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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): November 5, 1999
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
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Maryland 1-12592 75-2506197
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification Number)
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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)
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ITEM 5. OTHER EVENTS.
As previously announced, Walden Residential Properties, Inc. (the
"Company"), Oly Hightop Corporation, a Maryland corporation ("Newco"), and Oly
Hightop Parent, L.P., a Delaware limited partnership ("Parent"), entered into an
Agreement and Plan of Merger, dated as of September 24, 1999 (the "Prior Merger
Agreement"). A few weeks after signing the Prior Merger Agreement, Walden,
Parent and Newco agreed that the documents relating to the transaction
incorrectly reflected the receipt by holders of common and preferred partnership
units of Walden/Drever Operating Partnership, L.P. ("WDOP") and Walden
Residential Operating Partnership, L.P. ("WROP") of units of WDOP and WROP,
respectively, following the partnership mergers. The parties agreed that the
agreement reached on September 24, 1999 was to permit those holders to elect to
receive new securities in Parent rather than in WDOP and WROP. In addition, the
parties also agreed (1) to not permit Walden to make severance or similar
payments to its officers or consultants other than those permitted by existing
employment or consulting agreements, (2) to fix the aggregate cash merger
consideration reduction for capital expenditures at approximately $2.6 million
and (3) to provide that Walden would not be able to terminate the merger
agreement if Parent and Newco waived any reduction in the cash merger
consideration that exceed $5 million as a result of capital expenditures and
consent payments. On November 5, 1999, the parties entered into an amended and
restated merger agreement reflecting these revisions (the "Merger Agreement").
Two purported class action lawsuits have been filed against Walden and the
members of its board of directors alleging that the defendants have acted to
complete the proposed merger between Walden and Newco at a grossly inadequate
and unfair price at the expense of, and which is unfair to, Walden's common and
preferred stockholders. The litigation is in its preliminary stages and Walden
is not able to determine the full extent of the allegations. The defendants
intend to vigorously defend against the claims asserted in the two lawsuits.
Copies of the Merger Agreement and the First Amended and Restated Limited
Partnership Agreement of Parent are filed as exhibits to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
2.1 Amended and Restated Agreement and Plan of Merger, dated November 5,
1999, among Walden Residential Properties, Inc., Oly Hightop
Corporation and Oly Hightop Parent, L.P.
99.1 First Amended and Restated Limited Partnership Agreement of Oly
Hightop Parent, L.P., dated as of November 5, 1999, among Oly Hightop
Parent GP, LLC, as the general partner, and those persons identified
as limited partners on a schedule thereto
2
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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: November 12, 1999
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Mark S. Dillinger
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Mark S. Dillinger
Executive Vice President and Chief
Financial Officer
3
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WALDEN RESIDENTIAL PROPERTIES, INC.
INDEX TO EXHIBITS
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EXHIBIT PAGE
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2.1 Amended and Restated Agreement and Plan of Merger, dated November 5,
1999, among Walden Residential Properties, Inc., Oly Hightop
Corporation and Oly Hightop Parent, L.P.
99.1 First Amended and Restated Limited Partnership Agreement of Oly
Hightop Parent, L.P., dated as of September 22, 1999, among Oly
Hightop Parent GP, LLC, as the general partner, and those persons
identified as limited partners on a schedule thereto
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EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
WALDEN RESIDENTIAL PROPERTIES, INC.,
OLY HIGHTOP CORPORATION
AND
OLY HIGHTOP PARENT, L.P.
DATED AS OF NOVEMBER 5, 1999
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TABLE OF CONTENTS
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ARTICLE 1
THE MERGER
1.1 The Merger; Effective Time of the Merger.........................................3
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.................................................4
ARTICLE 2
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............................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...................................6
(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........................9
(d) No Further Ownership Rights.............................................9
(e) Termination of Exchange Fund...........................................10
(f) No Liability...........................................................10
(g) Lost, Stolen, or Destroyed Certificates................................11
(h) Payment Procedures for Company Stock Options...........................11
(i) Payment Procedures for Company Warrants...............................11
(j) Withholding of Tax.....................................................11
2.3 Appraisal Rights................................................................12
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company....................................12
(a) Organization, Standing and Power........................................12
(b) Capital Structure.......................................................13
(c) Authority; No Violations; Consents and Approvals........................16
(d) SEC Documents...........................................................18
(e) Information Supplied....................................................18
(f) Absence of Certain Changes or Events....................................19
(g) No Undisclosed Material Liabilities.....................................20
(h) No Default..............................................................20
(i) Compliance with Applicable Laws.........................................20
(j) Litigation..............................................................20
(k) Taxes...................................................................21
(l) Pension and Benefit Plans; ERISA........................................23
(m) Labor and Employment Matters............................................25
(n) Intangible Property.....................................................26
(o) Environmental Matters...................................................27
(p) Properties..............................................................29
(q) Insurance...............................................................31
(r) Opinion of Financial Advisor............................................31
(s) Vote Required...........................................................31
(t) Beneficial Ownership of Company Common Stock............................31
(u) Brokers.................................................................31
(v) Investment Company Act of 1940..........................................31
(w) Amendment to Rights Agreement; State Takeover Laws......................32
(x) Contracts...............................................................32
(y) Stock Purchase Plan.....................................................34
(z) Deferred Compensation Plan..............................................34
(aa) Company Options.........................................................34
(bb) Company Warrants........................................................34
(cc) Rule 16b-3..............................................................35
(dd) Information Systems.....................................................35
(ee) Drever Partners, Inc. Stock Purchase Agreement..........................35
(ff) Amendment and Restatement of Prior Agreement............................35
3.2 Representations and Warranties of Parent and Newco...............................35
(a) Organization, Standing and Power........................................36
(b) Capital Structure.......................................................36
(c) Authority; No Violations, Consents and Approvals........................37
(d) Information Supplied....................................................38
(e) Litigation..............................................................39
(f) Brokers.................................................................39
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(g) Sufficient Funds........................................................39
(h) Interim Operations of Parent and Newco..................................39
(i) Amendment and Restatement of Prior Agreement............................40
ARTICLE 4
COVENANTS RELATING TO CONDUCT
OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by the Company Pending the Merger............................40
(a) Ordinary Course.........................................................40
(b) Dividends; Changes in Stock.............................................40
(c) Issuance of Securities..................................................41
(d) Governing Documents.....................................................41
(e) No Acquisitions.........................................................41
(f) No Dispositions.........................................................41
(g) No Dissolution, Etc.....................................................42
(h) Accounting..............................................................42
(i) Affiliate Transactions..................................................42
(j) Insurance...............................................................42
(k) Tax Matters.............................................................42
(l) Certain Employee Matters................................................43
(m) Indebtedness............................................................43
(n) WROP Merger and WDOP Merger.............................................43
(o) Company Rights under Rights Agreement...................................43
(p) Contracts...............................................................43
(q) Discharge of Liabilities................................................43
(r) Drever Partners Stock Purchase Agreement................................44
(s) Agreements..............................................................44
4.2 No Solicitation by the Company...................................................44
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Preparation of S-4, Proxy Statement/Prospectus...................................46
5.2 Letter of the Company's Accountants..............................................46
5.3 Access to Information............................................................46
5.4 Stockholders Meeting.............................................................47
5.5 Approvals........................................................................47
5.6 Agreements of Rule 145 Affiliates................................................48
5.7 Employee Matters.................................................................48
5.8 Stock Options....................................................................49
5.9 Company Warrants.................................................................49
5.10 Deferred Compensation Plan.......................................................49
5.11 Directors' and Officers' Indemnification and Insurance...........................49
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5.12 Agreement to Defend..............................................................50
5.13 Public Announcements.............................................................50
5.14 Other Actions....................................................................51
5.15 Advice of Changes; SEC Filings...................................................51
5.16 Conveyance Taxes.................................................................51
5.17 WDOP Merger and WROP Merger......................................................51
5.18 Employee Loans...................................................................52
5.19 Dividends........................................................................52
5.20 Assistance.......................................................................52
5.21 [INTENTIONALLY OMITTED]..........................................................53
5.22 Proxy Solicitor..................................................................53
5.23 Drever Partners Stock Purchase Agreement.........................................53
5.24 Company Properties...............................................................53
5.25 Extraordinary Payments Amount....................................................53
5.26 Environmental Matters............................................................54
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.......................54
(a) Company Stockholder Approval............................................54
(b) Other Approvals.........................................................54
(c) S-4.....................................................................54
(d) No Injunctions or Restraints............................................54
(e) HSR Act.................................................................55
6.2 Conditions to Obligations of Newco to Effect the Merger..........................55
(a) Representations and Warranties of the Company...........................55
(b) Performance of Obligations of the Company...............................55
(c) Consents Under Agreements...............................................55
(d) WDOP Merger and WROP Merger.............................................55
(e) Financing...............................................................55
(f) Material Adverse Change or Effect.......................................55
(g) Drever Partners Stock Purchase Agreement................................56
(h) Legal Opinion...........................................................56
6.3 Conditions to Obligations of the Company to Effect the Merger....................56
(a) Representations and Warranties of Newco and Parent......................56
(b) Performance of Obligations of the Company...............................56
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ARTICLE 7
TERMINATION AND AMENDMENT
7.1 Termination......................................................................57
7.2 Effect of Termination............................................................59
7.3 Amendment........................................................................63
7.4 Extension; Waiver................................................................63
7.5 Procedure for Termination, Amendment, Extension or Waiver........................63
ARTICLE 8
GENERAL PROVISIONS
8.1 Payment of Expenses..............................................................63
8.2 Nonsurvival of Representations, Warranties and Agreements........................64
8.3 Notices..........................................................................64
8.4 Interpretation...................................................................65
8.5 Counterparts.....................................................................65
8.6 Entire Agreement; No Third Party Beneficiaries...................................65
8.7 Governing Law....................................................................65
8.8 No Remedy in Certain Circumstances...............................................66
8.9 Assignment.......................................................................66
8.10 Specific Performance.............................................................66
8.11 No Affiliate Liability...........................................................66
8.12 Schedule Definitions.............................................................67
8.13 Effect of Amendment and Restatement..............................................67
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EXHIBITS:
Exhibit A Amended and Restated WDOP Merger Agreement
Exhibit B Amended and Restated 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 First Amended and Restated Agreement of Limited
Partnership of Parent
Exhibit F Form of Articles Supplementary for Newco Senior
Preferred Stock
Exhibit G Form of 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
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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 Powers of Attorney
Schedule C Class B Preferred Unitholders with Powers of Attorney
Schedule D Class C Common Unitholders with Powers of Attorney
Schedule E Class D Common Unitholders with Powers of Attorney
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
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INDEX OF DEFINED TERMS
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Definition
Acquiring Person........................................................................................31
Affiliate...............................................................................................41
Agreement................................................................................................1
Articles of Merger.......................................................................................3
Base Amount.............................................................................................59
Break Up Fee............................................................................................58
Cash Merger Consideration................................................................................4
CERCLA..................................................................................................28
Certificate..............................................................................................8
Closing..................................................................................................3
Closing Date.............................................................................................3
Company..................................................................................................1
Company 1994 Option Plan.................................................................................6
Company Acquisition Proposal............................................................................43
Company Bylaws...........................................................................................3
Company Charter..........................................................................................3
Company Common Stock.....................................................................................4
Company Convertible Preferred Stock......................................................................4
Company Deferred Compensation Plan......................................................................33
Company Disclosure Schedule.............................................................................12
Company Employee Benefit Plans..........................................................................23
Company ERISA Affiliate.................................................................................23
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...................................................................................23
Company Permits.........................................................................................20
Company Properties......................................................................................29
Company Redeemable Preferred Stock.......................................................................4
Company Rights..........................................................................................31
Company Rights Agreement................................................................................31
Company SEC Documents...................................................................................18
Company Senior Preferred Stock...........................................................................4
Company Series A Warrants................................................................................6
Company Series B Warrants................................................................................6
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Company Special Committee................................................................................1
Company Stock Option.....................................................................................6
Company Stock Purchase Plan..............................................................................6
Company Superior Proposal...............................................................................44
Company Warrants.........................................................................................6
Confidentiality Agreement...............................................................................45
Constituent Entities.....................................................................................3
Distribution Date.......................................................................................31
Drever Partners Stock Purchase Agreement................................................................34
Effective Time...........................................................................................3
Encumbrances............................................................................................15
Environmental Laws......................................................................................26
EPA.....................................................................................................28
ERISA...................................................................................................22
Exchange Act............................................................................................17
Exchange Agent...........................................................................................7
Exchange Fund............................................................................................7
Extraordinary Capital Expenditures Payments.............................................................52
Extraordinary Consent Payments..........................................................................52
Extraordinary Payments Amount...........................................................................52
Financing Commitments...................................................................................38
GAAP....................................................................................................18
Governmental Entity.....................................................................................17
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....................................................................................8
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.....................................................................................................3
Net Cash Flow...........................................................................................13
Net Operating Income....................................................................................13
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Newco....................................................................................................1
Newco Common Stock.......................................................................................4
Newco Redeemable Preferred Stock.........................................................................5
Newco Senior Preferred Stock.............................................................................5
NYSE....................................................................................................17
OP Transaction Documents.................................................................................2
OP Transactions..........................................................................................2
Option Consideration.....................................................................................6
Parent...................................................................................................1
Parent Affiliate........................................................................................65
Parent Common Limited Partner Interests.................................................................35
Parent Partnership Agreement.............................................................................5
Parent Redeemable Preferred Unit.........................................................................5
Parent Senior Preferred Unit.............................................................................5
Parent/Newco Disclosure Schedule........................................................................35
Parent/Newco Litigation.................................................................................38
Parent/Newco Order......................................................................................38
Preferred Stock Vote.....................................................................................5
Prior Execution Date.....................................................................................1
Property Restrictions...................................................................................29
Proxy Statement/Prospectus..............................................................................17
Qualifying Income.......................................................................................59
REIT....................................................................................................21
REIT Requirements.......................................................................................59
Release.................................................................................................27
Released Claims.........................................................................................61
Remedial Action.........................................................................................27
Required Consents.......................................................................................46
Rule 145 Affiliates.....................................................................................47
S-4.....................................................................................................18
SDAT.....................................................................................................3
SEC.....................................................................................................17
Securities Act..........................................................................................18
Series A Warrant Agreement...............................................................................6
Stockholders Meeting....................................................................................46
Subsidiary..............................................................................................13
Surviving Entity.........................................................................................3
Takeover Statute........................................................................................31
Tax Protection Agreement................................................................................22
Taxes...................................................................................................21
Termination Date........................................................................................56
Termination Expenses....................................................................................59
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Termination Tax Opinion.................................................................................59
Transaction Documents...................................................................................16
Voting Agreement.........................................................................................2
Voting Debt.............................................................................................14
Warrant Agent...........................................................................................11
Warrant Agreements.......................................................................................6
Warrant Consideration....................................................................................6
WDN Properties..........................................................................................14
WDOP.....................................................................................................1
WDOP Class B Common Units...............................................................................14
WDOP Class B Preferred Units............................................................................14
WDOP Election and Consent Form.......................................................................1, 50
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..............................................................................................2
WROP Merger Agreement....................................................................................1
WROP Merger Sub..........................................................................................1
Year 2000 Data..........................................................................................34
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of November
5, 1999 (this "Agreement"), to be effective as of September 24, 1999 (the "Prior
Execution Date"), 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 Company, Parent and Newco are parties to that certain
Agreement and Plan of Merger dated September 24, 1999 (the "Prior Agreement");
WHEREAS, the Company, Parent and Newco desire to amend and restate the
Prior Agreement in its entirety to contemplate the mergers of newly formed
subsidiaries of Parent, rather than newly formed subsidiaries of WDOP and WROP,
into WDOP and WROP, as applicable, and the receipt by certain limited partners
of WDOP and WROP of cash, new securities of Parent, or a combination of cash and
new securities of Parent pursuant to such mergers, and to clarify certain other
matters;
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, Parent, the
Company, WDOP Merger Sub, 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 Amended and Restated Agreement and
Plan of Merger (the "WDOP Merger Agreement"), a copy of which is attached as
Exhibit A hereto, in connection with which (i) holders of WDOP Class B Common
Units (as hereinafter defined) and WDOP Class B Preferred Units (as hereinafter
defined) will (A) receive cash or (B) elect to receive new securities of Parent
or a combination of new securities of Parent and cash, 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, Parent,
Walden Operating, Inc., a Delaware corporation, WROP Merger Sub, 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 Amended and Restated Agreement and Plan of Merger (the "WROP
Merger Agreement"), a copy of which is attached as Exhibit B hereto, in
connection with which (i) holders of WROP Class C Common Units (as hereinafter
defined) and WROP
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Class D Common Units (as hereinafter defined) will (A) receive cash or (B) elect
to receive new securities of Parent or a combination of new securities of Parent
and cash, 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 (the
WROP Merger Agreement, WDOP Merger Agreement, WDOP Election and Consent Forms
(as hereinafter defined), WROP Election and Consent Forms (as hereinafter
defined), the Second Amended and Restated Limited Partnership Agreement of WDOP,
the 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");
WHEREAS, effective as of the Prior Execution Date, 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, effective as of the Prior Execution Date, concurrently with
the execution of this Agreement, certain limited partners of WDOP named in
Schedule B and Schedule C hereto have executed a power of attorney authorizing
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 executed a power of attorney authorizing 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 Parent or a combination of new securities of Parent 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:
2
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ARTICLE 1
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 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.
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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.
ARTICLE 2
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
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representing any such shares shall cease to have any rights with respect
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 First Amended and Restated 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, 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,
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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 3.1(bb), 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 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 (i) 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.
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(g) Reduction in Merger Consideration. (i) Subject to the
waiver rights of Parent and Newco set forth in Section 7.1(k), 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), subject to subsection (g)(iii), 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
(ii) Subject to the waiver rights of Parent and Newco
set forth in Section 7.1(k), 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) subject to
subsection (g)(iii), 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.
(iii) The percentages set forth in subsections (g)(i)
and (g)(ii) shall be adjusted to take into account any splits, combinations or
reclassifications of any equity interests or shares of capital stock, issuances
of any other securities in respect of, in lieu of or in substitution for the
Company's or any of its Subsidiaries' equity interests or capital stock,
conversions of securities, exercise of stock options or other permitted changes
in the number of outstanding shares of Company Common Stock or Company
Convertible Preferred Stock.
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 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.
(ii) 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.
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(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 (2) 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).
(ii) 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.
(iii) In the event of a transfer of ownership of
Company Common Stock, Company Convertible Preferred Stock, Company Senior
Preferred Stock or Company Redeemable
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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 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
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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 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.
(ii) 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
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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 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.
(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
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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 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Newco as follows (which representations
and warranties shall be deemed to have been made on and after the Prior
Execution Date (except to the extent that a representation or warranty is made
on or after another date or as of a specified date)), in each case as qualified
by matters reflected on the disclosure schedule delivered by the Company to
Parent on or prior to the Prior Execution Date (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 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
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<PAGE> 24
connection with the Company, any change, event or effect, whether or not
foreseeable or known as of the Prior Execution Date, 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 Prior Execution Date, 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 Prior Execution Date, (1)
25,460,322 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;
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<PAGE> 25
(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
4,000,000 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 5,227,853 Company Series B Warrants
that are issued and outstanding and upon exercise of Company Series B Warrants
that are issuable upon conversion of WDOP Class B Preferred Units (as defined
below); (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; (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; (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 Prior Execution Date,
Class A limited partnership interests representing a 63.6070% interest in WDOP,
3,611,483 units of Class B common 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 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 Prior Execution Date, 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"
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<PAGE> 26
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 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 Prior Execution Date, 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
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<PAGE> 27
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 Prior Execution Date 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 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
16
<PAGE> 28
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, 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
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<PAGE> 29
"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 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 Prior Execution Date (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
Prior Execution Date. 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 Prior Execution Date or was at any time prior to the
Prior Execution Date 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.
(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
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<PAGE> 30
to be filed with the SEC by Parent and Newco in connection with the issuance of
shares of Newco Senior Preferred Stock, Newco Redeemable Preferred Stock, Parent
Common Limited Partner Interests (as hereinafter defined), Parent Senior
Preferred Units and/or Parent Redeemable Preferred Units, as the case may be, in
the Merger, the WDOP Merger and the WROP Merger, as applicable (the "S-4"),
will, at the time the S-4 becomes effective under the Securities Act 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 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 or S-4, shall occur which is required to be described in an
amendment of, or a supplement to, the S-4 or the Proxy Statement/Prospectus,
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 and limited partners of WDOP and WROP, as applicable. The Proxy
Statement/Prospectus, insofar as it relates 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 Prior Execution Date, 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), or (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 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.
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<PAGE> 31
(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 Prior Execution Date, 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 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 Prior Execution
Date, 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
Prior Execution Date, 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 Prior Execution
20
<PAGE> 32
Date 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 Prior Execution Date, 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 Prior Execution Date 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 Prior Execution Date,
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
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
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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's
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.
(iv) The Tax returns of the Company and the Company's
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's
Subsidiaries (A) have filed a consent under Section 341(f) of the Code
concerning collapsible corporations, or (B) are 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's
Subsidiaries and the Company's Subsidiaries do not have any liability
for the Taxes of any person other than the Company and the Company's
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's
Subsidiaries have made any payments, are obligated to make any
payments, or are parties to an agreement that could obligate them to
make any payments that will not be deductible under Section 280G of the
Code. The Company and the Company's 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 of its
Subsidiaries 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
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<PAGE> 34
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 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 Prior Execution Date, 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.
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<PAGE> 35
(iv) Each Company Employee Benefit Plan and Company
Pension Plan, related trust (or other funding or financing arrangement)
and all amendments thereto are 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 Prior Execution Date, 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. 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.
(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.
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<PAGE> 36
(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.
(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 Prior Execution Date, there is no
unfair labor practice charge or grievance arising out of a collective
bargaining agreement or other grievance procedure
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<PAGE> 37
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 Prior Execution Date, 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.
(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 Prior Execution Date, there is no
proceeding, claim, suit, action or governmental investigation pending
or, to the knowledge of the Company or any of its Subsidiaries,
threatened, with 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
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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, 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
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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 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 Prior Execution Date, 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
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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 Prior
Execution Date) or any applicable state equivalent, are in material
compliance with applicable Environmental Laws;
(vii) As of the Prior Execution Date, there is not on
or in any property of the Company or its Subsidiaries or any property
for which the Company or its Subsidiaries are 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
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<PAGE> 41
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 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 its applicable 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 Prior Execution Date, 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's Subsidiaries and all
properties currently proposed for acquisition, development or
commencement of construction prior to the Effective Time by the
Company and the Company's 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 of its Subsidiaries 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.
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(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
of its Subsidiaries has received any notice of cancellation or termination with
respect to any existing material insurance policy of the Company or any of its
Subsidiaries.
(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
Prior Execution Date, 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 own" (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 (a copy of which has 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.
(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").
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(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 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 (A) the rights to purchase Company
Junior Preferred Stock under the Company Rights Agreement (the "Company
Rights") to be exercisable under the Company Rights Agreement, (B)
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 (C) any such event to be deemed a "Distribution 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.
(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's 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
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requires any of them to maintain any amount of indebtedness with
respect to any of the Company Properties.
(iv) Neither the Company nor any of the Company's
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
such 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's 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 of its Subsidiaries 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 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 of its Company Subsidiaries 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 of its Subsidiaries
(including by means of a take-or-pay or keepwell agreement) of the
indebtedness, liabilities, obligations or financial condition of, any
of the Company's Subsidiaries 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
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<PAGE> 45
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
Prior Execution Date and ends on or after the Prior Execution Date, 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 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 $0.01 below the Cash
Merger Consideration per share, effective immediately prior to the Effective
Time.
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(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 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 the Prior Agreement, WDOP, Marshall B.
Edwards, Mark S. Dillinger, Michael E. Masterson and Drever Partners, Inc. have
executed and delivered that certain Stock Purchase Agreement dated September 24,
1999, a copy of which is attached hereto as Exhibit H (the "Drever Partners
Stock Purchase Agreement").
(ff) Amendment and Restatement of Prior Agreement. As of the
date hereof, in accordance with Section 7.5 of the Prior Agreement, the Board of
Directors of the Company and the Company Special Committee have taken all
actions necessary to effect the amendment and restatement of the Prior Agreement
pursuant to this Agreement.
3.2 Representations and Warranties of Parent and Newco. Parent and
Newco represent and warrant, jointly and severally, to the Company as follows
(which representations and warranties shall be deemed to have been made on and
after the Prior Execution Date (except to the extent that a representation or
warranty is made on or after another date or as of a specified date), in each
case as qualified by matters reflected on the disclosure schedule delivered by
Parent and Newco to the
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<PAGE> 47
Company on or prior to the Prior Execution Date (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 WROP Merger Sub and WDOP Merger Sub are Subsidiaries
of Parent, and except for any newly created subsidiaries pursuant to Section
5.20. Newco has heretofore delivered to the Company 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 the Parent
Partnership Agreement, the Agreement of Limited Partnership of WROP Merger Sub
and the Agreement of Limited Partnership of WDOP Merger Sub.
(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 Oly Hightop Parent GP, LLC and a 99.99%
limited partnership interest held by Holding. As of the date hereof, Parent (i)
has designated a class of partnership interests as Common Limited Partner
Interests of Parent ("Parent Common Limited Partner Interests"), (ii) 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
(iii) 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. As of the
date hereof, Holding is the only holder of a Parent Common Limited Partner
Interest, 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)
other than the subscription agreements set forth on Schedule 3.2(g) of the
Parent/Newco Disclosure Schedule, 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
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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.
(i) Each of Parent, Newco, WDOP Merger Sub and WROP
Merger Sub has all requisite power and authority to enter into the Transaction
Documents and the OP Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby or 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 Parent, Newco, WDOP Merger Sub
and WROP Merger Sub. The Transaction Documents to which Parent, Newco, WDOP
Merger Sub or WROP Merger Sub is a party have been duly executed and delivered
by each of Parent, Newco, WDOP Merger Sub and WROP Merger Sub as the case may
be, and assuming the Transaction Documents to which the Company or any of its
Subsidiaries is a party constitute the valid and binding obligation of the
Company or its Subsidiary, as the case may be, constitute a valid and binding
obligation of each of Parent, Newco, WDOP Merger Sub or WROP Merger Sub
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 Parent Partnership Agreement, the Articles of Incorporation
or Bylaws of Newco or any provision of the comparable charter or organizational
documents of any of their 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,
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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.
(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 will, at the time the S-4 becomes effective under the Securities Act 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 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 or the S-4, shall occur which is required to be described
in an amendment of, or a supplement to, the S-4 or the Proxy
Statement/Prospectus, 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, insofar as it relates 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.
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(e) Litigation. As of the Prior Execution Date, 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 Prior Execution Date, none of
Parent, Newco or their Subsidiaries have knowledge of any facts that are likely
to give rise to any Parent/Newco Litigation, nor as of the Prior Execution Date
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;
(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,
Newco, WDOP Merger Sub and WROP Merger Sub was formed by Holding solely for the
purpose of engaging in the transactions contemplated hereby and, as of the Prior
Execution Date and as of the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or
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<PAGE> 51
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.
(i) Amendment and Restatement of Prior Agreement. As of the
date hereof, in accordance with Section 7.5 of the Prior Agreement, the Board of
Directors of Newco and the general partner of Parent have taken all actions
necessary to effect the amendment and restatement of the Prior Agreement
pursuant to this Agreement.
ARTICLE 4
COVENANTS RELATING TO CONDUCT
OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by the Company Pending the Merger. From the
Prior Execution Date until 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.
(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
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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 were outstanding on the Prior Execution Date under the
Company Incentive Plans, (B) Company Warrants that were outstanding on the Prior
Execution Date 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.
(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.
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(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 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
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case as in effect on the Prior Execution Date; (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 Prior Execution
Date, or amend any such plan or arrangement in existence on the Prior Execution
Date 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 contemplated by
the employment and consulting agreements set forth in Schedule 3.1(l) of the
Company Disclosure Schedule and paying up to an aggregate amount of Two Million
Dollars ($2,000,000) in retention bonuses to nonexecutive employees.
(m) Indebtedness. The Company shall not, nor shall it permit
any of its Subsidiaries to, (i) incur any indebtedness for borrowed money
(except regular 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.
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(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.
4.2 No Solicitation by the Company.
(a) From and after the Prior Execution Date and 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:
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(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, from and after the Prior Execution Date, 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 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
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party (if financing is required), and 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 5
ADDITIONAL AGREEMENTS
5.1 Preparation of S-4, Proxy Statement/Prospectus. 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 and the applicable
limited partners of WDOP and WROP at the earliest practicable date. 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 Common Limited Partner
Interests, 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.
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
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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.
(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
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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 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
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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.
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 Prior Execution Date; provided, that such exculpation and indemnification
covers actions or omissions on or prior to the Effective Time, including,
without limitation, all transactions
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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 Prior
Execution Date, 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.
(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 on or after the date
of this Agreement with respect to the transactions contemplated by this
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Agreement will be in the form agreed to by the parties hereto prior to the
execution of the Agreement.
5.14 Other Actions. From and after the Prior Execution Date, 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 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.
5.17 WDOP Merger and WROP Merger.
(a) The Company and Parent 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. 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
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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 execute and deliver a WDOP Election and Consent Form or a WROP
Election and Consent Form, as applicable, on or before the date of the
Stockholders Meeting, 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 of Parent.
5.18 Employee Loans. On or before 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, other than the persons who
are parties to the employment or consulting agreements listed on Schedule 3.1(l)
to the Company Disclosure Schedule, that was outstanding on the Prior Execution
Date, 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 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 to but
excluding the Closing Date immediately prior to the Effective Time.
5.20 Assistance. From and after the Prior Execution Date, if Parent
requests, the Company and its Subsidiaries shall cooperate, and shall use their
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).
From and after the Prior Execution Date, if Parent requests, the Company shall
create new subsidiaries and effect mergers,
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and conversions of, 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.
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, except as
indicated on Schedule 5.25 of the Parent/Newco Disclosure Schedule, paragraph 2
of Schedule 5.25 of the Parent/Newco Disclosure Schedule (the "Extraordinary
Capital Expenditures"). Notwithstanding the failure of any such capital repairs
set forth in paragraph 2 of Schedule 5.25 to be completed prior to the Closing,
for purposes of calculating the reduction in Cash Merger Consideration pursuant
to Section 2.1(g), the amount of the Extraordinary Capital Expenditures shall be
deemed to be $2,557,695. The sum of the Governmental Payments, the Extraordinary
Capital Expenditures Payments and any payments made in connection with obtaining
any consents contemplated by Section 5.5(b) in excess of $2,500,000,
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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 Prior
Execution Date, the Company developed and implemented 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 Prior Execution Date. Neither the
Company nor its Affiliates have, since the Prior Execution Date, or shall
thereafter, 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 6
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:
(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.
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(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 made and as of the Closing Date as though made on and as of the
Closing Date (to the extent that a representation and warranty speaks only as of
a particular date, then as of the Closing Date such representation and warranty
shall be made on and as of such particular date rather than 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 Prior
Execution Date, 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
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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 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 made and as of the Closing Date as though made
on and as of the Closing Date (to the extent that a representation and warranty
speaks only as of a particular date, then as of the Closing Date such
representation and warranty shall be made on and as of such particular date
rather than 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.
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ARTICLE 7
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 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);
(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
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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 Prior Execution Date, 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;
(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
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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 and the Extraordinary Consent
Payments exceeds Five Million Dollars ($5,000,000); provided, however, that the
Company shall not have the right to terminate this Agreement pursuant to this
Section 7.1(k) if Parent and Newco waive the requirement that the Cash Merger
Consideration be reduced by the amount, if any, by which these Extraordinary
Capital Expenditures Payments and Extraordinary Consent Payments exceed Five
Million Dollars ($5,000,000); or
(l) if the retention bonuses provided for in Section 3.1(l)
exceed Two Million Dollars ($2,000,000).
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.
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)).
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(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 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
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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 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
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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 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
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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, 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 8
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
63
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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
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
64
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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 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.
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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.
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 (i) Parent or
Newco, (ii) any Affiliate of Parent or Newco or (iii) 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.
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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.
8.13 Effect of Amendment and Restatement. This Agreement constitutes an
amendment and restatement of the Prior Agreement pursuant to Section 7.3 of the
Prior Agreement. The Company, Parent and Newco hereby agree that the Prior
Agreement shall hereafter be void and of no further force or effect. References
to the "Agreement and Plan of Merger" or the "Merger Agreement" contained in any
other instrument or document referenced in or executed in conjunction with the
Prior Agreement shall mean this Agreement.
[THE REMAINDER OF PAGE IS INTENTIONALLY BLANK]
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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. Edewards
---------------------------------------
Title: President and CEO
--------------------------------------
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 99.1
FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
OLY HIGHTOP PARENT, L.P.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 DEFINED TERMS
1.1 Definitions.....................................................................................1
1.2 Construction...................................................................................16
ARTICLE 2 GENERAL PROVISIONS
2.1 Purpose........................................................................................16
2.2 Powers.........................................................................................16
2.3 Name...........................................................................................16
2.4 Names and Addresses of Partners................................................................17
2.5 Place of Business..............................................................................17
2.6 Additional Filings.............................................................................17
2.7 Ownership......................................................................................17
2.8 No Partner Responsible for Other Partner's Commitments.........................................17
2.9 Term...........................................................................................17
2.10 Registered Office; Registered Agent............................................................17
ARTICLE 3 CAPITAL CONTRIBUTIONS
3.1 Capital Contributions..........................................................................17
3.2 Admission of Additional Limited Partners.......................................................18
3.3 Return of Capital..............................................................................20
3.4 Interest on Capital Contributions..............................................................20
3.5 No Preemptive Rights...........................................................................20
3.6 Optional Capital Contributions.................................................................20
ARTICLE 4 ACCOUNTING; BOOKS AND RECORDS; TAX MATTERS
4.1 Books and Records..............................................................................20
4.2 Bank Accounts..................................................................................20
4.3 Reports........................................................................................21
4.4 Preparation of Tax Returns.....................................................................21
4.5 Tax Elections..................................................................................21
4.6 Tax Matters Partner............................................................................21
4.7 Certain Elections..............................................................................23
ARTICLE 5 DISTRIBUTIONS; ALLOCATIONS
5.1 Requirement and Characterization of Distributions..............................................23
5.2 Distributions Upon Liquidation.................................................................24
5.3 Allocations of Income, Profits and Losses......................................................25
5.4 Special Allocations............................................................................27
5.5 Curative Allocations...........................................................................28
5.6 Loss Limitation................................................................................29
5.7 Tax Allocations: Code Section 704(c)..........................................................29
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
5.8 Other Allocation Rules.........................................................................29
ARTICLE 6 STATUS OF LIMITED PARTNERS
6.1 Participation in Management....................................................................30
6.2 Limited Liability..............................................................................30
6.3 Outside Activities of Limited Partners.........................................................30
6.4 Rights of Limited Partners Relating to the Partnership.........................................30
ARTICLE 7 MANAGEMENT AND OPERATION OF BUSINESS
7.1 Authority of the General Partner...............................................................31
7.2 Issuances of Additional Partnership Interests..................................................33
7.3 Amendment of Agreement and Certificate of Limited Partnership..................................34
7.4 Compensation of General Partner or Affiliates..................................................34
7.5 Expenses.......................................................................................34
7.6 Indemnification................................................................................35
7.7 Liability of the General Partner...............................................................36
7.8 Compliance with Law............................................................................37
7.9 Outside Activities of General Partner..........................................................37
ARTICLE 8 TRANSFERS OF INTERESTS IN AND WITHDRAWALS FROM
THE PARTNERSHIP
8.1 Transfer.......................................................................................37
8.2 Transfer of General Partner's Partnership Interest.............................................37
8.3 Limited Partners' Rights to Transfer...........................................................38
8.4 Substituted Limited Partners...................................................................38
8.5 Assignees......................................................................................39
8.6 General Provisions.............................................................................39
8.7 Admission of Successor General Partner.........................................................40
8.8 Put Option.....................................................................................40
8.9 Removal of the General Partner.................................................................41
ARTICLE 9 SPECIAL MATTERS CONCERNING SENIOR PREFERRED UNITS
9.1 Designation of Class...........................................................................41
9.2 Redemption.....................................................................................42
9.3 Voting Rights..................................................................................44
9.4 Ranking........................................................................................44
ARTICLE 10 SPECIAL MATTERS CONCERNING REDEEMABLE PREFERRED UNITS
10.1 Designation of Class...........................................................................45
10.2 Redemption.....................................................................................45
10.3 Voting Rights..................................................................................47
10.4 Ranking........................................................................................48
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 11 DISSOLUTION
11.1 Dissolution Events.............................................................................48
11.2 Winding Up.....................................................................................49
11.3 Timing; Negative Capital Accounts..............................................................51
11.4 Deemed Distribution and Recontribution.........................................................52
11.5 Rights of Partners.............................................................................52
11.6 Notice of Dissolution..........................................................................52
11.7 Termination of Partnership and Cancellation of Certificate of Limited
Partnership....................................................................................52
11.8 Reasonable Time for Winding-Up.................................................................52
11.9 Waiver of Partition............................................................................52
ARTICLE 12 POWER OF ATTORNEY
12.1 Power of Attorney..............................................................................53
12.2 Duration of Power..............................................................................54
ARTICLE 13 MISCELLANEOUS
13.1 Amendments.....................................................................................54
13.2 Meetings of the Partners.......................................................................56
13.3 Complete Agreement.............................................................................56
13.4 Governing Law..................................................................................57
13.5 Binding Effect.................................................................................57
13.6 Headings.......................................................................................57
13.7 Severability...................................................................................57
13.8 Multiple Counterparts; Facsimile Signatures....................................................57
13.9 Execution of Documents.........................................................................57
13.10 Reliance on Authority..........................................................................57
13.11 No Third Party Beneficiary.....................................................................58
13.12 References to this Agreement...................................................................58
13.13 Notices........................................................................................58
13.14 Title to Partnership Property..................................................................58
13.15 Reliance on Authority of Person Signing Agreement..............................................58
13.16 Waiver.........................................................................................59
</TABLE>
-iii-
<PAGE> 5
FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
OLY HIGHTOP PARENT, L.P.
This First Amended and Restated Limited Partnership Agreement (this
"Agreement") of OLY HIGHTOP PARENT, L.P., a Delaware limited partnership (the
"Partnership"), is made and entered into as of this 5th day of November, 1999,
by and among Oly Hightop Parent GP, LLC, as the general partner (the "General
Partner"), and those parties identified as Limited Partners on a schedule (the
"Ownership Schedule") prepared by the General Partner in accordance with this
Agreement (the "Limited Partners"). This Agreement supersedes and replaces the
previous Limited Partnership Agreement for the Partnership entered into as of
September 22, 1999.
ARTICLE 1
DEFINED TERMS
1.1 Definitions. When used in this Agreement, the following terms will
have the meanings set forth below.
"ACT" means the Delaware Revised Uniform Limited Partnership
Act, as amended from time to time.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 3.2 hereof and who is shown
as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account
maintained for each Partner as of the end of each Fiscal Year (i) increased by
any amounts that such Partner is obligated to restore pursuant to any provision
of this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
(ii) increased by such Partner's allocable share (as determined under Section
752 of the Code) of any nonrecourse indebtedness of the Partnership to the
extent that such indebtedness could not be repaid out of the Partnership's
assets if all of the Partnership's assets were sold at their respective Gross
Asset Values as of the end of the Fiscal Year and the proceeds from the sales
were used to pay the Partnership's liabilities, and (iii) decreased by the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition
of Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
1
<PAGE> 6
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Fiscal Year.
"ADJUSTMENT EVENT" has the meaning specified in Section 3.6
hereof.
"AFFILIATE" or "AFFILIATED" means, as to any Person, any other
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "affiliated," "controlling" and
"controlled" have the meanings correlative to the foregoing. In the case of an
individual, the term "Affiliate" shall include (i) any lineal descendants of
such individual and the spouse of such individual or of such descendants, (ii)
any trusts controlled by, or established and maintained for the benefit of,
individuals included in (i) above, and (iii) the estate of any of the foregoing.
In the case of an estate, trust, or partnership, the term "Affiliate" shall
include any beneficiary or partner thereof.
"AGGREGATE REDEEMABLE PREFERRED UNITS" means the total
outstanding Redeemable Preferred Units as adjusted from time to time. The total
number of outstanding Redeemable Preferred Units at the Transaction Effective
Date shall be equal to the sum of (i) the total number of shares of outstanding
Company Redeemable Preferred Stock immediately prior to the Transaction to be
converted into preferred units in accordance with the Transaction and (ii) the
total number of WDOP Class B Preferred Units deemed contributed pursuant to the
WDOP Merger Agreement. The amount of Aggregate Redeemable Preferred Units shall
be appropriately adjusted, from time to time, to reflect any increases or
reductions in the amount of Redeemable Preferred Units.
"AGGREGATE SENIOR PREFERRED UNITS" means the total outstanding
Senior Preferred Units as adjusted from time to time. The total number of
outstanding Senior Preferred Units at the Transaction Effective Date shall be
equal to the total number of shares of outstanding Company Senior Preferred
Stock immediately prior to the Transaction to be converted into preferred units
in accordance with the Transaction. The amount of Aggregate Senior Preferred
Units shall be appropriately adjusted, from time to time, to reflect any
increases or reductions in the amount of Senior Preferred Units.
"AGREEMENT" has the meaning assigned to such term in the first
paragraph hereof.
"APPROVAL" and "APPROVE" means approval in writing.
"ASSIGNEE" means a Person to whom one or more Partnership
Interests have been transferred in a manner permitted under this Agreement, but
who has not become a Substituted Partner.
2
<PAGE> 7
"AUTHORITY" means any governmental or quasi-governmental
authority, whether administrative, executive, judicial, legislative or other, or
any combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other entity of any of the foregoing, whether
domestic or foreign.
"BANKRUPTCY" means, with respect to any Partner, the first to
occur of (i) the entry of a decree or order for relief against the Partner by a
court of competent jurisdiction in any involuntary case brought against the
Partner under any bankruptcy, insolvency or other similar law (collectively,
"DEBTOR RELIEF LAWS") generally affecting the rights of creditors and relief of
debtors now or hereafter in effect; (ii) the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or other similar agent
under applicable Debtor Relief Laws for the Partner or for any substantial part
of its assets or property; (iii) the ordering of the winding up or liquidation
of the Partner's affairs; (iv) the filing of a petition in any such involuntary
bankruptcy case, which petition remains undismissed for a period of 180 days or
which is not dismissed or suspended pursuant to Section 305 of the Federal
Bankruptcy Code (or any corresponding provision of any future United States
bankruptcy law); (v) the commencement by the Partner of a voluntary case under
any applicable Debtor Relief Law now or hereafter in effect; (vi) the consent by
the Partner to the entry of an order for relief in an involuntary case under any
such law or to the appointment of or the taking of possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar agent
under any applicable Debtor Relief Laws for the Partner or for any substantial
part of its assets or property; (vii) the making by the Partner of any general
assignment for the benefit of its creditors; or (viii) the failure by the
Partner generally to pay its debts as such debts become due.
"BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York are authorized or required by
law to close.
"CAPITAL ACCOUNT" means, with respect to any Partner, the
capital account maintained for such Partner in accordance with the rules of
Section 1.704-1(b)(2)(iv) of the Regulations. Subject to Section
1.704-1(b)(2)(iv) of the Regulations:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contribution (net of liabilities that
the Partnership is considered to assume or to take subject to under
Code Section 752) and such Partner's distributive share of Profits,
Income and any items in the nature of income or gain that are specially
allocated pursuant to Section 5.4 or Section 5.5 hereof.
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement
(net of liabilities that such Partner is considered to assume or to
take subject to under Code Section 752) and such Partner's distributive
share of Losses
3
<PAGE> 8
and any items in the nature of expenses or losses that are specially
allocated pursuant to Section 5.4 or Section 5.5 hereof.
(iii) After the Effective Date, in the event all or a
portion of a Partnership Interest is transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred
Partnership Interest.
The provisions of this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Section 1.704-1(b) of the Regulations, and they
shall be interpreted and applied in a manner consistent with such Regulations.
"CAPITAL CONTRIBUTION" means, with respect to any Partner, the
total amount of cash or the Gross Asset Value of other property contributed (or
deemed to have been contributed) to the Partnership with respect to the
Partnership Interest held by such Partner. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.
"CERTIFICATE" means the Certificate of Limited Partnership
filed in the office of the Delaware Secretary of State to form the Partnership,
as amended from time to time in accordance with the terms hereof and the Act.
"CLAIM" has the meaning assigned to such term in Section 7.6
hereof.
"CLASS" means a class of Partnership Interests distinguished
by a specific alphabetical or other designation.
"COMMON LIMITED PARTNER" means Oly Hightop Holding, L.P., a
Delaware limited partnership, or any other Person admitted pursuant to this
Agreement as a Common Limited Partner either pursuant to the WDOP Merger or WROP
Merger or in connection with the issuance of newly-created Common Limited
Partner Interests or as a Substituted Partner with respect to any transferred
Common Limited Partner Interests (or any portion thereof), each for only so long
as such Person remains as a Common Limited Partner in accordance with this
Agreement and the Act.
"COMMON LIMITED PARTNER INTEREST" means the Partnership
Interest of a Common Limited Partner.
"CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, and any successor statutory provisions thereto.
"COMPANY" means Walden Residential Properties, Inc., a
Maryland corporation or any successor thereto by way of merger, consolidation,
or transfer of all or substantially all of its assets, and any successors to
such successors by similar means.
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"COMPANY REDEEMABLE PREFERRED STOCK" means the 9.0% Redeemable
Preferred Stock, par value $0.01 per share, of the Company.
"COMPANY SENIOR PREFERRED STOCK" means the 9.20% Senior
Preferred Stock, par value $0.01 per share, of the Company.
"DEBTOR RELIEF LAWS" has the meaning assigned to such term in
the definition of "Bankruptcy" set forth in this Article 1.
"DISTRIBUTABLE ASSETS" means the cash, securities and any
other assets of the Partnership available to the Partnership for distribution to
the Partners, as determined by the General Partner after payment or provision
for:
(i) all operating expenses including property taxes;
(ii) all scheduled payments of principal, interest
and other charges due during any relevant period in respect of any
Partnership indebtedness;
(iii) all expenditures for capital improvements to
the Partnership assets or property;
(iv) all current liabilities (including, but not
limited to, trade payables and other accounts payable, security
deposits and property taxes payable); and
(v) Working Capital Reserves in such amounts as the
General Partner deems necessary or advisable.
"DISTRIBUTION DATE" has the meaning assigned to such term in
Section 5.1(a) hereof.
"EFFECTIVE DATE" means September 22, 1999.
"EXCESS WITHHOLDING AMOUNT" has the meaning assigned to such
term in Section 5.1(c) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FEDERAL SECURITIES ACT" means the Securities Act of 1933, as
amended.
"FISCAL QUARTER" means (i) the period commencing on the
Effective Date and ending on the last day of the calendar quarter in which the
Effective Date occurs, (ii) any subsequent three-month period commencing on each
January 1, April 1, July 1 and October 1, and (iii) any portion of a period
described in clause (ii) that ends on the date the liquidation of the
Partnership is completed.
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"FISCAL YEAR" means (i) the period commencing on the Effective
Date and ending on December 31, 1999, (ii) any subsequent twelve-month period
commencing on January 1 and ending on December 31, or (iii) any portion of a
period described in clause (ii) that is considered a short taxable year of the
Partnership for federal income tax purposes.
"GENERAL PARTNER" means Oly Hightop Parent GP, LLC, a Delaware
limited liability company, and any other Person admitted pursuant to this
Agreement in the capacity of general partner of the Partnership, each for only
so long as such Person remains as a general partner in accordance with this
Agreement and the Act.
"GENERAL PARTNER INTEREST" means a Partnership Interest of a
General Partner.
"GROSS ASSET VALUE" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) As of the Effective Date, the Gross Asset Value
of the Partnership's assets shall be their gross fair market value, as
reasonably determined by the General Partner.
(ii) The initial Gross Asset Value of any asset
contributed (or deemed to have been contributed) by a Partner to the
Partnership shall be the gross fair market value of such asset, as
determined by the contributing Partner and the General Partner. The
initial Gross Asset Value of
(A) each share of Company Redeemable
Preferred Stock or Company Senior Preferred Stock deemed
contributed pursuant to the Walden Merger Agreement shall be
$25.00;
(B) each WDOP Class B Preferred Unit deemed
contributed pursuant to the WDOP Merger Agreement shall be
$25.00;
(C) each WDOP Class B Common Unit deemed
contributed pursuant to the WDOP Merger Agreement shall be an
amount equal to the WDOP Cash Merger Consideration less any
applicable WDOP Refinancing Distribution; and
(D) each WROP Class C Unit or WROP Class D
Unit deemed contributed pursuant to the WROP Merger Agreement
shall be an amount equal to the WROP Cash Merger Consideration
less any applicable WROP Refinancing Distribution.
(iii) The Gross Asset Values of all Partnership
assets shall be adjusted to equal their respective gross fair market
values, as determined by the General Partner as of the following times:
(A) the acquisition of an additional Partnership Interest by any new or
existing Partner in exchange for more than a de minimis Capital
Contribution, except as
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<PAGE> 11
provided in Section 3.6; (B) the distribution by the Partnership to a
Partner of more than a de minimis amount of property as consideration
for a Partnership Interest; and (C) the liquidation of the Partnership
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations.
(iv) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be adjusted to equal the gross fair
market value of such asset on the date of the distribution as
determined by the General Partner.
(v) The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 732(d), Code
Section 734(b) or Code Section 743(b), but only to the extent that (x)
such adjustments are taken into account in determining Capital Accounts
pursuant to clause (vi) of the definition of "Profits" or "Losses" and
(y) an adjustment pursuant to clause (iii) immediately above is not
required in connection with the transaction.
(vi) No adjustment of Gross Asset Values shall be
made in connection with any Optional Capital Contribution until after
the Adjustment Event has occurred.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any Partner
who is a natural Person, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage such
Partner's estate; (ii) as to any corporation that is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or revocation
of its charter; (iii) as to any partnership that is a Partner, the dissolution
of such partnership; (iv) as to any estate that is a Partner, the distribution
by the fiduciary of the estate's entire Partnership Interest in the Partnership;
(v) as to any trustee of a trust that is a Partner, the termination of the trust
(but not the substitution of a new trustee); or (vi) as to any Partner, the
Bankruptcy of such Partner.
"INCOME" means items of gross operating income of the
Partnership.
"INDEMNITEE" means (i) any Person made a party to a proceeding
by reason of such Person's status as (A) a Partner, (B) a director, officer,
shareholder, partner, member or employee of a Partner, or (C) any Affiliate of
any Person described in (A) or (B) hereof, and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time (whether before or after the event
giving rise to potential liability).
"IRS" means the United States Internal Revenue Service or any
successor thereto.
"LAW" shall mean any (a) administrative, judicial, legislative
or other action, code, consent decree, constitution, decree, directive,
enactment, finding, guideline, law, injunction, interpretation, judgment, order,
ordinance, policy statement, proclamation, promulgation, regulation,
requirement, rule, rule of law, rule of public policy, settlement agreement,
statute, or writ of any Authority, domestic or foreign; (b) the common law, or
other legal or quasi-legal precedent; or
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<PAGE> 12
(c) arbitrator's, mediator's or referee's award, decision, finding or
recommendation; including, in each such case or instance, any interpretation,
directive, guideline or request, whether or not having the force of law
including, in all cases, without limitation any particular section, part or
provision thereof.
"LIEN" shall mean any of the following: mortgage; lien
(statutory or other); or other security agreement, arrangement or interest;
hypothecation, pledge or other deposit arrangement; assignment; charge; levy;
executory seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention, voting agreement or other similar agreement, arrangement,
device or restriction; preemptive or similar right; the filing of any financial
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
"LIMITED PARTNER" means any Common Limited Partner, Senior
Preferred Limited Partner or Redeemable Preferred Limited Partner. To the extent
a General Partner is also a Limited Partner, the General Partner shall be
entitled to exercise all rights associated with its Limited Partner Interest
without regard to any duties or obligations imposed on the General Partner in
its capacity as a General Partner.
"LIMITED PARTNER INTEREST" means a Partnership Interest of a
Limited Partner.
"LIQUIDATING EVENT" has the meaning assigned to such term in
Section 11.1(b) hereof.
"LIQUIDATOR" has the meaning assigned to such term in Section
11.2 hereof.
"LOSSES" has the meaning assigned to such term in the
definition of "Profits" and "Losses" as set forth in this Article 1.
"MAJORITY IN INTEREST" means, with respect to any Partners
holding any series or Class of Partnership Interests, one or more Partners
holding such series or Class of Partnership Interests and owning more than 50%
of the Percentage Interests owned by all Partners holding that series or Class
of Partnership Interests.
"NEWCO" means Oly Hightop Corporation, a Maryland corporation.
"NONRECOURSE DEDUCTIONS" has the meaning assigned to such term
in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions
for a Fiscal Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
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"NONRECOURSE LIABILITY" has the meaning assigned to such term
in Regulations Section 1.752-1(a)(2).
"OPTIONAL CAPITAL CONTRIBUTION" has the meaning assigned to
such term in Section 3.6 hereof.
"ORGANIZATIONAL EXPENSES" means all expenses incurred in
organizing the Partnership, including all expenses incurred by the General
Partner and the Limited Partners for legal costs associated with drafting and
negotiating the terms of this Agreement.
"OWNERSHIP SCHEDULE" has the meaning assigned to such term in
the introductory paragraph hereof.
"PARTNER" means any General Partner or Limited Partner. If a
Partner transfers its Partnership Interest, such Person shall remain a Partner
in respect of such Partnership Interest until the transferee is admitted as a
Substituted Partner in respect of such Partnership Interest in accordance with
this Agreement and the Act, if ever.
"PARTNER MINIMUM GAIN" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" has the meaning assigned to such
term in Regulations Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Fiscal Year shall be
determined in accordance the rules of Regulations Section 1.704-2(i)(2).
"PARTNERSHIP" has the meaning assigned to such term in the
first paragraph of this Agreement.
"PARTNERSHIP EXPENSES" has the meaning assigned to such term
in Section 7.5(b) hereof.
"PARTNERSHIP INTEREST" means an ownership interest in the
Partnership and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement and the Act,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement.
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"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Fiscal Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"PERCENTAGE INTEREST" means for any Partner, as of any date of
determination, a fraction, expressed as a percentage, the numerator of which is
that Partner's Capital Account balance and the denominator of which is the
aggregate Capital Account balances of all Partners.
"PERSON" means an individual or a corporation, partnership,
limited liability company, trust, unincorporated organization, joint stock
company, joint venture, association or other entity, or any government, or any
agency or political subdivision thereof.
"PROFITS" and "LOSSES" means, for each Fiscal Year, an amount
equal to the Partnership's taxable income or loss as reported on the
Partnership's U.S. Partnership Return of Income (Form 1065) for such Fiscal
Year, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition of "Profits" and "Losses"
shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Regulations, and not otherwise taken into account in computing Profits
and Losses shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to clauses (iii) or (iv) of the
definition of Gross Asset Value, the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset
for purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its Gross Asset Value;
(v) The depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss shall be taken into account for such Fiscal Year in accordance
with Section 1.704-1(b)(2)(iv)(g) of the Regulations;
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(vi) To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) is
required, pursuant to Section 1.704- 1(b)(2)(iv)(m)(4) of the
Regulations, to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Partner's
Partnership Interest, the amount of such adjustment shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases such basis) from the disposition of
such asset and shall be taken into account for purposes of computing
Profits or Losses; and
(vii) Notwithstanding any other provisions of this
definition, items of Income allocated pursuant to Section 5.3(a) hereof
and any items which are specially allocated pursuant to Section 5.4 or
Section 5.5 hereof shall not be taken into account in computing Profits
or Losses.
The amounts of the items of Partnership income, gain, loss or deduction
available to be specially allocated pursuant to Section 5.4 or Section 5.5
hereof shall be determined by applying rules analogous to those set forth in
clauses (i) through (vi) above.
"PUT LIMITED PARTNER" has the meaning assigned to such term in
Section 8.8 hereof.
"PUT OPTION" has the meaning assigned to such term in Section
8.8 hereof.
"PUT OPTION CLOSING DATE" has the meaning assigned to such
term in Section 8.8 hereof.
"PUT OPTION EXERCISE NOTICE" has the meaning assigned to such
term in Section 8.8 hereof.
"PUT OPTION EXERCISE PERIOD" has the meaning assigned to such
term in Section 8.8 hereof.
"PUT OPTION EXERCISE PRICE" has the meaning assigned to such
term in Section 8.8 hereof.
"PUT UNIT" has the meaning assigned to such term in Section
8.8 hereof.
"RECAPTURE INCOME" means any gain recognized by the
Partnership upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or asset.
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"RECORD DATE", with respect to each distribution of
Distributable Assets pursuant to Section 5.1 hereof, means the date determined
by the General Partner which is at least 10 calendar days prior to the date of
distribution.
"REDEEMABLE PREFERRED LIMITED PARTNER" means each Person who
received a Redeemable Preferred Unit in exchange for a share of Company
Redeemable Preferred Stock pursuant to the Transaction, pursuant to the WDOP
Merger or any other Person admitted pursuant to this Agreement as a Redeemable
Preferred Limited Partner either in connection with the issuance of a
newly-created Redeemable Preferred Unit or as a Substituted Partner with respect
to any transferred Redeemable Preferred Unit.
"REDEEMABLE PREFERRED REDEMPTION PRICE" has the meaning
assigned to such term in Section 10.2(a) hereof.
"REDEEMABLE PREFERRED REDEMPTION DATE" has the meaning
assigned to such term in Section 10.2(b) hereof.
"REDEEMABLE PREFERRED LIQUIDATION PREFERENCE" has the meaning
assigned to such term in Section 11.2(a)(iv) hereof.
"REDEEMABLE PREFERRED UNIT" means a Partnership Interest of a
Redeemable Preferred Limited Partner.
"REGULATIONS" means the Income Tax Regulations promulgated by
the United States Department of the Treasury, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).
"REGULATORY ALLOCATIONS" has the meaning assigned to such term
in Section 5.5 hereof.
"SENIOR PREFERRED LIMITED PARTNER" means each Person who
received a Senior Preferred Unit in exchange for a share of Company Senior
Preferred Stock pursuant to the Transaction or any other Person admitted
pursuant to this Agreement as a Senior Preferred Limited Partner either in
connection with the issuance of a newly-created Senior Preferred Unit or as a
Substituted Partner with respect to any transferred Senior Preferred Unit.
"SENIOR PREFERRED REDEMPTION PRICE" has the meaning assigned
to such term in Section 9.2(a) hereof.
"SENIOR PREFERRED REDEMPTION DATE" has the meaning assigned to
such term in Section 9.2(b) hereof.
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"SENIOR PREFERRED LIQUIDATION PREFERENCE" has the meaning
assigned to such term in Section 11.2(a)(iii) hereof.
"SENIOR PREFERRED UNIT" means a Partnership Interest of a
Senior Preferred Limited Partner.
"STATE ACTS" has the meaning assigned to such term on the
cover page hereof.
"SUBSIDIARY" of any Person means (i) a corporation a majority
of whose outstanding shares of capital stock or other equity interests with
voting power, under ordinary circumstances, to elect directors, is at the time,
directly or indirectly, owned by such Person, by one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person, and
(ii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (x) at
least a majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"SUBSTITUTED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 8.4 hereof.
"TAX MATTERS PARTNER" has the meaning assigned to such term in
Section 4.6 hereof.
"TERMINATING CAPITAL TRANSACTION" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.
"TRANSACTION" means the merger of the Company with and into
Newco pursuant to the Walden Merger Agreement.
"TRANSACTION EFFECTIVE DATE" means the effective time of the
Transaction which shall occur upon the filing of the Articles of Merger
(prepared and executed in accordance with the relevant provisions of Title 8 of
the Corporations and Associations Article of the Annotated Code of Maryland and
the Maryland General Corporation Law) to evidence the Transaction with, and
acceptance for record of those Articles of Merger by, the State Department of
Assessments and Taxation of Maryland, or at such later time (but not to exceed
30 days after the Articles of Merger are accepted for record by the State of
Department of Assessments and Taxation of Maryland) specified in the Articles of
Merger.
"UNPAID DISTRIBUTION ACCOUNT" means an Unpaid Senior Preferred
Distribution Account or an Unpaid Redeemable Preferred Distribution Account, as
applicable.
"UNPAID REDEEMABLE PREFERRED DISTRIBUTION ACCOUNT" means an
account to be maintained by the Partnership for the Redeemable Preferred Limited
Partners and to which will be
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credited (i) for each full Fiscal Quarter the product of (w) the Aggregate
Redeemable Preferred Units, (x) $25.00, (y) 10% and (z) a fraction, the
numerator of which is 90 and the denominator of which is 360, and (ii) for each
partial Fiscal Quarter the product of (w) the Aggregate Redeemable Preferred
Units, (x) $25.00, (y) 10% and (z) a fraction, the numerator of which is the
number of days from and including the immediately preceding Distribution Date
to, but not including, the current Distribution Date and the denominator of
which is 360; provided, however, that with respect to the Fiscal Quarter that
includes the Transaction Effective Date, the fraction described in the second
clause (z) above shall have a numerator which is the number of days from and
including the Transaction Effective Date to, but not including, the Distribution
Date and a denominator of 360, and from which will be debited the amount of any
Distributable Assets which are distributed pursuant to Section 5.1(a)(ii)(B)
hereof.
"UNPAID SENIOR PREFERRED DISTRIBUTION ACCOUNT" means an
account to be maintained by the Partnership for the Senior Preferred Limited
Partners and to which will be credited (i) for each full Fiscal Quarter the
product of (w) the Aggregate Senior Preferred Units, (x) $25.00, (y) 10% and (z)
a fraction, the numerator of which is 90 and the denominator of which is 360,
and (ii) for each partial Fiscal Quarter the product of (w) the Aggregate Senior
Preferred Units, (x) $25.00, (y) 10% and (z) a fraction, the numerator of which
is the number of days from and including the immediately preceding Distribution
Date to, but not including, the current Distribution Date and the denominator of
which is 360; provided, however, that with respect to the Fiscal Quarter that
includes the Transaction Effective Date, the fraction described in the second
clause (z) above shall have a numerator which is the number of days from and
including the Transaction Effective Date to, but not including, the Distribution
Date and a denominator of 360, and from which will be debited the amount of any
Distributable Assets which are distributed pursuant to Section
5.1(a)(i)(B)hereof.
"WALDEN MERGER AGREEMENT" means the Amended and Restated
Agreement and Plan of Merger, dated as of November 5, 1999, among Walden
Residential Properties, Inc., Newco, and the Partnership.
"WDOP" means Walden/Drever Operating Partnership, L.P., a
Delaware limited partnership.
"WDOP CASH MERGER CONSIDERATION" has the meaning set forth in
the WDOP Merger Agreement.
"WDOP CLASS B COMMON LIMITED PARTNER" means a "Class B Common
Limited Partner" of WDOP as defined in the Amended and Restated Limited
Partnership Agreement of WDOP dated May 21, 1997, as amended to the date hereof.
"WDOP CLASS B COMMON UNIT" means a partnership interest of a
WDOP Class B Common Limited Partner in WDOP.
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"WDOP CLASS B PREFERRED LIMITED PARTNER" means a "Class B
Preferred Limited Partner" of WDOP as defined in the Amended and Restated
Limited Partnership Agreement of WDOP dated May 21, 1997, ad amended to the date
hereof.
"WDOP CLASS B PREFERRED UNIT" means a partnership interest of
a WDOP Class B Preferred Limited Partner in WDOP.
"WDOP EFFECTIVE TIME" means the effective time of the WDOP
Merger.
"WDOP MERGER" means the merger of WDOP Merger Sub, L.P., a
Delaware limited partnership, with and into WDOP pursuant to the WDOP Merger
Agreement.
"WDOP MERGER AGREEMENT" means the Amended and Restated
Agreement and Plan of Merger, dated as of November 5, 1999, among WDOP, WDOP
Merger Sub, L.P., a Delaware limited partnership, Parent and Walden Residential
Properties, Inc., a Maryland corporation.
"WDOP REFINANCING DISTRIBUTION" has the meaning set forth in
the WDOP Merger Agreement.
"WORKING CAPITAL RESERVES" means the amount of reserves set
aside for the proper operation of the Partnership from time to time in the sole
discretion of the General Partner.
"WROP" means Walden Residential Operating Partnership, L.P., a
Delaware limited partnership.
"WROP CASH MERGER CONSIDERATION" has the meaning set forth in
the WROP Merger Agreement.
"WROP CLASS C LIMITED PARTNER" means a "Class C Limited
Partner" of WROP as defined in the Amended and Restated Limited Partnership
Agreement of WROP dated March 4, 1993, as amended to the date hereof.
"WROP CLASS C UNIT" means a partnership interest of a WROP
Class C Limited partner in WROP.
"WROP CLASS D LIMITED PARTNER" means a "Class D Limited
Partner" of WROP as defined in the Amended and Restated Limited Partnership
Agreement of WROP dated March 4, 1993, as amended to the date hereof.
"WROP CLASS D UNIT" means a partnership interest of a WROP
Class D Limited Partner in WROP.
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"WROP EFFECTIVE TIME" means the effective time of the WROP
Merger.
"WROP MERGER" means the merger of WROP Merger Sub, L.P., a
Delaware limited partnership, with and into WROP, pursuant to the WROP Merger
Agreement.
"WROP MERGER AGREEMENT" means the Amended and Restated
Agreement and Plan of Merger, dated as of November 5, 1999, among WROP, WROP
Merger Sub, L.P., a Delaware limited partnership, and Walden Residential
Properties, Inc., a Maryland corporation.
"WROP REFINANCING DISTRIBUTION" has the meaning set forth in
the WROP Merger Agreement.
1.2 Construction. As used herein, the singular shall include the plural
and the masculine gender shall include the feminine and neuter, and vice versa,
as the context requires; words such as "herein," "hereinafter," "hereof,"
"hereto," "hereby" and "hereunder," when used with reference to this Agreement,
refer to this Agreement as a whole, unless the context otherwise requires.
ARTICLE 2
GENERAL PROVISIONS
2.1 Purpose. The purpose and nature of the business of the Partnership
is to invest in (either directly or through the acquisition of interests in
partnerships or other entities), purchase (either directly or through the
acquisition of interests in partnerships or other entities), develop, own,
manage, lease, finance and dispose of multi-family real estate properties and
any improvements thereon, enter into any partnership, joint venture, or similar
arrangement whose primary business is to engage in any of the foregoing, or to
own interests in any entity primarily engaged in any of the foregoing, and to do
anything necessary or appropriate to accomplish the foregoing.
2.2 Powers. The Partnership shall be empowered to do any and all acts
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership.
2.3 Name. The name of the Partnership shall be Oly Hightop Parent, L.P.
The Partnership's business may be conducted under any other name or names
approved by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall furnish
written notification to the Limited Partners no later than 90 days after making
any such change.
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2.4 Names and Addresses of Partners. The names and addresses of the
Partners are set forth in the books and records of the Partnership.
2.5 Place of Business. The principal place of business of the
Partnership shall be at 200 Crescent Court, Suite 1600, Dallas, Texas 75201. The
General Partner may change the place of business at any time and from time to
time by providing prompt notice to the Limited Partners. The Partnership also
may have such other offices or places of business as the General Partner
determines to be appropriate.
2.6 Additional Filings. The Partnership shall make any filings or
disclosures required by the laws of any other state with respect to the
qualification of the Partnership as a foreign limited partnership under the
internal laws of each such state.
2.7 Ownership. Unless otherwise required by applicable law, the
Partnership Interest of each Partner shall be treated as personal property for
all purposes.
2.8 No Partner Responsible for Other Partner's Commitments. The
Partnership shall not be responsible or liable for any indebtedness or
obligation of any Partner incurred, either before or after the execution of this
Agreement, in good faith in carrying out the purpose of the Partnership, or
hereafter undertaken or incurred on behalf of the Partnership under or pursuant
to the terms of this Agreement, or assumed in writing by the Partnership, and
the Partnership hereby indemnifies and agrees to hold the Partners harmless from
all such obligations and indebtedness.
2.9 Term. The Partnership shall continue until the dissolution of the
Partnership pursuant to the express provisions of Article 11 hereof or as
otherwise provided by Law.
2.10 Registered Office; Registered Agent. The initial registered office
and registered agent of the Partnership in the State of Delaware shall be as set
forth in the Certificate. The General Partner may from time to time change the
registered office and the registered agent. If the General Partner changes the
Partnership's registered office or agent (or if the General Partner is notified
of a change in the registered agent's office address), the General Partner shall
promptly notify each Limited Partner of any such change.
ARTICLE 3
CAPITAL CONTRIBUTIONS
3.1 Capital Contributions. The General Partner shall prepare, as soon
as practicable following the Effective Date, the Ownership Schedule which shall
be included in the books and records of the Partnership maintained by the
General Partner and which shall reflect, as of the Transaction Effective Date,
(A) the name of each Partner and type of Partnership Interest owned by such
Partner, (B) the number of Senior Preferred Units owned by each Senior Preferred
Limited Partner and (C) the number of Redeemable Preferred Units owned by each
Redeemable Preferred
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Limited Partner. The books and records of the Partnership shall reflect (A) the
Capital Account of each Partner and (B) the Percentage Interest of each Partner,
which Percentage Interest shall be adjusted in the books and records of the
Partnership from time to time by the General Partner to the extent necessary to
reflect accurately redemptions, Capital Contributions, the issuance of
additional Partnership Interests, the transfer of Partnership Interests or
similar events having an effect on a Partner's Percentage Interest, including,
without limitation, the Transaction, the WDOP Merger and the WROP Merger. The
General Partner shall from time to time make additional Capital Contributions to
the Partnership to maintain the ratio of the General Partner's and Limited
Partners' Capital Contributions at 99.99% to .01%. Except as provided in the
foregoing sentence, the Partners shall have no obligation to make any additional
Capital Contributions or loans to the Partnership. Notwithstanding anything in
this Agreement to the contrary, no capital called by the Partnership (or by any
Partner) shall be deemed an asset of or contribution to the Partnership unless
and until such capital is released from custodial or escrow accounts by the
General Partner and is (i) invested by and for the account of the Partnership in
stock or other securities that the General Partner designates as Partnership
portfolio assets or (ii) used for Partnership expenses or other purposes that
the General Partner expressly authorizes.
3.2 Admission of Additional Limited Partners.
(a) If the Transaction is approved and adopted by the
affirmative vote of both (i) the holders of at least two-thirds of the
outstanding shares of Company Senior Preferred Stock entitled to vote thereon
and (ii) the holders of at least two-thirds of the outstanding shares of Company
Redeemable Preferred Stock entitled to vote thereon, voting as separate classes,
then, on the Transaction Effective Date, (A) the holders of Company Senior
Preferred Stock shall be admitted as Senior Preferred Limited Partners and shall
receive one Senior Preferred Unit for each share of Company Senior Preferred
Stock so held and (B) the holders of Company Redeemable Preferred Stock shall be
admitted as Redeemable Preferred Limited Partners and shall receive one
Redeemable Preferred Unit for each share of Company Redeemable Preferred Stock
so held, in each case, automatically and without any further action or Approval
of any Person, including the General Partner. The General Partner is authorized
and directed to (i) issue the Senior Preferred Units to the Senior Preferred
Limited Partners and the Redeemable Preferred Units to the Redeemable Preferred
Limited Partners under this Section 3.2(a) and (ii) amend the Ownership Schedule
to the extent necessary to reflect the admission of the Senior Preferred Limited
Partners and the Redeemable Preferred Limited Partners under this Section 3.2(a)
on the Transaction Effective Date.
(b) At the WDOP Effective Time, (i) the holders of WDOP Class
B Preferred Units whose units are converted into Redeemable Preferred Units
pursuant to the WDOP Merger shall be admitted as Redeemable Preferred Limited
Partners and shall receive one Redeemable Preferred Unit for each WDOP Class B
Preferred Unit so held and (ii) the holders of WDOP Class B Common Units whose
units are converted into Common Limited Partner Interests pursuant to the WDOP
Merger shall be admitted as Common Limited Partners and shall receive a Common
Limited Partner Interest in an amount based upon the Gross Asset Value of such
holder's deemed Capital Contribution, in each case, automatically and without
any further action or Approval of any Person,
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including the General Partner. The General Partner is authorized and directed to
issue the Redeemable Preferred Units and Common Limited Partner Interests to the
Redeemable Preferred Limited Partners and Common Limited Partners, respectively,
under this Section 3.2(b) and amend the Ownership Schedule to the extent
necessary to reflect the admission of the Redeemable Preferred Limited Partners
and Common Limited Partners under this Section 3.2(b) at the WDOP Effective
Time.
(c) At the WROP Effective Time, the holders of WROP Class C
Units and WROP Class D Units whose units are converted into Common Limited
Partner Interests pursuant to the WROP Merger shall be admitted as Common
Limited Partners and shall receive a Common Limited Partner Interest in an
amount based upon the Gross Asset Value of such holder's deemed Capital
Contribution automatically and without any further action or Approval of any
Person, including the General Partner. The General Partner is authorized and
directed to issue the Common Limited Partner Interests to the Common Limited
Partners under this Section 3.2(c) and (ii) amend the Ownership Schedule to the
extent necessary to reflect the admission of the Common Limited Partners under
this Section 3.2(c) at the WROP Effective Time.
(d) Except as provided in Sections 3.2(b) and 3.2(c), after
the Transaction Effective Date, a Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an "Additional Limited Partner" only upon furnishing to the
General Partner (i) a written agreement in form satisfactory to the General
Partner accepting all of the terms and conditions of this Agreement, including,
but not limited to, the power of attorney granted in Section 12.2 hereof and
(ii) such other documents or instruments as may be required in the discretion of
the General Partner in order to effect such Person's admission as an Additional
Limited Partner. The General Partner shall provide prompt notice to all Limited
Partners of the admission to the Partnership of an Additional Limited Partner.
(e) Notwithstanding anything to the contrary in this Section
3.2 and except as provided in Section 3.2(a), (b) and (c) no Person shall be
admitted as an Additional Limited Partner without the consent of the General
Partner, which consent may be given or withheld in the General Partner's sole
and absolute discretion. Except as provided in Section 3.2(a), (b) and (c), the
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership as being a Partner, following the consent of the
General Partner to such admission.
(f) If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Fiscal Year, then Profits,
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Fiscal Year shall be allocated among such Additional Limited
Partner and all other Partners and Assignees by taking into account their
varying interests during the Fiscal Year in accordance with Section 706(d) of
the Code, using any permissible method selected by the General Partner in its
sole discretion. Solely for purposes of making such allocations, each of such
items for the calendar month in which an admission of any Additional Limited
Partner occurs shall be allocated among all Partners and Assignees including
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such Additional Limited Partner. All distributions of Distributable Assets with
respect to which the Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited Partner,
and all distributions of Distributable Assets thereafter shall be made to all
the Partners and Assignees including such Additional Limited Partners in
accordance with, and subject to the limitations of, this Agreement.
3.3 Return of Capital. No Partner shall have the right to demand or
receive the return of such Partner's Capital Contributions to the Partnership.
3.4 Interest on Capital Contributions. No Partner shall receive any
interest or amount computed like interest on such Partner's Capital
Contributions to the Partnership or such Partner's Capital Account,
notwithstanding any disproportion therein as between or among the Partners.
3.5 No Preemptive Rights. No Person shall have any preemptive,
preferential or other similar right with respect to (i) additional Capital
Contributions or loans to the Partnership or (ii) the issuance or sale of any
Partnership Interests.
3.6 Optional Capital Contributions. If additional funds are required by
the Partnership after the Transaction Effective Date for any Partnership
purpose, the General Partner may elect to call for optional Capital
Contributions to be funded by Oly Hightop Holding, L.P., a Delaware limited
partnership, or its designee (in each case, an "Optional Capital Contribution").
Notwithstanding anything to the contrary in this Agreement, the funding of any
Optional Capital Contribution shall not cause an adjustment of the Gross Asset
Values of the Partnership assets until after the first to occur of (i) the date
that is three years after the Transaction Effective Time or (ii) the aggregate
amount of Optional Capital Contributions made pursuant to this Section 3.6
exceeds $225,000,000 (the first to occur of the events in clauses (i) and (ii)
referred to as an "Adjustment Event"). Oly Hightop Holding, L.P. or its designee
will have 15 Business Days after written notice from the General Partner to
elect to fund an Optional Capital Contribution. In exchange for any Optional
Capital Contributions, the General Partner may issue Common Limited Partner
Interests or any other class or series of Partnership Interests pursuant to
Section 7.2.
ARTICLE 4
ACCOUNTING; BOOKS AND RECORDS; TAX MATTERS
4.1 Books and Records. The books and records of the Partnership shall,
at the cost and expense of the Partnership, be kept or caused to be kept on the
accrual method of accounting for financial and tax reporting purposes by the
General Partner (or such other Person as the General Partner may from time to
time designate) at the principal place of business of the Partnership. Such
books and records shall be kept on the basis of the Partnership's Fiscal Year.
4.2 Bank Accounts. All funds of the Partnership shall be deposited in
its name in an account or accounts maintained with such bank as is determined by
the General Partner. The funds of the Partnership shall not be commingled with
the funds of any other Person except to the extent
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that the General Partner utilizes sweep accounts with respect to the properties
and other real property owned or managed by affiliates of the General Partner.
Checks shall be drawn upon the Partnership account or accounts only for the
purposes of the Partnership and shall be signed by the General Partner or such
Person or Persons as are authorized by the General Partner.
4.3 Reports. As soon as practicable, but in no event later than 120
days after the close of each calendar year, the General Partner shall cause to
be mailed to each Limited Partner as of the close of the calendar year summary
financial statements of the Partnership for such calendar year, presented in
accordance with generally accepted accounting principles.
4.4 Preparation of Tax Returns. The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish to
each Limited Partner, within 60 days of the close of each taxable year, IRS Form
K-1, comparable state forms for the jurisdictions in which income-producing
property of the Partnership is located and any other tax information reasonably
required by Limited Partners for federal and state income tax reporting
purposes.
4.5 Tax Elections. Except as otherwise provided herein, the General
Partner shall, in its sole and absolute discretion, determine whether to make
any available election pursuant to the Code. The General Partner shall have the
right to seek to revoke any such election upon the General Partner's
determination in its sole and absolute discretion that such revocation is in the
best interests of the Partners.
4.6 Tax Matters Partner.
(a) The General Partner shall be the "Tax Matters Partner" of
the Partnership for federal income tax purposes. The General Partner will timely
notify the IRS as required of its designation as Tax Matters Partner. Pursuant
to Section 6230 of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Partnership, the
tax matters partner shall furnish the IRS with the name, address and profits
interest of each of the Limited Partners and the Assignees; provided, however,
that such information is provided to the Partnership by the Limited Partners and
the Assignees.
(b) Except as required by applicable Law, the Tax Matters
Partner shall not take any positions for federal income tax purposes contrary to
the intended federal income tax treatment of transactions, allocations, and
distributions described in, or made pursuant to, this Agreement. To the extent
not inconsistent with the foregoing provisions, the Tax Matters Partner is
authorized, but not required:
(i) to enter into any settlement with the IRS with
respect to any administrative or judicial
proceedings for the adjustment of Partnership
items required to be taken into account by a
Partner for
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income tax purposes, to seek judicial review of
such final adjustment, including the filing of
a petition for readjustment with the Tax Court
or the United States Claims Court, or the
filing of a complaint of for refund with the
District Court of the United States for the
district in which the Partnership's principal
place of business is located;
(ii) in the event that a notice of a final
administrative adjustment at the Partnership
level of any item required to be taken into
account by a Partner for tax purposes (a "final
adjustment") is mailed to the Tax Matters
Partner, to seek judicial review of such final
adjustment, including the filing of a petition
for readjustment with the Tax Court or the
United States Claims Court, or the filing of a
complaint for refund with the District Court of
the United States for the district in which the
Partnership's principal place of business is
located;
(iii) to intervene in any action brought by any other
Partner for judicial review of a final
adjustment;
(iv) to file a request or an administrative
adjustment with the IRS at any time and if any
part of such request is not allowed by the IRS,
to file an appropriate pleading (petition or
complaint) for judicial review with respect to
such request;
(v) to enter into an agreement with the IRS to
extend the period for assessing any tax which
is attributable to any item required to be
taken into account by a Partner for tax
purposes, or an item affected by such item; and
(vi) to take any other action on behalf of the
Partners of the Partnership in connection with
any tax audit or judicial review proceeding to
the extent permitted by Law.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by Law, is a matter in the sole and absolute discretion of the Tax
Matters Partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.6 hereof shall be fully applicable to the Tax
Matters Partner in its capacity as such.
(c) The Tax Matters Partner shall receive no compensation for
its services. All third party costs and expenses incurred by the Tax Matters
Partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm or a law
firm to assist
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the Tax Matters Partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
4.7 Certain Elections. The Partnership shall elect to deduct expenses,
if any, incurred by it in organizing the Partnership ratably over a sixty-month
period as provided in Section 709 of the Code. In connection with the first
transfer of a Partnership Interest permitted under this Agreement, the General
Partner shall cause the Partnership, on behalf of the Partnership and at the
time and in the manner provided in Section 1.754-1(b) of the Regulations, to
make an election to adjust the basis of the Partnership's property in the manner
provided in Sections 734(b) and 743(b) of the Code.
ARTICLE 5
DISTRIBUTIONS; ALLOCATIONS
5.1 Requirement and Characterization of Distributions.
(a) Distributable Assets may be distributed by the Partnership
at such time (each a "Distribution Date") and in such amounts as the General
Partner may determine, in its sole discretion, in the following order of
priority:
(i) first, to the Senior Preferred Limited Partners
who are, and to any former Senior Preferred
Limited Partners who were, Partners on the
Record Date for such distribution in proportion
to their respective Percentage Interests on
such Record Date until the Senior Preferred
Limited Partners have received an amount
pursuant to this clause equal to the balance in
the Unpaid Senior Preferred Distribution
Account; and
(ii) second, to the Redeemable Preferred Limited
Partners who are, and to any former Redeemable
Preferred Limited Partners who were, Partners
on the Record Date with respect to such
distribution in proportion to their respective
Percentage Interests on such Record Date until
the Redeemable Preferred Limited Partners have
received an amount pursuant to this clause
equal to the balance in the Unpaid Redeemable
Preferred Distribution Account; and
(iii) thereafter, to the General Partner and to the
Common Limited Partners in proportion to their
respective Percentage Interests (excluding the
Percentage Interests of the Senior Preferred
Limited Partners and the Redeemable Preferred
Limited Partners).
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(b) The General Partner shall have the power to determine any
alternative minimum tax adjustments and tax preference items in such manner and
in such amounts as the General Partner may determine in the General Partner's
discretion.
(c) If, pursuant to (i) any provision of the Code or the
Regulations or (ii) any comparable state law, the Partnership is required to
withhold any tax with respect to a Partner's distributive share of partnership
income, gain, loss, deduction or credit, the Partnership shall withhold the
required amount and pay the same over to the taxing authorities as required by
the Code, the Regulations or state law. The amount withheld will be deducted
from the amount that would otherwise be distributed to that Partner, but will be
treated as though it had been distributed to the Partner with respect to which
the Partnership is required to withhold. If at any time the amount required to
be withheld by the Partnership exceeds the amount of money that would otherwise
be distributed to the Partner with respect to which the withholding requirement
applies on the following Record Date (the "Excess Withholding Amount"), then the
Partnership shall provide notice and a brief explanation to such Partner of the
Excess Withholding Amount and if such amount is not paid within 30 days from the
date of such notice the Excess Withholding Amount shall be considered a loan
from the Partnership to such Partner. Such loan shall bear interest at 14% until
discharged by such Partner by repayment. Any amounts otherwise distributable to
such Partner on each Record Date following such Record Date referred to in
determining the Excess Withholding Amount will be treated as a repayment of such
loan.
(d) If distributions of property (rather than cash) are made
by the Partnership, the General Partner shall treat such property as though it
were sold for its fair market value, crediting or debiting the Capital Accounts,
as the case may be, for the difference between the fair market value and basis
of such property (the hypothetical gain or hypothetical loss, as the case may
be). The General Partner shall have the discretion to distribute cash or
property to any Partner provided that the fair market value of the cash and
property received by all Partners in the distribution is in compliance with
Section 5.1(a). Fair market value shall be determined by the General Partner in
its reasonable discretion. Notwithstanding the foregoing, if the property to be
distributed is securities of another issuer and the securities are then listed
on a national securities exchange or traded over the counter, the fair market
value of the securities shall be equal to the average of the closing prices, the
average of the last sales prices, or the average of the bid and asked prices, as
the case may be, for the 20 trading days immediately preceding the distribution
date. Notwithstanding the foregoing, all distributions to Senior Preferred
Limited Partners pursuant to Section 5.1(a)(i) and Redeemable Preferred Limited
Partners pursuant to Section 5.1(a)(ii) may be made only in cash.
5.2 Distributions Upon Liquidation. Proceeds from a Terminating Capital
Transaction, and any other proceeds received or reductions in reserves made
after commencement of the liquidation of the Partnership, shall be distributed
to the Partners in accordance with Section 11.2 hereof.
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5.3 Allocations of Income, Profits and Losses. After giving effect to
the special allocations set forth in Sections 5.4 and 5.5 hereof, Profits,
Income and Losses for a Fiscal Year or other period shall be allocated for both
tax and Capital Account purposes, in the following manner:
(a) Income and Profits shall be allocated in the following
order and priority:
(i) first, Income shall be allocated to the Senior
Preferred Limited Partners in proportion to
their respective Percentage Interests until the
amount of Income allocated to the Senior
Preferred Limited Partners pursuant to this
clause (i) for the current Fiscal Year equals
the excess of (A) the cumulative amount of the
Senior Preferred Distribution for each Fiscal
Quarter of the current Fiscal Year and all
prior Fiscal Years (but only to the extent that
such distributions have been previously paid to
the Senior Preferred Limited Partners pursuant
to Section 5.1(a)(i) hereof) over (B) the
cumulative amount of Income allocated to the
Senior Preferred Limited Partners pursuant to
this clause (i) for all prior Fiscal Years;
(ii) second, Income shall be allocated to the
Redeemable Preferred Limited Partners in
proportion to their respective Percentage
Interests until the amount of Income allocated
to the Redeemable Preferred Limited Partners
pursuant to this clause (ii) for the current
Fiscal Year equals the excess of (A) the
cumulative amount of the Redeemable Preferred
Distribution for each Fiscal Quarter of the
current Fiscal Year and all prior Fiscal Years
(but only to the extent that such distributions
have been previously paid to the Redeemable
Preferred Limited Partners pursuant to Section
5.1(a)(ii) hereof) over (B) the cumulative
amount of Income allocated to the Redeemable
Preferred Limited Partners pursuant to this
clause (ii) for all prior Fiscal Years;
(iii) [intentionally omitted]
(iv) third, Profits shall be allocated to the Common
Limited Partners and the General Partner, in
proportion to and to the extent of an amount
equal to the excess, if any, of (A) the
cumulative Losses allocated to such Partners
pursuant to Section 5.3(b)(iv) hereof for all
prior Fiscal Years, over (B) the cumulative
Profits allocated to such Partners pursuant to
this Section 5.3(a)(iv) for all prior Fiscal
Years;
(v) fourth, Profits shall be allocated to the
Senior Preferred Limited Partners, in
proportion to and to the extent of an amount
equal to the excess, if any, of (A) the
cumulative Losses allocated to each such
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Partner pursuant to Section 5.3(b)(iii) hereof
for all prior Fiscal Years, over (B) the
cumulative Profits allocated to such Partner
pursuant to this Section 5.3(a)(v) for all
prior Fiscal Years;
(vi) fifth, Profits shall be allocated to the
Redeemable Preferred Limited Partners, in
proportion to and to the extent of an amount
equal to the excess, if any, of (A) the
cumulative Losses allocated to each such
Partner pursuant to Section 5.3(b)(ii) hereof
for all prior Fiscal Years, over (B) the
cumulative Profits allocated to such Partner
pursuant to this Section 5.3(a)(vi) for all
prior Fiscal Years; and
(vii) thereafter, Profits shall be allocated to the
General Partner and the Common Limited Partners
in proportion to their respective Percentage
Interests.
(b) Losses shall be allocated in the following order and
priority:
(i) first, to the General Partner and the Common
Limited Partners in proportion to and until the
amount of Losses allocated pursuant to this
clause (i) for the current Fiscal Year equals
the excess, if any, of (A) the sum of (I) their
respective Capital Account balances on the
Effective Date, (II) the Capital Contributions
made by such Partners subsequent to the
Effective Date and (III) the cumulative amount
of Profits allocated to such Partners pursuant
to Section 5.3(a)(vii) hereof over (B) the sum
of (I) cumulative amount of Losses allocated to
such Partners pursuant to this clause (i) for
all prior Fiscal Years and (II) the cumulative
amount of distributions made to them pursuant
to Section 5.1(a)(iii) hereof;
(ii) second, to the Redeemable Preferred Limited
Partners, in proportion to their respective
Percentage Interests until the amount of Losses
allocated pursuant to this clause (ii) for the
current Fiscal Year equals the excess, if any,
of (A) the sum of (I) the aggregate amount of
the portion of their Capital Account balances
on the date of such Partners' admission to the
Partnership attributable to Redeemable
Preferred Units, (II) the aggregate Capital
Contributions made by such Partners subsequent
to the date of such Partners' admission to the
Partnership in respect of their Redeemable
Preferred Units, and (III) the cumulative
amount of Income allocated to them pursuant to
Section 5.3(a)(ii) hereof over (B) the sum of
(I) cumulative amount of Losses allocated to
such Partners pursuant to this clause (ii) for
all prior Fiscal Years and (II) the cumulative
amount of distributions made to them pursuant
to Section 5.1(a)(ii) hereof;
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(iii) third, to the Senior Preferred Limited
Partners, in proportion to their respective
Percentage Interests until the amount of Losses
allocated pursuant to this clause (iii) for the
current Fiscal Year equals the excess, if any,
of (A) the sum of (I) the aggregate amount of
the portion of their Capital Account balances
on the date of such Partners' admission to the
Partnership attributable to Senior Preferred
Units, (II) the aggregate Capital Contributions
made by such Partners subsequent to the date of
such Partners' admission to the Partnership in
respect of their Senior Preferred Units, and
(III) the cumulative amount of Income allocated
to them pursuant to Section 5.3(a)(i) hereof
over (B) the sum of (I) cumulative amount of
Losses allocated to such Partners pursuant to
this clause (iv) for all prior Fiscal Years and
(II) the cumulative amount of distributions
made to them pursuant to Section 5.1(a)(i)
hereof; and
(iv) thereafter, to the General Partner and to the
Common Limited Partners in proportion to their
respective Percentage Interests.
5.4 Special Allocations. The following special allocations shall be
made in the following order:
(a) Notwithstanding any other provision of this Agreement to
the contrary, if in any Fiscal Year there is a net decrease in Partnership
Minimum Gain, then each Partner shall first be allocated items of Partnership
income for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to the portion of such Partner's share of the net decrease in
Partnership Minimum Gain, determined in accordance with the provisions of
Regulations Section 1.704-2(g). As provided in Regulations Section 1.704-2(j),
income of the Partnership allocated for any Fiscal Year under this subsection
shall consist first of items of book gain recognized from the disposition of
Partnership property subject to Nonrecourse Liabilities to the extent of the
decrease in Partnership Minimum Gain that is attributable to such disposition,
with any remaining allocated income deemed to be made up of a pro rata portion
of the Partnership's other items of gross income for such taxable year.
(b) Notwithstanding any other provision of this Agreement to
the contrary, except as specified in Section 5.4(a), if in any Fiscal Year there
is a net decrease in Partner Minimum Gain, then each Partner shall first be
allocated items of Partnership income for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to the portion of such Partner's
share of the net decrease in such Partner Minimum Gain, determined in accordance
with the provisions of Regulations Section 1.704-2(i). As provided in
Regulations Section 1.704-2(j), income of the Partnership allocated for any
taxable year under this subsection shall consist first of items of book gain
recognized from the disposition of Partnership property subject to Partner
Nonrecourse Debt to the extent of the decrease in Partner Minimum Gain that is
attributable to such disposition, with
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any remaining allocated income deemed to be made up of a pro rata portion of the
Partnership's other items of gross income for such taxable year.
(c) In the event any Partner unexpectedly receives any
adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit, if
any, of such Partner as quickly as possible, provided that an allocation
pursuant to this Section 5.4(c) shall be made only if and to the extent that
such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Article 5 have been tentatively made as if this
Section 5.4(c) were not in the Agreement.
(d) In the event a Limited Partner (who is not also a General
Partner) has a deficit Capital Account at the end of any Fiscal Year that is in
excess of the sum of (i) the amount the Limited Partner is obligated to restore
pursuant to any provision of this Agreement, and (ii) the amount the Limited
Partner is deemed to be obligated to restore pursuant to Section 1.704-
1(b)(2)(ii)(c) of the Regulations, the Limited Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section 5.4(d)
shall be made only if and to the extent that the Limited Partner would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Article 5 have been made as if Section 5.4(c) hereof and
this Section 5.4(d) were not in the Agreement.
(e) Notwithstanding anything to the contrary in this
Agreement, any Partner Nonrecourse Deductions for any Fiscal Year or other
period shall be allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable.
(f) To the extent an adjustment to the adjusted tax basis of
any Partnership asset is required pursuant to Code Section 732(d), Code Section
734(b) or Code Section 743(b), the Capital Accounts of the Partners shall be
adjusted pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations.
5.5 Curative Allocations. The allocations set forth in Sections 5.4 and
5.6 hereof (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations. It is the intent of the Partners that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Partnership
income, gain, loss or deduction pursuant to this Section 5.5. Therefore,
notwithstanding any other provision of this Article 5 (other than the Regulatory
Allocations), the General Partner shall make such offsetting special allocations
of Partnership income, gain, loss or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Partner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would
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have had if the Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Section 5.3.
5.6 Loss Limitation. The Losses allocated to a Limited Partner pursuant
to Section 5.3(b) hereof shall not exceed the maximum amount of Losses that can
be so allocated without causing a Limited Partner to have an Adjusted Capital
Account Deficit at the end of any Fiscal Year. All Losses in excess of the
limitations set forth in this Section 5.6 shall be allocated among the Partners
other than the Limited Partner referred to in the immediately preceding sentence
in accordance with Section 5.3(b) hereof.
5.7 Tax Allocations: Code Section 704(c). In accordance with Code
Section 704(c) and the Regulations promulgated thereunder, income, gain, loss,
and deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with the definition of Gross Asset Value in
Section 1.1). In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to clause (v) of the definition of Gross Asset Value in
Section 1.1, subsequent allocations of income, gain, loss, and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Gross Asset Value in
the same manner as under Code Section 704(c) and the Regulations promulgated
thereunder. The Partnership shall use the "traditional method" as set forth in
Treasury Regulation Section 1.704-3(b) for making Section 704(c) allocations
with respect to the assets owned by the Partnership on the Effective Date.
5.8 Other Allocation Rules.
(a) Profits and Losses, each item thereof and all other items
allocable among Partners for the Fiscal Year that includes the Effective Date
shall be allocated among the Partners by taking into account their varying
interests during such Fiscal Year in accordance with Section 706(d) of the Code,
using any permissible method selected by the General Partner in its sole
discretion.
(b) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall to the extent possible, after
taking into account other required allocations of gain pursuant to this Article
5, be characterized as Recapture Income in the same proportions and to the same
extent as such Partners have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as Recapture Income.
(c) If a Partnership Interest is transferred during any Fiscal
Year, the Profits or Losses attributable to such Partnership Interest for such
Fiscal Year shall be divided and allocated proportionately between the
transferor and the transferee in accordance with Section 8.6(d) hereof.
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(d) In accordance with Section 752 of the Code and Regulations
Section 1.752-3(a)(3), excess Nonrecourse Liabilities shall be allocated to the
Partners, to the extent possible, in accordance with their respective Percentage
Interests.
ARTICLE 6
STATUS OF LIMITED PARTNERS
6.1 Participation in Management. The Limited Partners, as such, shall
not (i) participate in the management or control of the Partnership's business,
(ii) transact any business for the Partnership, nor (iii) have the power to act
for or bind the Partnership, said powers being vested solely and exclusively in
the General Partner. The Limited Partners shall have only the voting rights
expressly set forth in this Agreement or as required under the Act.
6.2 Limited Liability. No Limited Partner shall be bound by, or
personally liable for, the expenses, liabilities, or obligations of the
Partnership, except as provided in the Act.
6.3 Outside Activities of Limited Partners. Any Limited Partner and any
officer, director, employee, agent, trustee, family member, partner, shareholder
or Affiliate of any Limited Partner shall be entitled to and may have business
interests and activities that are in direct competition with the Partnership or
that are enhanced by the activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership. No
Partner or any other Person shall have any rights by virtue of this Agreement or
the partnership relationship established hereby in any business ventures of any
other Person even if such opportunity is of a character that, if presented to
the Partnership, any Partner or such other Persons, could be taken by such
Person.
6.4 Rights of Limited Partners Relating to the Partnership. In addition
to other rights provided by this Agreement or by the Act, each Limited Partner
shall have the right, upon five Business Days' prior written notice, at such
Limited Partner's own expense (including reimbursement for actual third party
copying and administrative charges that the General Partner may incur):
(a) to obtain a list of the name and last known business,
residence or mailing address of each Partner; and
(b) to obtain additional copies of this Agreement and the
Certificate and all amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed.
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ARTICLE 7
MANAGEMENT AND OPERATION OF BUSINESS
7.1 Authority of the General Partner. At all times during the existence
of this Partnership, and subject to any express Approvals otherwise required by
this Agreement, the General Partner shall have all rights and powers which may
be possessed by a general partner pursuant to the Act and shall have the
exclusive right and the obligation acting solely by itself and without the
necessity of approval by any Limited Partner or any other Person to operate,
manage and control the Partnership and its business, assets and affairs. The
General Partner shall have the authority to execute on behalf of the Partnership
such agreements, contracts, instruments and other documents as it shall from
time to time approve, such approval to be conclusively evidenced by its
execution and delivery of any of the foregoing, including, without limitation:
(i) checks, drafts, notes and other negotiable instruments; (ii) deeds of trust
and assignments of rights; (iii) contracts for the sale of assets, deeds,
leases, assignments and bills of sale; and (iv) loan agreements, mortgages,
security agreements, pledge agreements and financing statements. In addition to
the powers given to the General Partner by Law, and without limiting the
generality of the foregoing powers of the General Partner, the General Partner
shall have the power and authority to do the following on behalf of and at the
cost, expense and risk of, the Partnership:
(a) to borrow money for the Partnership from any Person,
including the General Partner or its Affiliates; provided that any loans from
the General Partner or its Affiliates must be on terms substantially similar to
those that could have been obtained from a non-Affiliate;
(b) to create a Lien on all or any part of the Partnership's
assets in order to secure loans or advances to the Partnership;
(c) to acquire by purchase, lease, contribution of property or
otherwise and own, hold, sell, convey, transfer or dispose of real or personal
property which may be necessary, convenient or incidental to the accomplishment
of the purposes of the Partnership;
(d) to guarantee obligations of any Person;
(e) to collect all income of the Partnership and to satisfy
all obligations of the Partnership;
(f) to prosecute, defend and settle legal, arbitration or
administrative proceedings on behalf of or against the Partnership or, to the
extent relating to the Partnership, any of its Partners;
(g) to make investments in or loans to any Subsidiary of the
Partnership on such terms and conditions as the General Partner deems advisable
and in the best interest of the Partnership;
(h) to make capital contributions to any Subsidiary;
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(i) to dissolve or liquidate any Subsidiaries of the
Partnership;
(j) to establish Working Capital Reserves;
(k) to pay, collect, compromise, settle, arbitrate or
otherwise adjust any and all claims or demands of or against or relating to the
Partnership;
(l) to employ at the Partnership's expense such Persons,
firms, companies, agents, employees, attorneys, accountants, financial advisors,
appraisers, surveyors, engineers, architects, business consultants and such
other professionals under terms and conditions and for such amounts as are
commercially reasonable and appropriate;
(m) to establish, maintain or close one or more bank accounts
in the Partnership's name for the Partnership funds, authorize designees to
disburse such funds on behalf of the Partnership, and, for such purpose, certify
the adoption of appropriate banking resolutions;
(n) to issue any additional Partnership Interests and admit
additional Partners in accordance with Section 7.2;
(o) subject to the restrictions of Section 13.1, to amend this
Agreement and the Certificate;
(p) to admit the transferee of a Partner's Partnership
Interest as a Substituted Partner in accordance with Section 8.4;
(q) subject to the restrictions of Section 7.5, receive
reimbursement for Partnership Expenses incurred on behalf of the Partnership and
paid by the General Partner or any of its Affiliates;
(r) to exercise the voting rights of the Partnership on
account of its ownership of any voting securities held by the Partnership as the
General Partner deems appropriate;
(s) to distribute cash or other assets of the Partnership to
the Partners in accordance with Article 5 of this Agreement;
(t) to sell, exchange or otherwise dispose of all or
substantially all of the Partnership assets;
(u) to merge or otherwise consolidate the Partnership with any
other entity, or effect a reorganization of the Partnership, pursuant to the Act
or otherwise;
(v) to dissolve the Partnership, except as otherwise provided
in Section 11.1, or continue the Partnership after its dissolution due to an
event described in Section 11.1;
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(w) to call for Optional Capital Contributions pursuant to
Section 3.6 hereof as necessary to meet the Partnership's obligations; and
(x) to perform all other necessary and appropriate acts in
connection with the Partnership business.
7.2 Issuances of Additional Partnership Interests. The General Partner
is hereby authorized to cause the Partnership from time to time to issue to
Persons additional Partnership Interests in one or more classes, or one or more
series of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties all as shall
be determined by the General Partner in its sole and absolute discretion and
without the approval of any of the Limited Partners, subject to provisions of
the Act and Articles 9 and 10, including, but not limited to, (i) the
allocations of items of Partnership income, gain, loss, deduction and credit to
each such class or series of Partnership Interests; (ii) the right of each such
class or series of Partnership Interests to share in Partnership distributions;
(iii) the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; (iv) the price at and the terms
and conditions on which such class or series of Partnership Interests may be
redeemed by the Partnership, if such Partnership Interests are redeemable by the
Partnership; (v) the rate at and the terms and conditions on which such class or
series of Partnership Interests may be converted into any other class or series
of Partnership Interests of the Partnership, if any class or series of
Partnership Interests are issued with the privilege of conversion; and (vi) the
right of such class or series of Partnership Interests to vote on matters
relating to the relative rights and preferences of such class; provided,
however, that the General Partner shall not be authorized to cause the
Partnership to issue additional Partnership Interests with such designations,
preferences, and relative, participating, optional or other special rights
senior to the Senior Preferred Units or the Redeemable Preferred Units with
respect to distribution rights or distributions upon liquidation, dissolution or
winding up of the Partnership, except as otherwise provided in Section 9.3(a) or
10.3(a). Upon the issuance of any class or series of Partnership Interests which
shall not be identical to the Partnership Interests issued on the Effective
Date, the General Partner (pursuant to the General Partner's power of attorney
from the Limited Partners), without the consent at the time of any Limited
Partner or Assignee (except as otherwise required in Articles 9 and 10) may
amend any provision of this Agreement, and execute, swear to, acknowledge,
deliver, file and record an amended Certificate of Limited Partnership and
whatever other documents may be required in connection therewith, as shall be
necessary or desirable to reflect the issuance of such class or series of
Partnership Interests and the relative rights and preferences of such class or
series of Partnership Interests as to the matters set forth in the preceding
sentence. The General Partner shall do all things necessary to comply with the
Act and is authorized and directed to do all things it deems to be necessary or
advisable in connection with any such future issuance to reflect the issuance of
the Partnership Interest and the admission of any Partner acquiring the
Partnership Interest, including, without limitation, compliance with any
statute, rule, regulation or guideline of any federal, state or other
governmental agency or any securities exchange on which the Partnership
Interests or other such security is listed for trading. The General Partner will
provide prompt notice to all Limited Partners of any additional Partnership
Interests issued pursuant to this Section 7.2.
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7.3 Amendment of Agreement and Certificate of Limited Partnership. To
the extent that such action is determined by the General Partner to be
reasonable and necessary or appropriate and provided that such action is not
inconsistent with any provision of this Agreement, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state or the District of Columbia in which the Partnership may
elect to do business or own property. The General Partner shall not be required,
before filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability to the extent provided by applicable
law) in the State of Delaware and any other state or the District of Columbia in
which the Partnership may elect to do business or own property.
7.4 Compensation of General Partner or Affiliates. Other than the
General Partner's right to distributions and expense reimbursement as described
herein, neither the General Partner nor any of its Affiliates shall be entitled
to any fees or other compensation in connection with the discharge of the
General Partner's duties hereunder.
7.5 Expenses.
(a) The Partnership shall be responsible for and shall pay or
reimburse the General Partner for all Partnership Expenses. All Partnership
Expenses shall be paid out of Working Capital Reserves and other funds of the
Partnership determined by the General Partner to be available for such purpose.
As used herein, the term "Partnership Expenses" means the Organizational
Expenses and all other costs, expenses or obligations of the Partnership
incurred by the Partnership or by the General Partner or any of its Affiliates
on behalf of the Partnership in connection with the conduct of the business and
affairs of the Partnership, including without limitation:
(i) all costs and expenses related to the business of
the Partnership, including, without limitation, all costs and
expenses of acquiring, holding and disposing of any
Partnership investments and any financings related thereto;
(ii) all routine third party expenses incurred in the
formation and day-to-day operation of the Partnership, such as
legal and accounting, maintenance of books and records of the
Partnership, obtaining valuations or appraisals of the
Partnership's assets, the preparation and dispatch to the
Partners of checks, financial reports, tax returns and notices
required pursuant to this Agreement and the holdings of
meetings of the Partners and other out-of-pocket expenses of
the General Partner and its Affiliates incurred to third
parties who are not Affiliates of the General Partner in
connection with the business of the Partnership;
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(iii) all expenses incurred in connection with the
registration, qualification or exemption of the Partnership
under any applicable federal, state, local or foreign Law;
(iv) all expenses incurred in connection with any
litigation or administrative or arbitration proceedings
involving or related to the Partnership (including the cost of
any investigation and preparation) and the amount of any
judgment or settlement paid in connection therewith; and
(v) the cost of preparing and filing, on behalf of
the Partnership, all required local, state and federal tax
returns, reports with the SEC and other documents relating to
the Partnership.
(b) If Newco is merged into the Partnership pursuant to the
Transaction, the Partnership shall assume the obligations of Newco under the
Monitoring Agreement between Newco and Oly Hightop Holding, L.P. All payments
made under the Monitoring Agreement to an Affiliate of the General Partner shall
be treated as Partnership Expenses.
7.6 Indemnification.
(a) The Partnership shall indemnify and hold harmless each
Indemnitee from and against any and all claims, actions, demands, losses, costs,
expenses (including attorneys' fees), and damages based upon or resulting or
arising from any act or any failure to act by the Indemnitee (except for an act
or failure to act constituting gross negligence or willful misconduct) or by
reason of the Indemnitee's position as such (a "Claim") to the full extent
permitted under the Act. The indemnification authorized by this Section 7.6
shall include any judgment, award, settlement, and the payment of reasonable
attorneys' fees and other expenses (not limited to taxable costs) incurred in
settling or defending any claims, threatened action or actual legal or
arbitration proceeding. The Partnership shall pay any and all costs, expenses
(including attorneys' and expert witnesses' fees), and obligations paid or
incurred by the Indemnitee in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in, any Claim with respect to which indemnification
is permitted under the Act (or, if applicable, reimburse the Indemnitee for any
and all such costs, expenses and obligations previously paid by it) in advance
of the final disposition or conclusion of such Claim. If, when, and to the
extent that it shall be finally judicially determined that the Indemnitee would
not be permitted to be indemnified with respect to a Claim under applicable Law
or pursuant to the terms hereof, then, upon such final determination, the
Indemnitee shall reimburse the Partnership without interest for all amounts so
advanced to it by the Partnership or paid on its behalf by the Partnership.
(b) The indemnification provided by this Section 7.6 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an
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Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement with such Indemnitee or in the writing pursuant to which
such Indemnitee is indemnified.
(c) In no event shall any Partner be liable to any Indemnitee
by reason of the indemnification provisions set forth in this Agreement.
(d) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.6 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
7.7 Liability of the General Partner.
(a) Neither the General Partner nor any Affiliate of the
General Partner, nor any officer, director, manager, member, employee,
stockholder, or partner of the General Partner or any of its Affiliates, shall
be liable, responsible, or accountable in damages or otherwise to the
Partnership or any Partner by reason of, arising from, or relating to the
operations, business, or affairs of or any action taken or failure to act on
behalf of the Partnership, the General Partner, or any of their respective
Affiliates, except to the extent that any of the foregoing is determined, by a
final, nonappealable order of a court of competent jurisdiction, to have been
primarily caused by the gross negligence, willful misconduct, or bad faith of
the person claiming exculpation.
(b) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the Partners, that,
except as expressly provided herein, the General Partner is under no obligation
to consider the separate interests of the Limited Partners alone in deciding
whether to cause the Partnership to take (or decline to take) any actions, and
that the General Partner shall not be liable for damages to the Partnership or
any Partner for losses sustained, liabilities incurred, or benefits not derived
by Limited Partners in connection with such decisions, so long as the General
Partner has acted in good faith and with fair dealing and without gross
negligence.
(c) The General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith and without gross negligence.
(d) Any amendment, modification or repeal of this Section 7.7
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 7.7 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
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(e) In exercising its authority under this Agreement, the
General Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner of any action taken by it. The General Partner
and the Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner pursuant
to its authority under this Agreement.
7.8 Compliance with Law. The General Partner shall manage the affairs
of the Partnership in accordance with all applicable Laws. Each Partner hereby
agrees to cooperate and use its reasonable best efforts to assist the
Partnership in obtaining or making any and all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any Authority
required by or with respect to the Partnership of such Partner in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
7.9 Outside Activities of General Partner. Any General Partner and any
officer, director, employee, agent, trustee, member, partner, shareholder or
Affiliate of any General Partner shall be entitled to and may have business
interests and activities that are in direct competition with the Partnership or
that are enhanced by the activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership. No
Partner or any other Person shall have any rights by virtue of this Agreement or
the partnership relationship established hereby in any business ventures of any
other Person even if such opportunity is of a character that, if presented to
the Partnership, any Partner or such other Persons, could be taken by such
Person.
ARTICLE 8
TRANSFERS OF INTERESTS IN AND
WITHDRAWALS FROM THE PARTNERSHIP
8.1 Transfer.
(a) The term "transfer," when used in this Article 8 with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which a Partner purports to assign all or any part of its Partnership Interest
to another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article 8. Any transfer or purported transfer of a Partnership Interest not made
in accordance with this Article 8 shall be null and void.
8.2 Transfer of General Partner's Partnership Interest. The General
Partner shall not transfer all or any part of its General Partner Interest,
whether now owned or hereafter acquired, except in accordance with the terms of
this Section 8.2. The General Partner may transfer its General Partner Interest
(a) without the Approval of any other Partner if such transfer is made to (i)
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an Affiliate of the General Partner, (ii) any Person with which the General
Partner merges or consolidates or effects some other business combination, or
(iii) any Person that acquires all or substantially all of the assets of the
General Partner or (b) with the Approval of a Majority in Interest of the
Limited Partners of each Class, which the Limited Partners may, in their sole
discretion, grant or deny. To the extent that both the General Partner that
transfers its General Partner Interest in compliance with this Section 8.2 and
the transferee of such interest express their intent in writing that the
transferee become a Substituted Partner in respect of the transferred General
Partner Interest, each Limited Partner hereby consents to such substitution.
8.3 Limited Partners' Rights to Transfer.
(a) The transfer of all or any portion of a Partnership
Interest by a Limited Partner shall not require the consent of any other Limited
Partner. No Limited Partner shall have the right to transfer all or any portion
of its Partnership Interest without the prior written consent of the General
Partner which consent may be given or withheld in the General Partner's sole and
absolute discretion; provided, however, that a Limited Partner shall have the
right to transfer all or any portion of its Partnership Interest without the
consent of the General Partner (i) to an Affiliate of such Limited Partner, (ii)
by operation of law or (iii) in accordance with the laws of descent and
distribution.
(b) If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but no more rights than those enjoyed by other Limited Partners, for the purpose
of settling or managing the estate and such power as the incapacitated Limited
Partner possessed to transfer all or any part of its Partnership Interest. The
Incapacity of a Limited Partner, in and of itself, shall not dissolve or
terminate the Partnership.
(c) Notwithstanding any provision herein to the contrary, no
transfer by a Limited Partner of such Partner's Partnership Interest may be made
to any Person if in the opinion of legal counsel for the Partnership, it would
result in (i) the Partnership being treated, for federal income tax purposes, as
an association taxable as a corporation or a "publicly traded partnership"
within the meaning of Section 7704(b) of the Code or (ii) the violation of any
applicable Law.
8.4 Substituted Limited Partners.
(a) Upon the transfer of a Limited Partner Interest permitted
by this Article 8, the transferee shall not become a Substituted Partner unless
and until (i) the transferee on or prior to the date of the transfer agrees in
writing to become a Partner in the Partnership bound by all of the terms and
conditions of this Agreement, (ii) the transferee pays all reasonable expenses
of the Partnership incurred in connection with such substitution and assumes all
obligations of the transferring Partner under this Agreement, (iii) the
transferring Partner and its transferee execute and deliver such instruments and
agreements as counsel for the Partnership deems reasonably necessary or
desirable
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to effect such substitution, and (iv) the General Partner consents to such
substitution which consent may be given or withheld in the General Partner's
sole and absolute discretion.
(b) A transferee who has been admitted as a Substituted
Partner in accordance with this Article 8 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
(c) Upon the admission of a Substituted Partner, the General
Partner shall amend the Ownership Schedule to reflect the Capital Account and
Percentage Interest of such Substituted Partner and to eliminate or adjust, if
necessary, the name, address and interest of the predecessor of such Substituted
Partner.
8.5 Assignees. If the transferee of a Partnership Interest has not
become a Substituted Partner pursuant to the terms of this Article 8, such
transferee shall be considered an Assignee for purposes of this Agreement. To
the extent so assigned, an Assignee shall be entitled to receive distributions
from the Partnership and the share of Profits, Losses, and any other items of
income, gain, loss, deduction and credit of the Partnership attributable to the
Partnership Interest assigned to such transferee but shall not be deemed to be a
holder of a Partnership Interest for any other purpose under this Agreement, and
shall not be entitled to vote such Partnership Interest or Approve any matter
presented to the Partners for a vote or Approval (and the Partner who assigned
the Partnership Interest to the Assignee shall remain entitled to vote such
Partnership Interest or Approve but shall not have any other rights under this
Agreement with respect to such Partnership Interest). In the event any such
transferee desires to make a further assignment of any such Partnership
Interest, such transferee shall be subject to all the provisions of this Article
8 to the same extent and in the same manner as any Partner desiring to make an
assignment of Partnership Interests.
8.6 General Provisions.
(a) No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such Limited Partner's
Partnership Interest in accordance with this Article 8.
(b) Any Limited Partner who shall transfer all of his
Partnership Interest in a transfer permitted pursuant to this Article 8 shall
cease to be a Limited Partner upon the admission of all Assignees of such
Partnership Interest as Substituted Limited Partners.
(c) Other than with respect to Assignees under Section 8.5
hereof, transfers pursuant to this Article 8 may only be made on the first or
last day of a calendar month, unless the General Partner otherwise agrees.
(d) If any Partnership Interest is transferred or assigned in
compliance with the provisions of this Article 8 on any day other than the first
day of a Fiscal Year, then Profits, Losses,
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each item thereof and all other items attributable to such Partnership Interest
for such Fiscal Year shall be allocated to the transferor Partner and to the
transferee Partner, by taking into account their varying interests during the
Fiscal Year in accordance with Section 706(d) of the Code, using any permissible
method selected by the General Partner, in its sole discretion. Solely for
purposes of making such allocations, for assignments that occur on or prior to
the 15th day of a calendar month each of such items for the calendar month in
which the assignment occurs shall be allocated to the assignor, and for
assignments that occur after the 15th day of a calendar month each of such items
for the calendar month in which the assignment occurs shall be allocated to the
Assignee. All distributions of Distributable Assets attributable to such
Partnership Interest with respect to which the Record Date is before the date of
such transfer or assignment shall be made to the transferor Partner and all
distributions of Distributable Assets thereafter attributable to such
Partnership Interest shall be made to the transferee Partner.
8.7 Admission of Successor General Partner. A successor to all of the
General Partner Interest pursuant to Section 8.2 or Section 8.9 hereof shall be
admitted to the Partnership as the substituted General Partner, effective as of
the date of, and immediately prior to the time of, such transfer or election.
The successor General Partner shall carry on the business of the Partnership
without dissolution. The admission of the successor General Partner shall be
subject to such successor's execution and delivery of a written agreement
accepting all of the terms and conditions of this Agreement, together with such
other documents or instruments as may be required by the Act to effect the
admission of the new General Partner to the Partnership, including a certificate
of amendment to this Agreement and/or an amended Certificate. In the event that
an admission occurs on any day other than the first day of a Fiscal Year, all
items attributable to the General Partner Interest for such Fiscal Year shall be
allocated between the transferring General Partner and such successor as
provided in Section 8.6(d) hereof.
8.8 Put Option.
(a) Grant. Except as may otherwise be prohibited by applicable
law, the Partnership hereby grants to each Senior Preferred Limited Partner and
Redeemable Preferred Limited Partner (each, a "Put Limited Partner") an
irrevocable right and option (each, a "Put Option") to cause the Partnership to
purchase, and the Partnership hereby agrees to purchase, all of the Senior
Preferred Units and Redeemable Preferred Units (the "Put Units" and each, a "Put
Unit") held by such Put Limited Partner, subject to the terms and conditions
described below.
(b) Exercise. The Put Option may be exercised, in whole but
not in part, by any Put Limited Partner at any time during the period beginning
after the date that is the fifth anniversary of the day that is one hundred and
eighty days following the Transaction Effective Date, and, subject to the
remaining terms of this Section 8.8, ending on and including the tenth
anniversary of the Transaction Effective Date (the "Put Option Exercise
Period"). In the event that a Put Limited Partner desires to exercise its Put
Option, such Put Limited Partner shall give, in accordance with Section 13.13
hereof, to the Partnership a written notice in the form attached hereto as Annex
A (a "Put Option Exercise Notice") of such Put Limited Partner's intention to
exercise its Put Option.
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(c) Put Option Exercise Price. For each Put Unit purchased by
the Partnership pursuant to Section 8.8(b), the exercise price for the Put
Option (the "Put Option Exercise Price") shall be the sum of (i) $25.00 and (ii)
the balance, if any, on the Unpaid Distribution Account attributable to such Put
Units as of the date the Put Option Exercise Notice is given to the Partnership.
(d) Put Option Payment. If the Put Limited Partner exercises a
Put Option by timely delivery of a Put Option Exercise Notice, the Partnership
shall deliver to the Put Limited Partner, at the address specified in the Put
Option Exercise Notice, a check in the amount of the Put Option Exercise Price
not later than 45 days following the date on which the Put Option Exercise
Notice is given to the Partnership (the "Put Option Closing Date"). Upon (i) the
mailing or (ii) the personal delivery of the payment of the Put Option Exercise
Price as provided herein, such Put Units shall no longer be deemed outstanding,
the holders thereof shall cease to be Limited Partners of the Partnership, and
all rights whatsoever with respect to the Put Units (except the right of the Put
Limited Partners to receive the Put Option Exercise Price without interest)
shall terminate. The exercise of a Put Option and the payment of the Put Option
Exercise Price, shall not be subject to Sections 5.1(a), 9.2(g) or 10.2(g)
hereof.
8.9 Removal of the General Partner. During the term of this
Partnership, the General Partner may be removed (a) by the vote of at least a
Majority in Interest of the Common Limited Partners only for gross negligence or
willful misconduct on the part of the General Partner as determined in a final
and non-appealable judicial action or (b) at any time without cause by the vote
of the holders of at least 75% of the Common Limited Partner Interests. Any such
removal shall become effective immediately following such determination, and
upon its removal the General Partner shall automatically become a Common Limited
Partner of the Partnership. In such event, a Majority in Interest of the Common
Limited Partners (not including the former General Partner) may (a) elect a
substituted General Partner in the place and stead of the General Partner in
order to avoid the dissolution of the Partnership in accordance with the
provisions of Section 11.1(c) and (b) transfer a portion of their Partnership
Interest to the substituted General Partner such that the substituted General
Partner shall acquire a .01% Percentage Interest which shall be taken from the
Percentage Interests of all Common Limited Partners (other than the former
General Partner) proportionately in accordance with the ratios of such
interests. The admission of the substituted General Partner shall be effective
as of the date of removal of the former General Partner.
ARTICLE 9
SPECIAL MATTERS CONCERNING SENIOR PREFERRED UNITS
9.1 Designation of Class. A class of Partnership Interests is
designated the "Senior Preferred Units" of the Partnership. The precise number
of Partnership Interests so designated shall equal the number of issued and
outstanding shares of Company Senior Preferred Stock immediately prior to the
Transaction Effective Date.
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9.2 Redemption.
(a) The Partnership, at the option of the General Partner, may
redeem the Senior Preferred Units, in whole or from time to time in part, at any
time and from time to time on and after December 31, 2006 at the price of $25.00
per Senior Preferred Unit, plus the amount of the Unpaid Senior Preferred
Distribution Account to, but not including, the Senior Preferred Redemption Date
attributable to each Senior Preferred Unit (the "Senior Preferred Redemption
Price"), except as may be provided below, without interest. Each date fixed for
redemption pursuant to Section 9.2(c) below is called a "Senior Preferred
Redemption Date." Any redemption pursuant to this Section 9.2 shall not be
subject to Section 5.1(a). On or before the Senior Preferred Redemption Date,
the Senior Preferred Limited Partner shall deliver to the Partnership any
certification required by the redemption notice and shall thereupon be entitled
to receive the Senior Preferred Redemption Price per Senior Preferred Unit
redeemed on the Senior Preferred Redemption Date.
(b) In case of redemption of less than all Senior Preferred
Units at the time outstanding, the Senior Preferred Units to be redeemed shall
be selected pro rata from the holders of record of such Senior Preferred Units
in proportion to the number of Senior Preferred Units held by such holders (with
adjustments to avoid redemption of fractional Senior Preferred Units) or by any
other equitable method determined by the General Partner.
(c) Notice of any redemption will be given by publication in a
newspaper of general circulation in the City of New York, such publication to be
made once a week for two successive weeks commencing not less than 30 nor more
than 60 days prior to the Senior Preferred Redemption Date. A similar notice
will be mailed by the Partnership, postage prepaid, not less than 30 nor more
than 60 days prior to the Senior Preferred Redemption Date, addressed to the
respective holders of record of the Senior Preferred Units to be redeemed at
their respective addresses as they appear on the records of the Partnership. No
failure to give such notice or any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any Senior
Preferred Units except as to the holder to whom the Partnership has failed to
give notice or except as to the holder to whom notice was defective. In addition
to any information required by Law or by the applicable rules of any exchange
upon which the Senior Preferred Units may be listed or admitted to trading, such
notice shall state: (i) the Senior Preferred Redemption Date; (ii) the Senior
Preferred Redemption Price; (iii) the aggregate number of Senior Preferred Units
to be redeemed and, if less than all Senior Preferred Units held by such holder
are to be redeemed, the number of such Senior Preferred Units to be redeemed;
and (iv) that distributions on the Senior Preferred Units to be redeemed will
cease to accrue on the Senior Preferred Redemption Date. The notice shall also
require any certification of the Senior Preferred Limited Partner evidencing
such Partner's ownership of the Senior Preferred Units as the General Partner
may require.
(d) If notice has been mailed in accordance with Section
9.2(c) above and provided that on or before the Senior Preferred Redemption Date
specified in such notice all funds necessary for such redemption shall have been
set aside by the Partnership, separate and apart from its other funds in trust
for the pro rata benefit of the holders of the Senior Preferred Units called for
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redemption, so as to be and to continue to be available therefor, then, from and
after the Senior Preferred Redemption Date, distributions on the Senior
Preferred Units so called for redemption shall cease to accrue, and such Senior
Preferred Units shall no longer be deemed to be outstanding and shall not have
the status of Senior Preferred Units, and all rights of the holders thereof as
Partners of the Partnership (except the right to receive from the Partnership
the Senior Preferred Redemption Price) shall cease.
(e) Any deposit of funds with a bank or trust company for the
purpose of redeeming Senior Preferred Units shall be irrevocable except that:
(i) the Partnership shall be entitled to receive from
such bank or trust company the interest or other earnings, if any,
earned on any money so deposited in trust, and the holders of any
Senior Preferred Units redeemed shall have no claim to such interest or
other earnings; and
(ii) any balance of monies so deposited by the
Partnership and unclaimed by the holders of the Senior Preferred Units
entitled thereto at the expiration of two (2) years after the
applicable Senior Preferred Redemption Date shall be repaid, together
with any interest or other earnings earned thereon, to the Partnership,
and after such repayment, the holders of the Senior Preferred Units
entitled to the funds so repaid to the Partnership shall look only to
the Partnership for payment without interest or other earnings.
(f) Unless the balance in the Unpaid Senior Preferred
Distribution Account through the date prior to the Senior Preferred Redemption
Date is zero or a sum sufficient for the payment thereof has been set apart for
payment, no Senior Preferred Units shall be redeemed unless all outstanding
Senior Preferred Units are simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Senior Preferred
Units pursuant to a purchase or exchange offer made on the same terms to holders
of all outstanding Senior Preferred Units.
(g) Notwithstanding anything in this Agreement to the
contrary, except as permitted by Section 8.8, the Partnership may not redeem,
purchase or otherwise acquire for any consideration any Partnership Interests
ranking junior to or on a parity with the Senior Preferred Units upon
liquidation or winding up of the Partnership (nor shall any moneys be paid to or
made available for a sinking fund for the redemption of any Partnership Interest
ranking junior to or on a parity with the Senior Preferred Units upon
liquidation, dissolution or winding up of the Partnership) unless (i) the
balance in the Unpaid Senior Preferred Distribution Account through the date
prior to such redemption, purchase or acquisition is zero or a sum sufficient
for the payment thereof has been set apart for payment or (ii) the consideration
to be given in such redemption, purchase or acquisition consists of Partnership
Interests ranking junior to the Senior Preferred Units as to distributions and
upon liquidation, dissolution and winding up.
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9.3 Voting Rights.
(a) The holders of record of Senior Preferred Units shall not
be entitled to any voting rights except as hereinafter provided in this Section
9.3 or as otherwise provided by Law. After the Transaction Effective Date, the
Partnership shall not (i) without the affirmative vote or consent of the holders
of at least a Majority in Interest of the Senior Preferred Units outstanding at
the time, given in person or by proxy, either in writing or at a meeting (such
Senior Preferred Units voting separately as a class), authorize, create or
issue, or increase the authorized or issued amount of, any class or series of
Partnership Interests ranking senior to the Senior Preferred Units as to
distributions or upon liquidation, dissolution or winding up or reclassify any
Partnership Interests into any such senior Partnership Interests, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such Partnership Interests; or (ii) without the
affirmative vote or consent of at least two-thirds of the Senior Preferred Units
outstanding at the time, given in person or by proxy, either in writing or at a
meeting (such Senior Preferred Units voting separately as a Class), amend the
provisions of this Agreement, whether by merger, consolidation or otherwise, so
as to materially and adversely affect any right, preference, privilege or voting
power of the Senior Preferred Units or the holders thereof; provided, however,
that any increase in the amount of the authorized Senior Preferred Units or the
creation or issuance of any other series of Senior Preferred Units, or any
increase in the amount of authorized Senior Preferred Units or any other series
of Senior Preferred Units, in each case ranking on a parity with or junior to
the Senior Preferred Units with respect to payment of distributions and the
distribution of assets upon liquidation, dissolution or winding up, shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.
(b) In any matter in which the Senior Preferred Units may
vote, including any action by written consent, each Senior Preferred Units shall
be entitled to one vote (except as expressly provided herein or as may be
required by Law).
(c) Except as required by Law, the foregoing voting provisions
shall not apply if, at or prior to the time when the act with respect to which
such vote would otherwise be required shall be effected, all outstanding Senior
Preferred Units shall have been redeemed or shall have been called for
redemption upon proper notice and sufficient funds shall have been deposited in
trust to effect such redemption.
9.4 Ranking.
The Senior Preferred Units shall, with respect to distribution rights
and distributions upon liquidation, dissolution and winding up, rank (i) senior
to the Common Limited Partner Interests, the Redeemable Preferred Units, and all
other series of Partnership Interests issued from time to time by the
Partnership other than any series of Partnership Interests the terms of which
specifically provide that such series ranks senior to or on a parity with the
Senior Preferred Units with respect to distribution rights or distributions upon
liquidation, dissolution or winding up of the Partnership; (ii) on a parity with
all other Partnership Interests issued by the Partnership the terms of which
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specifically provide that the Partnership Interests rank on a parity with the
Senior Preferred Units with respect to distributions and distributions upon
liquidation, dissolution or winding up of the Partnership or make no specific
provisions as to their ranking; and (iii) junior to all other Partnership
Interests issued by the Partnership the terms of which specifically provide that
the Partnership Interests rank senior to the Senior Preferred Units with respect
to distributions and distributions upon liquidation, dissolution or winding up
of the Partnership (the issuance of which must have been approved by a vote of
at least a Majority in Interest of the outstanding Senior Preferred Units).
ARTICLE 10
SPECIAL MATTERS CONCERNING REDEEMABLE PREFERRED UNITS
10.1 Designation of Class. A class of Partnership Interests is
designated the "Redeemable Preferred Units" of the Partnership. The precise
number of Partnership Interests so designated shall equal the sum of (i) the
number of issued and outstanding shares of Company Redeemable Preferred Stock
immediately prior to the Transaction Effective Date and (ii) the number of WDOP
Class B Preferred Units deemed contributed pursuant to the WDOP Merger
Agreement.
10.2 Redemption.
(a) The Partnership, at the option of the General Partner, may
redeem the Redeemable Preferred Units, in whole or from time to time in part, at
any time and from time to time on and after January 1, 2008 at the price of
$25.00 per Redeemable Preferred Unit, plus the amount of the Unpaid Redeemable
Preferred Distribution Account to, but not including, the Redeemable Preferred
Redemption Date attributable to each Redeemable Preferred Unit (the "Redeemable
Preferred Redemption Price"), except as may be provided below, without interest.
Each date fixed for redemption pursuant to Section 10.2(c) below is called a
"Redeemable Preferred Redemption Date." Any redemption pursuant to this Section
10.2 shall not be subject to Section 5.1(a). On or before the Redeemable
Preferred Redemption Date, the Redeemable Preferred Limited Partner shall
deliver to the Partnership any certification required by the redemption notice
and shall thereupon be entitled to receive the Redeemable Preferred Redemption
Price per Redeemable Preferred Unit redeemed on the Redeemable Preferred
Redemption Date.
(b) In case of redemption of less than all shares of
Redeemable Preferred Units at the time outstanding, the Redeemable Preferred
Units to be redeemed shall be selected pro rata from the holders of record of
such Redeemable Preferred Units in proportion to the number of Redeemable
Preferred Units held by such holders (with adjustments to avoid redemption of
fractional interests) or by any other equitable method determined by the General
Partner.
(c) Notice of any redemption will be given by publication in a
newspaper of general circulation in the City of New York, such publication to be
made once a week for two successive weeks commencing not less than 30 nor more
than 60 days prior to the Redeemable Preferred Redemption Date. A similar notice
will be mailed by the Partnership, postage prepaid, not
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less than 30 nor more than 60 days prior to the Redeemable Preferred Redemption
Date, addressed to the respective holders of record of the Redeemable Preferred
Units to be redeemed at their respective addresses as they appear on the records
of the Partnership. No failure to give such notice or any defect therein or in
the mailing thereof shall affect the validity of the proceedings for the
redemption of any Redeemable Preferred Units except as to the holder to whom the
Partnership has failed to give notice or except as to the holder to whom notice
was defective. In addition to any information required by Law or by the
applicable rules of any exchange upon which the Redeemable Preferred Units may
be listed or admitted to trading, such notice shall state: (i) the Redeemable
Preferred Redemption Date; (ii) the Redeemable Preferred Redemption Price; (iii)
whether all or less than all the outstanding Redeemable Preferred Units are to
be redeemed and the aggregate number of Redeemable Preferred Units to be
redeemed and, if less than all Redeemable Preferred Units held by such holder
are to be redeemed, the number of Redeemable Preferred Units to be redeemed; and
(iv) that distributions on the Redeemable Preferred Units to be redeemed will
cease to accrue on the Redeemable Preferred Redemption Date. The notice shall
also require any certification of the Redeemable Preferred Limited Partner
evidencing such Partner's ownership of the Redeemable Preferred Units as the
General Partner may require.
(d) If notice has been mailed in accordance with Section
10.2(c) above and provided that on or before the Redeemable Preferred Redemption
Date specified in such notice all funds necessary for such redemption shall have
been set aside by the Partnership, separate and apart from its other funds in
trust for the pro rata benefit of the holders of the Redeemable Preferred Units
called for redemption, so as to be and to continue to be available therefor,
then, from and after the Redeemable Preferred Redemption Date, distributions on
the Redeemable Preferred Units so called for redemption shall cease to accrue,
and such Redeemable Preferred Units shall no longer be deemed to be outstanding
and shall not have the status of Redeemable Preferred Units, and all rights of
the holders thereof as Partners of the Partnership (except the right to receive
from the Partnership the Redeemable Preferred Redemption Price) shall cease.
(e) Any deposit of funds with a bank or trust company for the
purpose of redeeming Redeemable Preferred Units shall be irrevocable except
that:
(i) the Partnership shall be entitled to receive from
such bank or trust company the interest or other earnings, if any,
earned on any money so deposited in trust, and the holders of any
Redeemable Preferred Units redeemed shall have no claim to such
interest or other earnings; and
(ii) any balance of monies so deposited by the
Partnership and unclaimed by the holders of the Redeemable Preferred
Units entitled thereto at the expiration of two (2) years after the
applicable Redeemable Preferred Redemption Date shall be repaid,
together with any interest or other earnings earned thereon, to the
Partnership, and after such repayment, the holders of the shares
entitled to the funds so repaid to the Partnership shall look only to
the Partnership for payment without interest or other earnings.
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(f) Unless the balance in the Unpaid Redeemable Preferred
Distribution Account through the date prior to the Redeemable Preferred
Distribution Date is zero or a sum in cash sufficient for the payment thereof
has been set apart for payment, no Redeemable Preferred Units shall be redeemed
unless all outstanding Redeemable Preferred Units are simultaneously redeemed;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Redeemable Preferred Units pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Redeemable
Preferred Units.
(g) Notwithstanding anything in this Agreement to the
contrary, except as permitted by Section 8.8, the Partnership may not redeem,
purchase or otherwise acquire for any consideration any Partnership Interests
ranking junior to or on a parity with the Redeemable Preferred Units upon
liquidation or winding up of the Partnership (nor shall any moneys be paid to or
made available for a sinking fund for the redemption of any Partnership Interest
ranking junior to or on a parity with the Redeemable Preferred Units upon
liquidation, dissolution or winding up of the Partnership) unless (i) the
balance in the unpaid Redeemable Preferred Distribution Account through the date
prior to such redemption, purchase or acquisition is zero or a sum sufficient
for the payment thereof has been set apart for payment or (ii) the consideration
to be given in such redemption, purchase or acquisition consists of Partnership
Interests ranking junior to the Redeemable Preferred Units as to distributions
and upon liquidation, dissolution and winding up.
10.3 Voting Rights.
(a) The holders of record of Redeemable Preferred Units shall
not be entitled to any voting rights except as hereinafter provided in this
Section 10.3 or as otherwise provided by Law. After the Transaction Effective
Date, the Partnership shall not (i) without the affirmative vote or consent of
the holders of at least two-thirds of the Redeemable Preferred Units outstanding
at the time, given in person or by proxy, either in writing or at a meeting
(such Redeemable Preferred Units voting separately as a class), authorize,
create or issue, or increase the authorized or issued amount of, any class or
series of Partnership Interests ranking senior to the Redeemable Preferred Units
as to distributions or upon liquidation, dissolution or winding up of the
Partnership or reclassify any Partnership Interests into any such senior
Partnership Interests, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such Partnership
Interests; or (ii) without the affirmative vote or consent of at least
two-thirds of the Redeemable Preferred Units outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such Redeemable Preferred
Units voting separately as a Class), amend the provisions of this Agreement so
as to materially and adversely affect any right, preference, privilege or voting
power of the Redeemable Preferred Units or the holders thereof; provided,
however, that any increase in the amount of the authorized Redeemable Preferred
Units or the creation or issuance of any other series of Redeemable Preferred
Units, or any increase in the amount of authorized shares of the Redeemable
Preferred Units or any other series of Redeemable Preferred Units, in each case
ranking on a parity with or junior to the Redeemable Preferred Units with
respect to payment of distributions and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
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(b) In any matter in which the Redeemable Preferred Units may
vote, including any action by written consent, each share of Redeemable
Preferred Units shall be entitled to one vote (except as expressly provided
herein or as may be required by Law).
(c) Except as required by Law, the foregoing voting provisions
shall not apply if, at or prior to the time when the act with respect to which
such vote would otherwise be required shall be effected, all outstanding the
Redeemable Preferred Units shall have been redeemed or shall have been called
for redemption upon proper notice and sufficient funds shall have been deposited
in trust to effect such redemption.
10.4 Ranking.
The Redeemable Preferred Units shall, with respect to distribution
rights and distributions upon liquidation, dissolution and winding up of the
Partnership, rank (i) senior to the Common Limited Partner Interests and all
other series of Partnership Interests issued from time to time by the
Partnership other than any series of Partnership Interests the terms of which
specifically provide that the Partnership Interests of such series rank senior
to or on parity with the Redeemable Preferred Units with respect to distribution
rights or distributions upon liquidation, dissolution or winding up of the
Partnership; (ii) on a parity with all other Partnership Interests issued by the
Partnership the terms of which specifically provide that such Partnership
Interests rank on a parity with the Redeemable Preferred Units with respect to
distributions and distributions upon liquidation, dissolution or winding up of
the Partnership or make no specific provisions as to their ranking; and (iii)
junior to the Partnership's Senior Preferred Units, and all other Partnership
Interests issued by the Partnership the terms of which specifically provide that
the Partnership Interests rank senior to the Redeemable Preferred Units with
respect to distributions and distributions upon liquidation, dissolution or
winding up of the Partnership (the issuance of which must have been approved by
a vote of at least two-thirds of the outstanding shares of Redeemable Preferred
Units).
ARTICLE 11
DISSOLUTION
11.1 Dissolution Events.
(a) Except as set forth in this Article 11, no Partner shall
have the right to dissolve the Partnership. The Partnership shall not be
dissolved by the admission of Substituted Partners or Additional Limited
Partners, or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the transfer of the Partnership Interest of
the General Partner under Section 8.2 hereof, any successor General Partner
shall continue the business of the Partnership.
(b) The Partnership shall dissolve, and its affairs shall be
wound up, upon the first to occur of any of the following ("Liquidating Event"):
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(i) an event of withdrawal of the General Partner,
as defined in the Act;
(ii) an election to dissolve the Partnership is made
by the General Partner upon 30 days' written
notice to all Limited Partners;
(iii) the entry of a decree of judicial dissolution
of the Partnership pursuant to Section 17-802
of the Act or any successor provision;
(iv) the sale or disposition of all or substantially
all of the assets and properties of the
Partnership; or
(v) the Bankruptcy of the General Partner.
(c) Election to Continue the Partnership. Following a
Liquidating Event described in Section 11.1(b)(i) or (v) hereof, the business of
the Partnership shall be continued with the Partnership properties and assets,
and such properties and assets shall not be liquidated, provided the Partnership
is continued as set forth in this Section 11.1(c) or, in the case of removal of
the General Partner by vote of the Common Limited Partners, as set forth in
Section 8.9. The Partnership and its business shall be continued pursuant to
this Section 11.1(c) if, within 90 days after the occurrence of such Liquidating
Event, a Majority in Interest of the remaining Partners elect to continue the
Partnership and elect a Person to be admitted, effective as of the date of the
Liquidating Event, to the Partnership as successor General Partner. Upon the
satisfaction of all conditions necessary to the continuation of the Partnership,
including the admission of a successor General Partner and the amendment of the
Partnership's Certificate (if required by applicable law), the Partnership shall
be continued without any further Approval of any Partner, in which case the
Partnership shall continue to conduct the business of the Partnership with the
Partnership's properties and assets in accordance with, and the Partnership and
interests of the Partners shall continue to be governed by, the terms and
provisions of this Agreement.
11.2 Winding Up.
(a) Upon the occurrence of a Liquidating Event (other than
those described in Section 11.1(b)(i) or (v) hereof) or upon the expiration of
the 90 day period for continuation of the Partnership set forth in Section
11.1(c) hereof with respect to Liquidating Events described in Section
11.1(b)(i) or (v) hereof if no election to continue the Partnership has
occurred, the Partnership shall continue solely for the purposes of winding up
its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner or, in the event there
is no remaining General Partner, any Person elected by a Majority in Interest of
the Limited Partners (the General Partner or such other Person being referred to
herein as the "Liquidator") shall be responsible for overseeing the winding up
and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as
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is consistent with obtaining the fair value thereof, and the proceeds therefrom
shall be applied and distributed in the following order:
(i) First, to the payment and discharge of all of
the Partnership's debts and liabilities to
creditors other than the Partners;
(ii) Second, to the payment and discharge of all of
the Partnership's debts and liabilities to the
Partners;
(iii) Third, to each Senior Preferred Limited Partner
an amount equal to $25.00 per Senior Preferred
Unit plus such Senior Preferred Limited
Partner's proportional share of the Unpaid
Senior Preferred Distribution Account to, but
not including, the date of liquidation (the
"Senior Preferred Liquidation Preference");
(iv) Fourth, to each Redeemable Preferred Limited
Partner an amount equal to $25.00 per
Redeemable Preferred Unit plus such Redeemable
Preferred Limited Partner's proportional share
of the Unpaid Redeemable Preferred Distribution
Account to, but not including, the date of
liquidation (the "Redeemable Preferred
Liquidation Preference"); and
(v) The balance, if any, to the General Partner and
the Common Limited Partners pro rata in
accordance with the positive balances of their
Capital Accounts, after giving effect to all
contributions, distributions, and allocations
for all periods (including, if applicable, the
allocation of Profit and Loss realized from or
in connection with the Liquidating Event and
the winding up of the Partnership under this
Section 11.2).
The General Partner shall not receive any compensation for any services
performed pursuant to this Article 9.
(b) Notwithstanding the provisions of Section 11.2(a) hereof
that require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership (including to
those Partners as creditors) and/or distribute to the Partners in lieu of cash,
in accordance with the provisions of Section 11.2(a) hereof, such Partnership
assets as the Liquidator deems not suitable for liquidation. The Liquidator
shall have the discretion to distribute cash or property to any Partner provided
that the fair market value of the cash and property received by all Partners in
the distribution is distributed in accordance with Section 11.2(a)(iii). In the
event that assets of the Partnership are distributed in kind to the Partners,
adjustments to the Partners' Capital Accounts for purposes of
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determining the amount of such assets distributable to each of the Partners
shall be made by taking into account the hypothetical gain or loss that would
have been recognized had the assets been sold for their fair market value on the
date of the distribution in kind. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method of
valuation as it may adopt. Notwithstanding the foregoing, if the property to be
distributed is securities of another issuer and the securities are then listed
on a national securities exchange or traded over the counter, the fair market
value of the securities shall be equal to the average of the closing prices, the
average of the last sales prices, or the average of the bid and asked prices, as
the case may be, for the 20 trading days immediately preceding the distribution
date. Notwithstanding the foregoing, any distributions payable from the Unpaid
Senior Preferred Distribution Account pursuant to Section 11.2(a)(iii) or the
Unpaid Redeemable Preferred Distribution Account pursuant to Section 11.2(a)(iv)
may be made only in cash.
(c) In the discretion of the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article 11 may be:
(i) distributed to a trust established for the
benefit of the Partners for the purposes of
liquidating Partnership assets, collecting
amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or
obligations of the Partnership or the Partners
arising out of or in connection with the
Partnership. The assets of any such trust shall
be distributed to its beneficiaries as soon as
practicable, in the reasonable discretion of
the Liquidator, in the same proportions as the
amount distributed to such trust by the
Partnership would otherwise have been
distributed to the Partners who are such
beneficiaries or from whom the beneficiaries
derived such status pursuant to this Agreement;
or
(ii) withheld or escrowed to provide a reasonable
reserve for Partnership liabilities (contingent
or otherwise) and to reflect the unrealized
portion of any installment obligations owed to
the Partnership, provided that such withheld or
escrowed amounts shall be distributed to the
Partners in the manner and order of priority
set forth in Section 11.2(a) as soon as
practicable.
11.3 Timing; Negative Capital Accounts. In the event that the
Partnership is "liquidated" upon the occurrence of a Liquidating Event within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be
made pursuant to this Article 11 to the General Partner and Limited Partners who
have positive balances in their Capital Accounts in compliance with Regulations
Section 1.704-1(b)(2)(ii)(b)(2). No Partner shall be liable to the Partnership
or to any other Partner for any negative balance outstanding in each such
Partner's Capital Account, whether such negative Capital Account results from
the allocation of Losses or other items of deduction and
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loss to such Partner or from distributions to such Partner, and such Partner
shall not have any obligation to make any contribution to the capital of the
Partnership with respect to such deficit and such deficit shall not be
considered a debt owed to the Partnership or, except as required by the Act with
respect to a deficit of the General Partner, to any other Person for any purpose
whatsoever.
11.4 Deemed Distribution and Recontribution. Notwithstanding any other
provision of this Article 11, in the event the Partnership is liquidated within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event
has occurred, the Partnership's property shall not be liquidated, the
Partnership's liabilities shall not be paid or discharged, and the Partnership's
affairs shall not be wound up. Instead, for federal income tax purposes and for
purposes of maintaining Capital Accounts pursuant to this Agreement, the
Partnership shall be deemed to have distributed the property in kind to the
General Partner and Limited Partners, who shall be deemed to have assumed and
taken such property subject to all Partnership liabilities, all in accordance
with their respective Capital Accounts. Immediately thereafter, the General
Partner and Limited Partners shall be deemed to have recontributed the
Partnership property in kind to the Partnership, which shall be deemed to have
assumed and taken such property subject to all such liabilities.
11.5 Rights of Partners. Except as otherwise provided in this
Agreement, each Partner shall look solely to the assets of the Partnership for
the return of his Capital Contributions and shall have no right or power to
demand or receive property other than cash from the Partnership. Except as
otherwise provided in this Agreement, no Partner shall have priority over any
other Partner as to the return of his Capital Contributions, distributions, or
allocations.
11.6 Notice of Dissolution. In the event a Liquidating Event occurs or
an event occurs that would, but for an election or vote by one or more Partners
required pursuant to Section 11.1 hereof, result in a dissolution of the
Partnership, the General Partner shall, within 30 days thereafter, provide
written notice thereof to each of the Partners.
11.7 Termination of Partnership and Cancellation of Certificate of
Limited Partnership. Upon the completion of the liquidation of the Partnership
cash and property as provided in Section 11.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed, and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
11.8 Reasonable Time for Winding-Up. A reasonable time shall be allowed
for the orderly winding-up of the business and affairs of the Partnership and
the liquidation of its assets pursuant to Section 11.2 hereof, in order to
minimize any losses otherwise attendant upon such winding-up, and the provisions
of this Agreement shall remain in effect between the Partners during the period
of liquidation.
11.9 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.
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ARTICLE 12
POWER OF ATTORNEY
12.1 Power of Attorney.
(a) Each Limited Partner and each Assignee hereby constitutes
and appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to, and provided that
any action taken pursuant to the power granted to any such Person pursuant to
this Section 12.1 is not inconsistent with any other provision of this
Agreement,:
(i) execute, swear to, seal, acknowledge, deliver,
file and record in the appropriate public
offices (A) all certificates, documents and
other instruments (including, without
limitation, this Agreement and the Certificate
and all amendments or restatements thereof)
that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify
or continue the existence or qualification of
the Partnership as a limited partnership (or a
partnership in which the limited partners have
limited liability to the extent provided by
applicable law) in the State of Delaware and in
all other jurisdictions in which the
Partnership may or plans to conduct business or
own property; (B) all instruments that the
General Partner or Liquidator deems appropriate
or necessary to reflect any amendment, change,
modification or restatement of this Agreement
as permitted in and in accordance with this
Agreement; (C) all conveyances and other
instruments or documents that the General
Partner deems appropriate or necessary to
reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this
Agreement, including, but not limited to, a
certificate of cancellation; (D) all
instruments relating to the admission,
withdrawal, removal or substitution of any
Partner pursuant to, or other events described
in, Articles 8 or 11 hereof or the Capital
Contribution of any Partner; and (E) all
certificates, documents and other instruments
relating to the determination of the rights,
preferences and privileges of Partnership
Interests; and
(ii) execute, swear to, seal, acknowledge and file
all ballots, consents, approvals, waivers,
certificates and other instruments appropriate
or necessary, in the sole and absolute
discretion of the General Partner or
Liquidator, to evidence, confirm or ratify any
vote, consent, approval, agreement or other
action which is made or given by the
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Partners hereunder or is consistent with the
terms of this Agreement or appropriate or
necessary, in the sole discretion of the
General Partner or Liquidator, to effectuate
the terms or intent of this Agreement.
(b) The foregoing grant of authority:
(i) is a special power of attorney coupled with an
interest in favor of the General Partner and, as such, shall be
irrevocable and shall survive the dissolution of all or any of the
Limited Partners; and
(ii) may be exercised for each Limited Partner by a
signature of the General Partner or by listing the names of all the
Limited Partners and executing any instrument with the signature of the
General Partner acting as attorney-in-fact for all of them.
(c) Nothing contained herein shall be construed as authorizing
the General Partner or Liquidator to amend this Agreement except in accordance
with the terms of Section 13.1 hereof or as may be otherwise expressly provided
for in this Agreement.
12.2 Duration of Power. The power of attorney granted herein is hereby
declared to be irrevocable and a power coupled with an interest in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or Liquidator to act as contemplated by this Agreement in any
filing or other action by it on behalf of the Partnership, and it shall survive
and not be affected by the subsequent Incapacity of any Limited Partner or
Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Interest, shall survive the Incapacity of the Limited
Partner, and shall extend to such Limited Partner's or Assignee's heirs,
successors, assigns and personal representatives. Each such Limited Partner or
Assignee hereby agrees to be bound by any action taken by the General Partner or
Liquidator, acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General Partner or
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within 15 days after receipt of the General Partner's or
Liquidator's request therefor, such further designation, powers of attorney and
other instruments as the General Partner or the Liquidator, as the case may be,
reasonably deems necessary to effectuate this Agreement and the purposes of the
Partnership.
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ARTICLE 13
MISCELLANEOUS
13.1 Amendments.
(a) Amendments to this Agreement may be proposed by the
General Partner and the General Partner shall submit any proposed amendment to
all of the Limited Partners entitled to vote thereon or Approve. The General
Partner shall seek the Approval of the Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business that it
may deem appropriate. Except as provided in Section 8.9, 13.1(b) or 13.1(c), a
proposed amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Approval of a Majority
in Interest of all Partners.
(b) Notwithstanding Section 13.1(a) hereof, the General
Partner shall have the power, without the Approval of the Limited Partners, to
amend this Agreement as may be required to facilitate or implement any of the
following purposes:
(i) to add to the obligations of the General
Partner or surrender any right or power
granted to the General Partner or any
Affiliate of the General Partner for the
benefit of the Limited Partners;
(ii) to reflect the admission, substitution,
termination, or withdrawal of Partners in
accordance with this Agreement;
(iii) to set forth the designations, rights
powers, duties and preferences of the
holders of any additional Partnership
Interests issued pursuant to Section 7.3
hereof;
(iv) to reflect any change that does not
adversely affect the Limited Partners in any
material respect, or to cure any ambiguity,
correct or supplement any provision in this
Agreement not inconsistent with law or with
other provisions, or make other changes with
respect to matters arising under this
Agreement that will not be inconsistent with
law or with the provisions of this
Agreement; and
(v) to satisfy any requirements, conditions, or
guidelines contained in any order,
directive, opinion, ruling, or regulations
of a federal or state agency or contained in
federal or state law.
The General Partner shall provide notice promptly to the Limited Partners when
any action under this Section 13.1(b) is taken.
(c) Notwithstanding Sections 13.1(a) and 13.1(b) hereof, this
Agreement, including any definitional provisions under Article 1 hereof, shall
not be amended without the Approval of each Partner adversely affected if such
amendment would (i) convert a Limited Partner Interest in the Partnership into a
General Partner Interest, (ii) modify the limited liability of a Limited Partner
in a manner adverse to such Limited Partner, (iii) alter rights of the Partner
to receive distributions pursuant to Article 5 or the allocations specified in
Article 5 or Article 11 in
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a manner adverse to such Partner (except as permitted pursuant to Section 3.2
and Section 11.1(b)(iii) hereof), (iv) cause the termination of the Partnership
prior to the time set forth in Sections 2.9 or 11.1 hereof, or (v) amend Section
2.8, Section 2.9, Section 6.2, Section 8.9, Article 11 or any provision of this
Section 13.1(c).
13.2 Meetings of the Partners.
(a) Meetings of the Partners may be called by the General
Partner. The call shall state the nature of the business to be transacted.
Notice of any such meeting shall be given to all Partners not less than seven
Business Days nor more than 30 Business Days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting. Whenever the vote or
Approval of Partners is permitted or required under this Agreement, such vote or
Approval may be given at a meeting of Partners or may be given in accordance
with the procedure prescribed in the definition of "Approved" or "Approval" or
Section 13.2(b) hereof. Except as otherwise expressly provided in this
Agreement, the Approval of holders of a Majority in Interest of the Limited
Partners shall control.
(b) Any action required or permitted to be taken at a meeting
of the Partners may be taken without a meeting if, at least five Business Days
prior to the taking of such action, written notice is sent to all Partners whose
vote or Approval is required with respect to such action, and a written consent
setting forth the action so taken is signed by a Majority in Interest of the
Partners (or such other percentage as is expressly required by this Agreement)
whose vote or consent is required with respect to such action. Such consent may
be in one instrument or in several instruments and shall have the same force and
effect as a vote of a Majority in Interest of the Partners (or such other
percentage as is expressly required by this Agreement) whose vote or consent is
required with respect to such action. Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
(c) Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it, such
revocation to be effective upon the Partnership's receipt of written notice of
such revocation from the Limited Partner executing such proxy.
(d) Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate in his sole discretion.
13.3 Complete Agreement. This Agreement and each agreement referred to
herein and therein constitutes the complete and exclusive statement of the
agreement between the Partners and
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replaces and supersedes any other oral or written agreements by and among the
Partners or any of them.
13.4 Governing Law. This agreement and the rights of the parties
hereunder shall be governed by, interpreted and enforced in accordance with, the
internal laws (exclusive of the choice of law provisions thereof) of the State
of Delaware as to all matters, including, but not limited to, matters of
validity, construction, effect, performance and remedies.
13.5 Binding Effect. Subject to the provisions of this Agreement
relating to transferability, this Agreement shall be binding upon and inure to
the benefit of the parties signatory hereto, and their respective distributes,
successors and assigns.
13.6 Headings. All headings, title or captions herein are inserted only
for convenience and ease of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement.
13.7 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstances is or becomes invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other Persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by Law.
13.8 Multiple Counterparts; Facsimile Signatures. This Agreement may be
executed in several counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same instrument. However, in making
proof hereof it shall be necessary to produce only one copy hereof signed by the
party against whom enforcement is sought. Each party hereto hereby acknowledges
the effectiveness of, and agrees to accept, facsimile signatures of any other
party hereto for purposes of executing this Agreement; provided, however, that
any party executing this Agreement by facsimile signature shall provide the
General Partner with the number of original signatures pages as the General
Partner may specify as soon as is practicable following a request for same by
the General Partner.
13.9 Execution of Documents. Each party hereto agrees to execute, with
acknowledgment or affidavit, if required, any and all documents and writings
which may be necessary or expedient in connection with the achievement of the
Partnership's purposes, specifically including the amendment to the
Partnership's Certificate contemplated by the terms hereof and all further
amendments thereto or cancellation thereof.
13.10 Reliance on Authority. In no event shall any Person dealing with
the General Partner be obligated to ascertain that the terms of this Agreement
have been complied with, or be obligated to inquire into the necessity or
expediency of any act or action of the General Partner; and every contract,
agreement, deed, mortgage, promissory note, or other instrument or document
executed by the General Partner with respect to the Partnership shall be
conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and/or
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delivery thereof, this Agreement was in full force and effect, (ii) such
instrument or document was duly executed in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership and all of the
Partners thereof, and (iii) the General Partner was duly authorized and
empowered to execute and deliver any and every such instrument or documents for
and on behalf of the Partnership.
13.11 No Third Party Beneficiary. Except as otherwise provided herein,
this Agreement is made solely and specifically among and for the benefit of the
parties hereto and their respective successors and assigns, and no other Person
shall have any rights, interest or claims hereunder or be entitled to any
benefits under or on account of this Agreement as a third party beneficiary or
otherwise.
13.12 References to this Agreement. Numbered or lettered articles,
sections and subsections herein contained refer to articles, sections and
subsections of this Agreement unless otherwise expressly stated.
13.13 Notices. All notices and other communications provided for herein
shall be given or made by telex, telecopy, facsimile, telegraph, cable or in
writing and telexed, telecopied, faxed, telegraphed, cabled, mailed or delivered
to the intended recipient at the address set forth in the books and records of
the Partnership. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when received by telex,
telecopy, facsimile, telegraph or cable or personally delivered by a courier
service or, by mail, postage prepaid and return receipt requested, in each case,
given or addressed as aforesaid. Any party hereto may, at any time by giving ten
Business Days' prior written notice to the other parties hereto, designate any
other address in substitution of the foregoing address to which such notice
shall be given.
13.14 Title to Partnership Property. Title to Partnership property,
whether real, personal or mixed and whether tangible or intangible, and all
interests in such property shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership property or any portion thereof except as a Partner
in the Partnership. Title to any or all of the Partnership property may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership property
for which legal title is held in the name of the General Partner or any nominee
or Affiliate of the General Partner shall be held for the use and benefit of the
Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such property to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets and properties shall be recorded
as the property of the Partnership in its books and records, irrespective of the
name in which legal title to such Partnership property is held.
13.15 Reliance on Authority of Person Signing Agreement. In the event
that a Partner is any Person other than a natural person, neither the
Partnership nor any Partner shall (i) be required
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to determine the authority of the Person signing this Agreement to make any
commitment or undertaking on behalf of such first Person or to determine any
fact or circumstance bearing upon the existence of the authority of such Person;
or (ii) be required to see to the application or distribution of proceeds paid
or credited to persons signing this Agreement on behalf of such first Person.
13.16 Waiver. No failure by any party to insist upon strict performance
of any covenant, duty, agreement or condition of this Agreement or to the
exercise of any right or remedy resulting from a breach thereof shall
constitute, or be deemed to constitute, a waiver of any such breach or any other
covenant, duty, agreement or condition.
IN WITNESS WHEREOF, the General Partner and the Limited Partner have
executed this Agreement on the date set forth opposite their signatures.
SIGNATURE PAGES OF PARTNERS ATTACHED
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This signature page is attached to that certain First Amended and
Restated Limited Partnership Agreement of OLY HIGHTOP PARENT, L.P.
GENERAL PARTNER:
OLY HIGHTOP PARENT GP, LLC, a Delaware limited
liability company
By: Oly Hightop Holding, L.P., its Member
By: Oly Hightop, LLC, its General Partner
Date: November 5, 1999 By: /s/ David B. Deniger
-------------------------------------
Name: David B. Deniger
-----------------------------------
Title: President
---------------------------------
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This signature page is attached to that certain First Amended and
Restated Limited Partnership Agreement of OLY HIGHTOP PARENT, L.P..
COMMON LIMITED PARTNER:
OLY HIGHTOP HOLDING, L.P., a Delaware limited
partnership
By: Oly Hightop, LLC, its General Partner
Date: November 5, 1999 By: /s/ David B. Deniger
-------------------------------------
Name: David B. Deniger
-----------------------------------
Title: President
----------------------------------
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ANNEX A
PUT OPTION EXERCISE NOTICE
The undersigned hereby irrevocably elects to exercise its Put Option
pursuant to Section 8.8(b) of the Limited Partnership Agreement of Oly Hightop
Parent, L.P. (the "Agreement") to cause the Partnership to purchase all of the
Put Units held by the undersigned and herewith requests payment of the Put
Option Exercise Price (such payment being in cash or check payable to the order
of the undersigned) on the terms and conditions specified in the Agreement.
(Capitalized terms not defined herein shall have the meaning given them in the
Agreement.)
The undersigned hereby represents and warrants that: (i) the
undersigned is the record or beneficial owner of the Put Units conveyed by this
Put Option Exercise Notice, and (ii) the undersigned has good and indefeasible
title to all of the Put Units conveyed by this Put Option Exercise Notice, free
and clear of all liens, claims, security interests or other encumbrances.
The undersigned hereby requests that payment for the Put Units be
delivered to:
- --------------------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Social Security or other taxpayer identifying number)
Dated:_____________________, 19____
Name of Registered Owner:
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- --------------------------------------------------------------------------------
Address:
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Social Security or other taxpayer identifying number)
Signature:
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Annex A - 1
<PAGE> 67
IMPORTANT: ALL SIGNATURES MUST BE GUARANTEED IN THE SPACE
PROVIDED BELOW BY A FIRM THAT IS A MEMBER OF A
NATIONAL SECURITIES EXCHANGE OR OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A
COMMERCIAL BANK OR TRUST COMPANY LOCATED IN THE
UNITED STATES OF AMERICA.
SIGNATURE GUARANTEE:
Name:
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(please print)
By:
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Title:
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Annex A - 2
