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AGREEMENT AND PLAN OF MERGER
among
GROVE PROPERTY TRUST
GROVE OPERATING, L.P.
and
ERP OPERATING LIMITED PARTNERSHIP
Dated as of July 17, 2000
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TABLE OF CONTENTS
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Article Page
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THE MERGER.....................................................................2
1.1 The Partnership Merger..............................................2
1.2 The Company Merger..................................................2
1.3 Closing.............................................................2
1.4 Effective Times.....................................................2
1.5 Effect of Company Merger on Operating Agreement of New LLC3.........3
1.6 Effect of Partnership Merger on Agreement of Limited
Partnership.......................................................3
1.7 Effect of Partnership Merger on Grove LP Units......................3
1.8 Effect of Company Merger on Shares..................................4
1.9 Receipt of Consideration............................................5
1.10 Transfer Books......................................................7
1.11 No Further Ownership Rights in Shares...............................7
1.12 Adjustment to Merger Consideration..................................8
REPRESENTATIONS AND WARRANTIES OF GROVE AND GROVE OP...........................8
2.1 Organization, Standing and Power of Grove...........................8
2.2 Grove Subsidiaries..................................................9
2.3 Capital Structure..................................................11
2.4 Other Interests and Sale Obligations...............................12
2.5 Authority; Noncontravention; Consents..............................12
2.6 SEC Documents; Financial Statements; Undisclosed Liabilities.......14
2.7 Absence of Certain Changes or Events...............................15
2.8 Litigation.........................................................15
2.9 Properties.........................................................16
2.10 Environmental Matters..............................................19
2.11 Consultants and Related Party Transactions.........................20
2.12 Employee Benefits..................................................21
2.13 Employee Matters...................................................23
2.14 Taxes..............................................................23
2.15 No Payments to Employees, Officers, Trustees or Directors..........24
2.16 Brokers; Schedule of Fees and Expenses.............................25
2.17 Compliance with Laws...............................................25
2.18 Contracts; Debt Instruments........................................25
2.19 Opinion of Financial Advisor.......................................28
2.20 State Takeover Statutes............................................28
2.21 Registration Statement.............................................28
2.22 Development Properties.............................................28
2.23 Investment Company Act of 1940.....................................28
2.24 Trademarks, Patents and Copyrights.................................28
2.25 Insurance..........................................................29
2.26 Definition of Knowledge of Grove...................................29
2.27 Vote Required......................................................29
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2.28 Secured Credit Facility............................................29
2.29 Assumption of Secured Debt.........................................29
2.30 Certain Fees.......................................................29
REPRESENTATIONS AND WARRANTIES OF ERP.........................................30
3.1 Organization, Standing and Power of ERP............................30
3.2 Capital Structure of ERP...........................................30
3.3 Authority; Noncontravention; Consents..............................30
3.4 SEC Documents; Financial Statements; Undisclosed Liabilities.......31
3.5 Absence of Certain Changes or Events...............................32
3.6 Litigation.........................................................32
3.7 Properties.........................................................33
3.8 Environmental Matters..............................................33
3.9 Taxes..............................................................34
3.10 Brokers............................................................34
3.11 Compliance with Laws...............................................34
3.12 Contracts; Debt Instruments........................................35
3.13 State Takeover Statutes............................................35
3.14 Registration Statement.............................................35
3.15 Investment Company Act of 1940.....................................35
3.16 Definition of Knowledge of ERP.....................................35
3.17 Vote Required......................................................35
3.18 Employee Policies..................................................35
3.19 Financing..........................................................35
3.20 Validity of Securities Issued......................................36
COVENANTS.....................................................................36
4.1 Acquisition Proposals..............................................36
4.2 Conduct of Grove's Business Pending Merger.........................37
4.3 Conduct of ERP's Business Pending Merger...........................40
4.4 Other Actions......................................................41
4.5 Compliance with the Securities Act.................................41
ADDITIONAL COVENANTS..........................................................42
5.1 Preparation of the Registration Statement and the Proxy
Statement; Grove Shareholders Meeting and Grove OP Partners
Meeting..........................................................42
5.2 Access to Information: Confidentiality.............................43
5.3 Best Efforts; Notification.........................................44
5.4 Costs of Transaction..............................................44
5.5 Public Announcements...............................................44
5.6 Taxes..............................................................45
5.7 Benefit Plans and Other Employee Arrangements......................45
5.8 Indemnification....................................................46
5.9 Declaration of Dividends and Distributions.........................47
5.10 Notices............................................................48
5.11 Resignations.......................................................48
5.12 Third Party Management Agreements and Outside
Management Agreements............................................48
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5.13 Modification of Rosenthal Transaction..............................49
5.14 Retail Sale Agreement..............................................49
5.15. Election to Undertake Deficit Restoration Obligation
Under ERP Agreement..............................................49
5.16 Transfer of Grove LP Units.........................................49
5.17 Transfer of Grove Corp. Shares.....................................49
CONDITIONS....................................................................50
6.1 Conditions to Each Party's Obligation to Effect the Mergers........50
6.2 Conditions to Obligations of ERP...................................50
6.3 Conditions to Obligations of Grove.................................52
TERMINATION, AMENDMENT AND WAIVER.............................................53
7.1 Termination........................................................53
7.2 Certain Fees and Expenses..........................................54
7.3 Effect of Termination..............................................56
7.4 Amendment..........................................................56
7.5 Extension; Waiver..................................................56
GENERAL PROVISIONS............................................................57
8.1 Nonsurvival of Representations and Warranties......................57
8.2 Notices............................................................57
8.3 Interpretation.....................................................58
8.4 Counterparts.......................................................58
8.5 Entire Agreement; No Third-Party Beneficiaries.....................58
8.6 Governing Law......................................................58
8.7 Assignment.........................................................58
8.8 Enforcement........................................................58
8.9 Severability.......................................................59
8.10 Non-Recourse to Trustees and Officers..............................59
EXHIBITS
Exhibit "A" - Agreement of Merger
Exhibit "B" - Company Articles of Merger
Exhibit "C" - Opinion of Maryland Counsel
Exhibit "D" - Opinion of Cummings & Lockwood
Exhibit "E" - Opinion of Piper Marbury Rudnick & Wolfe
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of July
17, 2000 by and among ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited
partnership ("ERP"), GROVE PROPERTY TRUST, a Maryland real estate investment
trust ("Grove"), and GROVE OPERATING, L.P., a Delaware limited partnership
("Grove OP").
R E C I T A L S:
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WHEREAS, the General Partner of ERP and the Board of Trust Managers of
Grove (the "Grove Board"), the sole general partner of Grove OP, have each
approved the acquisition of the business and assets of Grove by ERP, with such
acquisition being effected by the transactions described herein, including,
without limitation, the Partnership Merger and Company Merger (each as defined
below and collectively referred to as the "Mergers");
WHEREAS, ERP shall form a single member Delaware limited liability company
("New LLC"), which in turn shall form a second single member Delaware limited
liability company ("New LLC2");
WHEREAS, the General Partner of ERP and the Grove Board have approved (i)
the merger of New LLC2 with and into Grove OP (the "Partnership Merger") and
(ii) immediately following the Partnership Merger, the merger (the "Company
Merger") of Grove with and into a single member Maryland limited liability
company to be formed by ERP ("New LLC3"), all upon the terms and subject to the
conditions set forth herein;
WHEREAS, Grove has received a fairness opinion relating to the Mergers, as
more fully described herein;
WHEREAS, the Grove Board has: (i) determined that the consideration to be
paid for each outstanding unit of limited partnership interest in Grove OP (each
an "Grove LP Unit") in the Partnership Merger is fair to and in the best
interests of the limited partners of Grove OP (the "Limited Partners"); (ii)
determined that the consideration to be paid for each issued and outstanding
share of beneficial interest, $.01 par value per share, of Grove (each a "Share"
or "Grove Common Share") in the Company Merger is fair to and in the best
interests of the shareholders of Grove; and (iii) approved this Agreement and
the transactions contemplated hereby, declared their advisability and resolved
to recommend approval and adoption of this Agreement by the shareholders of
Grove and Limited Partners; and
WHEREAS, ERP, Grove and Grove OP desire to make certain representations,
warranties and agreements in connection with the Mergers.
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
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ARTICLE 1
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THE MERGERS
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1.1 THE PARTNERSHIP MERGER. Prior to the Partnership Merger Effective Time
(as defined below), and subject to and upon the terms and conditions of this
Agreement, an Agreement of Merger in substantially the form attached hereto as
Exhibit "A" (the "Agreement of Merger") shall be executed and delivered by Grove
OP and New LLC2. Pursuant to the terms of the Agreement of Merger, upon the
terms and subject to the conditions of this Agreement, and in accordance with
Section 18-209 of the Delaware Limited Liability Company Act (the "LLC Act") and
Section 17-211 of the Delaware Revised Uniform Limited Partnership Act (the
"DRULPA"), New LLC2 shall be merged with and into Grove OP, with Grove OP as the
surviving entity (the "Surviving Partnership").
1.2 THE COMPANY MERGER. Upon the terms and subject to the conditions of
this Agreement, immediately following the effectiveness of the Partnership
Merger, and in accordance with Title 8 of the Corporations and Associations
Article of the Annotated Code of Maryland, as amended ("Title 8") and Title 4A
of the Corporations and Associations Article of the Annotated Code of Maryland,
as amended ("Title 4A"), Grove shall be merged with and into New LLC3, with New
LLC3 as the surviving entity (the "Surviving Company").
1.3 CLOSING. The closing of the Mergers ("Closing") will take place at 8:00
a.m. local time on the date to be specified by the parties, which (subject to
satisfaction or waiver of the other conditions set forth in Article 6) shall be
no later than the third business day after satisfaction or waiver of the
conditions set forth in Section 6.1(a) (the "Closing Date"), at the offices of
Piper Marbury Rudnick & Wolfe, 203 North LaSalle Street, Chicago, Illinois
60601, unless another date or place is agreed to in writing by the parties
hereto.
1.4 EFFECTIVE TIMES. As soon as practicable following the satisfaction or
waiver of the conditions set forth in Article 6 by the party entitled to the
benefit of the same:
(a) Grove OP shall execute and file a Certificate of Merger in
substantially the form attached to the Agreement of Merger (the
"Partnership Certificate of Merger"), executed in accordance with
the LLC Act and DRULPA, with the Office of the Secretary of State
of Delaware (the "Delaware Secretary"), and shall make all other
filings and recordings required under the LLC Act and DRULPA. The
Partnership Merger shall become effective (the "Partnership
Merger Effective Time") upon filing of the Partnership
Certificate of Merger. Unless otherwise agreed, the parties shall
cause the Partnership Merger Effective Time to occur on the
Closing Date.
(b) Immediately following the Partnership Merger Effective Time, New
LLC3 and Grove shall execute and file Articles of Merger in
substantially the form attached hereto as Exhibit "B" (the
"Company Articles of Merger"), executed in accordance with Title
8 and Title 4A, with the State Department of Assessments and
Taxation of Maryland (the "Maryland Department"), and shall make
all other filings and recordings required under Title 8 and Title
4A. The Company Merger
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shall become effective (the "Company Merger Effective Time") at
such time as shall be specified in the Company Articles of
Merger. Unless otherwise agreed, the parties shall cause the
Company Merger Effective Time to occur on the Closing Date.
1.5 EFFECT OF COMPANY MERGER ON OPERATING AGREEMENT OF NEW LLC3. The
Operating Agreement of New LLC3 shall continue in full force and effect after
the Company Merger Effective Time until amended in accordance with Delaware law.
1.6 EFFECT OF PARTNERSHIP MERGER ON AGREEMENT OF LIMITED PARTNERSHIP. The
Agreement of Limited Partnership of Grove OP, as amended (the "Grove OP
Agreement"), shall continue in full force and effect after the Partnership
Merger Effective Time until further amended in accordance with applicable
Delaware law.
1.7 EFFECT OF PARTNERSHIP MERGER ON GROVE LP UNITS. At the Partnership
Merger Effective Time, by virtue of the Partnership Merger and without any
action on the part of ERP, Grove, Grove OP or the holders of any of the
following securities:
(a) CONVERSION OF GROVE LP UNITS. Each Grove LP Unit issued and
outstanding immediately prior to the Partnership Merger Effective Time
(excluding any Grove LP Units to be canceled pursuant to Section 1.7(b)) shall
be canceled and converted into the right to receive, subject to the terms and
condition of this Agreement, at the election of the Limited Partner holding such
Grove LP Unit made pursuant to Section 1.9(c), either (i) $17.00 per Grove LP
Unit (the "Partnership Cash Merger Consideration") payable to the holder thereof
in cash, without interest thereon, less any required withholding of taxes, or
(ii) 0.3696 units ("ERP Units") of limited partnership interest in ERP (the
"Partnership Unit Merger Consideration" and, together with the Partnership Cash
Merger Consideration, the "Partnership Merger Consideration"). If, from the date
hereof until the Partnership Merger Effective Time, ERP (i) pays a dividend or
makes a distribution on ERP Units in ERP Units, (ii) subdivides the outstanding
ERP Units into a greater number of ERP Units or (iii) combines the outstanding
ERP Units into a smaller number of ERP Units, the Partnership Unit Merger
Consideration shall be adjusted to reflect the proportionate change in the
number of outstanding ERP Units. It is the intention of the parties hereto that
the payment of the Partnership Cash Merger Consideration shall be treated as a
purchase by ERP of the Grove LP Units of each Limited Partner who elects to
receive the Partnership Cash Merger Consideration pursuant to Proposed Treasury
Regulation ss.1.708-1(c)(3).
(b) CANCELLATION. Each Grove LP Unit held by Grove OP and each Grove
LP Unit owned by ERP or any direct or indirect wholly-owned subsidiary of Grove
or ERP immediately prior to the Partnership Merger Effective Time shall, by
virtue of the Partnership Merger and without any action on the part of the
holder thereof, cease to be outstanding, be canceled and retired without payment
of any consideration therefor and cease to exist.
(c) CONVERSION OF INTERESTS IN NEW LLC2. At the Partnership Merger
Effective Time, each interest in New LLC2 shall be automatically converted into
one Grove LP Unit.
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(d) CONVERSION OF GENERAL PARTNER INTEREST. Each unit of general
partnership interest in Grove OP shall be unaffected by the Partnership Merger.
(e) FUTURE CONTINGENT VALUE DISTRIBUTIONS. The right of any person to
receive Grove LP Units at any time in the future with respect to Contingent
Earnout Rights, as defined and contemplated in that certain Agreement, dated as
of April 22, 1998, as amended by that certain Amendment to Conveyance Agreement,
dated as of August 31, 1998 (the "McNeil Conveyance Agreement"), involving the
acquisition by Grove Corporation of certain properties owned by 22 limited
partnerships affiliated with Alexander H. McNeil, shall convert into the right
to receive that number of ERP Units calculated in accordance with and subject to
all of the other terms and conditions contemplated in the McNeil Conveyance
Agreement; provided, however, that any reference in such agreements to Grove
Shares shall be deemed to refer to common shares ("EQR Common") of Equity
Residential Properties Trust, a Maryland real estate investment trust ("EQR"),
as traded on the New York Stock Exchange, Inc. (the "NYSE").
1.8 EFFECT OF COMPANY MERGER ON SHARES. At the Company Merger Effective
Time, by virtue of the Company Merger and without any action on the part of ERP,
Grove, Grove OP or the holders of any of the following securities:
(a) CONVERSION OF SHARES. Each Share issued and outstanding immediately
prior to the Company Merger Effective Time (excluding any Shares to be
canceled pursuant to Section 1.8(b)) shall be cancelled and converted
into the right to receive, subject to the terms and conditions of this
Agreement, $17.00 per Share (the "Company Merger Consideration")
payable to the holder thereof in cash, without interest thereon, upon
the surrender of the certificate formerly representing such Share,
less any required withholding of taxes. The Company Merger
Consideration shall be payable in cash without interest thereon in
accordance with Section 1.9 as soon as practicable after the Deposit
Date, as defined herein.
(B) CANCELLATION. Each Share held in the treasury of Grove and each Share
owned by ERP or any direct or indirect wholly-owned subsidiary of
Grove, Grove OP or ERP immediately prior to the Company Merger
Effective Time shall, by virtue of the Company Merger and without any
action on the part of the holder thereof, cease to be outstanding, be
canceled and retired without payment of any consideration therefor and
cease to exist.
(C) STOCK OPTIONS. Except as specifically set forth in Section 5.7(c), at
the Company Merger Effective Time, each outstanding option (an "Grove
Option") to purchase Shares granted under or pursuant to any employee
stock option plan or agreement entered into by Grove with any employee
of Grove or any subsidiary thereof or any other person listed on
Schedule 2.3 of the Grove Disclosure Letter (as defined herein) or
otherwise existing (the "Grove Stock Option Plans"), shall be
cancelled and the holder thereof shall be entitled to receive in cash
(the "Total Option Amount") an amount, if any, (less applicable
withholding taxes) equal to the product of: (i) the number of Shares
previously subject to such Grove Option, whether vested or unvested,
multiplied by; (ii) the excess, if any, of the amount of
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the Company Merger Consideration over the exercise price per Share
previously subject to such Grove Option, payable not later than the
Trading Day immediately following the Company Merger Effective Time.
1.9 RECEIPT OF CONSIDERATION.
(a) PAYMENT AGENT. Prior to the Partnership Merger Effective Time, a
bank or trust company reasonably acceptable to Grove shall be designated by ERP
to act as agent in connection with the Mergers to receive the funds to which
holders of Shares and Grove LP Units shall become entitled pursuant to Sections
1.7 and 1.8 (the "Paying Agent").
(b) PROCEDURES FOR RECEIPT OF COMPANY MERGER CONSIDERATION. Promptly
after the Company Merger Effective Time, the Surviving Company shall cause to be
mailed to each holder of record, as of the Company Merger Effective Time, of a
certificate or certificates (the "Certificates") that, prior to the Company
Merger Effective Time, represented Shares, a form of letter of transmittal and
instructions for use in effecting the surrender of the Certificates for payment
of the Company Merger Consideration therefor. Upon the surrender of each such
Certificate formerly representing Shares, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the Paying Agent shall pay the holder of record of such
Certificate the Company Merger Consideration multiplied by the number of Shares
formerly represented by such Certificate, in exchange therefor, and such
Certificate shall forthwith be canceled. Until so surrendered and exchanged,
each such Certificate (other than Shares held by ERP or Grove, or any direct or
indirect subsidiary thereof) shall represent solely the right to receive the
Company Merger Consideration. No interest shall be paid or accrue on the Company
Merger Consideration.
(c) PROCEDURES FOR RECEIPT OF PARTNERSHIP MERGER CONSIDERATION.
(i) All elections by Limited Partners to receive the Partnership Cash
Merger Consideration or Partnership Unit Merger Consideration shall be made on a
form furnished by ERP for that purpose (a "Form of Election") and reasonably
satisfactory to Grove. Each Limited Partner may only make an election to receive
all Partnership Cash Merger Consideration or Partnership Unit Merger
Consideration in exchange for all of its Grove LP Units.
(ii) Together with the Prospectus (as defined herein), ERP or the
Paying Agent shall mail a Form of Election to record holders of Grove LP Units
as of the record date for the Grove OP Partners Meeting (as defined below) (the
"Record Date"). Elections shall be made by Limited Partners by delivering the
Form of Election to the Paying Agent, as indicated in the Form of Election. To
be effective, a Form of Election must be properly completed, signed and
submitted to the Paying Agent by 5:00 p.m. (New York City time) on the last
Trading Day (as defined below) prior to the date of the Grove OP Partners
Meeting or such other time and date as ERP and Grove may mutually agree (the
"Election Deadline"). ERP will have the discretion, which it may delegate in
whole or in part to the Paying Agent, to determine whether Forms of Election
have been properly completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. The good faith decision of ERP (or the
Paying Agent) in such matters shall be conclusive and binding. Neither ERP nor
the Paying Agent will be under any obligation to notify any person of any defect
in a Form of Election submitted to the
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Paying Agent. The Paying Agent shall also make all computations contemplated by
Section 1.7 and this Section 1.9(c) and all such computations shall be
conclusive and binding on the Limited Partners in the absence of manifest error.
Any Form of Election may be changed or revoked prior to the Election Deadline.
For purposes hereof, if a Limited Partner (i) does not submit a Form of Election
which is received by the Paying Agent prior to the Election Deadline (including
a Limited Partner who submits and then revokes his or her Form of Election and
does not resubmit a Form of Election which is timely received by the Paying
Agent) or (ii) submits a Form of Election which is defective in any manner such
that the Paying Agent cannot reasonably determine the election preference of the
Limited Partner submitting such Form of Election, then such Limited Partner
shall be deemed for all purposes of this Agreement to have validly elected to
receive the Partnership Cash Merger Consideration with respect to the Grove LP
Units held by such Limited Partner. Except as specifically provided in Section
5.13, any Persons (as defined herein) acquiring Grove LP Units after the Record
Date shall be entitled to receive only that form of Partnership Merger
Consideration previously validly elected by the transferor of such Grove LP
Units or, to the extent no such valid election was made by such transferor in
accordance with this Section 1.9, the Partnership Cash Merger Consideration.
(iii) Following the Partnership Merger Effective Time, a Limited
Partner shall be entitled to receive the amount of Partnership Cash Merger
Consideration or Partnership Unit Merger Consideration, as the case may be, as
calculated in accordance with Section 1.7. The Paying Agent shall promptly pay
to each Limited Partner any Partnership Cash Merger Consideration to which such
Limited Partner is entitled pursuant to this Section 1.9. No interest shall be
paid or accrue on the Partnership Cash Merger Consideration. With respect to any
Partnership Unit Merger Consideration to which such Limited Partner is entitled
pursuant to this Section 1.9, ERP shall promptly mail to such Limited Partner
the documentation necessary to reflect such Limited Partner's ownership of that
number of ERP Units calculated pursuant to this Section 1.9 including, without
limitation, a signature page to the Fifth Amended and Restated Agreement of
Limited Partnership of ERP dated as of August 1, 1998 (the "ERP Agreement") for
execution by such Limited Partner, which execution shall be a condition to such
Limited Partner's receipt of ERP Units. Notwithstanding any other provision
hereof, no fractional ERP Units shall be issued in connection with the
Partnership Merger. Instead, each Limited Partner having a fractional interest
arising upon the conversion of such Limited Partner's Grove LP Units for
Partnership Unit Merger Consideration shall be paid an amount in cash equal to
the Closing Price (as hereinafter defined) multiplied by the fraction of an ERP
Unit to which such Limited Partner would otherwise be entitled. For purposes of
this Section 1.9, "Closing Price" shall mean the unweighted average closing
price of a share of EQR Common (as reported in the NYSE Composite Tape) for the
five (5) Trading Days immediately preceding the Partnership Merger Effective
Time, and "Trading Day" shall mean any day on which EQR Common is traded on the
NYSE and reported on its Composite Tape.
(d) CONSIDERATION. Within three (3) Trading Days after the Partnership
Merger Effective Time (the "Deposit Date"), ERP or the Surviving Company shall
deposit, or cause to be deposited, in trust with the Paying Agent, (i) the
amount of Company Merger Consideration to which holders of Shares shall be
entitled at the Company Merger Effective Time pursuant to Section 1.8(a) hereof
and (ii) the amount of Partnership Cash Merger Consideration to which holders of
Grove LP Units shall be entitled at the Partnership Merger Effective Time
pursuant to Section 1.7(a) hereof (the "Total Cash Consideration").
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(e) INVESTMENT OF TOTAL CASH CONSIDERATION. The Total Cash
Consideration shall be invested by the Paying Agent, as directed by ERP,
provided such investments shall be limited to direct obligations of the United
States of America, obligations for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest, commercial paper rated of the highest quality by Moody's Investors
Service, Inc. and Standard & Poor's Corporation, or certificates of deposit
issued by a commercial bank having at least $10,000,000,000 in assets; PROVIDED,
HOWEVER, that the Total Cash Consideration shall be readily available to satisfy
all obligations to pay the Company Merger Consideration and the Partnership Cash
Merger Consideration in accordance with the terms of this Agreement.
(f) TERMINATION OF DUTIES. Promptly following the date which is one
(1) year after the Company Merger Effective Time, ERP will cause the Paying
Agent to deliver to the Surviving Company all cash and documents in its
possession relating to the funds deposited on the Deposit Date described in this
Agreement, and the Paying Agent's duties relating thereto shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to ERP and (subject to applicable abandoned property,
escheat and similar laws) receive in exchange therefor the Company Merger
Consideration, as calculated in accordance with this Section 1.9.
(g) NO LIABILITY. None of ERP, Grove or Grove OP shall be liable to
any holder of Shares or Grove LP Units for any Company Merger Consideration or
Partnership Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. ERP or the Paying Agent shall be entitled to
deduct and withhold from the Company Merger Consideration or Partnership Merger
Consideration otherwise payable pursuant to or in connection with this
Agreement, or any other payment or debt cancellation made pursuant to this
Agreement, to any holder of Shares or Grove LP Units, such amounts as ERP or the
Paying Agent is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by ERP or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares or Grove LP Units, as the case may be, in respect of which such
deduction and withholding was made by ERP or the Paying Agent.
1.10 TRANSFER BOOKS. At the Company Merger Effective Time, the stock
transfer books of Grove shall be closed, and there shall be no further
registration of transfers of Shares thereafter on the records of Grove.
1.11 NO FURTHER OWNERSHIP RIGHTS IN SHARES.
(a) The Company Merger Consideration delivered upon the surrender for
exchange of Shares in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Shares, and
there shall be no further registration of transfers on the records of the
Surviving Company of Shares which were outstanding immediately prior to the
Company Merger Effective Time. If, after the Company Merger
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Effective Time, Certificates are presented to the Surviving Company for any
reason, they shall be canceled and exchanged as provided in this Article 1.
(b) The Partnership Merger Consideration delivered upon the conversion
of Grove LP Units in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Grove LP Units
and there shall be no further registration of transfers on the records of the
Surviving Partnership of Grove LP Units which were outstanding immediately prior
to the Partnership Merger Effective Time.
1.12 ADJUSTMENT TO MERGER CONSIDERATION. Notwithstanding Section 1.7 or
Section 1.8, the Partnership Cash Merger Consideration, Partnership Unit Merger
Consideration and Company Merger Consideration shall be subject to reduction as
a result of any Closing Agreement Costs (as defined in Section 6.2) as follows:
(a) The Partnership Cash Merger Consideration and the Company Merger
Consideration shall each be reduced by an amount equal to the Closing Agreement
Costs, if any, up to an aggregate of $3.5 million, divided by the aggregate
number of Grove LP Units and Grove Shares cancelled and converted in the Mergers
in exchange for the Partnership Merger Consideration or Company Merger
Consideration, as the case may be (the "Reduction Amount"); provided, however,
that the Partnership Cash Merger Consideration and the Company Merger
Consideration, when adjusted pursuant to this Section 1.12(a), shall be adjusted
to the nearest full cent, with any fractional cent equal to .5 being rounded to
the next highest full cent.
(b) If the Partnership Cash Merger Consideration shall be adjusted
pursuant to Section 1.12(a), the Partnership Unit Merger Consideration shall be
equal that number of ERP Units determined by dividing (i) the Partnership Cash
Merger Consideration, as adjusted pursuant to (a) above, by (ii) $46.00.
ARTICLE 2
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REPRESENTATIONS AND WARRANTIES OF GROVE AND GROVE OP
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Except as set forth in the letter of even date herewith signed by the Chief
Financial Officer of Grove in his capacity as such and delivered to ERP prior to
the execution hereof (the "Grove Disclosure Letter"), Grove and Grove OP
represent and warrant to ERP as follows:
2.1 ORGANIZATION, STANDING AND POWER OF GROVE AND GROVE OP.
(a) Grove is a real estate investment trust duly organized and validly
existing under the laws of Maryland and has the requisite trust power and
authority to carry on its business as now being conducted. Grove is duly
qualified or licensed to do business as a foreign trust and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a material adverse effect on
the business, properties, assets, financial condition or results of operations
of Grove and the Grove Subsidiaries (as defined below) taken as a whole (a
"Grove Material Adverse Effect"). Schedule 2.1 to the Grove Disclosure Letter
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sets forth each jurisdiction in which Grove is qualified or licensed to do
business, as well as all assumed names under which Grove conducts business in
such jurisdictions. Grove has previously delivered to ERP complete and correct
copies of its Third Amended and Restated Declaration of Trust (the "Grove
Declaration") and Bylaws and the Agreement of Limited Partnership of Grove OP
(the "Grove OP Agreement"), in each case, as amended or supplemented to the date
of this Agreement.
(b) Grove OP is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware, and has the
requisite partnership power and authority to carry on its business as now being
conducted. Grove OP is duly qualified or licensed to do business as a foreign
limited partnership and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, would
not have a Grove Material Adverse Effect. Schedule 2.1 to the Grove Disclosure
Letter sets forth each jurisdiction in which Grove OP is qualified or licensed
to do business, as well as all assumed names under which Grove OP conducts
business in such jurisdictions.
2.2 GROVE SUBSIDIARIES. Except as otherwise provided in the Grove
Disclosure Letter:
(a) Schedule 2.2 to the Grove Disclosure Letter sets forth:
(i) each Subsidiary of Grove;
(ii) the legal form of each Grove Subsidiary, including the state or
country of formation;
(iii) the identity and ownership interest of each owner of such Grove
Subsidiary, including but not limited to the amount, class or series and terms
of securities of such Grove Subsidiary owned by such owner;
(iv) each apartment community and/or other real estate properties
owned or under contract to be purchased by each Grove Subsidiary, and separately
setting forth each apartment community currently under development, if any;
(v) each jurisdiction in which each Grove Subsidiary is qualified or
licensed to do business; and
(vi) each assumed name under which each Grove Subsidiary conducts
business in any jurisdiction.
As used in this Agreement, "Subsidiary" of any Person means any corporation,
partnership, limited liability company, joint venture or other legal entity of
which such Person (either directly or through or together with another
Subsidiary of such Person) owns any of the capital stock or other equity
interests of such corporation, partnership, limited liability company, joint
venture or other legal entity. As used herein, "Person" means an individual,
corporation, partnership, limited liability company, joint venture, association,
trust, unincorporated organization or any
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other legal entity. Without limiting the foregoing, for all purposes of this
Agreement, Grove OP shall be considered a Subsidiary of Grove.
(b) All the outstanding shares of capital stock of each Grove
Subsidiary that is a corporation have been validly issued and are (A) fully paid
and nonassessable, (B) owned by Grove or by another Grove Subsidiary, and (C)
owned free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens"), and
all equity interests in each Grove Subsidiary that is a partnership, joint
venture, limited liability company or trust which are owned by Grove, by another
Grove Subsidiary or by Grove and another Grove Subsidiary are owned free and
clear of all Liens. Each Grove Subsidiary that is a corporation is duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted, and each Grove Subsidiary that is a
partnership, limited liability company or trust is duly organized and validly
existing under the laws of its jurisdiction of organization and has the
requisite power and authority to carry on its business as now being conducted.
Each Grove Subsidiary is duly qualified or licensed to do business and, with
respect to each Grove Subsidiary that is a corporation, is in good standing in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a Grove Material Adverse
Effect. True and correct copies of the articles or certificate of incorporation,
articles of organization, bylaws, partnership agreements, joint venture and
operating agreements or similar organizational documents of each Grove
Subsidiary, as amended to the date of this Agreement, have been previously
delivered to ERP.
(c) Grove Corporation, a Delaware corporation ("Grove Corp."), (i) has
no material assets or liabilities, (ii) carries on no material operations and
(iii) is, and has been since its formation, wholly owned by certain executive
officers of Grove. Schedule 2.2 to the Grove Disclosure Letter sets forth each
Affiliate (as defined herein) of Grove or any Grove Subsidiary (excluding
individuals, Grove Corporation and Grove Subsidiaries), the legal form and
ownership structure of such Affiliate. As used in this Agreement, the term
"Affiliate" shall have the same meaning as such term is defined in Rule 405
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
(d) The process by which Grove merged, converted or otherwise
restructured certain Grove Subsidiaries in October 1999 and December 1999 which,
prior to such dates, were not wholly-owned (directly or indirectly) by Grove,
into single member limited liability companies wholly-owned (directly or
indirectly) by Grove or Grove OP (the "Consolidation") conformed in all respects
with all applicable laws and regulations. Prior to the date hereof, Grove has
delivered to ERP true and correct copies of all documents pertaining to the
Consolidation.
(e) Schedule 2.2 to the Grove Disclosure Letter sets forth all of the
assets and liabilities as of June 30, 2000 of the Grove Subsidiaries subject to
the Retail Sale Agreement (as defined below).
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2.3 CAPITAL STRUCTURE.
(a) As of the date hereof, the authorized shares of beneficial
interest of Grove consist of (i) 34,000,000 Grove Common Shares, of which
8,301,604 were issued and outstanding (including any Grove Common Shares issued
pursuant to Restricted Share Grants (as defined below) but excluding any Grove
Common Shares owned by Grove OP); and (ii) 1,000,000 Preferred Shares, $0.01 par
value per share (the "Grove Preferred Shares", and, collectively with the Grove
Common Shares, the "Grove Shares"), none of which was issued or outstanding. As
of the date hereof, (i) 111,032 Grove Common Shares were reserved for issuance
but not issued under Grove's 1994 Share Option Plan (the "1994 Plan"); (ii)
1,308,860 Grove Common Shares were reserved for issuance but not issued under
Grove's 1996 Share Incentive Plan (the "1996 Plan"); and (iii) 3,896,910 Grove
Common shares have been reserved for issuance upon the exchange of Grove LP
Units. On the date hereof, except as set forth in this Section 2.3 or Schedule
2.3 of the Grove Disclosure Letter, no Grove Shares or other voting securities
of Grove were issued, reserved for issuance or outstanding.
(b) Set forth in Schedule 2.3 of the Grove Disclosure Letter is a true
and complete list as of the date hereof of the following: (i) each Grove Option
granted and outstanding under the 1994 Plan, 1996 Plan or otherwise and a total
thereof; and (ii) each grant of Grove Shares to employees or trust managers of
Grove which are subject to any risk of forfeiture, and the plan pursuant to
which such grants were made, if any, ("Restricted Share Grants") and a total
thereof. The Restricted Share Grants are included in the number of outstanding
Grove Shares set forth in Section 2.3(a). Grove has no obligation to issue any
Grove Shares as a result of the transactions contemplated hereby ("Change in
Control Share Grants"). For each Grove Option held by the executive officers of
Grove, Schedule 2.3 of the Grove Disclosure Letter sets forth as of the date
hereof, the name of the grantee, the date of the grant, status of the option as
qualified or nonqualified under Section 422 of the Code, the number of Grove
Shares subject to such option, the number of shares subject to options that are
currently exercisable, the exercise price per share, those options granting
reload options, and the number of such shares subject to share appreciation
rights. For each Grove Option held by employees of Grove or any of the Grove
Subsidiaries who are not executive officers of Grove, Schedule 2.3 to the Grove
Disclosure Letter sets forth as of the date hereof the name of the grantee, the
date of the grant, the number of Grove Shares subject to such option, the
exercise price per share and the vesting schedule. For each Restricted Share
Grant, Schedule 2.3 of the Grove Disclosure Letter sets forth as of the date
hereof the name of the grantee, the date of the grant, the number of Grove
Shares granted and the vesting schedule. On the date of this Agreement, except
as set forth in Section 2.3(a) or Schedule 2.3 of the Grove Disclosure Letter,
no Grove Shares or other voting securities of Grove were issued, reserved for
issuance, or outstanding.
(c) All outstanding Grove Shares are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of Grove, or assets of any other
entities, exchangeable into Grove Shares having the right to vote on any matters
on which shareholders of Grove may vote.
(d) As of the date hereof, 12,198,514 Partnership Units (as defined in
the Grove OP Agreement) of Grove OP ("Grove OP Units") are duly and validly
issued, of which 8,301,604 are held by Grove and 3,896,910 are held by Limited
Partners. Schedule 2.3(d) to the
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Grove Disclosure Letter sets forth the name of each Limited Partner and the
number of Grove LP Units owned by each such Limited Partner in each case as of
the date of this Agreement. The Grove OP Units are subject to no restrictions
except as set forth in the Grove OP Agreement or in Schedule 2.3 to the Grove
Disclosure Letter. Except as provided in the Grove OP Agreement or in Schedule
2.3 to the Grove Disclosure Letter, Grove OP has not issued or granted or is a
party to any outstanding commitments of any kind relating to, or any presently
effective agreements or understandings with respect to, the issuance or sale of
interests in Grove OP, whether issued or unissued, or securities convertible or
exchangeable into interests in Grove OP or Grove, except as contemplated by this
Agreement.
(e) Except as set forth in this Section 2.3 or in Schedule 2.3 of the
Grove Disclosure Letter, as of the date of this Agreement there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Grove or any Grove
Subsidiary is a party or by which such entity is bound, obligating Grove or any
Grove Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock, voting securities or other ownership
interests of Grove or any Grove Subsidiary or obligating Grove or any Grove
Subsidiary to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
(f) Except as set forth in Schedule 2.3 of the Grove Disclosure
Letter, all dividends or distributions on Grove Shares and Grove LP Units which
have been authorized or declared prior to the date of this Agreement have been
paid in full.
2.4 OTHER INTERESTS AND SALE OBLIGATIONS. Except as set forth in Schedule
2.2 or 2.4 of the Grove Disclosure Letter, neither Grove nor any Grove
Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, limited liability company,
joint venture, business trust or entity (other than investments in short-term
investment securities) or has any right or obligation (whether current or
contingent) to acquire such an interest. With respect to such interests, except
as set forth in Schedule 2.2 or 2.4 to the Grove Disclosure Letter, Grove and
each such Grove Subsidiary owns such interests which are owned by it free and
clear of all liens, pledges, security interests, claims, options or other
encumbrances. Neither Grove nor any of the Grove Subsidiaries is in breach in
any material respect of any provision of any agreement, document or contract
governing its rights in or to the interests owned or held by it, all of which
agreements, documents and contracts are (a) set forth on the Grove Disclosure
Letter, (b) unmodified except as described therein and (c) in full force and
effect. To the Knowledge of Grove (as defined in Section 2.26), the other
parties to such agreements, documents or contracts are not in any material
breach of any of their respective obligations under such agreements, documents
or contracts.
2.5 AUTHORITY; NONCONTRAVENTION; CONSENTS.
(a) Grove and Grove OP each have the requisite power and authority to
enter into this Agreement and, subject (i) in Grove's case, to the affirmative
vote of holders of at least two-thirds of the outstanding Grove Common Shares
entitled to vote thereon to approve the Company Merger (the "Grove Shareholder
Approvals") and (ii) in Grove OP's case, to the affirmative vote of holders of
at least two-thirds of the outstanding Grove OP Units, including
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the Grove OP Units beneficially owned by Grove and the Grove Subsidiaries, to
approve this Agreement and the transactions contemplated hereby (the "Grove
Partner Approvals" and, together with the Grove Shareholder Approvals, the
"Grove Approvals"), to consummate the transactions contemplated by this
Agreement to which Grove or Grove OP is a party. The execution and delivery of
this Agreement by Grove and Grove OP and the consummation by Grove and Grove OP
of the transactions contemplated by this Agreement have been duly authorized by
all necessary action on the part of Grove or any Grove Subsidiary, subject to
the Grove Approvals. This Agreement has been duly executed and delivered by
Grove and Grove OP and constitutes a valid and binding obligation of Grove and
Grove OP, enforceable against Grove and Grove OP in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
(b) Except as set forth in Schedule 2.5 to the Grove Disclosure
Letter, the execution and delivery of this Agreement by Grove and Grove OP do
not, and, except as set forth in Schedule 2.5 or Schedule 2.30 to the Grove
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement by Grove and Grove OP and compliance by Grove and Grove OP with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation, forfeiture, obligation to sell or
convey (with or without a right to receive consideration therefor) or
acceleration of any material obligation or the loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets of
Grove or any Grove Subsidiary under, (i) the Declaration of Trust or the Bylaws
of Grove or the comparable charter or organizational documents or partnership or
similar agreement (as the case may be) of any Grove Subsidiary, in each case as
amended or supplemented to the date of this Agreement, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, reciprocal easement agreement,
employment or consulting agreement, lease or other agreement, instrument,
permit, concession, franchise or license to which Grove or any Grove Subsidiary
is a party or their respective properties or assets are bound or (iii) subject
to the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation (collectively, "Laws") applicable to Grove or any Grove Subsidiary,
or their respective properties or assets, other than, in the case of clause (ii)
or (iii), any such conflicts, violations, defaults, rights, loss or Liens that
individually or in the aggregate would not (x) result in fees or other payments
in excess of $250,000 or the conveyance or forfeiture of any asset (tangible or
intangible) or right having a book value in excess of $250,000 or (y) prevent
the consummation of the transactions contemplated by this Agreement. Except as
set forth on Schedule 2.5 to the Grove Disclosure Letter, no consent, approval,
order or authorization of, or registration, declaration or filing with, any
federal, state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with respect to Grove or
any Grove Subsidiary in connection with the execution and delivery of this
Agreement by Grove or the consummation by Grove of the transactions contemplated
by this Agreement, except for (i) the filing with the Securities and Exchange
Commission (the "SEC") of (x) a proxy statement relating to the Grove
Shareholder Approvals (as amended or supplemented from time to time, the "Proxy
Statement") and (y) such reports under Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (ii)
the acceptance for record of the Company Articles of Merger by the Maryland
Department, (iii) the acceptance for record of the
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Partnership Certificate of Merger by the Delaware Secretary and (iv) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings, including, without limitation, any consents, approvals, orders,
authorizations, registrations, declarations and filings required by the United
States Department of Housing and Urban Development ("HUD"), the Massachusetts
Housing Finance Authority ("MHFA") or similar agencies, (A) as are set forth in
Schedule 2.5 to the Grove Disclosure Letter, (B) as may be required under
federal, state or local environmental laws, or (C) which, if not obtained or
made, would not prevent or delay in any material respect the consummation of any
of the transactions contemplated by this Agreement or otherwise prevent Grove or
any Grove Subsidiary from performing its obligations under this Agreement in any
material respect or have, individually or in the aggregate, a Grove Material
Adverse Effect.
(c) For purposes of determining compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Hart-Scott Act"), Grove
confirms that the conduct of its business does not require a filing under the
Hart-Scott Act in connection with the Mergers.
2.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Except as indicated on Schedule 2.6 to the Grove Disclosure
Letter, Grove has filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1995 through the date hereof (the
"Grove SEC Documents") on a timely basis. Schedule 2.6 of the Grove Disclosure
Letter contains a complete list (without exhibits) of all Grove SEC Documents
filed by Grove with the SEC since January 1, 1995 and on or prior to the date of
this Agreement. All of the Grove SEC Documents (other than preliminary
material), as of their respective filing dates, or as of the date of the last
amendment thereof (if amended after filing), complied in all material respects
with all applicable requirements of the Securities Act, and the Exchange Act
and, in each case, the rules and regulations promulgated thereunder applicable
to such Grove SEC Documents. None of the Grove SEC Documents at the time of
filing contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except to the extent such statements have been modified or
superseded by later Grove SEC Documents filed on a non-confidential basis prior
to the date of this Agreement. The consolidated financial statements of Grove
included in the Grove SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
accounting principles generally accepted in the United States ("GAAP") (except,
in the case of unaudited statements, as permitted by the applicable rules and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and fairly
presented, in accordance with the applicable requirements of GAAP and the
applicable rules and regulations of the SEC, in all material respects, the
consolidated financial position of Grove and the consolidated Grove
Subsidiaries, taken as a whole, as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments, any other
adjustments described therein and the fact that certain information and notes
have been condensed or omitted in accordance with the Exchange Act). Schedule
2.6 of the Grove Disclosure Letter sets forth all Grove Subsidiaries which are
not consolidated for accounting purposes as of the date hereof. Except for
liabilities
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and obligations set forth in the Grove SEC Documents or in Schedule 2.6 to the
Grove Disclosure Letter, neither Grove nor any of the Grove Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of Grove or in the notes thereto and which, individually or in the aggregate,
would have a Grove Material Adverse Effect, after taking into account any assets
acquired or services provided in connection with the incurrence of such
liabilities or obligations.
(b) Grove has at all times been in material compliance with the rules
and regulations of the American Stock Exchange ("AMEX").
(c) At no time has Grove OP or any other Grove Subsidiary been subject
to the reporting requirements of Sections 13 or 15(d) of the Exchange Act.
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the Grove
SEC Documents or Schedule 2.7 to the Grove Disclosure Letter, since the date of
the most recent audited financial statements included in the Grove SEC Documents
(the "Grove Financial Statement Date") Grove and the Grove Subsidiaries have
conducted their business only in the ordinary course (taking into account prior
practices, including the acquisition of properties and issuance of securities)
and there has not been (a) any material adverse change in the business,
financial condition or results of operations of Grove and the Grove Subsidiaries
taken as a whole (a "Grove Material Adverse Change"), nor has there been any
occurrence or circumstance that with the passage of time would reasonably be
expected to result in a Grove Material Adverse Change, (b) except (i) prior to
the date hereof, regular quarterly dividends or distributions (in the case of
Grove and Grove OP) not in excess of $0.18 per Grove Common Share and Grove OP
Unit with customary record and payment dates and (ii) subsequent to the date
hereof, in accordance with Section 5.9, any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any Grove Shares and Grove OP Units, (c) any split,
combination or reclassification of any Grove Shares or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for, or giving the right to acquire by exchange or exercise,
shares of its beneficial interest or any issuance of an ownership interest in,
any Grove Subsidiary except as contemplated by this Agreement, (d) any damage,
destruction or loss, whether or not covered by insurance, that has or would have
a Grove Material Adverse Effect, (e) any change made prior to the date of this
Agreement in accounting methods, principles or practices by Grove or any Grove
Subsidiary materially affecting its assets, liabilities or business, except
insofar as may have been disclosed in Grove SEC Documents or required by a
change in GAAP or (f) any amendment of any employment, consulting, severance,
retention or any other agreement between Grove and any officer or trust manager
of Grove.
2.8 LITIGATION. Except as disclosed in the Grove SEC Documents, Schedule
2.8 or Schedule 2.9 to the Grove Disclosure Letter, and other than personal
injury and other routine tort litigation arising from the ordinary course of
operations of Grove and the Grove Subsidiaries (a) which are covered by adequate
insurance or (b) for which all material costs and liabilities arising therefrom
are reimbursable pursuant to common area maintenance or similar agreements,
there is no suit, action or proceeding pending or, to the Knowledge of Grove,
threatened against or affecting Grove or any Grove Subsidiary that, individually
or in the aggregate, could
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reasonably be expected to have a Grove Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Grove or any Grove Subsidiary having, or which
could reasonably be expected to have, any such effect. Notwithstanding the
foregoing, (y) Schedule 2.8 to the Grove Disclosure Letter sets forth each and
every claim involving a potential dollar cost to Grove in excess of $50,000 and
each and every equal employment opportunity claim and claim relating to sexual
harassment and/or discrimination pending or, to the Knowledge of Grove,
threatened as of the date hereof, in each case with a brief summary of such
claim or threatened claim and (z) no claim is pending or has been made since
January 1, 1995 under any trustees', directors' or officers' liability insurance
policy maintained at any time by Grove or any of the Grove Subsidiaries. There
is no suit, action or proceeding pending, or to the Knowledge of Grove,
threatened, against Grove or any Grove Subsidiary which challenges, states a
cause of action grounded in, or seeks damages in respect of, the transactions
contemplated by this Agreement.
2.9 PROPERTIES.
(a) Schedule 2.9 to the Grove Disclosure Letter identifies all real
property owned or leased by Grove and the Grove Subsidiaries and the Grove
Subsidiary or Subsidiaries which owns or leases such real property (the "Grove
Properties"). Except as provided in Schedule 2.9 of the Grove Disclosure Letter,
Grove or the Grove Subsidiary set forth on Schedule 2.2 of the Grove Disclosure
Letter owns fee simple title to their respective Grove Properties. All such
properties are owned in each case free and clear of liens, mortgages or deeds of
trust, claims against title, charges which are liens, security interests or
other encumbrances on title securing monetary obligations ("Encumbrances")
(except as provided below). Except as set forth in Schedule 2.2, Schedule 2.18
or Schedule 2.9 of the Grove Disclosure Letter, no other Person has any
ownership interest in any of the Grove Properties, and any such ownership
interest so scheduled does not materially detract from the value of, or
materially interfere with the present use of, any of the Grove Properties
subject thereto or affected thereby. The Grove Properties are not subject to any
rights of way, written agreements, laws, ordinances and regulations affecting
building use or occupancy, or reservations of an interest in title
(collectively, "Property Restrictions") or other Encumbrances, except for (i)
Encumbrances and Property Restrictions set forth in the Grove Disclosure Letter,
(ii) Property Restrictions imposed or promulgated by law or any governmental
body or authority with respect to real property, including zoning regulations,
provided they do not materially adversely affect the current use of any Grove
Property, (iii) Encumbrances and Property Restrictions disclosed on existing
title reports or existing surveys (in either case copies of which title reports
and surveys have been delivered or made available to ERP), which Encumbrances
and Property Restrictions disclosed in Schedule 2.9 to the Grove Disclosure
Schedule or contained in the previously delivered title reports, in any event,
do not materially interfere with the present use of, any of the Grove Properties
subject thereto or affected thereby (provided that Grove specifically represents
and warrants that any Encumbrances identified on any existing title report as
securing any Indebtedness, other than the Indebtedness identified on Schedule
2.18 of the Grove Disclosure Letter, has been released of record since the date
of the title report in question), (iv) real estate taxes and assessments which
constitute a Lien but are not yet due and payable and (v) mechanics', carriers',
workmen's, repairmen's liens, other Encumbrances and Property Restrictions
(other than Encumbrances and Property Restrictions contained in any agreement of
the type described in Section 2.9(j) and disclosed on Schedule 2.9 to the Grove
Disclosure Letter), if any, which, individually or in the
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aggregate, do not materially detract from the value of or materially interfere
with the present use of any of the Grove Properties subject thereto or affected
thereby, and do not otherwise materially impair business operations conducted by
Grove and the Grove Subsidiaries, taken as a whole. Except as disclosed in
Schedule 2.9 of the Grove Disclosure Letter, no portion of any of the Grove
Properties is located in a flood zone area for which flood insurance is
available under a federally sponsored insurance program except for that which,
individually or in the aggregate, do not materially detract from the value of or
materially interfere with the present use of such Grove Property subject thereto
or affected thereby. Schedule 2.9 lists each of the Grove Properties which is
under development as of the date of this Agreement.
(b) Except as provided in Schedule 2.9 to the Grove Disclosure Letter,
valid policies of title insurance (each a "Grove Title Insurance Policy") have
been issued insuring Grove's or the applicable Grove Subsidiary's fee simple
title to the Grove Properties, subject only to the matters disclosed above and
on the Grove Disclosure Letter, and such policies are, at the date hereof, in
full force and effect and no claim has been made against any such policy. A true
and correct copy of each Grove Title Insurance Policy has been previously
delivered to ERP.
(c) Except as provided in Schedule 2.9 to the Grove Disclosure Letter
or in Grove's capital budget attached to the Grove Disclosure Letter (the "Grove
Capital Budget"), Grove has no Knowledge (i) that, any certificate, permit or
license from any governmental authority having jurisdiction over any of the
Grove Properties or any agreement, easement or other right which is necessary to
permit the lawful use and operation of the buildings and improvements on any of
the Grove Properties or which is necessary to permit the lawful current use and
operation of all driveways, roads and other means of egress and ingress to and
from any of the Grove Properties has not been obtained and is not in full force
and effect, or of any pending threat of modification or cancellation of any of
same; (ii) of any written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement materially and
adversely affecting any of the Grove Properties issued by any governmental
authority; (iii) of any material structural defects relating to any Grove
Property which costs more than $75,000 to repair; (iv) of any Grove Property
whose building systems are not in working order in any material respect and
costs more than $75,000 to repair; (v) of any physical damage to any Grove
Property in excess of $75,000 for which there is no insurance in effect covering
the cost of the restoration; (vi) of any current renovation or uninsured
restoration underway to any Grove Property the cost of which exceeds $75,000; or
(vii) of items referred to in Section 2.9(c)(iii)-(vi) which aggregate for Grove
and the Grove Subsidiaries more than $1,000,000.
(d) Except as set forth in Schedule 2.9 to the Grove Disclosure
Letter, neither Grove nor any of the Grove Subsidiaries has received any written
notice to the effect that (i) any condemnation or rezoning proceedings are
pending or threatened with respect to any of the Grove Properties or (ii) any
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated in any material respect for any property by the continued
maintenance, operation or use of any buildings or other improvements on any of
the Grove Properties in accordance with current practice or by the continued
maintenance, operation or use of the parking areas.
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(e) Except as set forth in Schedule 2.9 to the Grove Disclosure
Letter, all of the Grove Properties are managed by Grove or a wholly-owned Grove
Subsidiary.
(f) The rent roll for the Grove Properties as of April 30, 2000 has
been previously delivered to ERP, and is complete and correct in all material
respects as of the date thereof (the "Rent Roll"). The Rent Roll lists each
lease with respect the Grove Properties, identifies the leased premises, names
all tenants, indicates square footage or other indication of space leased,
monthly rental, date to which paid, term of lease, date of occupancy and date of
expiration.
(g) Except as set forth in Schedule 2.9 to the Grove Disclosure
Letter, all work required to be performed, payments required to be made and
actions required to be taken prior to the date hereof pursuant to any agreement
entered into with a governmental body or authority in connection with a site
approval, zoning reclassification or other similar action relating to any Grove
Properties (e.g., local improvement district, road improvement district,
environmental mitigation) have been performed, paid or taken, as the case may
be, other than those where, individually or in the aggregate with any other
condition or omission resulting in a breach of the representations and
warranties set forth in this Section 2.9, the failure would not have a Grove
Material Adverse Effect, and Grove has no Knowledge of any material work,
payments or actions that are required after the date hereof pursuant to such
agreements, except as set forth in development or operating budgets for such
Grove Properties delivered to ERP prior to the date hereof.
(h) Grove and each of the Grove Subsidiaries have good and sufficient
title to all their personal and non-real properties and assets reflected in
their books and records as being owned by them (including those reflected in the
consolidated balance sheet of Grove as of December 31, 1999, except as since
sold or otherwise disposed of in the ordinary course of business), free and
clear of all liens and encumbrances, except such Encumbrances reflected on
Schedule 2.18 or Schedule 2.9 to the Grove Disclosure Letter or on the
consolidated balance sheet of Grove as of December 31, 1999, and the notes
thereto, and except for Liens for current taxes not yet due and payable, and
Liens or encumbrances which are normal to the business of Grove and the Grove
Subsidiaries and are not, in the aggregate, material in relation to the assets
of Grove on a consolidated basis and except also for such imperfections of
title, easement and encumbrances, if any, as do not materially interfere with
the present use of the properties subject thereto or affected thereby, or
otherwise materially impair the consolidated business operations of Grove.
(i) Except as set forth in Schedule 2.9 to the Grove Disclosure
Letter, no Grove Property is currently under development or subject to any
agreement with respect to development, and neither Grove nor any Grove
Subsidiary shall enter into any such agreements between the date hereof and the
Company Merger Effective Time without the prior written approval of ERP.
(j) Schedule 2.9 to the Grove Disclosure Letter sets forth each Grove
Property subject to regulation by HUD, MHFA or similar agency, as well as any
agreements entered into between Grove and any Grove Subsidiary and such agencies
(including, without limitation, any so-called 121A excise tax agreements). Those
certain closing binders delivered to ERP by Grove prior to the date hereof
contain true and correct copies of all such agreements. Grove and
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the Grove Subsidiaries have at times been in compliance with all applicable
rules and regulations of, and agreements with, HUD, MHFA or similar agencies.
2.10 ENVIRONMENTAL MATTERS. Grove has delivered to ERP a true and complete
copy of the environmental reports by third-party consulting firms listed on
Schedule 2.10 of the Grove Disclosure Letter (the "Grove Environmental
Reports"). To Grove's Knowledge, the Grove Environmental Reports constitute all
final environmental reports (including, without limitation, all final versions
of environmental investigations and testing or laboratory analysis made by or on
behalf of Grove or any of the Grove Subsidiaries) with respect to the Grove
Properties in the possession of Grove or any Grove Subsidiary. With respect to
each Grove Property, except for any condition that individually or in the
aggregate would not be reasonably expected to have a Grove Material Adverse
Effect, (a) no Hazardous Substances (as defined below) have been used, stored,
manufactured, treated, processed or transported to or from any such Grove
Property except as necessary to the conduct of business and in compliance with
Environmental Laws (as defined below); (b) no unlawful spills, releases,
discharges or disposals of Hazardous Substances have occurred or are presently
occurring on or from such Grove Property; (c) such Grove Property and the
business conducted thereon are not in violation of Environmental Laws; and (d)
Grove and the Grove Subsidiaries have not received and do not reasonably expect
to receive any notice of potential responsibility, letter of inquiry or notice
of alleged liability under any Environmental Law from any Person regarding such
Grove Property or the business conducted thereon, provided, however, that with
respect to any Grove Property covered by an Environmental Report, the
representation contained in this Section 2.10 covers only that period following
the date of such Environmental Report. For the purposes of this Section 2.10
only, "Grove Properties" shall be deemed to include all property formerly owned,
operated or leased by Grove or the Grove Subsidiaries; solely, however, as to
the period of time when such property was so owned, operated, or leased by Grove
or the Grove Subsidiaries.
"Environmental Laws" shall mean any applicable statute, code, enactment,
ordinance, rule, regulation, permit, consent, approval, authorization, judgment,
order, common law rule (including without limitation the common law respecting
nuisance and tortious liability), decree, injunction, or other requirement
having the force and effect of law, whether local, county, state, territorial or
national, at any time in force or effect relating to:
(a) emissions, discharges, spills, releases or threatened releases of
Hazardous Substances into ambient air, surface water,
groundwater, watercourses, publicly or privately owned treatment
works, drains, sewer systems, wetlands, septic systems or onto
land;
(b) the use, treatment, storage, disposal, handling, manufacturing,
transportation or shipment of Hazardous Substances;
(c) the regulation of storage tanks; or
(d) otherwise relating to pollution or the protection the
environment.
"Hazardous Substances" shall mean all substances, wastes, pollutants,
contaminants and materials regulated or defined or designated as hazardous,
extremely or imminently hazardous,
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dangerous, or toxic pursuant to any law, by any local, county, state,
territorial or federal governmental authority, or with respect to which such a
governmental authority otherwise requires environmental investigation,
monitoring, reporting, or remediation; including, but not limited to:
(a) all substances, wastes, pollutants, contaminants and materials
regulated, or defined or designated as hazardous, extremely or imminently
hazardous, dangerous or toxic, under the following federal statutes and their
state counterparts, as well as their statutes' implementing regulations: the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
section 9601 et. seq., the Resource Conservation and Recovery Act, 42 U.S.C.
section 6901 et. seq., the Toxic Substances Control Act, 15 U.S.C. section 2601
et. seq., the Clean Water Act, 33 U.S.C. section 1251 et. seq., the Clean Air
Act, 42 U.S.C. section 7401 et. seq., the Emergency Planning and Community Right
to Know Act, 42 U.S.C. section 11011 et. seq., the Safe Drinking Water Act, 33
U.S.C. section 300f et. seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. section 136 et. seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. section 1501 et. seq.;
(b) petroleum and petroleum products including crude oil and any
fractions thereof;
(c) natural gas, synthetic gas, and any mixtures thereof; and
(d) radon, radioactive substances, asbestos, urea formaldehyde,
polychlorinated biphenyls and electromagnetic field radiation.
2.11 CONSULTANTS AND RELATED PARTY TRANSACTIONS.
(a) Set forth in Schedule 2.11 to the Grove Disclosure Letter is a
list of all arrangements, agreements and contracts entered into by Grove or any
of the Grove Subsidiaries under which continuing obligations exist with (i) any
consultant (other than a consultant entitled to receive less than $15,000 from
Grove or any Grove Subsidiary, provided, however, that if the total amount owed
to consultants by Grove and the Grove Subsidiaries under arrangements,
agreements and contracts not set forth in Schedule 2.11 to the Grove Disclosure
Letter exceeds $100,000, all such agreements shall be set forth in Schedule
2.11), (ii) any person who is an officer, trust manager, trustee, director or
Affiliate of Grove or any of the Grove Subsidiaries, any member of the
"immediate family" (as such term is defined in Item 404 of Regulation S-K
promulgated under the Securities Act) of any of the foregoing or any entity of
which any of the foregoing is an Affiliate or (iii) any person who acquired
Grove Shares in a private placement within three years preceding the date
hereof, except those of a type available to Grove employees generally. To the
extent in writing, such documents, copies of all of which have previously been
delivered or made available to ERP, are listed in Schedule 2.11 to the Grove
Disclosure Letter.
(b) On or prior to the date hereof, (i) a special independent
committee of the Grove Board comprised of all the non-employee trust managers of
Grove (the "Special Committee") has approved that certain agreement by and among
Grove OP, Joseph LaBrosse, Damon Navarro, Brian Navarro and Edmund Navarro and
certain affiliates thereof relating to the transfer by Grove OP of its equity
interests in four retail properties and related assets and
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liabilities (the "Retail Sale Agreement") and the transactions contemplated
therein, (ii) the Retail Sale Agreement has been duly authorized and executed by
the parties thereto and is enforceable against the parties thereto in accordance
with its terms and (iii) a copy of the Retail Sale Agreement, as executed and
delivered and currently in effect, has been delivered to ERP. The Special
Committee has been duly created and authorized in accordance with Maryland law
and has received such advice, legal counsel and information deemed appropriate
by the Special Committee to carry out its duties in accordance with Maryland and
Delaware law. Schedule 2.11 to the Grove Disclosure Letter sets forth the
compensation, if any, payable to each Grove non-employee trust manager for his
service as a member of the Special Committee.
2.12 EMPLOYEE BENEFITS. As used herein, the term "Employee Plan" includes
any pension, retirement, savings, disability, medical, dental, health, life,
death benefit, group insurance, profit sharing, deferred compensation, stock
option, stock loan, bonus, incentive, vacation pay, tuition reimbursement,
severance pay, or other employee benefit plan, trust, agreement, contract,
arrangement, policy or commitment (including, without limitation, any pension
plan, as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended and the rules and regulations promulgated thereunder
("ERISA") ("Pension Plan"), and any welfare plan as defined in Section 3(1) of
ERISA ("Welfare Plan")), whether any of the foregoing is funded, insured or
self-funded, written or oral, (i) sponsored or maintained by Grove or Grove
Subsidiaries (each a "Controlled Group Member") and covering any Controlled
Group Member's active or former employees (or their beneficiaries), (ii) to
which any Controlled Group Member is a party or by which any Controlled Group
Member (or any of the rights, properties or assets thereof) is bound or (iii)
with respect to which any current Controlled Group Member may otherwise have any
material liability (whether or not such Controlled Group Member still maintains
such Employee Plan). Each Employee Plan is listed on Schedule 2.12. With respect
to the Employee Plans:
(a) Except as disclosed in the Grove SEC Documents or in Schedule
2.12 to the Grove Disclosure Letter, no Controlled Group Member
has any continuing liability under any Welfare Plan which
provides for continuing benefits or coverage for any participant
or any beneficiary of a participant after such participant's
termination of employment, except as may be required by section
4980B of the Code or Section 601 (ET SEQ.) of ERISA, or under any
applicable state law, and at the expense of the participant or
the beneficiary of the participant.
(b) Each Employee Plan complies in all material respects with the
applicable requirements of ERISA and any other applicable law
governing such Employee Plan, and each Employee Plan has at all
times been properly administered in all material respects in
accordance with all such requirements of law, and in accordance
with its terms and the terms of any applicable collective
bargaining agreement to the extent consistent with all such
requirements of law. Each Pension Plan which is intended to be
qualified is qualified under Section 401(a) of the Code, has
received a favorable determination letter from the Internal
Revenue Service (the "IRS") stating that such Plan meets the
requirements of Section 401(a) of the Code and that the trust
associated with such Plan is tax exempt under Section 501(a) of
the Code and no event has occurred which would
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jeopardize the qualified status of any such Plan or the tax
exempt status of any such trust under Section 401(a) and Section
501(a) of the Code, respectively. No lawsuits, claims (other than
routine claims for benefits) or complaints to, or by, any person
or governmental entity have been filed or are pending, Grove has
received no notice of such a lawsuit, claim or complaint and, to
the Knowledge of Grove, there is no fact or contemplated event
which would be expected to give rise to any such lawsuit, claim
(other than routine claims for benefits) or complaint with
respect to any Employee Plan. Without limiting the foregoing,
except as disclosed on Schedule 2.12 to the Grove Disclosure
Letter, the following are true with respect to each Employee
Plan:
(i) except for those not yet required to be filed or distributed, all
Controlled Group Members have filed or caused to be filed every material return,
report, statement, notice, declaration and other document required by any law or
governmental agency, federal, state and local (including, without limitation,
the IRS and the Department of Labor), with respect to each such Employee Plan,
each of such filings has been complete and accurate in all material respects and
no Controlled Group Member has incurred any material liability in connection
with such filings;
(ii) except for those not yet required to be filed or distributed, all
Controlled Group Members have delivered or caused to be delivered to every
participant, beneficiary and other party entitled to such material, all material
plan descriptions, returns, reports, schedules, notices, statements and similar
materials, including, without limitation, summary plan descriptions and summary
annual reports, as are required under Title I of ERISA, the Code, or both, and
no Controlled Group Member has incurred any material liability in connection
with such deliveries;
(iii) all contributions and payments with respect to Employee Plans
that are required to be made by a Controlled Group Member with respect to
periods ending on or before the Closing Date (including periods from the first
day of the current plan or policy year to the Closing Date) have been, or will
be, made or accrued before the Closing Date in accordance with the appropriate
plan document, actuarial report, collective bargaining agreement or insurance
contract or arrangement or as otherwise required by ERISA or the Code;
(iv) with respect to each such Employee Plan, to the extent
applicable, Grove has delivered to ERP true and complete copies of (A) current
plan documents, or any and all other documents that establish the existence of
the current plan, trust, arrangement, contract, policy or commitment and all
amendments thereto, (B) the most recent determination letter, if any, received
from the IRS, (C) the three most recent Form 5500 Annual Report (and all
schedules and reports relating thereto) and actuarial reports and (D) all
related trust agreements, insurance contracts or other funding agreements that
implement each such Employee Plan.
(c) With respect to each Employee Plan, there has not occurred, and
no person or entity is contractually bound to enter into, any
"prohibited transaction" within the meaning of Section 4975(c) of
the Code or Section 406 of ERISA, which transaction is not exempt
under Section 4975(d) of the Code or Section 408 of ERISA.
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(d) Except as disclosed in Schedule 2.12A, no Controlled Group Member
has maintained or been obligated to contribute to any Employee
Plan subject to Code Section 412 or Title IV of ERISA. With
respect to each Employee Plan set forth on Schedule 2.12A, Grove
represents that each such Employee Plan has been completely
terminated in accordance with all Code and ERISA requirements for
a "standard termination" (as defined in 4041(b) of ERISA), as
applicable on the termination date.
(e) Except as set forth in Schedule 2.12 to the Grove Disclosure
Letter, with respect to each Pension Plan maintained by any
Controlled Group Member, such Plan provides the Plan Sponsor the
authority to amend or terminate the Pension Plan at any time,
subject to applicable requirements of ERISA and the Code.
(f) Except as disclosed on Schedule 2.12 to the Grove Disclosure
Letter, Grove has no obligation to make payments to any
individual to offset, in whole or in part, any federal or state
income taxes, including taxes imposed pursuant to the provisions
of Code Sections 280G or 4999, and the consummation of the
transactions contemplated by this Agreement will not result in
any excise tax withholding.
2.13 EMPLOYEE MATTERS. Schedule 2.13 of the Grove Disclosure Letter lists
the employee handbooks of Grove and each of the Grove Subsidiaries currently in
effect. A copy of each such employee handbook has previously been made available
to ERP. Except as set forth in Schedule 2.13 of the Grove Disclosure Letter,
such handbooks fairly and accurately summarize all material employee policies,
vacation policies and payroll practices of Grove and the Grove Subsidiaries.
Neither Grove nor any of the Grove Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or other labor organization, nor has Grove or any of the
Grove Subsidiaries agreed that any unit of their employees is appropriate for
collective bargaining. No union or other labor organization has been certified
as bargaining representative for any of Grove's employees. To the Knowledge of
Grove there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of Grove or any of the Grove Subsidiaries.
2.14 TAXES.
(a) Each of Grove and the Grove Subsidiaries 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 has paid (or Grove has paid on its behalf) all Taxes (as defined below)
shown or reflected on such returns and reports as required to be paid by it and
all such tax returns are correct in all material respects except (i) as set
forth in Schedule 2.14 to the Grove Disclosure Letter, or (ii) real estate taxes
that are being contested in good faith by appropriate proceedings, each as
described in Schedule 2.14 to the Grove Disclosure Letter, and for which Grove
or the applicable Grove Subsidiary shall have set aside on its books adequate
reserves. Except with respect to any Taxes which might be imposed or assessed
with respect to the matters set forth in Schedule 5.6(d) to the Grove Disclosure
Letter, the most recent audited financial statements contained in the Grove SEC
Documents reflect an
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adequate reserve for all material Taxes payable or accrued by Grove and the
Grove Subsidiaries for all taxable periods and portions thereof through the date
of such financial statements. Since the Grove Financial Statement Date, Grove
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 Grove nor
any Grove Subsidiary has incurred any liability for Taxes other than in the
ordinary course of business. No deficiencies for any Taxes have been proposed,
asserted or assessed pursuant to a "30-day letter" or notice of deficiency sent
by the IRS, or, to the Knowledge of Grove, except as set forth in Schedule 2.14
of the Grove Disclosure Letter, otherwise proposed, asserted or assessed against
Grove or any of the Grove Subsidiaries. No waivers of the time to assess any
such Taxes have been executed by Grove or any Grove Subsidiary and, to the
Knowledge of Grove, no requests for such waivers are pending. As used in this
Agreement, "Taxes" shall include all federal, state, local and foreign income,
property, sales, franchise, employment, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, together with penalties, interest
or additions to Tax with respect thereto.
(b) Grove (i) has been subject to taxation as a real estate investment
trust (a "REIT") within the meaning of Section 856 of the Code commencing with
the taxable year beginning January 1, 1994, and has satisfied all requirements
to qualify as a REIT for such years, (ii) has operated, and intends to continue
to operate, in such a manner as to qualify as a REIT until the Company Merger
Effective Time and (iii) has not taken or omitted to take any action which would
reasonably be expected to (A) result in any rents paid by the tenants of the
Properties to be excluded from the definition of "rents from real property"
under Section 856(d)(2)(C) of the Code, or (B) otherwise result in a challenge
to its status as a REIT, and no such challenge is pending or, to Grove's
Knowledge, threatened. Each Grove Subsidiary which is a partnership, joint
venture or limited liability company (i) has been since its formation and
continues to be treated for federal income tax purposes as either a partnership
or ignored as a separate entity and not as a corporation or an association
taxable as a corporation, as the case may be, and (ii) has not since its
formation owned any assets (including, without limitation, securities) that
would cause Grove to violate Section 856(c)(4) of the Code. Each Grove
Subsidiary which is a corporation or treated as an association taxable as a
corporation has been since the date of its formation or January 1, 1994
(whichever is later) a qualified REIT subsidiary under Section 856(i) of the
Code. All former Grove Subsidiaries, if such entities had remained Grove
Subsidiaries, would comply with this Section 2.14.
2.15 NO PAYMENTS TO EMPLOYEES, OFFICERS, TRUST MANAGERS OR DIRECTORS.
(a) Set forth in Schedule 2.15 of the Grove Disclosure Letter is a
true and complete list of all cash and non-cash payments, rights to property or
other contract rights which may become payable, accelerated or vested as a
result of the Company Merger or Partnership Merger ("Section 2.15 Payments") to
or in each current or former employee, officer, trustee, trust manager or
director of Grove or any Grove Subsidiary (each a "Section 2.15 Employee").
Except as described Schedule 2.15 to the Grove Disclosure Letter, or as
otherwise provided for in this Agreement, there is no employment or severance
contract, or other agreement requiring payments, cancellation of indebtedness or
other obligation to be made on a change of control or otherwise as a result of
the consummation of any of the transactions contemplated by this Agreement, with
respect to any current or former employee, officer, trust manager, trustee or
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director of Grove or any Grove Subsidiary. On or prior to the date hereof, each
executive officer of Grove listed on Schedule 2.15 to the Grove Disclosure
Letter (each a "Grove Executive") has executed an amendment to such Grove
Executive's employment agreement or arrangement with Grove or any Grove
Subsidiary in the applicable form attached to Schedule 2.15.
(b) Schedule 2.15 to the Grove Disclosure Schedule sets forth (i) all
payments (whether in cash, in equity securities of Grove or any Grove Subsidiary
or otherwise) to be made to or for the account of employees of Grove or any
Grove Subsidiary (except for wages paid in the normal course of business) which
have been authorized and/or accrued but not paid and (ii) all compensation
payments which have been made to any employees listed on Schedule 2.15 to the
Grove Disclosure Letter from January 1, 2000 through July 7, 2000. As of the
date of this Agreement, no compensation payments have been made to Grove
employees since July 6, 2000.
(c) Any Section 2.15 Payment or arrangement or program providing for
Section 2.15 Payments which were authorized, adopted, approved or ratified after
June 12, 2000 have been authorized, adopted, approved or ratified by the Special
Committee, other than the grants of certain Grove Options pursuant to and in
accordance with the 1996 Plan, each of which is disclosed on Schedule 2.15 to
the Grove Disclosure Letter.
2.16 BROKERS; SCHEDULE OF FEES AND EXPENSES. Except as disclosed in
Schedule 2.16 to the Grove Disclosure Letter, no broker, investment banker,
financial advisor or other person, other than Houlihan Lokey Howard & Zukin, the
fees and expenses of which have previously been disclosed to ERP, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated hereby or any pending
acquisition or disposition by Grove or any Grove Subsidiary based upon
arrangements made by or on behalf of Grove or any Grove Subsidiary. A true and
correct copy of the engagement letter for Houlihan Lokey Howard & Zukin and each
person referred to on Schedule 2.16 has been delivered to ERP prior to the date
hereof.
2.17 COMPLIANCE WITH LAWS. Except as disclosed in the Grove SEC Documents
or in Schedule 2.6 or Schedule 2.17 to the Grove Disclosure Letter, neither
Grove nor any of the Grove Subsidiaries has violated or failed to comply with
any statute, law, ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations, except
to the extent that such violation or failure would not have a Grove Material
Adverse Effect.
2.18 CONTRACTS; DEBT INSTRUMENTS.
(a) To the Knowledge of Grove, except as disclosed in the Grove SEC
Documents or in Schedule 2.18 to the Grove Disclosure Letter, there is no
contract or agreement that purports to limit in any material respect the names
under or the geographic location in which Grove or any Grove Subsidiary may
conduct its business. Neither Grove nor any Grove Subsidiary has received a
written notice that Grove or any Grove Subsidiary is in violation of or in
default under (nor to the Knowledge of Grove does there exist any condition
which upon the passage of time or the giving of notice or both would cause such
a violation of or default under) any material loan or credit agreement, note,
bond, mortgage, indenture, lease, permit, concession, franchise, license or any
other material contract, agreement, arrangement or understanding, to
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which it is a party or by which it or any of its properties or assets is bound,
except as set forth in Schedule 2.18 to the Grove Disclosure Letter, nor to the
Knowledge of Grove does such a violation or default exist, except as set forth
in Schedule 2.18 to the Grove Disclosure Letter, or to the extent that such
violation or default, individually or in the aggregate, would not have a Grove
Material Adverse Effect.
(b) Schedule 2.18 to the Grove Disclosure Letter sets forth a list of
each loan or credit agreement, note, bond, mortgage, indenture and any other
agreement and instrument pursuant to which any Indebtedness (as defined herein)
of Grove or any Grove Subsidiary is outstanding or may be incurred
(collectively, the "Debt Documents"), as well as, with respect to the
Indebtedness evidenced by each Debt Document, as of July 1, 2000, the
outstanding principal balance, the maturity date, the applicable interest rate
(including the method or formula for calculating any interest that is not a
fixed percentage of the principal balance) and the amount of or the method or
formula for calculating any Equity Participation (as defined herein). For
purposes of this Section 2.18, "Indebtedness" shall mean (i) indebtedness for
borrowed money, whether secured or unsecured, (ii) obligations under conditional
sale or other title retention agreements relating to property purchased by such
person, (iii) capitalized lease obligations, (iv) obligations under interest
rate cap, swap, collar or similar transaction or currency hedging transactions
(valued at the termination value thereof), (v) obligations to pay any equity
kicker or other participation in the operating cash flow, gross revenue or other
income from the real property or other asset of Grove or any Grove Subsidiary or
in the gross, net or excess sale, financing, refinancing or other capital
proceeds from any such property or other asset (whether or not in connection
with any other Indebtedness) (each an "Equity Participation") and (vi)
guarantees of any such indebtedness of any other person. Grove hereby represents
and warrants that each item of Indebtedness may be assumed by ERP without cost
or penalty, except as set forth in Schedule 2.18 to the Grove Disclosure Letter,
and without the consent of or requirement to obtain the approval or confirmation
as to any matter from the holder of any such Indebtedness or any other person.
For purposes of this Section 2.18, "assumed by ERP" shall mean that, immediately
or after the giving of notice or the passage of time (or both), such
Indebtedness will not, either automatically or upon the exercise of any right or
option of the holder of such Indebtedness or any other person, be accelerated or
become due and payable in whole or in part as a result of the consummation of
the transactions contemplated by this Agreement (including, without limitation,
the Mergers).
(c) Schedule 2.18 to the Grove Disclosure Letter 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
Grove or any Grove Subsidiary is a party or an obligor with respect thereto.
(d) Except as set forth in Schedule 2.18 to the Grove Disclosure
Letter, neither Grove nor any of the Grove Subsidiaries is party to any
agreement which would restrict any of them from prepaying any of their
Indebtedness without penalty or premium at any time or which requires any of
them to maintain any amount of Indebtedness with respect to any of the Grove
Properties.
(e) Neither Grove nor any of the Grove Subsidiaries is a party to any
agreement relating to the management of any of the Grove Properties by a party
other than Grove or any
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wholly-owned Grove Subsidiary (a "Third Party"), except the agreements described
in Schedule 2.18 to the Grove Disclosure Letter (the "Third Party Management
Agreements"). A true and complete copy of each Third Party Management Agreement
has previously been delivered to ERP.
(f) None of Grove or any of the Grove Subsidiaries is a party to any
agreement pursuant to which Grove or any Grove Subsidiary manages any real
properties for any Third Party, except for the agreements described in Schedule
2.18 to the Grove Disclosure Letter (the "Outside Management Agreements"). A
true and complete copy of each Outside Management Agreement, if any, has
previously been delivered to ERP.
(g) Schedule 2.18 of the Grove Disclosure Letter lists all agreements
entered into by Grove or any of the Grove Subsidiaries relating to the
development, construction, rehabilitation or renovation of, or additions or
expansions to, any Grove Properties which are currently in effect and under
which Grove or any of the Grove Subsidiaries currently has, or reasonably
expects to incur, an obligation in excess of $125,000. True and correct copies
of such agreements have previously been delivered to ERP.
(h) Schedule 2.18 to the Grove Disclosure Letter lists all agreements
entered into by Grove or any of the Grove Subsidiaries providing for the sale
of, or option to sell, any Grove Properties or the purchase of, or option to
purchase, any real estate which are currently in effect.
(i) Except as set forth in Schedule 2.18 to the Grove Disclosure
Letter, neither Grove nor any Grove Subsidiary has any continuing contractual
liability (i) for indemnification or otherwise under any agreement relating to
the sale of real estate previously owned, whether directly or indirectly, by
Grove or any Grove Subsidiary, except for standard indemnification provisions
entered into in the normal course of business, (ii) to pay any additional
purchase price for any of the Grove Properties, or (iii) to make any
reprorations or adjustments to prorations that may previously have been made
with respect to any property currently or formerly owned by Grove.
(j) Except as set forth in Schedule 2.18 to the Grove Disclosure
Letter, neither Grove nor any Grove Subsidiary has entered into or is subject,
directly or indirectly, to any Tax Protection Agreements. 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 the Grove Partnership or any other
Grove Subsidiary that is treated as a partnership for federal income tax
purposes, and (B) that (i) prohibits or restricts in any manner the disposition
of any assets of Grove or any Grove Subsidiary (including, without limitation,
requiring Grove or any Grove Subsidiary to indemnify any person for any tax
liabilities resulting from any such disposition), (ii) requires that Grove or
any Grove Subsidiary maintain, or put in place, or replace, indebtedness,
whether or not secured by one or more of the Grove Properties, or (iii) requires
that Grove or any Grove Subsidiary 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
Grove or any Grove Subsidiary. A true and correct copy of each Tax Protection
Agreement has been previously delivered to ERP.
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(k) Except as set forth in Schedule 2.18 to the Grove Disclosure
Letter, there are no material outstanding contractual obligations of Grove or
any Grove Subsidiary to make any investment in the form of a loan, capital
contribution or otherwise in any Grove Subsidiary or any other Person. True and
correct copies of each such agreement has been delivered to ERP.
2.19 OPINION OF FINANCIAL ADVISOR. Grove has received the opinion of
Houlihan Lokey Howard & Zukin, dated July 14, 2000, satisfactory to Grove, and a
signed copy of which has been provided to ERP, to the effect that (i) the
consideration to be received by the holders of Grove Common Shares pursuant to
the Company Merger and the Limited Partners pursuant to the Partnership Merger
is fair, from a financial point of view, to such holders and Limited Partners,
and (ii) the consideration to be received by Grove OP pursuant to the
transactions contemplated by the Retail Sale Agreement is fair, from a financial
point of view, to Grove OP.
2.20 STATE TAKEOVER STATUTES. Grove has taken all action necessary to
exempt the transactions contemplated by this Agreement between ERP and Grove and
its Affiliates from the operation of Subtitles 6 and 7 of Title 3 of the
Maryland General Corporation Law and any other "fair price," "moratorium,"
"control share acquisition" or any other takeover statute or similar statute
enacted under the state or federal laws of the United States or similar statute
or regulation (each a "Takeover Statute").
2.21 REGISTRATION STATEMENT. The information relating to Grove and the
Grove Subsidiaries included in the Proxy Statement and the registration
statement on Form S-4 under the Securities Act relating to the ERP Units
issuable in the Partnership Merger (the "Registration Statement") will not, as
of the date of mailing of the Proxy Statement and as of the effective date of
the Registration Statement, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
2.22 DEVELOPMENT PROPERTIES. Schedule 2.22 to the Grove Disclosure Letter
lists all agreements entered into by Grove or any of the Grove Subsidiaries
relating to the development or construction of, or additions or expansions to,
any real properties under development for use as rental properties by Grove or
any Grove Subsidiary which are material and currently in effect.
2.23 INVESTMENT COMPANY ACT OF 1940. Neither Grove nor any of the Grove
Subsidiaries is, or at the Company Merger Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
2.24 TRADEMARKS, PATENTS AND COPYRIGHTS. Except as set forth in Schedule
2.24 to the Grove Disclosure Letter, or to the extent the inaccuracy of any of
the following (or the circumstances giving rise to such inaccuracy) individually
or in the aggregate would not have a Grove Material Adverse Effect, Grove and
each Grove Subsidiary owns or possesses adequate licenses or other legal rights
to use all patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of Grove and
the Grove Subsidiaries as currently conducted and Grove has no Knowledge of any
assertion or claim challenging the validity of any of the foregoing. The conduct
of the business of Grove and the Grove Subsidiaries as currently
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conducted does not and will not infringe in any way any patent, patent right,
license, trademark, trademark right, trade name, trade name right, service mark,
or copyright of any third party that, individually or in the aggregate, could
have a Grove Material Adverse Effect. To Grove's Knowledge, there are no
infringements of any proprietary rights owned by or licensed by or to Grove or
any Grove Subsidiary that individually or in the aggregate could have a Grove
Material Adverse Effect.
2.25 INSURANCE. Except as set forth on Schedule 2.25 to the Grove
Disclosure Letter, each of Grove and the Grove Subsidiaries is, and has been
continuously since the later of January 1, 1995 or the date upon which Grove
acquired ownership of such Grove Subsidiary, insured with insurers in such
amounts and against such risks and losses as are customary for companies
conducting the business as conducted by Grove and the Grove Subsidiaries during
such time period. Except as set forth on Schedule 2.25 to the Grove Disclosure
Letter, neither Grove nor any Grove Subsidiary has received any written notice
of cancellations or termination with respect to any material insurance policy of
Grove or any Grove Subsidiary. The insurance policies of Grove and each Grove
Subsidiary are valid and enforceable policies in all material respects. Schedule
2.25 sets forth each policy of insurance maintained by Grove and each Grove
Subsidiary, as well as a brief description of the coverage provided, annual
premium, self insured retention or co-payment provisions and deductible(s) for
each such policy.
2.26 DEFINITION OF KNOWLEDGE OF GROVE. As used in this Agreement, the
phrase "to the Knowledge of Grove" (or words of similar import) means the actual
knowledge of those individuals identified in Schedule 2.26 of the Grove
Disclosure Letter.
2.27 VOTE REQUIRED. Except for the Grove Approvals, no other vote or
consent by the equity holders of Grove or any Grove Subsidiary, including, but
not limited to, Grove OP, (whether by agreement, under applicable law or
otherwise) is required to approve this Agreement and the transactions
contemplated hereby, nor shall any such equity holders be entitled to
dissenters' rights or other rights of appraisal in connection with the Grove
Approvals or the consummation of the transactions contemplated by this
Agreement.
2.28 SECURED CREDIT FACILITY. The secured credit facility by and among
Grove, Grove OP and Sovereign Bank may be paid off at or prior to the Company
Merger Effective Time without the incurrence of any fee or penalty other than
fees payable due to a prepayment of a thirty (30) day LIBOR note.
2.29 ASSUMPTION OF SECURED DEBT. The secured debt of Grove may be assumed
by ERP or an ERP Subsidiary pursuant to or in connection with the Mergers
without payment of a fee or penalty in connection with such debt assumption
exceeding, in the aggregate, 1% of the aggregate outstanding balance of such
secured debt as of the date of such assumption.
2.30 CERTAIN FEES. The actual fees and expenses incurred by Grove and the
Grove Subsidiaries in connection with the transactions contemplated by this
Agreement shall not exceed (i) the aggregate estimate of all such fees and
expenses, as set forth on Schedule 2.30 to the Grove Disclosure Letter, or (ii)
to the extent specifically provided on Schedule 2.30, the estimates of the
specific categories of fees and expenses, as set forth on such Schedule.
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ARTICLE 3
---------
REPRESENTATIONS AND WARRANTIES OF ERP
-------------------------------------
Except as set forth in the letter of even date herewith signed by the
President or an Executive Vice President of EQR, the sole general partner of ERP
("EQR"), and delivered to Grove prior to the execution hereof (the "ERP
Disclosure Letter"), ERP represents and warrants to Grove and Grove OP as
follows:
3.1 ORGANIZATION, STANDING AND POWER OF ERP. ERP is authorized and exists
as an Illinois limited partnership under the laws of Illinois and has the
requisite power and authority to carry on its business as now being conducted.
ERP and its Subsidiaries (the "ERP Subsidiaries") are duly qualified or licensed
to do business and are in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, would
not have a material adverse effect on the business, properties, assets,
financial condition or results of operations of ERP and the ERP Subsidiaries
taken as a whole ("ERP Material Adverse Effect"). ERP has delivered to Grove a
complete and correct copy of the ERP Agreement, as amended or supplemented to
the date of this Agreement.
3.2 CAPITAL STRUCTURE OF ERP. Schedule 3.2 to the ERP Disclosure Letter
sets forth the number of outstanding ERP Units as of June 30, 2000.
3.3 AUTHORITY; NONCONTRAVENTION; CONSENTS.
(a) ERP has the requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement to
which ERP is a party. The execution and delivery of this Agreement by ERP and
the consummation by ERP of the transactions contemplated by this Agreement to
which ERP is a party have been duly authorized by all necessary action on the
part of ERP. This Agreement has been duly executed and delivered by ERP and
constitutes a valid and binding obligation of ERP, enforceable against ERP in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
(b) Except as set forth in Schedule 3.3 to the ERP Disclosure Letter,
the execution and delivery of this Agreement by ERP do not, and the consummation
of the transactions contemplated by this Agreement by ERP and compliance by ERP
with the provisions of this Agreement will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or the loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of ERP or any ERP
Subsidiary under, (i) the ERP Agreement or the comparable charter or
organizational documents or partnership or similar agreement (as the case may
be) of any other ERP Subsidiary, each as amended or supplemented to the date of
this Agreement, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement, instrument,
permit, concession, franchise or license to which ERP or any ERP Subsidiary is a
party or their respective properties
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or assets are bound or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any Laws applicable to ERP or any
ERP Subsidiary or their respective properties or assets, other than, in the case
of clause (ii) or (iii), any such conflicts, violations, defaults, rights, loss
or Liens that individually or in the aggregate would not (x) have an ERP
Material Adverse Effect or (y) prevent the consummation of the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is required
by or with respect to ERP or any ERP Subsidiary in connection with the execution
and delivery of this Agreement or the consummation by ERP of any of the
transactions contemplated by this Agreement, except for (i) the filing with the
SEC of (x) the Registration Statement and (y) such reports under Section 13(a)
of the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (ii) the acceptance for record of
the Company Articles of Merger by the Maryland Department, (iii) the acceptance
for record of the Partnership Certificate of Merger by the Delaware Secretary,
(iv) such filings as may be required in connection with the payment of any
transfer and gains taxes and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings including, without
limitation, any consents, approvals, orders, authorizations, registrations,
declarations and filings required by HUD, MFHA or similar agencies, (A) as are
set forth in Schedule 3.3 to the ERP Disclosure Letter, (B) as may be required
under federal, state or local environmental laws or (C) which, if not obtained
or made, would not prevent or delay in any material respect the consummation of
any of the transactions contemplated by this Agreement or otherwise prevent ERP
from performing its obligations under this Agreement in any material respect or
have, individually or in the aggregate, an ERP Material Adverse Effect.
(c) For purposes of determining compliance with the Hart-Scott Act,
ERP confirms that the conduct of its business does not require a filing under
the Hart-Scott Act in connection with the Mergers.
3.4 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. ERP has
filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1995 through the date hereof (the "ERP SEC
Documents"). All of the ERP SEC Documents (other than preliminary material), as
of their respective filing dates or as of the date of the last amendment thereof
(if amended after filing), complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and, in each case, the
rules and regulations promulgated thereunder applicable to such ERP SEC
Documents. None of the ERP SEC Documents at the time of filing contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later ERP SEC Documents filed on a non-confidential basis prior to
the date of this Agreement. The consolidated financial statements of ERP and the
ERP Subsidiaries included in the ERP SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by the applicable rules and regulations of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented, in accordance with the applicable
requirements of GAAP and the applicable rules and regulations
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of the SEC, in all material respects, the consolidated financial position of ERP
and the ERP Subsidiaries, taken as a whole, as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments, any other adjustments described therein and the fact that certain
information and notes have been condensed or omitted in accordance with the
Exchange Act). Except for liabilities and obligations set forth in the ERP SEC
Documents or in Schedule 3.4 to the ERP Disclosure Letter, neither ERP nor any
ERP Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
a consolidated balance sheet of ERP or in the notes thereto and which,
individually or in the aggregate, would have an ERP Material Adverse Effect,
after taking into account any assets acquired or services provided in connection
with the incurrence of such liabilities or obligations.
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the ERP
SEC Documents or in Schedule 3.5 to the ERP Disclosure Letter, since the date of
the most recent audited financial statements included in the ERP SEC Documents
(the "ERP Financial Statement Date"), ERP and the ERP Subsidiaries have
conducted their business only in the ordinary course (taking into account prior
practices, including the acquisition of properties and issuance of securities)
and there has not been (a) any material adverse change in the business,
financial condition or results of operations of ERP and the ERP Subsidiaries
taken as a whole (an "ERP Material Adverse Change"), nor has there been any
occurrence or circumstance that with the passage of time would reasonably be
expected to result in an ERP Material Adverse Change, (b) except for regular
quarterly distributions (in the case of ERP) with customary record and payment
dates, any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of ERP's
partnership interests, (c) any split, combination or reclassification of any of
ERP's partnership interests, (d) any damage, destruction or loss, whether or not
covered by insurance, that has or would have an ERP Material Adverse Effect, or
(e) any change made prior to the date of this Agreement in accounting methods,
principles or practices by ERP or any ERP Subsidiary materially affecting its
assets, liabilities or business, except insofar as may have been disclosed in
the ERP SEC Documents or required by a change in GAAP.
3.6 LITIGATION. Except as disclosed in the ERP SEC Documents or in Schedule
3.6 to the ERP Disclosure Letter, and other than personal injury and other
routine tort litigation arising from the ordinary course of operations of ERP
and the ERP Subsidiaries (a) which are covered by adequate insurance, or (b) for
which all material costs and liabilities arising therefrom are reimbursable
pursuant to common area maintenance or similar agreements, there is no suit,
action or proceeding pending or, to the Knowledge of ERP, threatened in writing
against or affecting ERP or any ERP Subsidiary that, individually or in the
aggregate, (i) could reasonably be expected to have an ERP Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against ERP or any ERP Subsidiary
having or which could reasonably be expected to have any such effect, or (ii)
could reasonably be expected to prevent the consummation of any of the
transactions contemplated by this Agreement.
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3.7 PROPERTIES.
(a) ERP or one of the ERP Subsidiaries owns fee simple title to each
of the real properties listed in the ERP SEC Filings as owned by it (the "ERP
Properties"), except where the failure to own such title would not have an ERP
Material Adverse Effect.
(b) The ERP Properties are not subject to any Encumbrances or Property
Restrictions or located in a flood zone area "V" which, individually or in the
aggregate, would cause an ERP Material Adverse Effect.
(c) Valid policies of title insurance have been issued insuring ERP's
or the applicable ERP Subsidiary's fee simple title to the ERP Properties except
where the failure to obtain such title insurance would not have an ERP Material
Adverse Effect.
(d) ERP has no Knowledge (i) that it has failed to obtain a
certificate, permit or license from any governmental authority having
jurisdiction over any of the ERP Properties where such failure would have an ERP
Material Adverse Effect, or of any pending threat of modification or
cancellation of any of the same which would have an ERP Material Adverse Effect,
(ii) of any written notice of any violation of any federal, state or municipal
law, ordinance, order, rule, regulation or requirement affecting any of the ERP
Properties issued by any governmental authorities which would have an ERP
Material Adverse Effect, or (iii) of any structural defects relating to ERP
Properties, ERP Properties whose building systems are not in working order,
physical damage to any ERP Property for which there is no insurance in effect
covering the cost of restoration, any current renovation or uninsured
restoration, except such structural defects, building systems not in working
order, physical damage, renovation and restoration which, in the aggregate,
would not have an ERP Material Adverse Effect.
(e) All work to be performed, payments to be made and actions to be
taken by ERP or the ERP Subsidiaries prior to the date hereof pursuant to any
agreement entered into with a governmental body or authority in connection with
a site approval, zoning reclassification or similar action relating to any ERP
Property (e.g., Local Improvement District, Road Improvement District,
Environmental Mitigation), has been performed, paid or taken, as the case may
be, except where the failure to do so would, in the aggregate, not have an ERP
Material Adverse Effect.
3.8 ENVIRONMENTAL MATTERS. None of ERP, any of the ERP Subsidiaries or, to
ERP's Knowledge, any other Person has caused or permitted (a) the unlawful
presence of any Hazardous Substances on any of the ERP Properties, or (b) any
unlawful spills, releases, discharges or disposal of Hazardous Materials to have
occurred or be presently occurring on or from the ERP Properties as a result of
any construction on or operation and use of the ERP Properties, which presence
or occurrence would, individually or in the aggregate, have an ERP Material
Adverse Effect; and in connection with the construction on or operation and use
of the ERP Properties, ERP and the ERP Subsidiaries have not failed to comply in
any material respect with all applicable Environmental Laws, except to the
extent such failure to comply, individually or in the aggregate, would not have
an ERP Material Adverse Effect.
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3.9 TAXES.
(a) Each of ERP and the ERP Subsidiaries 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 has
paid (or ERP has paid on its behalf) all Taxes shown or reflected on such
returns and reports as required to be paid by it except where the failure to
file such tax returns or reports and failure to pay such Taxes would not have an
ERP Material Adverse Effect. Since the ERP Financial Statement Date, EQR 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 ERP nor any ERP
Subsidiary has incurred any liability for taxes other than in the ordinary
course of business. No deficiencies for any Taxes have been proposed, asserted
or assessed pursuant to a "30-day letter" or notice of deficiency sent by the
IRS, or, to the Knowledge of ERP, otherwise proposed, asserted or assessed
against ERP or any of the ERP Subsidiaries.
(b) EQR (i) for all taxable years commencing with 1992, has been
subject to taxation as a REIT within the meaning of Section 856 of the Code and
has satisfied all requirements to qualify as a REIT for such years, (ii) has
operated, and intends to continue to operate, in such a manner as to qualify as
a REIT for the tax year ending December 31, 2000, and (iii) has not taken or
omitted to take any action which would reasonably be expected to (A) result in
any rents paid by tenants to the ERP Properties to be excluded from the
definition of "rents from real property" under Section 856(d)(2) of the Code, or
(B) otherwise result in a challenge to EQR's status as a REIT, and no such
challenge is pending or, to ERP's Knowledge, threatened. Each ERP Subsidiary
which is a partnership, joint venture or limited liability company has been
treated since its formation and continues to be treated for federal income tax
purposes as a partnership, or ignored as a separate entity, as the case may be,
and not as a corporation or as an association taxable as a corporation. Each
corporation, trust or other entity taxable as an association which has merged
with and into EQR had been subject to taxation as a REIT at all times since its
initial election of REIT status and had satisfied all requirements to qualify as
a REIT for such years, except to the extent that a failure to satisfy such
requirements would not have an ERP Material Adverse Effect. Each Subsidiary of
EQR which is a corporation or which is treated as an association taxable as a
corporation for federal income tax purposes (of which EQR directly or indirectly
owns ten percent (10%) or more of the outstanding voting securities (as defined
in Section 856(c) of the Code)) has been since the date of its formation or
since EQR's first taxable year as a REIT (whichever is later) a qualified REIT
subsidiary under Section 856(i) of the Code.
3.10 BROKERS. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of ERP or any ERP
Subsidiary.
3.11 COMPLIANCE WITH LAWS. Except as disclosed in the ERP SEC Documents,
neither ERP nor any of the ERP Subsidiaries has violated or failed to comply
with any statute, law, ordinance, regulation, rule, judgment, decree or order of
any Governmental Entity
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applicable to its business, properties or operations, except to the extent that
such violation or failure would not have an ERP Material Adverse Effect.
3.12 CONTRACTS; DEBT INSTRUMENTS. Neither ERP nor any ERP Subsidiary has
received a written notice that ERP or any ERP Subsidiary is in violation of or
in default under (nor to the Knowledge of ERP does (i) such a violation or
default exist or (ii) does there exist any condition which, upon the passage of
time or the giving of notice or both would cause such a violation or default to
exist) any material loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other material contract,
agreement, arrangement or understanding, to which it is a party or by which it
or any of its properties or assets is bound, except to the extent such violation
or default, individually or in the aggregate, would not have an ERP Material
Adverse Effect, except as set forth in Schedule 3.12 to the ERP Disclosure
Letter.
3.13 STATE TAKEOVER STATUTES. ERP has taken all action necessary to exempt
transactions between ERP and Grove and its Affiliates from the operation of any
Takeover Statute.
3.14 REGISTRATION STATEMENT. The information with respect to ERP and the
ERP Subsidiaries included in the Proxy Statement or the Registration Statement
will not, as of the date of mailing of the Proxy Statement and as of the
effective date of the Registration Statement, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3.15 INVESTMENT COMPANY ACT OF 1940. Neither ERP nor any of the ERP
Subsidiaries is, or at the Company Merger Effective Time will be, required to be
registered under the 1940 Act.
3.16 DEFINITION OF KNOWLEDGE OF ERP. As used in this Agreement, the phrase
"to the Knowledge of ERP" (or words of similar import) means the actual
knowledge of those individuals identified in Schedule 3.16 to the ERP Disclosure
Letter.
3.17 VOTE REQUIRED. No vote or consent by the equity holders of ERP or any
ERP Subsidiary (whether by agreement, under applicable law or otherwise) is
required to approve this Agreement or the transactions contemplated hereby, nor
will any such equity holders be entitled to dissenters' rights or other rights
of appraisal in connection with the consummation of the transactions
contemplated by this Agreement.
3.18 EMPLOYEE POLICIES. Each employee plan or arrangement of ERP is in
material compliance with ERISA, to the extent subject to ERISA, and any other
applicable law governing such employee plan or arrangement.
3.19 FINANCING. ERP will have readily available all funds necessary to
perform its obligations under this Agreement and the transactions contemplated
hereby.
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3.20 VALIDITY OF SECURITIES ISSUED. Any ERP Units issued pursuant to the
Partnership Merger, and any shares of EQR Common issued upon redemption of such
ERP Units, when issued, shall be duly authorized, validly issued, fully-paid and
non-assessable.
ARTICLE 4
---------
COVENANTS
---------
4.1 ACQUISITION PROPOSALS. Prior to the Company Merger Effective Time,
Grove agrees that:
(a) neither it nor any of the Grove 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 any of their respective shareholders or limited partners)
with respect to a merger, acquisition, tender offer, exchange offer,
consolidation, sale of assets or similar transaction involving all or any
significant portion of the assets or any equity securities of Grove or any of
the Grove Subsidiaries, other than the transactions contemplated by this
Agreement (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal;
(b) it will use its best efforts not to permit any of its officers,
trust managers, employees, agents or financial advisors to engage in any of the
activities described in Section 4.1(a);
(c) 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 4.1(b) of the obligations
undertaken in this Section 4.1; and
(d) it will notify ERP as promptly as practicable if Grove 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;
provided, however, that nothing contained in this Section 4.1 shall prohibit the
Grove Board from (i) furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited Acquisition
Proposal, if, and only to the extent that (A) the Grove Board determines in good
faith that failure to do so would create a reasonable probability of a breach of
its duties to shareholders or Limited Partners imposed by law, (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Grove provides written notice to ERP to the effect
that it is furnishing information to, or entering into discussions with, such
person or entity, and (C) subject to any confidentiality agreement with such
person or entity (which Grove determined in good faith was required to be
executed in order for the Grove Board to comply with its duties to shareholders
or Limited
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Partners imposed by law), Grove keeps ERP informed of the status of any such
discussions or negotiations; and (ii) to the extent applicable, complying with
Rule 14e-2 or Rule 14d-9 promulgated under the Exchange Act with regard to an
Acquisition Proposal. Nothing in this Section 4.1 shall (x) permit Grove to
terminate this Agreement (except as specifically provided in Article 7 hereof),
(y) permit Grove to enter into an agreement with respect to an Acquisition
Proposal during the term of this Agreement (it being agreed that during the term
of this Agreement, Grove shall not enter into an agreement with any Person that
provides for, or in any way facilitates, an Acquisition Proposal (other than a
confidentiality agreement in customary form executed as provided above)) or (z)
affect any other obligation of Grove under this Agreement; provided, however,
that the Grove Board may approve and recommend a Superior Acquisition Proposal
and, in connection therewith, withdraw or modify its approval or recommendation
of this Agreement and the Mergers. As used herein, "Superior Acquisition
Proposal" means a bona fide Acquisition Proposal made by a third party which a
majority of the members of the Grove Board determines in good faith to be more
favorable to Grove's shareholders and Limited Partners from a financial point of
view than the Mergers and which the Grove Board determines is reasonably capable
of being consummated.
4.2 CONDUCT OF GROVE'S BUSINESS PENDING MERGER. Prior to the Company Merger
Effective Time, except as (i) contemplated by this Agreement, (ii) set forth in
Schedule 4.2 to the Grove Disclosure Letter, (iii) within the aggregate amounts
reflected in the Grove Capital Budget or (iv) consented to in writing by ERP,
Grove shall, and shall cause each of the Grove Subsidiaries to, conduct its
business only in the usual, regular and ordinary course and in substantially the
same manner as heretofore conducted, and, irrespective of whether or not in the
ordinary course of business, Grove shall, and shall cause each of the Grove
Subsidiaries to:
(a) use its reasonable efforts to preserve intact its business
organizations and goodwill and keep available the services of its officers and
employees;
(b) confer on a regular basis with one or more representatives of ERP
to report operational matters of materiality and, subject to Section 4.1, any
proposals to engage in material transactions;
(c) promptly notify ERP of any material emergency or other material
change in the condition (financial or otherwise), business, properties, assets,
liabilities, or the normal course of its businesses or in the operation of its
properties, or of any material governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated);
(d) promptly deliver to ERP true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(e) maintain its books and records in accordance with GAAP
consistently applied and not change in any material manner any of its methods,
principles or practices of accounting in effect at the Grove Financial Statement
Date, except as may be required by the SEC, applicable law or GAAP;
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(f) duly and timely file all reports, tax returns and other documents
required to be filed with federal, state, local and other authorities, subject
to extensions permitted by law, provided Grove notifies ERP that it is availing
itself of such extensions and provided such extensions do not adversely affect
Grove's status as a qualified REIT under the Code;
(g) not make or rescind any express or deemed election relative to
Taxes (unless required by law or necessary to preserve Grove's status as a REIT
or the status of any Grove Subsidiary as a partnership for federal income tax
purposes or as a qualified REIT subsidiary under Section 856(i) of the Code, as
the case may be);
(h) other than in connection with those development agreements set
forth in Schedule 2.22 to the Grove Disclosure Letter or as permitted pursuant
to subsection (o) hereof, not acquire, enter into any option or agreement to
acquire, or exercise an option or contract to acquire, additional real property,
incur additional indebtedness except for working capital under its revolving
line(s) of credit, encumber assets or commence construction of, or enter into
any agreement or commitment to develop or construct other real estate projects
except in connection with the potential purchase of (i) 521 subsidized elderly
apartment units in Brookline, Massachusetts (the "Brookline Transaction"), (ii)
interests in the Kismul Family Limited Partnership (the "Kismul Transaction"),
and (iii) interests in certain partnerships affiliated with Sydney and John
Rosenthal (the "Rosenthal Transactions"), each as more fully described in
Schedule 4.2 of the Grove Disclosure Letter, PROVIDED, HOWEVER, that ERP shall
have the right to review and comment upon the terms of and documentation related
to the Brookline Transaction and Kismul Transaction and necessary amendments to
the documentation related to the Rosenthal Transactions in order to provide for
transactions contemplated by this Agreement, and such terms and documentation
shall be subject to prior approval by ERP, which approval shall not be
unreasonably withheld or delayed;
(i) not amend its Bylaws or the Grove Declaration or the articles of
incorporation, bylaws, partnership agreement, joint venture agreement or
comparable charter or organization document of any Grove Subsidiary without
ERP's prior written consent, which shall not be unreasonably withheld or
delayed;
(j) issue no and make no change in the number of shares of beneficial
interest, capital stock, membership interests or units of limited partnership
interest issued and outstanding or reserved for issuance, other than pursuant to
those items disclosed in Schedule 2.3 to the Grove Disclosure Letter;
(k) except in connection with and pursuant to the terms of the
Brookline Transaction and Rosenthal Transactions, grant no options or other
right or commitment relating to its shares of beneficial interest or capital
stock, membership interests or units of limited partnership interest or any
security convertible into its shares of beneficial interest or capital stock,
membership interests or units of limited partnership interest, or any security
the value of which is measured by shares of beneficial interest, or any security
subordinated to the claim of its general creditors;
(l) except as permitted by Section 5.9 and for dividends and
distributions by a Grove Subsidiary to Grove or a wholly-owned Grove Subsidiary,
not (x) authorize, declare, set
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aside or pay any dividend or make any other distribution or payment with respect
to any shares of its beneficial interest or capital stock, or (y) except for
redemptions of Grove LP Units in accordance with the Grove OP Agreement or
pursuant to the terms of the Retail Sale Agreement, directly or indirectly
redeem, purchase or otherwise acquire any shares of beneficial interest, shares
of capital stock, membership interests or units of partnership interest or any
option, warrant or right to acquire, or security convertible into, shares of
beneficial interest, shares of capital stock, membership interests, or units of
partnership interest of any Person;
(m) not sell, lease, mortgage, subject to Lien or otherwise dispose of
any material part of its assets, individually or in the aggregate, except in the
ordinary course of business;
(n) not make any loans, advances or capital contributions to, or
investments in, any other Person, other than loans, advances and capital
contributions to wholly-owned Grove Subsidiaries in existence on the date
hereof;
(o) not pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice, or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) furnished
to ERP or incurred in the ordinary course of business consistent with past
practice;
(p) not enter into any commitment, contractual obligation, capital
expenditure or transaction (each, a "Commitment") which may result in total
payments or liability by or to it in excess of $135,000 or aggregate Commitments
in excess of $250,000; PROVIDED, HOWEVER, that no Commitments shall be made with
respect to any Grove Property subject to the Retail Sale Agreement, except as
specifically permitted by the terms of the Retail Sale Agreement;
(q) not guarantee the indebtedness of another Person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic effect of any
of the foregoing;
(r) not enter into or amend any commitment with any officer, trust
manager, director, trustee, consultant or Affiliate of Grove or any of the Grove
Subsidiaries other than commitments with consultants involving payments of (i)
less than $15,000 per consultant and (ii) total aggregate payments to all
consultants of less than $110,000;
(s) not increase any compensation or enter into or amend any
employment agreement or other arrangement with any of its officers, trust
managers, trustees, directors or employees earning more than $50,000 per annum
as of the date hereof, other than waivers by employees of benefits under such
agreements, enter into any employment agreement or arrangement with any other
Person not currently an employee of Grove or a Grove Subsidiary, providing for
compensation in excess of $60,000 per annum or increase any compensation, enter
into or amend any employment agreement or other arrangement with any new or
current employee (except with respect to arrangements which do not comprise
employment agreements or amendments thereto in the ordinary course of business
and consistent with past practice in timing and amount or pursuant to the terms
of any such arrangement) or take any action which
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could result in the creation of a right of the type required to be disclosed in
Section 2.15, or alter in any manner a payment or right disclosed on Schedule
2.15 of the Grove Disclosure Letter;
(t) not adopt any new employee benefit plan or amend any existing
plans, options or rights, except for changes which are required by law and
changes which are not more favorable to participants in the aggregate than
provisions presently in effect;
(u) not settle any shareholder or limited partner, derivative or other
claims arising out of or in connection with any of the transactions contemplated
by this Agreement without the prior written approval of ERP, which approval
shall not be unreasonably withheld or delayed;
(v) not reduce its ownership of any of Grove Subsidiaries except
pursuant to a transaction which has the same effect as a transaction permitted
by subsection (m) hereof;
(w) not accept a promissory note in payment of the exercise price
payable under any Grove Option;
(x) not enter into or amend or otherwise modify or waive any rights
under any agreement or arrangement for the persons that are affiliates, or as of
the date hereof, all officers, trust managers, trustees, directors or employees,
of Grove or any Grove Subsidiary;
(y) except as provided in Schedule 2.9 or Schedule 2.18 to the Grove
Disclosure Letter, not directly or indirectly or through a subsidiary, merge or
consolidate with, acquire all or substantially all of the assets of, or acquire
the beneficial ownership of a majority of the outstanding capital stock or other
equity interest in any Person or entity;
(z) use its reasonable best efforts to continue to qualify as a REIT
prior to the Company Merger Effective Time, and not enter into any transaction
that would be considered a prohibited transaction as defined in Section
857(b)(6) of the Code; and
(aa) with respect to the Retail Sale Agreement, (i) not amend, waive
any provision, or exercise any right under, the Retail Sale Agreement, (ii)
operate the Grove Subsidiaries subject to the Retail Sale Agreement only in the
ordinary course of business and (iii) not take any action which would result in
a material change to the assets and liabilities of such Grove Subsidiaries, as
set forth on Schedule 2.2 to the Grove Disclosure Schedule.
For purposes of this Section 4.2 only, any contract, transaction
or other event shall be deemed to be material and to be subject to the
terms hereof if it would result or is expected to result in a net
impact on Grove's consolidated income statement in excess of $275,000,
or on Grove's consolidated balance sheet in excess of $275,000.
4.3 CONDUCT OF ERP'S BUSINESS PENDING MERGER. Prior to the Company Merger
Effective Time, except as (i) contemplated by this Agreement, or (ii) consented
to in writing by Grove, ERP shall, and shall cause each of the ERP Subsidiaries
to:
(a) use its reasonable efforts to preserve intact its business
organizations and goodwill and keep available the services of its officers and
employees;
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(b) confer on a regular basis with one or more representatives of
Grove to report operational matters of materiality which would have a ERP
Material Adverse Effect;
(c) promptly notify Grove of any material emergency or other material
change in the condition (financial or otherwise), business, properties, assets,
liabilities, prospects or the normal course of its businesses or in the
operation of its properties, or of any material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated);
(d) promptly deliver to Grove true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(e) maintain its books and records in accordance with GAAP
consistently applied;
(f) duly and timely file all reports, tax returns and other documents
required to be filed with federal, state, local and other authorities; and
(g) duly form New LLC and New LLC3, cause New LLC to duly form New
LLC2 and cause each of New LLC, New LLC2 and New LLC3, respectively, to carry
out its obligations pursuant to this Agreement.
For purposes of this Section 4.3 only, an emergency, change, complaint,
investigation or hearing shall be deemed material if it would reasonably be
expected to have an ERP Material Adverse Effect.
4.4 OTHER ACTIONS. Each of Grove and Grove OP on the one hand and ERP on
the other hand shall not, and shall use their reasonable best efforts to cause
their Subsidiaries not to, take any action that would result in (i) any of the
representations and warranties of such party set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) except as contemplated by Section 4.1, any of the
conditions to the Mergers set forth in Article 6 not being satisfied.
4.5 COMPLIANCE WITH THE SECURITIES ACT. No later than ten (10) days prior
to the Partnership Merger Effective Time, Grove shall cause to be prepared and
delivered to ERP a list identifying all persons who, at the time of the Grove
Shareholders Meeting (as defined in Section 5.1 hereto), (i) may reasonably be
deemed to be "affiliates" of Grove or Grove OP as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act and (ii) shall be
entitled to receive Partnership Unit Merger Consideration pursuant to the
Partnership Merger (the "Affiliates"). Grove shall use its reasonable efforts to
cause each person who is identified as an Affiliate in such list to deliver to
Grove on or prior to the Partnership Merger Effective Time a written agreement,
in the form previously approved by the parties hereto, that such Affiliate will
not sell, pledge, transfer or otherwise dispose of any shares of EQR Common
issued to such Affiliate upon exchange of ERP Units pursuant to the ERP
Agreement, except pursuant to an effective registration statement under the
Securities Act or in compliance with Rule 145.
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ARTICLE 5
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ADDITIONAL COVENANTS
--------------------
5.1 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY STATEMENT;
GROVE SHAREHOLDERS MEETING AND GROVE OP PARTNERS MEETING.
(a) Grove and ERP shall use their reasonable best efforts to prepare
and file with the SEC the Registration Statement and Proxy Statement, each in
form and substance satisfactory to each of ERP and Grove. A portion of the
Registration Statement shall also constitute a prospectus of ERP with respect to
the ERP Units to be offered pursuant to the Partnership Merger (the
"Prospectus"). Each of Grove and ERP shall promptly use its reasonable best
efforts to (i) respond to any comments of the SEC and (ii) with respect to ERP
only, have the Registration Statement declared effective under the Securities
Act and the rules and regulations promulgated thereunder as promptly as
practicable after such filing and to keep the Registration Statement effective
as long as is necessary to consummate the Partnership Merger. ERP will use its
reasonable best efforts to cause the Prospectus to be mailed to the Limited
Partners, as promptly as practicable after the SEC has declared the Registration
Statement effective. Grove will use its reasonable best efforts to cause the
Proxy Statement to be mailed to Grove's shareholders, as promptly as practicable
after the SEC has completed its review of the Proxy Statement. Each party will
notify the other promptly of the receipt of any comments from the SEC and of any
request by the SEC for amendments or supplements to the Registration Statement
or the Proxy Statement or for additional information and will supply the other
with copies of all correspondence (and written summaries or transcripts of any
oral communication) between such party or any of its representatives and the
SEC, with respect to the Registration Statement or the Proxy Statement. The
respective parties will cause the Registration Statement and the Proxy Statement
to comply in all material respects with all applicable requirements of law.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Registration Statement or the Proxy Statement, ERP or Grove,
as the case may be, shall promptly inform the other of such occurrences and
cooperate in filing with the SEC and/or mailing to the shareholders of Grove or
the Limited Partners such amendment or supplement to the Proxy Statement or
Prospectus, as the case may be. ERP also shall take any action required to be
taken under any applicable state securities or "blue sky" laws in connection
with the issuance of ERP Units pursuant to the Partnership Merger, and Grove and
Grove OP shall furnish all information concerning Grove and the holders of Grove
Shares and rights to acquire Grove Shares, or Grove OP and the Limited Partners
and the rights to acquire Grove LP Units, as the case may be and as may be
reasonably requested in connection with any such action.
(b) Grove will, as soon as practicable following the date of this
Agreement (but in no event sooner than 20 business days following the date the
Proxy Statement is mailed to the shareholders of Grove), duly call, give notice
of, convene and hold a meeting of its shareholders (the "Grove Shareholders
Meeting") for the purpose of obtaining the Grove Shareholder Approvals. Grove
will, through the Grove Board, recommend to its shareholders approval of this
Agreement, the Company Merger and the transactions contemplated by this
Agreement; provided, that prior to the Grove Shareholders Meeting, such
recommendation may be
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withdrawn, modified or amended to the extent that, as a result of the
commencement or receipt of a proposal constituting a Superior Acquisition
Proposal, the Grove Board determines in good faith that such withdrawal,
modification or amendment is appropriate
(c) Subject to the provisions of Sections 5.1(b), the Grove
Shareholders Meeting shall be held not later than 35 days after the date the
Proxy Statement is mailed.
(d) Grove OP will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its partners
(the "Grove OP Partners Meeting") for the purpose of obtaining the Grove Partner
Approvals. The Grove OP Partners Meeting shall be held on the same date as the
Grove Shareholders Meeting. Grove will, through the Grove Board, recommend to
the Limited Partners approval of this Agreement and the transactions
contemplated hereby; provided, that prior to the Grove OP Partners Meeting, such
recommendation may be withdrawn, modified or amended to the extent that, as a
result of the commencement or receipt of a proposal constituting a Superior
Acquisition Proposal, the Grove Board determines in good faith that such
withdrawal, modification or amendment is appropriate.
(e) If on the date for the Grove Shareholders Meeting established
pursuant to Section 5.1(b) of this Agreement, Grove has not received a
sufficient number of proxies to approve the Company Merger (but less than
one-third of the outstanding Shares have been voted against the Company Merger),
then Grove shall adjourn its shareholders meetings until such date as shall be
mutually agreed upon by Grove and ERP, which date shall be not less than ten
(10) days nor more than twenty (20) days after the originally scheduled date.
(f) In connection with the Grove Partner Approvals, Grove shall vote
all Grove OP Units beneficially owned by Grove, and shall cause any Grove
Subsidiary to vote all Grove OP Units beneficially owned by such Grove
Subsidiary, in favor of this Agreement and the transactions contemplated hereby.
5.2 ACCESS TO INFORMATION: CONFIDENTIALITY. Subject to the requirements of
confidentiality agreements with third parties, each of Grove and ERP shall, and
shall cause each of the Grove Subsidiaries and ERP Subsidiaries, respectively,
to afford to the other party and to the officers, employees, accountants,
counsel, financial advisors and other representatives of such other party,
reasonable access during normal business hours prior to the Company Merger
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, each of Grove and
ERP shall, and shall cause each of the Grove Subsidiaries and ERP Subsidiaries,
respectively, to furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and (b)
all other information concerning its business, properties and personnel as such
other party may reasonably request. Each of Grove and ERP shall, and shall cause
the Grove Subsidiaries and ERP Subsidiaries, respectively, to use commercially
reasonable efforts to cause its officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to, hold any
nonpublic information in confidence to the extent required by, and in accordance
with, and will comply with the provisions of the letter agreement dated as of
March 13, 2000 between Grove and ERP (the "Confidentiality Agreement").
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5.3 BEST EFFORTS; NOTIFICATION.
(a) Subject to the terms and conditions herein provided, Grove and ERP
shall: (i) use all reasonable best efforts to cooperate with one another in (A)
determining which filings are required to be made prior to the Company Merger
Effective Time or Partnership Merger Effective Time, as applicable, with, and
which consents, approvals, permits or authorizations are required to be obtained
prior to the Company Merger Effective Time or Partnership Merger 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 (B) timely making all such filings and
timely seeking all such consents, approvals, permits and authorizations; (ii)
use all reasonable best efforts to obtain in writing any consents required from
third parties to effectuate the Mergers, such consents to be in form reasonably
satisfactory to Grove and ERP; and (iii) use all reasonable best efforts to
take, or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make effective
the transactions contemplated by this Agreement. If, at any time after the
effectiveness of the Mergers, any further action is necessary or desirable to
carry out the purpose of this Agreement, the proper officers and trust managers
of Grove and the general partner of ERP shall take all such necessary action.
(b) Grove shall give prompt notice to ERP, and ERP shall give prompt
notice to Grove, (i) if any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becomes untrue or inaccurate
in any respect or any such representation or warranty that is not so qualified
becomes untrue or inaccurate in any material respect or (ii) of the failure by
it to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
5.4 COSTS OF TRANSACTION. In the event that the Mergers are not
consummated, each of ERP and Grove shall pay their own costs and expenses
relating to the Mergers and the other transactions contemplated by this
Agreement; provided, however, that (i) all SEC filing fees in connection with
the Mergers shall be paid 50% by Grove and 50% by ERP, (ii) all printing costs
associated with the Proxy Statement shall be paid by Grove and (iii) all
printing costs associated with the Prospectus shall be paid by ERP. This Section
5.4 shall in no way affect the rights and obligations of the parties hereto
under Article 7 hereof.
5.5 PUBLIC ANNOUNCEMENTS. ERP and Grove will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other written public statements with respect to the
transactions contemplated by this Agreement, including the Mergers, and shall
not issue any such press release or make any such written public statement prior
to such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement will be in the form
agreed to by the parties hereto prior to the execution of this Agreement. For
purposes of this Section 5.5, "written public statements" shall
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include any written statement transmitted to the NYSE, AMEX, the shareholders of
Grove or the limited partners of ERP or Grove LP.
5.6 TAXES.
(a) ERP and Grove shall 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 this Agreement (together with any related interest, penalties or
additions to tax, "Transfer and Gains Taxes"). From and after the Company Merger
Effective Time, the Surviving Company shall, or shall cause ERP, as appropriate,
to pay or cause to be paid, without deduction or withholding from any amounts
payable to the holders of beneficial interests in the Surviving Company, all
Transfer and Gains Taxes.
(b) Grove will consult with and provide ERP the opportunity to review
and comment upon all returns, questionnaires, applications or other documents to
be filed after the date hereof by Grove with respect to Taxes including, without
limitation, Grove's federal, state and local income tax returns, as well as the
Form 5500 returns for its health and welfare benefit and retirement plans, for
its taxable year ended December 31, 1999 (collectively, the "Grove Tax
Returns"), and shall not file any Grove Tax Returns without the prior review and
comment of ERP, which shall not be unreasonably delayed.
(c) Grove will cause each Grove Subsidiary to consult with and provide
ERP the opportunity to review and comment upon all returns, questionnaires,
applications or other documents to be filed after the date hereof by each
respective Grove Subsidiary with respect to Taxes including, without limitation,
each Grove Subsidiary's federal, state and local income tax returns for its
taxable year ended December 31, 1999 (collectively, the "Grove Subsidiary Tax
Returns"), and Grove shall not cause any Grove Subsidiary to file any Grove
Subsidiary Tax Returns without the prior review and comment of ERP, which shall
not be unreasonably delayed.
(d) Prior to Closing, Grove shall use its reasonable good faith
efforts to obtain a final written closing agreement under Section 7121 of the
Code with respect to the matters set forth on Schedule 5.6(d) to the Grove
Disclosure Letter, which closing agreement shall be satisfactory in form and
substance to ERP in its sole and absolute discretion (the "Closing Agreement").
5.7 BENEFIT PLANS AND OTHER EMPLOYEE ARRANGEMENTS.
(a) BENEFIT PLANS. After the Company Merger Effective Time, all
employees of Grove or Grove OP who are employed by ERP shall, at the option of
ERP, either continue to be eligible to participate in an "employee benefit
plan," as defined in Section 3(3) of ERISA, currently maintained by Grove or
Grove OP which is, at the option of ERP, continued by ERP, or alternatively,
shall be eligible to participate in the same manner as other similarly situated
employees of ERP in any "employee benefit plan," as defined in Section 3(3) of
ERISA, sponsored or maintained by ERP for similarly situated employees after the
effectiveness of the Mergers. With respect to each such employee benefit plan,
service with Grove or any Grove
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Subsidiary (as applicable) shall be included for purposes of determining
eligibility to participate and vesting (if applicable). With respect to medical
benefits provided by ERP on and after the effectiveness of the Mergers, (i)
coverage that would otherwise be denied due to a preexisting illness shall be
provided to those employees who had such coverage under a plan sponsored by
Grove or any Grove Subsidiary (each, a "Prior Plan"), (ii) unless required by
law, no such employee shall be required to observe any waiting period prior to
entitlement to such benefits and (iii) each such employee shall be credited as
to previously paid deductible and co-payment amounts under any Prior Plan.
(b) SEVERANCE PROGRAMS. In no event shall Grove amend, modify or alter
in any manner any severance program or adopt or agree to any other programs,
agreements or arrangements which would in any way alter the Section 2.15
Payments, as set forth in Schedule 2.15 of the Grove Disclosure Letter. No
program, arrangement or agreement of Grove, or any term of this Agreement, shall
require ERP to continue the employment of any employee of Grove after the
Effective Time. As a condition to receiving a Section 2.15 Payment, each Section
2.15 Employee and each other terminated employee shall execute and deliver to
Grove an agreement and release in the applicable form as attached to Schedule
2.15 to the Grove Disclosure Letter (a " Release"). The Section 2.15 Payments
shall be satisfied immediately following the Company Merger Effective Time or as
otherwise set forth in Schedule 2.15 to the Grove Disclosure Letter.
(c) OPTIONEES.
(i) Prior to the Closing, Grove will, through the Grove Board (or any
committee thereof), take all action required (x) for, except as provided herein,
the cancellation as of the Company Merger Effective Time of all Grove Options in
consideration for cash in an amount set forth in Section 1.8 and (y) to provide
that any Grove Options granted on or about June 19, 2000 to non-employee trust
managers of Grove who were re-elected as trust managers at Grove's 2000 annual
meeting of shareholders shall be canceled as of the Company Merger Effective
Time for no consideration.
(ii) From and after the date hereof, Grove, through the Grove Board or
otherwise, will not modify any Plan or authorize, and Grove will not grant, any
Grove Options, Restricted Share Grants or any other equity or cash incentive
grants or awards of any kind, nature or description.
(d) WITHHOLDING. Grove shall require each employee who exercises a
Grove Option, receives Grove Shares pursuant to any existing commitment, or
otherwise receives any payment from Grove as a result of the transactions
contemplated by this Agreement, to pay to Grove in cash or Grove Shares an
amount sufficient to satisfy in full Grove's obligation to withhold Taxes
incurred by reason of such exercise, issuance or receipt.
5.8 INDEMNIFICATION.
(a) From and after the Company Merger Effective Time, ERP 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 Company Merger
Effective Time, an officer or trust
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manager of Grove or any Grove Subsidiary (the "Indemnified Parties") which is
the same as the exculpation and indemnification provided to the Indemnified
Parties by Grove (including advancement of expenses, if so provided, and
provided that such coverage provided by Grove shall have at least $5,000,000 of
current trust manager and officer insurance with no more than a $75,000
deductible) immediately prior to the Company Merger Effective Time in its
Declaration of Trust, Bylaws, or any Employee Plan as in effect at the close of
business on the date hereof; PROVIDED, that such exculpation and indemnification
covers actions on or prior to the Company Merger Effective Time, including,
without limitation, all transactions contemplated by this Agreement. ERP shall
use commercially reasonable efforts to obtain and, if obtained, maintain in
effect from the Company Merger Effective Time and continuing until the sixth
anniversary thereof "run-off" trust managers and officers liability insurance
with a coverage amount and other terms and conditions comparable to Grove's
current trust managers and officers liability insurance policy covering the
trust managers and officers of Grove with respect to their service as such prior
to the Company Merger Effective Time, PROVIDED, HOWEVER, that in no event shall
ERP be required pay a premium in excess of $300,000 for such coverage (the
"Run-Off Policy"). ERP shall provide Grove with a true and complete copy of a
binder with respect to the Run-Off Policy at least 10 days prior to the Company
Merger Effective Time, and shall use its reasonable best efforts to provide to
Grove a true and complete copy of the Run-Off Policy as proposed to be issued
prior to the Company Merger Effective Time. The premium for such policy shall be
paid in full at the Company Merger Effective Time.
(b) The provisions of this Section 5.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of ERP and Grove. ERP agrees to pay all costs and
expenses (including fees and expenses of counsel) that may be incurred by any
Indemnified Party or his or her heirs or his or her personal representatives in
successfully enforcing the indemnity or other obligations of ERP under this
Section 5.8. The provisions of this Section 5.8 shall survive the Company Merger
and are in addition to any other rights to which an Indemnified Party may be
entitled.
(c) In the event that ERP 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 company 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 the obligations set forth in this Section 5.8, which obligations
are expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each trustee and officer covered hereby.
5.9 DECLARATION OF DIVIDENDS AND DISTRIBUTIONS. From and after the date of
this Agreement, Grove or Grove OP shall not make any dividend or distribution to
its shareholders or Limited Partners without the prior written consent of ERP,
except for the authorization and payment of dividends or distributions with
respect to the Grove Common Shares and Grove LP Units of (i) subject to
reduction as provided below, an amount per share/unit for each full quarterly
dividend not to exceed $0.18 per share/unit (each a "Quarterly Dividend") and
(ii) subject to reduction as provided below, a pro-rated Quarterly Dividend for
the period following the end of the calendar quarter immediately preceding the
payment date for the latest Quarterly Dividend until the Company Merger
Effective Time, with such dividend to be pro-rated on the
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basis of the number of days in such period divided by ninety-two (92) (the
"Short Dividend"), provided however, that at least ten (10) days prior to the
setting of any record date or declaring of any dividend or distribution
permitted pursuant to this Section 5.9, Grove shall submit to ERP a then current
estimate of the fees and expenses of the transactions contemplated by this
Agreement, in reasonable detail and in such categories so as to conform to the
detail and categories set forth in Schedule 2.30 to the Grove Disclosure Letter,
which estimate shall be certified by the Chief Financial Officer of Grove and
subject to review by ERP. In conducting its review of such estimate, ERP shall
have the right to verify and examine all supporting documentation which was
utilized by Grove in determining such estimate, including, without limitation,
the right to contact vendors of Grove for the purpose of confirming such
estimates. To the extent that any estimated category of fees or expenses set
forth in such estimate exceeds the corresponding estimate of such category set
forth on Schedule 2.30 of the Grove Disclosure Letter, the total of such excess
amounts (the "Exceeded Cost Amount") shall be divided by the total number of
Grove Common Shares and Grove LP Units outstanding as of the record date for the
next distribution permitted to be made pursuant to this Section 5.9 (the "Per
Share Exceeded Cost Amount"), and the maximum dividend or distribution per
share/unit payable pursuant to this Section 5.9 shall be $0.18 per share/unit
less the Per Share Exceeded Cost Amount (or, in the case of a Short Dividend,
the maximum amount of such Short Dividend, as calculated above, less the Per
Share Exceeded Cost Amount). In the event that the Exceeded Cost Amount exceeds
the total aggregate distribution to be made pursuant to this Section 5.9, such
amount shall be carried forward and added to the Exceeded Cost Amount with
respect to the next distribution permitted under this Section 5.9. The record
and payment dates for each Quarterly Dividend shall be the same date as the
record and payment dates for the corresponding quarterly dividend for the EQR
Common Shares, as provided to Grove by written notice not less than twenty (20)
days prior to the record date for such quarterly EQR dividend. In the event that
a dividend with respect to Grove Common Shares or a distribution with respect to
Grove LP Units permitted by this Section 5.9 has (i) a record date prior to the
Company Merger Effective Time or Partnership Merger Effective Time, as the case
may be, and (ii) has not been paid as of such Company Merger Effective Time or
Partnership Merger Effective Time, as the case may be, the holders of Grove
Common Shares or Limited Partners shall be entitled to receive such
distribution.
5.10 NOTICES. Each party hereto shall provide such notice to its equity
holders of the Mergers and other transactions contemplated hereby as is required
under applicable law.
5.11 RESIGNATIONS. On the Closing Date, if requested by ERP, Grove shall
request that the trust managers, directors and officers of Grove and each of the
Grove Subsidiaries to submit their resignations from such positions, effective
as of the Company Merger Effective Time or Partnership Merger Effective Time, as
requested.
5.12 THIRD PARTY MANAGEMENT AGREEMENTS AND OUTSIDE MANAGEMENT AGREEMENTS.
Grove will not, and will not permit any Grove Subsidiary to, (i) amend the Third
Party Management Agreements and Outside Management Agreements, (ii) renew the
Third Party Management Agreements except on terms which permit its cancellation
by Grove or the applicable Grove Subsidiary on thirty days notice without
charge, penalty or other cost for such cancellation, or (iii) renew any Outside
Management Agreement.
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5.13 MODIFICATION OF ROSENTHAL TRANSACTIONS. Grove and Grove OP shall (i)
use its reasonable good faith efforts to cause the terms of the Rosenthal
Transactions to be modified to provide that (A) in lieu of the issuance of any
units of preferred limited partnership interest in Grove OP ("Preferred Units")
pursuant to the Rosenthal Transactions, one Grove LP Unit shall be issued in
substitution for each Preferred Unit which otherwise would have been issued
pursuant to the Rosenthal Transactions, (B) in the event that the Mergers are
consummated prior to the closing of the Rosenthal Transactions, then upon the
closing of the Rosenthal Transactions, in lieu of receiving Grove LP Units, the
Persons who would otherwise be entitled to receive Grove LP Units in connection
with the Rosenthal Transactions shall instead be entitled to receive, in
substitution for each Grove LP Unit they would have otherwise been entitled to
receive, either (y) the Partnership Cash Merger Consideration or (z) the
Partnership Unit Merger Consideration, in each case as adjusted by Section 1.12,
at the election of such Person, which election shall be made prior to the
Election Deadline, and (C) in the event the Rosenthal Transactions are
consummated prior to the effectiveness of the Mergers, each Grove LP Unit issued
pursuant to the Rosenthal Transactions shall be converted pursuant to the
Partnership Merger in accordance with Section 1.7 or (ii) with the prior written
consent of Oak OP, which consent shall not be unreasonably withheld, otherwise
modify or terminate the agreements relating to the Rosenthal Transactions;
provided, however, that in the event that the Rosenthal Transactions are
consummated prior to the effectiveness of the Mergers but subsequent to the
Record Date, each Person entitled to receive Grove LP Units pursuant to the
Rosenthal Transactions shall promptly be provided a Form of Election, which must
be completed and returned prior to the Election Deadline in accordance with
Section 1.9 if such Person wishes to elect to receive Partnership Unit Merger
Consideration pursuant to the Partnership Merger.
5.14 RETAIL SALE AGREEMENT. Immediately prior to, and on the date of, the
Partnership Merger Effective Time, Grove and Grove OP shall cause the
transactions contemplated by the Retail Sale Agreement to be consummated in
accordance with the terms of such agreement.
5.15 ELECTION TO UNDERTAKE DEFICIT RESTORATION OBLIGATION UNDER ERP
AGREEMENT. In the event that a Limited Partner holding any Grove LP Units who is
subject to a deficit restoration obligation under Section 13.5 of the Grove OP
Agreement elects pursuant to Section 1.7(b) of this Agreement to receive ERP
Units in exchange for any portion of such Limited Partner's Grove LP Units, then
such Limited Partner shall have the right to become an "Obligated Partner" (as
such term is defined under the ERP Agreement) of ERP by delivery of written
notice to ERP no later than the Election Deadline. Such written notice shall
specify the "Restoration Amount" (as such term is defined under the ERP
Agreement) for such Limited Partner, which amount shall not exceed such Limited
Partner's "Protected Amount" (as such term is defined under the Grove OP
Agreement) as determined immediately prior to the Partnership Merger Effective
Time.
5.16 TRANSFER OF GROVE LP UNITS. Grove, as general partner of Grove OP,
hereby consents pursuant to the Grove OP Agreement to the transfer of Grove LP
Units by New LLC subsequent to the Partnership Merger Effective Time to any
Affiliate of EQR or ERP.
5.17 TRANSFER OF GROVE CORP. SHARES. At the Closing, at the option of ERP,
Grove shall cause the owners of Grove Corp. to transfer to such person or
persons as ERP shall designate by written notice delivered to Grove prior to the
Closing, all of the shares of Grove
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Corp. owned by them, constituting all of the outstanding shares of Grove Corp.,
for an aggregate consideration of $1.00.
ARTICLE 6
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CONDITIONS
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6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGERS. The
obligations of each party to effect the Mergers shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) GROVE APPROVALS. This Agreement, the Merger and the transactions
contemplated by this Agreement shall have been approved and adopted by the Grove
Approvals.
(b) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings by the SEC seeking a stop order.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers or any of the other transactions contemplated hereby
shall be in effect.
(d) BLUE SKY LAWS. ERP shall have received all state securities or
"blue sky" permits and other authorizations necessary to issue ERP Units to the
Limited Partners.
6.2 CONDITIONS TO OBLIGATIONS OF ERP. The obligations of ERP to effect the
Mergers and to consummate the other transactions contemplated to occur on the
Closing Date are further subject to the following conditions, any one or more of
which may be waived in writing by ERP:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Grove and Grove OP set forth in this Agreement shall be true and correct as
of the Closing Date, as though made on and as of the Closing Date, except to the
extent the representation or warranty is expressly limited by its terms to
another date, and ERP shall have received a certificate (which certificate may
be qualified by Knowledge to the same extent as the representations and
warranties of Grove and Grove OP contained herein are so qualified) signed on
behalf of Grove and Grove OP by the chief executive officer or the chief
financial officer of Grove, in such capacity, to such effect. For the purposes
of Section 6.2(a), the representations and warranties of Grove shall be deemed
true and correct unless the breach of such representations and warranties, in
the aggregate, could reasonably be expected to have a Grove Material Adverse
Effect, PROVIDED, HOWEVER, that this sentence shall not apply to any beach of
Section 2.15 or Section 2.8.
(b) PERFORMANCE OF OBLIGATIONS OF GROVE. Grove and Grove OP shall have
performed in all material respects all covenants and obligations required to be
performed by them under this Agreement at or prior to the earlier of the Company
Merger Effective Time or Partnership Merger Effective Time, and ERP shall have
received a certificate signed on behalf of Grove by the chief executive officer
or the chief financial officer of Grove, in such capacity, to such effect.
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(c) MATERIAL ADVERSE CHANGE. Since March 31, 2000, there shall have
been no Grove Material Adverse Change and ERP shall have received a certificate
of the chief executive officer or chief financial officer of Grove, in such
capacity, certifying to such effect.
(d) OPINION OF MARYLAND COUNSEL. ERP and Grove shall have received the
opinion of Maryland counsel reasonably satisfactory to Oak OP addressing the
matters set forth in Exhibit "C" hereto.
(e) OPINION RELATING TO REIT STATUS. ERP shall have received an
opinion, dated as of the date of the Proxy Statement and the Closing Date, of
Cummings & Lockwood reasonably satisfactory to ERP, that, commencing with its
taxable year ended December 31, 1994, (A) Grove was organized and has operated
in conformity with the requirements for qualification as a REIT under the Code
and (B) Grove OP has been during and since 1997 and continues to be, treated for
federal income tax purposes as a partnership, and not as a corporation or
association taxable as a corporation (with customary exceptions, assumptions and
qualifications and based upon customary representations and the Closing
Agreement).
(f) OPINION OF COUNSEL. ERP shall have received an opinion from
Cummings & Lockwood or other counsel to Grove reasonably satisfactory to ERP
dated the Closing Date in form and substance reasonably satisfactory to ERP
addressing the matters set forth in Exhibit "D" hereto.
(g) CONSENTS. Except as set forth on Schedule 6.2 to the Grove
Disclosure Letter, all consents and waivers (including, without limitation,
waivers of rights of first refusal) from third parties necessary in connection
with the consummation of the transactions contemplated by this Agreement shall
have been obtained, other than such consents and waivers from third parties,
which, if not obtained, would not result, individually or in the aggregate, in
an ERP Material Adverse Effect or a Grove Material Adverse Effect.
(h) CERTAIN FEES AND EXPENSES. The actual fees and expenses incurred
in connection with the transactions contemplated by this Agreement shall not
exceed (i) the aggregate estimate of all such fees and expenses, set forth on
Schedule 2.30 to the Grove Disclosure Letter, or (ii) to the extent specifically
provided on Schedule 2.30, the estimates of the specific categories of fees and
expenses, as set forth on such Schedule.
(i) RETAIL PROPERTY SALE. The transactions contemplated by the Retail
Sale Agreement shall have been consummated in accordance with the terms of such
agreement.
(j) CLOSING AGREEMENT AND COSTS. Grove shall have obtained the Closing
Agreement; provided, however, that the Closing Agreement Costs shall not exceed
$3.5 million without the prior written consent of ERP, which consent may be
given in ERP's sole and absolute discretion. As used herein "Closing Agreement
Costs" shall mean all Taxes, fees (including without limitation any fees for
professional services), or other costs incurred by or imposed upon any of Grove,
Grove OP, any Grove Subsidiary, EQR, ERP or any ERP Subsidiary, with respect to,
or as a result of, obtaining the Closing Agreement and the matters to be
addressed by the Closing Agreement ("Closing Agreement Costs")
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6.3 CONDITIONS TO OBLIGATIONS OF GROVE. The obligation of Grove and Grove
OP to effect the Mergers and to consummate the other transactions contemplated
to occur on the Closing Date is further subject to the following conditions, any
one or more of which may be waived in writing by Grove:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of ERP set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date, as though made on and as of the
Closing Date, except to the extent the representation or warranty is expressly
limited by its terms to another date, and Grove shall have received a
certificate (which certificate may be qualified by Knowledge to the same extent
as the representations and warranties of ERP contained herein are so qualified)
signed on behalf of ERP by the chief executive officer and the chief financial
officer of EQR to such effect. For the purposes of this Section 6.3(a), the
representations and warranties of ERP shall be deemed true and correct unless
the breach of such representations and warranties, in the aggregate, could
reasonably be expected to have an ERP Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF ERP. ERP shall have performed in all
material respects all covenants and obligations required to be performed by it
under this Agreement at or prior to the earlier of the Company Merger Effective
Time or the Partnership Merger Effective Time, and Grove shall have received a
certificate of ERP signed on behalf of ERP by the chief executive officer or the
chief financial officer of EQR, in such capacity, to such effect.
(c) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no ERP Material Adverse Change and Grove shall have received a
certificate of the chief executive officer or chief financial officer of ERP, in
such capacity, certifying to such effect.
(d) OPINION RELATING TO REIT STATUS. Grove shall have received an
opinion, dated as of the date of the Proxy Statement and the Closing Date, of
Piper Marbury Rudnick & Wolfe, reasonably satisfactory to Grove, that,
commencing with its taxable year ended December 31, 1992, (A) EQR was organized
and has operated in conformity with the requirements for qualification as a REIT
under the Code and (B) ERP has been during and since 1992 and continues to be,
treated for federal income tax purposes as a partnership, and not as a
corporation or association taxable as a corporation (with customary exceptions,
assumptions and qualifications and based upon customary representations).
(e) OPINION OF COUNSEL. Grove shall have received an opinion from
Piper Marbury Rudnick & Wolfe or other counsel to ERP reasonably satisfactory to
Grove dated the Closing Date in form and substance reasonably satisfactory to
Grove addressing the matters set forth in Exhibit "E" hereto dated the Closing
Date.
(f) CONSENTS. All consents and waivers (including, without limitation,
waivers or rights of first refusal) from third parties necessary in connection
with the consummation of the transactions contemplated hereby shall have been
obtained, other than such consents and waivers from third parties, which, if not
obtained, would not result, individually or in the aggregate, in an ERP Material
Adverse Effect or a Grove Material Adverse Effect.
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(g) CLOSING AGREEMENT. Grove shall have obtained, and delivered to
ERP, the Closing Agreement. Under no circumstance shall Grove be obligated to
obtain the Closing Agreement if the Closing Agreement Costs are in excess of
$3.5 million, unless ERP agrees, in its sole and absolute discretion, to pay the
amount of Closing Agreement Costs in excess of $3.5 million.
ARTICLE 7
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TERMINATION, AMENDMENT AND WAIVER
---------------------------------
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
acceptance of the Partnership Certificate of Merger by the Delaware Secretary,
whether before or after the Grove Approvals are obtained:
(a) by mutual written consent duly authorized by both the general
partner of ERP and the Grove Board;
(b) by ERP, upon a breach of any representation, warranty, covenant,
obligation or agreement on the part of Grove or Grove OP set forth in this
Agreement, in either case such that the conditions set forth in Section 6.2(a)
or Section 6.2(b), as the case may be, would be incapable of being satisfied by
March 31, 2001 (or as otherwise extended);
(c) by Grove, upon a breach of any representation, warranty, covenant
obligation or agreement on the part of ERP set forth in this Agreement, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b), as the case may be, would be incapable of being satisfied by March 31,
2001 (or as otherwise extended);
(d) by either ERP or Grove, if any judgment, injunction, order, decree
or action by any Governmental Entity of competent authority preventing the
consummation of either the Partnership Merger or Company Merger shall have
become final and nonappealable;
(e) by either ERP or Grove, if the Mergers shall not have been
consummated before March 31, 2001; provided, that in the case of termination
pursuant to this Section 7.1(e), the terminating party shall not have breached
in any material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the occurrence of the failure referred to
in this Section and, provided further, that (i) if the Mergers shall not have
been consummated solely due to the failure to receive any required lender, HUD
or MHFA consents (as listed on Schedule 2.5 of the Grove Disclosure Letter),
March 31, 2001 shall be automatically extended to May 31, 2001 and (ii) any
termination of this Agreement resulting solely by reason of the failure to meet
the condition set forth in (i) above shall be pursuant to this Section 7.1(e);
(f) by either ERP or Grove if, upon a vote at a duly held Grove
Shareholders Meeting or any adjournment thereof, the Grove Shareholder Approvals
shall not have been obtained as contemplated by Section 5.1;
(g) by either ERP or Grove if the Grove Partner Approvals shall not
have been obtained as contemplated by Section 5.1;
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(h) by Grove, if prior to the Grove Shareholders Meeting or the Grove
OP Partners Meeting, the Grove Board shall have withdrawn or modified its
approval or recommendation of the Mergers or this Agreement in connection with,
or approved or recommended, a Superior Acquisition Proposal; and
(i) by ERP if (i) prior to the Grove Shareholders Meeting or the Grove
OP Partners Meeting, the Grove Board shall have withdrawn or modified in any
manner adverse to ERP its approval or recommendation of the Mergers or this
Agreement in connection with, or approved or recommended, any Superior
Acquisition Proposal, or (ii) Grove shall have entered into a definitive
agreement with respect to any Acquisition Proposal.
7.2 CERTAIN FEES AND EXPENSES.
(a) If this Agreement shall be terminated (i) pursuant to Section
7.1(h) or 7.1(i), then Grove will pay ERP (provided Grove was not entitled to
terminate this Agreement pursuant to Section 7.1(c) at the time of such
termination) a fee equal to the Break-Up Fee (as defined below), or (ii)
pursuant to Section 7.1(b), 7.1(f) or 7.1(g), then Grove will pay ERP (provided
Grove was not entitled to terminate this Agreement pursuant to Section 7.1(c) at
the time of such termination) an amount equal to the Expense Fee (as defined
below). If this Agreement shall be terminated by ERP or Grove pursuant to
Section 7.1(e) and Grove has not, at the time of such termination, (i) obtained
and delivered to ERP the Closing Agreement in satisfaction of both Section
6.2(j) and Section 6.3(g) or (ii) caused to be delivered to ERP the legal
opinion referenced in Section 6.2(e), then Grove will pay ERP an amount equal to
the Expense Fee. If this Agreement shall be terminated pursuant to Section
7.1(c), then ERP will pay Grove (provided ERP was not entitled to terminate this
Agreement pursuant to Section 7.1(b) at the time of such termination), an amount
equal to the Expense Fee. If the Merger is not consummated (other than due to
the termination of this Agreement pursuant to Section 7.1(a), 7.1(c) or 7.1(e)
(excluding any termination pursuant to Section 7.1(e) with respect to which
Grove is obligated to pay ERP the Expense Fee)), and at the time of the
termination of this Agreement an Acquisition Proposal has been received by
Grove, and either prior to the termination of this Agreement or within twelve
(12) months thereafter Grove or any Grove Subsidiary enters into any written
Acquisition Proposal which is subsequently consummated (whether or not such
Acquisition Proposal is the same Acquisition Proposal which had been received at
the time of the termination of this Agreement), then Grove shall pay the
Break-Up Fee to ERP, PROVIDED, HOWEVER, that for purposes of this sentence only,
(x) "Acquisition Proposal" shall not include a sale of Grove Properties to a
single purchaser or related group of purchasers for a Purchase Price (as defined
below) equal to or in excess of $158.6 million (an "Exempt Sale") and (y) ERP
shall have a right of first offer for a period of thirty days (but no right of
first refusal) with respect to the Grove Properties subject to the Exempt Sale.
EQR shall communicate its offer with respect to a proposed Exempt Sale within
thirty days of its receipt of notice that (i) Grove desires to sell certain
Grove Properties which sale, if consummated, would constitute an Exempt Sale (an
"Offer to Sell") or (ii) Grove has received a bona fide offer to purchase
certain Grove Properties which sale, if consummated, would constitute an Exempt
Sale (an "Offer to Purchase"). Grove shall provide notice to ERP of an Offer to
Sell or Offer to Purchase as soon as practicable (but in all cases within three
(3) days) following its decision to undertake an Offer to Sell or its receipt of
an Offer to Purchase, as the case may be. In the case of an Offer to Sell, (i)
if Grove does not accept ERP's offer with respect to such proposed
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Exempt Sale, Grove shall be prohibited from consummating such proposed Exempt
Sale with any other Person or Persons at a price or on other terms equal to or
less than that offered by ERP and (ii) in the event ERP does not make an offer
with respect to such proposed Exempt Sale within the time period prescribed
herein, Grove shall be free to consummate such proposed Exempt Sale with any
Person or Persons. In the case of an Offer to Purchase, (i) if ERP's offer with
respect to such proposed Exempt Sale shall (x) equal or exceed the value of the
Offer to Purchase and (y) contain substantially equivalent terms in other
respects, Grove shall be bound to consummate the Exempt Sale with ERP as soon as
practicable in accordance with such offer, (ii) EQR shall have the right to
consummate such proposed Exempt Sale with Grove on substantially the same terms
as the Offer to Purchase and (iii) in the event that ERP makes an offer which is
declined by Grove, Grove must consummate the Exempt Sale with the Person or
Persons making the Offer to Purchase, on better terms than the declined ERP
offer, within six months of Grove's refusal of such ERP offer. For purposes of
this Section 7.2 "Purchase Price" shall include the value of the consideration
paid for the Grove Properties, including the value of any direct or indirect
debt assumed, retired or released in connection with the Exempt Sale. Any
amounts to be paid by the purchaser contingent upon future events, if any, shall
be estimated in a manner to be mutually agreed upon by the parties hereto. All
communications with respect to an Exempt Sale shall be in accordance with
Section 8.2.
(b) The payment of the Break-Up Fee shall be compensation and
liquidated damages for the loss suffered by ERP as a result of the failure of
the Mergers to be consummated and to avoid the difficulty of determining damages
under the circumstances and neither party shall have any other liability to the
other after the payment of the Break-Up Fee. The Break-Up Fee shall be paid by
Grove to ERP, or the Expense Fee shall be paid by Grove to ERP or ERP to Grove
(as applicable), in immediately available funds within fifteen (15) days after
the date of the event giving rise to the obligation to make such payment
occurred.
(c) As used in this Agreement, "Break-Up Fee" shall be an amount equal
to the lesser of (i) $8,500,000 plus the Expense Fee (the "Base Amount") and
(ii) the sum of (A) the maximum amount that can be paid to ERP without causing
it to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code
determined as if the payment of such amount did not constitute income described
in Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("Qualifying
Income"), as determined by independent accountants to ERP, and (B) in the event
ERP receives a letter from outside counsel (the "Break-Up Fee Tax Opinion")
indicating that ERP has received a ruling from the IRS holding that ERP's
receipt 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 the receipt by ERP of the excess of
the Base Amount over the amount payable in clause (A) following the receipt of
and pursuant to such ruling would not be deemed constructively received prior
thereto, the Base Amount less the amount payable under clause (A) above. In the
event that ERP determines, in its absolute and sole discretion, that it is not
able to receive the full Base Amount, Grove shall place the unpaid amount in
escrow and shall not release any portion thereof to ERP unless and until Grove
receives any one or combination of the following: (i) a letter from ERP's
independent accountants indicating the maximum amount that can be paid at that
time to ERP without causing ERP to fail to meet the REIT Requirements or (ii) a
Break-Up Fee Tax Opinion, in which event Grove shall pay to ERP the lesser of
the unpaid Base Amount or the maximum amount stated in the letter referred to in
(i) above. Grove's obligation to pay any unpaid portion
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of the Break-Up Fee shall terminate three years from the date of this Agreement.
The "Expense Fee" payable to ERP or Grove, as the case may be (the "Recipient"),
shall be an amount equal to the least of (i) $2,000,000, (ii) the Recipient's
documented out-of-pocket expenses incurred in connection with this Agreement and
the transactions contemplated hereby (including, without limitation, all
attorneys', accountants' and investment bankers' fees and expenses) and (iii)
the sum of (A) the maximum amount that can be paid to the Recipient without
causing it to fail to meet the requirements of Sections 856(c)(2) and (3) of the
Code determined as if the payment of such amount did not constitute Qualifying
Income, as determined by independent accountants to the Recipient, and (B) in
the event the Recipient receives a Break-Up Fee Tax Opinion indicating that the
Recipient has received a ruling from the IRS holding that the Recipient's
receipt of the Expense Fee would either constitute Qualifying Income or would be
excluded from gross income within the meaning of the REIT Requirements or that
receipt by the Recipient of the excess of the Expense Fee over the amount
payable under clause (A) following the receipt of and pursuant to such ruling
would not be deemed constructively received prior thereto, the Expense Fee less
the amount payable under clause (A) above. In the event that the Recipient is
not able to receive the full Expense Fee, the Payor (as defined below) shall
place the unpaid amount in escrow and shall not release any portion thereof to
the Recipient unless and until the Payor receives any one or combination of the
following: (i) a letter from the Recipient's independent accountants indicating
the maximum amount that can be paid at that time to the Recipient without
causing the Recipient to fail to meet the REIT Requirements or (ii) a Break-Up
Fee Tax Opinion, in which event the Payor shall pay to the Recipient the lesser
of the unpaid Expense Fee or the maximum amount stated in the letter referred to
in (i) above. The obligation of ERP or Grove, as applicable ("Payor"), to pay
any unpaid portion of the Expense Fee shall terminate three years from the date
of this Agreement.
7.3 EFFECT OF TERMINATION. In the event of termination of this Agreement by
either Grove or ERP as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of ERP, Grove or Grove OP, other than the last sentence of Section 5.2, Section
7.2, this Section 7.3 and Article 8; provided that (a) if this Agreement is
terminated by ERP pursuant to Section 7.1(b), Grove shall not be entitled to any
of the benefits of Section 7.2, or (b) if this Agreement is terminated by Grove
pursuant to Section 7.1(c), ERP shall not be entitled to any of the benefits of
Section 7.2.
7.4 AMENDMENT. This Agreement may be amended by the parties in writing by
action of the general partner of ERP and the Grove Board at any time before or
after the Grove Approvals are obtained and prior to the filing of the Company
Articles of Merger or Partnership Certificate of Merger; provided, however,
that, after the Grove Approvals are obtained, no such amendment, modification or
supplement shall be made which changes the amount or type of consideration to be
received by the shareholders of Grove or partners of Grove OP or which by law
requires the further approval of the shareholders of Grove or partners of Grove
OP without obtaining such further approval.
7.5 EXTENSION; WAIVER. At any time prior to the earlier of the Company
Merger Effective Time or Partnership Merger Effective Time, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.4,
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waive compliance with any of the agreements or conditions of the other party
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
ARTICLE 8
---------
GENERAL PROVISIONS
------------------
8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement solely to confirm the representations and warranties
in this Agreement shall survive the Company Merger Effective Time or Partnership
Merger Effective Time, as the case may be. This Section 8.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Times.
8.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) if to ERP, to: ERP Operating Limited Partnership
Two North Riverside Plaza, Suite 400
Chicago, Illinois 60606
Attention: Bruce C. Strohm
Fax No.: (312) 454-0039
with a copy to: Piper Marbury Rudnick & Wolfe
203 North LaSalle Street, Suite 1800
Chicago, Illinois 60601-1293
Attention: Errol R. Halperin, Esq.
Fax No. (312) 236-7516
(b) if to Grove or Grove OP, to: Grove Property Trust
598 Asylum Avenue
Hartford, Connecticut 06105
Attention: Joseph R. LaBrosse
Fax No.: (860) 527-0401
with a copy to: Cummings & Lockwood
Four Stamford Plaza
Stamford, Connecticut 06904
Attention: Michael J. Hinton, Esq.
Fax No.: (203) 351-4535
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All notices shall be deemed given only when actually received.
8.3 INTERPRETATION. All references made herein to any party shall include
any predecessor to such party. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement, the
Grove Disclosure Letter, the ERP Disclosure Letter, the Confidentiality
Agreement and the other agreements entered into in connection with the Mergers,
including, without limitation, the executed documents the forms of which are
included in the Grove Disclosure Letter or are otherwise specifically referred
to herein, (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter of this Agreement and (b) except as provided in
Section 5.7 and Section 5.8 ("Third Party Provisions"), are not intended to
confer upon any person other than the parties hereto any rights or remedies. The
Third Party Provisions may be enforced by the beneficiaries thereof or on behalf
of the beneficiaries thereof by the trust managers of Grove who had been trust
managers of Grove prior to the Company Merger Effective Time.
8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
8.7 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned or delegated, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
8.8 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Illinois or Connecticut or in any Illinois or
Connecticut State court located in Illinois or Connecticut, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself (without
making such submission exclusive) to the personal jurisdiction of any federal
court located in the
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State of Illinois or Connecticut or any Illinois or Connecticut State court in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement and (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court.
8.9 SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.10 NON-RECOURSE TO TRUSTEES, TRUST MANAGERS AND OFFICERS.
(a) This Agreement and all documents, certificates, agreements,
understandings and arrangements relating hereto have been entered into or
executed on behalf of Grove (both in its individual capacity and in its capacity
as general partner of Grove OP) by the undersigned in his capacity as a trust
manager or officer of Grove, which has been formed as a Maryland real estate
investment trust pursuant to its Third Amended and Restated Declaration of Trust
dated as of March 14, 1997, as amended, and not individually, and neither the
trust managers, officers nor shareholders of Grove shall be personally bound or
have any personal liability hereunder. ERP shall look solely to the assets of
Grove for satisfaction of any liability of Grove with respect to this Agreement
and any other agreements to which it is a party. ERP will not seek recourse or
commence any action against any of the shareholders of Grove or any of their
personal assets, and will not commence any action for money judgments against
any of the trust managers or officers of Grove or seek recourse against any of
their personal assets, for the performance or payment of any obligation of Grove
hereunder or thereunder.
(b) This Agreement and all documents, certificates, agreements,
understandings and arrangements relating hereto have been entered into or
executed on behalf of ERP by the undersigned in his capacity as a trustee or
officer of EQR, the sole general partner of ERP, which has been formed as a
Maryland real estate investment trust pursuant to an Amended and Restated
Declaration of Trust of EQR dated as of November 2, 1992, as amended and
restated, and not individually, and neither the trustees, officers nor equity
holders of EQR or ERP shall be personally bound or have any personal liability
hereunder. Grove shall look solely to the assets of ERP for satisfaction of any
liability of ERP with respect to this Agreement and any other agreements to
which it is a party. Grove will not seek recourse or commence any action against
any of the equity holders of ERP or any of their personal assets, and will not
commence any action for money judgments against any of the trustees or officers
of EQR or seek recourse against any of their personal assets, for the
performance or payment of any obligation of ERP hereunder or thereunder.
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IN WITNESS WHEREOF, ERP, Grove and Grove OP have caused this Agreement to be
signed by their respective officers thereunto duly authorized all as of the date
first written above.
ERP OPERATING LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Equity Residential Properties Trust
Its: General Partner
By: /s/ BRUCE C. STROHM
---------------------------------------------
Name: Bruce C. Strohm
---------------------------------------
Title: Executive Vice President
--------------------------------------
GROVE PROPERTY TRUST, a Maryland real estate
investment trust
By: /s/ JOSEPH R. LaBROSSE
----------------------------------------------
Name: Joseph LaBrosse
----------------------------------------
Title: Chief Financial Officer
---------------------------------------
GROVE OPERATING, L.P., a Delaware limited
partnership
By: Grove Property Trust
Its: General Partner
By: /s/ JOSEPH R. LaBROSSE
---------------------------------------------
Name: Joseph LaBrosse
---------------------------------------
Title: Chief Financial Officer
--------------------------------------
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