any
voting arrangement, whether by proxy, voting agreement or otherwise, in
connection with, directly or indirectly, any Acquisition Proposal, and
agrees not to commit or agree to take any of the foregoing actions.
Notwithstanding the foregoing, the Stockholder shall have the right,
for tax or estate planning purposes, to Transfer the Subject Shares to
a transferee provided that, as a condition to any such Transfer, each
such transferee shall execute and deliver to Parent a counterpart of
this Agreement and expressly agree to be bound hereby.
(d) During the term of this Agreement, the Stockholder shall
not, nor shall the Stockholder permit any affiliate, investment banker,
attorney or other adviser or representative of the Stockholder on the
Stockholder's behalf to, (i) directly or indirectly solicit, initiate
or encourage the submission of, any Acquisition Proposal or (ii) except
as permitted under the terms of the Merger Agreement, directly or
indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal.
3
<PAGE> 4
4. IRREVOCABLE PROXY. The Stockholder hereby grants to Parent a proxy
to vote the Subject Shares of the Stockholder in accordance with Sections 3(a)
and 3(b). The Stockholder intends such proxy to be irrevocable and coupled with
an interest and will take such further action or execute such other instruments
as may be necessary to effectuate the intent of this proxy and hereby revokes
any proxy previously granted by the Stockholder with respect to the Subject
Shares. The Stockholder will not revoke or attempt to revoke such proxy prior to
the termination of this Agreement in accordance with Section 7.
5. FURTHER ASSURANCES. The Stockholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Parent and Newco may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that Parent or Newco may assign, in their sole discretion, any
or all of their rights, interests and obligations hereunder to any direct or
indirect wholly owned subsidiary of Parent. Subject to the preceding sentence,
this Agreement will be binding solely, upon, inure to the sole benefit of and be
enforceable solely by the parties and their respective successors and assigns.
7. TERMINATION. This Agreement shall terminate upon the earlier of (a)
the termination of the Merger Agreement in accordance with Section 7.1 thereof
or (b) the Effective Time (as defined in the Merger Agreement) of the Merger;
provided, however, the liabilities of any party for breach prior to such time by
such party of a representation, warranty or covenant contained in this Agreement
shall survive the termination of this Agreement.
8. COMPANY'S OBLIGATIONS. By execution of this Agreement, the Company
hereby recognizes the existence of this Agreement and agrees to take such action
as is necessary to give effect to the terms hereof, including but not limited to
informing its transfer agent of the restrictions on transfer set forth in
Section 3 hereof, not permitting any transfer of any Subject Shares to be made
of record in violation of such restrictions, and not recognizing any proxy given
by the Stockholder in violation of this Agreement.
9. GENERAL PROVISIONS.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to Parent in
accordance with Section 8.3 of the Merger Agreement and to the
Stockholder at the Stockholder's address set forth on the signature
page hereto (or at such other address for a party as shall be specified
by like written notice).
4
<PAGE> 5
(c) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement
unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Wherever the words
"include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Unless the context otherwise requires, "or" is disjunctive but not
necessarily exclusive, and words in the singular include the plural and
in the plural include the singular.
(d) 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 parties,
it being understood that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein)
(i) 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 and (ii) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
(f) Severability. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to take
any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability
of the remaining provisions and obligations contained or set forth
herein shall not in any way be affected or impaired thereby,
(g) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland,
without giving effect to the principles of conflicts of law thereof.
(h) No Affiliate Liability. Any (i) direct or indirect holder
of any equity interests or securities in Parent or Newco (whether
limited or general partners, members, stockholders or otherwise), (ii)
Affiliate of Parent or Newco, or (iii) director, officer, employee,
representative or agent of (A) Parent or Newco, (B) any Affiliate of
Parent or Newco or (C) any holder referred to in clause (i) above is
herein referred to as a "Parent Affiliate." No Parent Affiliate shall
have any liability or obligation of any nature whatsoever in connection
with or under this Agreement or the transactions contemplated hereby,
and the Company and the Stockholder hereby waive and release all claims
of any such liability and obligation, it being understood that no such
person or entity (other than Parent or Newco) shall be liable for or in
respect of this Agreement.
10. ENFORCEMENT. The parties hereby acknowledge and agree that the
failure of any party to perform its obligations under this Agreement in
accordance with its specific terms or to otherwise comply with such obligations
will cause irreparable injury for which damages, even if
5
<PAGE> 6
available, will not be an adequate remedy. Accordingly, the parties hereby
consent to the issuance of injunctive relief by any court of competent
jurisdiction located in the State of Texas to compel performance of any party's
obligations, including an injunction to prevent breaches, and to the granting by
any such court of the remedy of specific performance of the terms and conditions
of this Agreement, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit such party to the personal jurisdiction of any Federal or
State court in Texas in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (b) agrees that such party will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that such party will not bring any
action relating to this Agreement or the transactions contemplated hereby in any
court other than a Federal or State court sitting in the state of Texas and (d)
waives any right to trial by jury with respect to any claim or proceeding
related to arising out of this Agreement or any of the transactions contemplated
hereby.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
6
<PAGE> 7
IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed as of the date first written above.
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
OLY HIGHTOP CORPORATION,
a Maryland corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
OLY HIGHTOP PARENT, L.P.,
a Delaware limited partnership
By: Oly Hightop Parent GP, LLC,
its general partner
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
- --------------------------
SUBJECT SHARES STOCKHOLDER:
NUMBER OF
SECURITY SHARES
- -------------------------- ---------
-------------------------------------
Common Stock Name:
--------- --------------------------------
Senior Preferred Stock Address:
--------- -----------------------------
Redeemable Preferred Stock ----------------------------
---------
7
<PAGE> 8
SCHEDULE I
S-1
