FINAL EXECUTION COPY
AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION
DATED AS OF
FEBRUARY 13, 2002
BY AND AMONG
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS,
THAT CERTAIN OHIO TRUST, DECLARED AS OF OCTOBER 1, 1996, BY XXXXXX XXXXXXX,
TRUSTEE,
FIRST UNION MANAGEMENT, INC.,
GGC MERGER SUB, INC.,
GOTHAM PARTNERS, L.P.,
GOTHAM GOLF PARTNERS, L.P.,
FLORIDA GOLF ASSOCIATES, L.P.,
FLORIDA GOLF PROPERTIES, INC.,
AND
GOTHAM GOLF CORP.
TABLE OF CONTENTS
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Page
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ARTICLE I
GENERAL
Section 1.01. Defined Term Index.............................................3
ARTICLE II
THE MERGERS
Section 2.01. The Mergers....................................................6
Section 2.02. Closing........................................................7
Section 2.03. Effective Time.................................................7
Section 2.04. Effects of the Mergers.........................................7
Section 2.05. Certificate of Incorporation and Bylaws........................7
Section 2.06. Directors......................................................8
Section 2.07. Officers.......................................................8
Section 2.08. Effects on Beneficial Interests and Capital Stock..............8
Section 2.09. Surrender and Payment; Designation of Paying Agent and
FUMI Agent....................................................10
Section 2.10. [RESERVED]....................................................13
Section 2.11. Warrants......................................................13
Section 2.12. Subscription Rights; Designation of Subscription Rights
Agent; Mechanics..............................................13
Section 2.13. The Notes.....................................................16
Section 2.14. The Escrow Fund...............................................18
ARTICLE III
THE CONTRIBUTION
Section 3.01. The Contribution..............................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GOTHAM, FGA, FGPI AND FGP
Section 4.01. Organization and Qualification................................20
Section 4.02. Authority; Non-Contravention; Approvals.......................20
Section 4.03. GGP Interests.................................................21
Section 4.04. Solicitation Documentation; Proxy Statement-Prospectus........21
Section 4.05. Availability of Funds.........................................22
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Section 4.06. No Knowledge of Certain Facts.................................22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GGP, GGC AND SUB
Section 5.01. Organization and Qualification................................22
Section 5.02. Capitalization................................................23
Section 5.03. Interim Operations of GGC and Sub.............................23
Section 5.04. Subsidiaries..................................................23
Section 5.05. Authority; Non-Contravention; Approvals.......................24
Section 5.06. Reports and Financial Statements..............................25
Section 5.07. Absence of Undisclosed Liabilities; Material Adverse
Effect........................................................26
Section 5.08. Litigation....................................................26
Section 5.09. Solicitation Documentation; Proxy Statement-Prospectus........26
Section 5.10. No Violation of Law...........................................26
Section 5.11. Compliance with Agreements; Certain Contracts.................27
Section 5.12. Taxes.........................................................28
Section 5.13. Employee Benefit Plans; ERISA.................................29
Section 5.14. Environmental Matters.........................................30
Section 5.15. Intellectual Property.........................................31
Section 5.16. Brokers and Finders...........................................31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
THE FUMI SHARE TRUST AND FUMI
Section 6.01. Organization and Qualification................................32
Section 6.02. Capitalization................................................32
Section 6.03. Subsidiaries..................................................34
Section 6.04. Authority; Non-Contravention; Approvals.......................35
Section 6.05. Reports and Financial Statements..............................36
Section 6.06. Absence of Undisclosed Liabilities; Material Adverse
Effect........................................................37
Section 6.07. Litigation....................................................38
Section 6.08. Solicitation Documentation; Proxy Statement-Prospectus........38
Section 6.09. No Violation of Law...........................................38
Section 6.10. Compliance with Agreements; Certain Contracts.................39
Section 6.11. Taxes.........................................................41
Section 6.12. Employee Benefit Plans; ERISA.................................41
Section 6.13. Labor Controversies...........................................43
Section 6.14. Environmental Matters.........................................43
Section 6.15. Intellectual Property.........................................43
Section 6.16. Opinion of Financial Advisor..................................44
Section 6.17. Brokers and Finders...........................................44
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ARTICLE VII
COVENANTS
Section 7.01. Conduct of the Company's Business Pending the Mergers.........44
Section 7.02. Certain Adjustment of Consideration...........................47
Section 7.03. Preparation of Solicitation Documentation and Proxy
Statement-Prospectus; Company Meeting.........................47
Section 7.04. No Solicitation...............................................48
Section 7.05. Access to Information; Confidentiality........................49
Section 7.06. Post-Closing Note Redemption..................................49
Section 7.07. Section 16 Matters............................................50
Section 7.08. Public Announcements..........................................50
Section 7.09. Expenses and Fees.............................................50
Section 7.10. Agreement to Cooperate........................................51
Section 7.11. Trustees' and Officers' Indemnification.......................52
Section 7.12. Supplemental Indenture........................................53
Section 7.13. Market Listing................................................53
Section 7.14. Certain Actions and Undertakings by the FUMI Share Trust......53
Section 7.15. Advice of Changes.............................................53
Section 7.16. Affiliates....................................................53
Section 7.17. Creation of Golf LLC..........................................54
Section 7.18. Purchase of Underlying Shares.................................54
ARTICLE VIII
CONDITIONS TO THE MERGERS AND CONTRIBUTION
Section 8.01. Conditions to the Obligations of Each Party...................54
Section 8.02. Conditions to the Obligations of Gotham, GGP, FGA, FGPI,
GGC and Sub...................................................55
Section 8.03. Conditions to the Obligations of the Company..................56
ARTICLE IX
TERMINATION
Section 9.01. Termination...................................................56
ARTICLE X
MISCELLANEOUS
Section 10.01. Effect of Termination........................................58
Section 10.02. Non-Survival of Representations and Warranties...............58
Section 10.03. Notices......................................................58
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Section 10.04. Interpretation...............................................59
Section 10.05. Miscellaneous................................................60
Section 10.06. Counterparts.................................................60
Section 10.07. Amendments; Extensions.......................................60
Section 10.08. Entire Agreement.............................................61
Section 10.09. Severability.................................................61
Section 10.10. Specific Performance.........................................61
Section 10.11. No Admission.................................................61
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EXHIBITS
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EXHIBIT A - Voting Agreement
EXHIBIT B - Mirror Series A Certificate of Designations EXHIBIT C - Note Terms
EXHIBIT D - Form of GGP Amended and Restated Agreement of Limited
Partnership and related constitutive documents
EXHIBIT E - Form of Amended and Restated Certificate of Incorporation of GGC
EXHIBIT F - Form of Amended and Restated Bylaws of GGC
EXHIBIT G - Form of GGP Equityholders Agreement
EXHIBIT H - Fairness Opinion
EXHIBIT I - Form of Second Supplemental Indenture
EXHIBIT J - Form of Affiliate Letter
SCHEDULES
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SCHEDULE A - Gotham Disclosure Schedule
SCHEDULE B - GGP Disclosure Schedule
SCHEDULE C - Company Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION
---------------------------------------------
AGREEMENT AND PLAN OF MERGER AND CONTRIBUTION, dated as of February
13, 2002 (this "AGREEMENT"), by and among First Union Real Estate Equity and
Mortgage Investments, an Ohio business trust (the "COMPANY"), that certain Ohio
trust, declared as of October 1, 1996, by Xxxxxx Xxxxxxx, trustee (the "FUMI
SHARE TRUST"), First Union Management, Inc., a Delaware corporation ("FUMI"),
Gotham Partners, L.P., a Delaware limited partnership ("GOTHAM"), Gotham Golf
Partners, L.P., a Delaware limited partnership ("GGP"), Gotham Golf Corp., a
Delaware corporation and wholly owned subsidiary of GGP ("GGC"), GGC Merger Sub,
Inc., a Delaware corporation and a wholly owned subsidiary of GGC ("SUB"),
Florida Golf Properties, Inc., a Florida corporation and the sole general
partner of GGP ("FGPI"), and Florida Golf Associates, L.P., a Virginia limited
partnership ("FGA"), (the Company, the FUMI Share Trust, Gotham, GGP, GGC, Sub,
FGPI and FGA collectively, the "PARTIES").
W I T N E S S E T H:
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WHEREAS, the respective Boards of Trustees, Trustees, Boards of
Directors or partners of the Company, the FUMI Share Trust, FUMI, GGP, GGC and
Sub, as the case may be, have approved this Agreement and the transactions
contemplated hereby, and deem such matters advisable and in the best interests
of their respective common shareholders, common equity participants, partners or
holders of beneficial interests or similar common equity instruments, as the
case may be, and agree to consummate the transactions contemplated hereby,
including:
(A) the merger of the Company with and into GGC, with GGC as
the surviving entity, in accordance with the General Corporation Law of
the State of Delaware (the "DGCL") and the Business Trust Law of the State
of Ohio (the "BSTL"), on the terms and conditions set forth herein
(defined below as the FUR Merger), whereby, among other things, each
issued and outstanding share of beneficial interests, par value $1.00 per
share, of the Company (each a "COMPANY COMMON SHARE") other than the
Company Common Shares owned by the Company (or any of its direct or
indirect wholly owned subsidiaries), issued and outstanding immediately
prior to the Effective Time (as defined below) shall be converted into the
right to receive (i) an amount in cash as set forth in this Agreement,
(ii) three-fiftieths (3/50ths) of a Subscription Right (as defined below)
(iii) at the option of the holder of the Company Common Share, either (X)
an additional amount in cash as set forth in this Agreement or (Y),
subject to the Adjustment Event (as defined below), 0.0057461 of a Note
(as defined below) and (iv) if applicable, the Escrow Distribution Amount
(as defined below) as set forth in this Agreement;
(B) the merger of Sub with and into FUMI, with FUMI as the
surviving entity, in accordance with the DGCL, on the terms and conditions
set forth herein (defined below as the Sub Merger, together with the FUR
Merger, the "MERGERS"), whereby, among other things, (i) each share of
common stock of Sub, par value $0.01 per share (each a "SUB SHARE"),
issued and outstanding immediately prior to the Effective Time shall be
converted into and become a fully paid and nonassessable share of FUMI
common stock, without par value (each a "FUMI SHARE"), and (ii) each FUMI
Share issued and outstanding immediately prior to the Effective Time shall
(X) automatically be cancelled and retired, (Y) cease to exist and (Z) be
converted into the right to receive an amount in cash as set forth in this
Agreement; and, each holder of FUMI Shares immediately prior to the
Effective Time shall cease to have any rights with respect thereto; and
(C) the contribution by (i) each of Gotham and FGA and
Gotham's controlled affiliates of their respective limited partner
interests in GGP to GGC and (ii) FGPI of its general partner interests in
GGP to GGC by transferring such general partner interests directly to a
single-member Delaware limited liability company that, as of the Effective
Time, shall be a single-member Delaware limited liability company and
wholly owned subsidiary of GGC, created solely for the purpose of
effecting the transactions contemplated by this Agreement ("GOLF LLC")
(the matters described in the foregoing clauses (i) and (ii) collectively,
the "CONTRIBUTION"), in each case, in exchange for common stock of GGC;
WHEREAS, the parties acknowledge and agree that the Mergers and the
Contribution are part of a single integrated plan, are cross-conditioned and
shall be effected serially at a single closing in accordance herewith and
applicable law;
WHEREAS, as a condition to the willingness of, and as an inducement
to, Gotham, Sub, GGC and GGP to enter into this Agreement, contemporaneously
with the execution and delivery of this Agreement, certain holders of Company
Common Shares are entering into simultaneously herewith that certain Voting
Agreement relating to the agreement of such holders to vote to approve the
transactions contemplated by this Agreement, attached as EXHIBIT A;
WHEREAS, the parties intend that the Contribution, taken together
with the FUR Merger, shall constitute an exchange described in Section 351(a) or
351(b) of the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, the Company Debt (as defined below) and the Company
Preferred Shares (as defined below) will remain outstanding and be converted or
exchanged, as the case may be, into securities of the Surviving Corporation (as
defined below) after the Effective Time (as defined below), with substantially
identical rights; and
WHEREAS, the parties desire to make certain representations,
warranties, covenants and other agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
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ARTICLE I
GENERAL
Section 1.01. Defined Term Index.
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TERM REFERENCE
---- ---------
Acquisition Proposal............................... Section 7.04(a)
Acquisition Transaction............................ Section 7.04(a)
Action............................................. Section 7.11(a)
Adjustment Event................................... Section 7.02
Affiliate Letter................................... Section 7.16
Aggregate Holdback................................. Section 2.08(c)(1)
Agreement.......................................... Preamble
Basic Subscription Privilege....................... Section 2.12(a)
BSTL............................................... Recitals
Cash Amount........................................ Section 2.08(c)
Cash Consideration................................. Section 2.08(c)
Cash Consideration Adjustment...................... Section 2.08(c)(2)
Cash Electors...................................... Section 2.08(c)
Certificates....................................... Section 2.08(d)
Certificates of Merger............................. Section 2.03
Circle Tower Lease................................. Section 6.10(c)
Closing............................................ Section 2.02
Closing Date....................................... Section 2.02
Code............................................... Recitals
Common Certificate................................. Section 2.08(c)
Company............................................ Preamble
Company 10-K....................................... Section 6.05
Company 10-Q....................................... Section 6.05
Company Common Share............................... Recitals
Company Debt....................................... Section 6.04(b)
Company Debt Indenture............................. Section 7.12
Company Disclosure Schedule........................ Article VI
Company Financial Advisor.......................... Section 6.16
Company Material Adverse Effect.................... Section 6.01
Company Meeting.................................... Section 4.04
Company Option..................................... Section 6.02(a)
Company Option Plans............................... Section 6.02(e)
Company Permits.................................... Section 6.09
Company Plans...................................... Section 6.12(a)
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TERM REFERENCE
---- ---------
Company Preferred Shares........................... Section 2.08(a)
Company Required Approvals......................... Section 6.04(c)
Company SEC Reports................................ Section 6.05
Company Shareholder Approval....................... Section 6.04(a)
Confidentiality Agreement.......................... Section 7.05(a)
Contract........................................... Section 4.02(c)
Contributed Property............................... Section 3.01
Contribution....................................... Recitals
Conversion Price................................... Section 6.02(f)
Current GGP Agreement.............................. Section 5.01
Declined Notes..................................... Section 2.13(c)
DGCL............................................... Recitals
Dividend Holdback.................................. Section 2.08(c)(1)
Due Authorizations................................. Section 7.10(a)
Effective Time..................................... Section 2.03
Environmental Law.................................. Section 5.14(b)
Equityholders Agreement............................ Section 5.02(d)
ERISA.............................................. Section 5.13(a)
Escrow Agreement................................... Section 7.11(a)
Escrow Amount...................................... Section 2.14(a)
Escrow Appraiser................................... Section 2.14(c)
Escrow Arrangement................................. Section 2.14(a)
Escrow Distribution Amount......................... Section 2.14(b)
Escrow Distribution Costs.......................... Section 2.14(b)
Escrow Distribution Date........................... Section 2.14(b)
Escrow Fund........................................ Section 2.14(a)
Escrow Share Holdback.............................. Section 2.08(c)(1)
Excess Shares...................................... Section 2.12(d)
Exchange Act....................................... Section 4.02(b)
Existing Company Credit Facilities................. Section 7.01(e)
Expiration Date.................................... Section 2.12(b)
Fairness Opinion................................... Section 6.16
FGA................................................ Preamble
FGPI............................................... Preamble
Fractional Note Purchase Rights.................... Section 2.13(c)
FUMI............................................... Preamble
FUMI Agent......................................... Section 2.09(a)
XXXX Xxxx Amount................................... Section 2.08(e)
FUMI Share......................................... Recitals
FUMI Share Trust................................... Preamble
FUR Merger......................................... Section 2.01(a)
GAAP............................................... Section 5.06(a)
GGC................................................ Preamble
GGP................................................ Preamble
GGP Disclosure Schedule............................ Article V
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TERM REFERENCE
---- ---------
GGP Material Adverse Effect........................ Section 5.01
GGP Permits........................................ Section 5.10
GGP Plans.......................................... Section 5.13(a)
GGP Required Approvals............................. Section 5.05(c)
GGP Reports........................................ Section 5.06(a)
GGP Subsidiary..................................... Section 5.04
Golf LLC........................................... Recitals
Gotham............................................. Preamble
Gotham Note Payment................................ Section 2.13(e)
Gotham Notes....................................... Section 2.13(e)
Gotham Disclosure Schedule......................... Article IV
Gotham Required Approvals.......................... Section 4.02(b)
Governmental Authority............................. Section 7.10(b)
Governmental Permits............................... Section
2.01(a)(viii)
Hazardous Substance................................ Section 5.14 (c)
Indemnified Parties................................ Section 7.11(a)
Indemnified Party.................................. Section 7.11(a)
Indenture Trustee.................................. Section 7.12
Intellectual Property.............................. Section 5.15
Interest Date...................................... Section 2.08(c)(2)
IRS................................................ Section 5.12
Merger Consideration............................... Section 2.08(c)
Merger Share....................................... Section 2.08(c)
Mergers............................................ Recitals
Mirror Series A Preferred Shares................... Section 2.08(d)
Mirror Series A Certificate of Designations........ Section 2.08(d)
Multiemployer Plan................................. Section 5.13(f)
Note............................................... Section 2.08(c)
Note Agent......................................... Section 2.13(a)
Note Cash Amount................................... Section 2.08(c)
Note Consents...................................... Section 7.02
Note Election...................................... Section 2.08(c)
Note Terms......................................... Section 2.13(b)
NYSE............................................... Section 4.02(b)
Over-allotment Right............................... Section 2.12(e)
Oversubscription Privilege......................... Section 2.12(d)
parties............................................ Preamble
Paying Agent....................................... Section 2.09(a)
Post-Closing Note Redemption....................... Section 7.06
Potential Acquiror................................. Section 7.04(b)
Preferred Certificate.............................. Section 2.08(d)
Proposed Determination............................. Section 2.14(c)
Proxy Statement-Prospectus......................... Section 4.04
Reasonably Expected Liabilities.................... Section 2.14(a)
Record Date........................................ Section 2.12
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TERM REFERENCE
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Redeemed Notes..................................... Section 7.06
Redemption Time.................................... Section 7.06
Registration Statement............................. Section 4.04
Registration Statement Effective Date.............. Section 2.12
REIT............................................... Section 6.11(b)
Remaining Escrow Amount............................ Section 2.14(b)
Remaining Notes Section 2.13(d)
Restated GGC Agreements............................ Section 5.01
Restated GGP Agreement............................. Section 5.01
SEC................................................ Section 2.12
Second Supplemental Indenture...................... Section 7.12
Securities Act..................................... Section 4.02(b)
Shared Costs....................................... Section 7.10(a)
Shared Costs Holdback.............................. Section 2.08(c)(1)
Shareholder Note Purchase Right.................... Section 2.13(d)
Solicitation Documentation......................... Section 4.04
Sub................................................ Preamble
Sub Merger......................................... Section 2.01(b)
Sub Merger Consideration........................... Section 2.08(f)
Sub Share.......................................... Recitals
Subscription Forms................................. Section 2.12
Subscription Price................................. Section 2.12(a)
Subscription Right................................. Section 2.08(c)
Subscription Rights Agent.......................... Section 2.12
Superior Proposal.................................. Section 7.04(b)
Surviving Corporation.............................. Section 2.01(a)
Tax Returns........................................ Section 5.12
Taxes.............................................. Section 5.12
Underlying Shares.................................. Section 2.08(c)
Undisclosed Liability.............................. Section 2.14(a)
VenTek............................................. Article VI
Warrant Agreement.................................. Section 2.11
Warrants........................................... Section 2.11
ARTICLE II
THE MERGERS
Section 2.01. The Mergers. (a) Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL and
under the BSTL, the Company shall be merged with and into GGC at the Effective
Time (the "FUR MERGER"). At the Effective Time, the separate existence of the
Company shall cease, and GGC shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and shall succeed to and assume all of the rights and
obligations of the Company in accordance with the DGCL and the BSTL.
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(b) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, Sub shall be merged with and into
FUMI at the Effective Time (the "SUB MERGER"). At the Effective Time, the
separate existence of Sub shall cease, and FUMI shall continue as the surviving
corporation and shall succeed to and assume all of the rights and obligations of
Sub in accordance with the DGCL.
Section 2.02. Closing. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Mergers and the Contribution
(the "CLOSING") shall take place at 10:00 a.m., New York time, no later than the
fifth business day after the satisfaction or (to the extent permitted by
applicable law) waiver of the conditions set forth in Article VIII (other than
those conditions to be satisfied or waived at the Closing), at the offices of
Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at such other time, date or place agreed to in writing by Gotham and the
Company. The date on which the Closing occurs is referred to in this Agreement
as the "CLOSING DATE".
Section 2.03. Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, as soon as practicable on or, if
permissible, prior to the Closing Date, certificates of merger, an amended
declaration of trust or other appropriate documents (in any such case, the
"CERTIFICATES OF MERGER") shall be duly prepared, executed and acknowledged by
the parties in accordance with the relevant provisions of (A) the DGCL and (B)
the BSTL, and filed with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Ohio. The Mergers shall become effective upon
the filing of the Certificates of Merger with the Secretary of State of the
State of Delaware or at such subsequent time or date as Gotham and the Company
shall agree in writing and specify in the Certificates of Merger. The time at
which the Mergers shall become effective is referred to in this Agreement as the
"EFFECTIVE TIME".
Section 2.04. Effects of the Mergers. The FUR Merger shall have the
effects set forth in Sections 254 and 259 of the DGCL. The Sub Merger shall have
the effects set forth in Sections 251 and 259 of the DGCL.
Section 2.05. Certificates of Incorporation and Bylaws. (a) At the
Effective Time, (i) subject to the applicable requirements of Section 7.11, the
Certificate of Incorporation of GGC, as in effect immediately prior to the
Effective Time, shall become the Certificate of Incorporation of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law and (ii) the Certificate of Incorporation of FUMI, as in effect
immediately prior to the Effective Time, shall be amended and restated to read
in substantially the same form as the Certificate of Incorporation of Sub, as in
effect immediately prior to the Effective Time, until thereafter changed or
amended as provided therein or by applicable law.
(b) At the Effective Time, (i) subject to the applicable
requirements of Section 7.11, the Bylaws of GGC, as in effect immediately prior
to the Effective Time, shall become the Bylaws of the Surviving Corporation,
until thereafter changed or amended as provided therein or by applicable law and
(ii) the Bylaws of FUMI, as in effect immediately prior to the Effective Time,
shall be amended and restated to read in substantially the same form as the
Bylaws of Sub, as in effect immediately prior to the Effective Time, until
thereafter changed or amended as provided therein or by applicable law.
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Section 2.06. Directors. (a) At the Effective Time, the Board of
Directors of GGC immediately prior to the Effective Time shall become the Board
of Directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(b) At the Effective Time, the Board of Directors of Sub immediately
prior to the Effective Time shall become the Board of Directors of FUMI, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
Section 2.07. Officers. (a) At the Effective Time, the officers of
GGC immediately prior to the Effective Time shall become the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
(b) At the Effective Time, the officers of Sub immediately prior to
the Effective Time shall be the officers of FUMI, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 2.08. Effects on Beneficial Interests and Capital Stock. At
the Effective Time, by virtue of the Mergers and without any action on the part
of the holder of any shares of beneficial interests (including all equity
capital) or common stock, as the case may be, of the Company, GGC, Sub or FUMI:
(a) Cancellation of Company Treasury Stock. Each (i) Company Common
Share that is owned by the Company (or any of its direct or indirect
wholly owned subsidiaries) immediately prior to the Effective Time, as
well as each share of the Company's Series A Cumulative Convertible
Redeemable Preferred Shares of Beneficial Interests, par value $25.00 per
share (the "COMPANY PREFERRED SHARES"), that is owned by the Company (or
any of its direct or indirect wholly owned subsidiaries) immediately
prior to the Effective Time, and (ii) Sub Share that is owned by Sub (or
any of Sub's or GGC's direct or indirect wholly owned subsidiaries)
immediately prior to the Effective Time, (X) shall automatically be
cancelled and retired, (Y) shall cease to exist and (Z) no consideration
shall be delivered in exchange therefor.
(b) Cancellation of GGC Common Stock. Each share of GGC common stock
immediately prior to the Effective Time (i) shall automatically be
cancelled and retired, (ii) shall cease to exist and (iii) no
consideration shall be delivered in exchange therefor; and, each holder
of GGC common stock immediately prior to the Effective Time shall cease
to have any rights with respect thereto.
(c) Conversion of Company Common Shares. Each Company Common Share
issued and outstanding immediately prior to the Effective Time (other
than shares to be cancelled in accordance with Section 2.08(a)) (each, a
"MERGER SHARE") shall be converted into the right to receive the
following (the "MERGER CONSIDERATION"): (i) subject to the Adjustment
Event provided in Section 7.02 an amount in cash (rounded to the nearest
whole cent and without interest) equal to $2.20 less the Aggregate
Hold-
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back (defined below) (such amount, the "CASH AMOUNT"); (ii) three
fiftieths (3/50ths) of an uncertificated right to subscribe (each such
right, a "SUBSCRIPTION RIGHT") for common stock in the Surviving
Corporation (the "UNDERLYING SHARES"), in accordance with Section 2.12;
(iii) an additional amount in cash, without interest, equal to $0.35 (the
"NOTE CASH AMOUNT" and collectively with the Cash Amount, the "CASH
CONSIDERATION"), or, subject to the Adjustment Event, and at the option
of the holder of the Company Common Shares (the "NOTE ELECTION"),
0.0057461 of a debt security (one such debt security, a "NOTE") backed by
certain assets of a special-purpose entity, in accordance with Section
2.13; and (iv) if applicable, the Escrow Distribution Amount (defined
below) as of the Escrow Distribution Date (defined below), in accordance
with Section 2.14(b). If and to the extent holders of Company Common
Shares fail to make an election in connection with the Note Election,
such shareholders shall be deemed to have elected to receive the Note
Cash Amount (such holders who elect, or are deemed to elect, to receive
the Note Cash Amount, the "CASH ELECTORS"). At the Effective Time, all
Company Common Shares shall no longer be outstanding, shall automatically
be cancelled and shall cease to exist, and each holder of a certificate
that represented any such shares immediately prior to the Effective Time
(a "COMMON CERTIFICATE") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration.
(1) For purposes of this Section 2.08(c), the "AGGREGATE
HOLDBACK" shall mean the sum of the Escrow Share Holdback, the
Dividend Holdback and the Shared Costs Holdback. For purposes
hereof, the "ESCROW SHARE HOLDBACK" shall mean the Escrow Amount
(defined below) divided by the aggregate number of Merger
Shares; the "DIVIDEND HOLDBACK" shall mean the total amount of
dividends that the Company pays with respect to Company Common
Shares after the date hereof and prior to the Effective Time
divided by the aggregate number of Merger Shares; and the
"SHARED COSTS HOLDBACK" shall mean one-half of the Shared Costs
(defined below) divided by the aggregate number of Merger
Shares.
(2) If the Mergers, the Contribution (defined below) and the
transactions contemplated hereby are not consummated by August
31, 2002 (the "INTEREST DATE"), the aggregate Cash Amount shall
be increased by an amount of cash equal to 6% per annum of the
Cash Consideration (the "CASH CONSIDERATION ADJUSTMENT");
provided, however, that no Cash Consideration Adjustment shall
accrue or be paid in connection with Merger Consideration on
account of this Section 2.08(c)(2) if the Mergers, the
Contribution and the transactions contemplated hereby are not
consummated prior to the Interest Date and (i) as of such date,
Gotham, GGP, GGC, Sub, FGPI and FGA have complied with their
respective obligations hereunder or (ii) in the event that such
persons have not so complied, such noncompliance is primarily
due to the failure of the Company, the FUMI Share Trust, FUMI or
their respective subsidiaries to comply with their respective
obligations hereunder.
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(d) Conversion of Company Preferred Shares. Subject to the existing
rights of the Company Preferred Shares, each Company Preferred Share
issued and outstanding immediately prior to the Effective Time (other
than shares to be cancelled in accordance with Section 2.08(a)) shall be
converted into the right to receive, by way of book entry credit in the
Surviving Corporation's transfer books, one uncertificated security of
the Surviving Corporation (the "MIRROR SERIES A PREFERRED SHARES"), with
the rights and privileges described in the Certificate of Designations
attached as EXHIBIT B (the "MIRROR SERIES A CERTIFICATE OF
DESIGNATIONS"), which provides, among other things, that (1) each Mirror
Series A Preferred Share shall have substantially identical rights as
each Company Preferred Share and (2) each Mirror Series A Preferred Share
shall be entitled to one-tenth (1/10th) of the vote attributable to an
Underlying Share, voting as a class with the Underlying Shares. At the
Effective Time, all such Company Preferred Shares shall no longer be
outstanding, shall automatically be cancelled and shall cease to exist,
and each holder of a certificate that represented any such shares
immediately prior to the Effective Time (a "PREFERRED CERTIFICATE",
together with Common Certificates, the "CERTIFICATES") shall cease to
have any rights with respect thereto, except the right to receive Mirror
Series A Preferred Shares (without interest).
(e) Conversion of FUMI Shares. Each FUMI Share issued and
outstanding immediately prior to the Effective Time shall be converted
into the right to receive $10.00 (the "XXXX XXXX AMOUNT"). At the
Effective Time, all such FUMI Shares shall no longer be outstanding,
shall automatically be cancelled and shall cease to exist, and each
holder of a certificate that represented any such shares immediately
prior to the Effective Time shall cease to have any rights with respect
thereto, except the right to receive the XXXX Xxxx Amount (without
interest).
(f) Conversion of Sub Shares. Each Sub Share issued and outstanding
immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 2.08(a)) shall be converted into and
become a fully paid and nonassessable FUMI Share (the "SUB MERGER
CONSIDERATION"). At the Effective Time, all such Sub Shares shall no
longer be outstanding, shall automatically be cancelled and shall cease
to exist, and each holder of a certificate that represented any such
shares immediately prior to the Effective Time shall cease to have any
rights with respect thereto, except the right to receive the Sub Merger
Consideration (without interest).
Section 2.09. Surrender and Payment; Designation of Paying Agent and
FUMI Agent. (a) Prior to the Registration Statement Effective Date (as defined
below), (i) for the benefit of holders of Company Common Shares and Company
Preferred Shares, GGC shall designate, or shall cause to be designated (pursuant
to an agreement in form and substance reasonably acceptable to GGC and the
Company), a bank or trust company acceptable to the Company in its reasonable
discretion to act as transfer agent, registrar, paying agent and exchange agent
for (V) the payment of the Merger Consideration and (W) the exchange of Company
Preferred Shares for Mirror Series A Preferred Shares, in each case upon
surrender of Certificates in accordance with this Article II (the "PAYING
AGENT"), from time to time after the Effective Time and (ii) for the benefit of
holders of FUMI Shares and Sub Shares, the Company and GGC shall jointly
designate, or shall cause to be designated, a single representative (the "FUMI
AGENT") to acts as transfer agent, registrar and exchange agent for (X) the
payment of the XXXX Xxxx
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Amount and (Y) the payment of the Sub Merger Consideration. The Company or the
Surviving Corporation, as applicable, shall provide on a timely basis to the
Paying Agent and the FUMI Agent, as and when needed after the Effective Time,
cash in amounts sufficient for the payment of the Cash Consideration upon
surrender of the Certificates and for the payment of the XXXX Xxxx Amount. For
the avoidance of doubt, it is acknowledge and agreed that, subject to applicable
law, the delivery of any uncertificated security as part of the Merger
Consideration or Sub Merger Consideration shall be made by book entry credit in
the transfer books of the Company or the Surviving Corporation (as applicable)
for the account of the holders of Company Common Shares, Company Preferred
Shares, Sub Shares, FUMI Shares or Notes, as the case may be.
(b) Cash Consideration and Company Preferred Share Exchange
Procedure. As soon as reasonably practicable after the Effective Time but in no
event later than the fifth business day following the Closing Date, the Paying
Agent shall mail to each holder of record of a Common Certificate and/or a
Preferred Certificate (i) a form of letter of transmittal (which shall comply
with all applicable laws and which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates held by such person
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and shall be in customary form and have such other provisions as GGC and the
Company may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration or Mirror
Series A Preferred Shares, as applicable. Upon surrender by any shareholder of
the Company of any Certificate to the Paying Agent or to such other agent or
agents as may be appointed by GGC, together with such letter of transmittal,
duly completed and validly executed, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate shall be
entitled to receive (in the case of securities, by way of book entry credit in
the Surviving Corporation's transfer books) in exchange therefor (i) the Merger
Consideration due and owing to such holder; or (ii) that number of
uncertificated Mirror Series A Preferred Shares equal to the number of Company
Preferred Shares exchanged therefor, each as applicable. In the event of a
transfer of ownership of Company Common Shares or Company Preferred Shares that
is not registered in the transfer books of the Company, (i) the proper amount of
Merger Consideration may be paid in exchange for such Company Common Shares or
(ii) the proper number of Mirror Series A Preferred Shares may be exchanged for
such Company Preferred Shares, in each case as applicable, to a person other
than the person in whose name the applicable Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
GGC and the Surviving Corporation that such tax has been paid or is not
applicable. No interest shall be paid or shall accrue on the cash payable upon
surrender of any Certificate. The foregoing notwithstanding, the Paying Agent,
in its capacity as Transfer Agent, Paying Agent and Subscription Rights Agent
(as defined below), will be authorized and instructed to net from any cash owing
to a holder of Company Common Shares any monies due and owing in respect of the
Basic Subscription Privilege (as defined below), the Oversubscription Privilege
(as defined below) or the Over-allotment Right (as defined below), as
applicable.
(c) Transfer Books; Uncertificated Shares. At the close of business
on the day on which the Effective Time occurs, (i) the transfer books of the
Company shall be closed, and there shall be no further registration of transfers
on the transfer books of the Surviving Corporation of Company Common Shares or
Company Preferred Shares (as applicable) that were
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outstanding immediately prior to the Effective Time and (ii) the transfer books
of Sub shall be closed, and there shall be no further registration of transfers
on the transfer books of FUMI of Sub Shares that were outstanding immediately
prior to the Effective Time. The foregoing notwithstanding, if, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Paying Agent, or FUMI Shares or Sub Shares are presented to Sub or the FUMI
Agent, for transfer or for any other reason, such Certificates, FUMI Shares or
Sub Shares, as the case may be, shall be exchanged as provided in this Article
II. Further, in connection with the payment of the Merger Consideration or the
exchange of Company Preferred Shares for Mirror Series A Preferred Shares, the
receipt of Underlying Shares on account of the Basic Subscription Privilege or
the Oversubscription Privilege, any Subscription Rights, Mirror Series A
Preferred Shares or Underlying Shares issued in connection therewith shall be
uncertificated, subject to applicable law. Any transfers in respect of such
Subscription Rights, Mirror Series A Preferred Shares or Underlying Shares shall
be made by book entry on the transfer books of the subject entity.
(d) No Liability; Distributions with Respect to Unexchanged Shares.
None of the parties hereto, the Paying Agent or the FUMI Agent shall be liable
to any person in respect of any cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. All funds held by the
Paying Agent or FUMI Agent for payment to the holders of unsurrendered
Certificates or unsurrendered FUMI Shares, as the case may be, and unclaimed at
the end of one year after the Effective Time shall be returned to the Surviving
Corporation, after which time any holder of unsurrendered Certificates or FUMI
Shares shall look as a general creditor only to the Surviving Corporation for
payment of such funds to which such holder may be due, subject to applicable
law. The foregoing notwithstanding, no dividends or other distributions declared
or made after the Effective Time with respect to the capital stock of the
Surviving Corporation, with a record date after the Effective Time, shall be
paid to the holder of any unsurrendered or unexchanged Certificate or FUMI
Shares with respect to the capital stock represented thereby until the holder of
record of such Certificate surrenders such Certificate. Subject to applicable
law, following the surrender of any such Certificate, there shall be paid to the
record holder of capital stock of the Surviving Corporation, issued in exchange
therefor as applicable, without interest, at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such capital stock.
(e) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may reasonably direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent shall pay or exchange in respect of such lost,
stolen or destroyed Certificate the Merger Consideration or the Mirror Series A
Preferred Shares, as applicable.
(f) Withholding Rights. The FUMI Agent, the Surviving Corporation or
the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of FUMI Shares,
Subscription Rights, Underlying Shares, Company Common Shares or Company
Warrants such amounts as the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
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that amounts are so withheld by the Surviving Corporation or the Paying Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of FUMI Shares, Subscription Rights, Underlying
Shares, Company Common Shares or Company Warrants in respect of which such
deduction and withholding was made by the FUMI Agent, the Surviving Corporation
or the Paying Agent.
Section 2.10. [RESERVED].
Section 2.11. Warrants. At the Effective Time, each outstanding
warrant (the "WARRANTS") to purchase Company Common Shares pursuant to that
certain Agreement, dated November 2, 1998 by and between Enterprise Asset
Management Company, Inc. and the Company (the "WARRANT AGREEMENT") shall be (i)
adjusted by the Company's Board of Trustees in accordance with the terms of the
Warrant Agreement to reflect any Adjustment Events (as such term is defined in
the Warrant Agreement) and (ii) converted into an obligation of the Company (or
the Surviving Corporation, as the case may be) to pay, and a right of the holder
thereof to receive in full satisfaction of such Warrant, such consideration as
is required by the terms of the Warrants on account of this Agreement and the
transactions contemplated thereby.
Section 2.12. Subscription Rights; Designation of Subscription
Rights Agent; Mechanics. Prior to the Registration Statement Effective Date and
pursuant to an agreement in form and substance reasonably acceptable to GGC and
the Company, providing for, among other things, the tendering (or, if
applicable, the netting against any Cash Consideration owing to the subject
holder of Company Common Shares) of the applicable per share Subscription Price
(as defined below) by the holders of Company Common Shares as of the Effective
Time upon the valid exercise of Subscription Rights in exchange for Underlying
Shares, GGC shall designate the Paying Agent to act as agent (the "SUBSCRIPTION
RIGHTS AGENT") for (i) the distribution of Subscription Rights by way of book
entry credit in the Company's transfer books for the account of each holder of
Company Common Shares as of the Effective Time; (ii) distribution of Underlying
Shares in connection with the valid exercise of any Subscription Rights; and
(iii) collection of (X) any monies due and owing to the Surviving Corporation on
account of the valid exercise of any Subscription Right and (Y) any documents as
may reasonably be required by the Subscription Rights Agent in order to evidence
the valid exercise of the Subscription Rights (including the Basic Subscription
Privilege and the Oversubscription Privilege) (such documents, the "SUBSCRIPTION
FORMS"); provided that holders of Company Common Shares as of the Effective Time
shall be required to submit monies due and Subscription Forms to the
Subscription Rights Agent prior to the Expiration Date. In order to facilitate
the exercise of the Subscription Rights, the Subscription Forms shall be
included in the Solicitation Documentation but shall not themselves represent
any right to Subscription Rights or any other security, value or any part of the
Merger Consideration. In furtherance of the foregoing and subject to the
agreement of the Company and Gotham, the Subscription Rights Agent shall make
Subscription Forms available upon request by any holder of Company Common Shares
(whether such holder held such share as of the Record Date (as defined below) or
thereafter) and shall institute such procedures as may reasonably be required by
the Subscription Rights Agent in order to allow any such holder to exercise his
or her Subscription Rights (including the Basic Subscription Privilege and the
Oversubscription Privilege) prior to the Expiration Date. Except as provided
otherwise in this Section 2.12, the Surviving Corporation, acting through and
with the assistance of the Subscription Rights Agent, shall cause Underlying
Shares purchased pursuant to the valid exercise of Sub-
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scription Rights to be entered into the transfer books of the Surviving
Corporation in the name of each subscriber as soon as reasonably practicable
after the Effective Time but in no event later than the fifth business day
following the Closing Date.
Subject to the consummation of all of the transactions contemplated
hereby, at a date determined by the Company's Board of Trustees in consultation
with GGC (such date, the "RECORD DATE"), with the acknowledgement and agreement
that the Record Date shall also be the record date for the Company Meeting, and
after the Registration Statement (as defined in Section 4.04) that is part of
the Proxy Statement-Prospectus (as defined in Section 4.04) is declared
effective by the Securities and Exchange Commission (the "SEC") (such date, the
"REGISTRATION STATEMENT EFFECTIVE Date") and without any action on the part of
any holder of Company Common Shares, the following actions, undertakings and
events shall occur:
(a) Basic Subscription Privilege. For every fifty (50) Company
Common Shares that a holder of record holds as of the Effective Time, the
Subscription Rights Agent shall distribute by way of book entry credit in
the Company's transfer books for the account of such holder three (3)
uncertificated Subscription Rights, with each Subscription Right
exercisable to purchase one Underlying Share at $20.00 per share (the
"SUBSCRIPTION PRICE") (with such Underlying Shares to be issued and
distributed by way of book entry credit in the Surviving Corporation's
transfer books for the account of by the Surviving Corporation through
the Subscription Rights Agent, and with all proceeds on account of any
exercise of Subscription Rights to go to the Surviving Corporation,
subject to fees and expenses) (the "BASIC SUBSCRIPTION PRIVILEGE"). For
purposes of clarity, it is agreed and understood that holders of Company
Common Shares may exercise the Subscription Rights granted to such
holders in connection herewith in whole or in part.
(b) Expiration of Subscription Rights; Effect of Expiration. Each
holder entitled to receive a Subscription Right as of the Effective Time
shall have the right to submit to the Subscription Rights Agent a
Subscription Form evidencing such holder's exercise of his or her
Subscription Right, provided, however, that the Subscription Rights Agent
receive such Subscription Form no later than one business day prior to
the Effective Time (the "EXPIRATION DATE"). On or after the Expiration
Date, the Subscription Rights Agent and the Surviving Corporation shall
not be obligated to and shall not recognize the validity of any
Subscription Form evidencing a holder's decision to exercise a
Subscription Right, or otherwise honor any purported exercise of any
Subscription Rights received by the Subscription Agent, regardless of
when the Subscription Form relating to such exercise were sent. Notice of
any extension of the Expiration Date shall be made through a joint press
release issued by the Company and GGC.
(c) No Fractional Subscription Rights. No fraction of Subscription
Rights shall be issued as part of the Merger Consideration, but in lieu
thereof each holder of Company Common Shares who would otherwise be
entitled to a fraction of Subscription Rights shall receive a number of
Subscription Rights rounded up or down to the nearest whole number (with
fractions equal to or greater than 0.5 being rounded up).
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(d) Oversubscription Privilege. Subject to the allocation described
below, each Subscription Right shall also carry the right (the
"OVERSUBSCRIPTION PRIVILEGE") to subscribe for Underlying Shares at the
Subscription Price, up to the aggregate number of Underlying Shares not
subscribed through the Basic Subscription Privilege (such number, the
"EXCESS SHARES"). If the Excess Shares are insufficient to satisfy all of
the subscriptions pursuant to the Oversubscription Privilege, the Excess
Shares shall be allocated pro rata among those holders of Subscription
Rights exercising such Oversubscription Privilege in proportion to the
number of Underlying Shares that each such holder exercising the
Oversubscription Privilege has requested pursuant to the Oversubscription
Privilege; provided, however, that (i) no fractional Underlying Shares
shall be allocated, but, in lieu thereof, each holder of Subscription
Rights exercising the Oversubscription Privilege who otherwise would be
entitled to a fraction of an Underlying Share shall receive a number of
Underlying Shares rounded to the nearest whole number and (ii) if such
pro rata allocation results in any Subscription Rights holder being
allocated a greater number of Excess Shares than such holder subscribed
for pursuant to the exercise of such holder's Oversubscription Privilege,
then such additional Excess Shares shall be allocated pro rata among all
other holders exercising the Oversubscription Privilege in proportion to
the number of Underlying Shares that each such other holder exercising
the Oversubscription Privilege has requested pursuant to the
Oversubscription Privilege. All beneficial holders of Subscription Rights
who exercise the Basic Subscription Privilege shall be entitled to
exercise the Oversubscription Privilege. In respect of the
Oversubscription Privilege, Underlying Shares shall be entered into the
transfer books of the Surviving Corporation in the name of each
subscriber as soon as practicable following the Closing Date and after
all prorations have been effected. Funds received, if any, in payment of
the Subscription Price for Excess Shares subscribed for pursuant to the
Oversubscription Privilege prior to notification by the Subscription
Agent of the allocation of Excess Shares shall be held in a segregated
account pending issuance of the Excess Shares. If a Subscription Rights
holder exercising the Oversubscription Privilege is allocated less than
all of the Excess Shares to which such holder wished to subscribe
pursuant to the Oversubscription Privilege, the excess funds paid by such
holder in respect of the Subscription Price for Excess Shares not issued
shall be returned by mail without interest or deduction as soon as
practicable after the Closing Date.
(e) Additional Shares. Anything contained herein to the contrary
notwithstanding, (i) in connection with the transactions contemplated
hereby, GGC may in its sole discretion offer additional Underlying Shares
to holders of Company Common Shares or third parties at the Subscription
Price (the "OVER-ALLOTMENT RIGHT") (provided, however, that any
Underlying Shares offered pursuant to the Over-allotment Right shall not
exceed 15% of the total number of Underlying Shares available pursuant to
the Basic Subscription Privilege) and (ii) subject to applicable law, GGC
may at any time prior to or after the Effective Time issue, sell or offer
to issue or sell debt or equity securities of itself to any persons or
entity on terms and conditions of its own choosing, in its sole
discretion.
(f) Nominees. Banks, brokers and other nominee holders of
Subscription Rights who exercise the Basic Subscription Privilege and the
Oversubscription Privilege on behalf of beneficial owners of Subscription
Rights shall be required to certify to the
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Subscription Rights Agent and the Surviving Corporation, in
connection with the exercise of each of the Basic Subscription Privilege
and the Oversubscription Privilege, as to the aggregate number of
Subscription Rights that have been exercised and the number of Excess
Shares that are being subscribed for pursuant to the Oversubscription
Privilege by each beneficial owner of Subscription Rights on whose behalf
such bank, broker or other nominee holder is acting.
Section 2.13. The Notes. In connection with the payment of the
Merger Consideration (but in lieu of the Note Cash Amount), and subject to the
Adjustment Event provided in Section 7.02 and the consummation of all of the
transactions contemplated hereby, prior to the Registration Statement Effective
Date, the following actions, undertakings and events shall occur:
(a) Designation of the Note Agent. GGC shall designate (pursuant to
an agreement in form and substance reasonably acceptable to GGC and the
Company) the Paying Agent (or such other person or entity as GGC shall
designate who is acceptable to the Company in its reasonable discretion)
to act as agent for the distribution of Notes and collection of documents
evidencing the right to a Note (the "NOTE AGENT").
(b) Distribution of the Notes. Upon a Note Election by a holder of
Company Common Shares and the execution of any documentation that the
Note Agent shall reasonably require, for every 174.0296 shares of Company
Common Shares that a holder of record possesses as of the Record Date,
the Note Agent shall distribute by way of book entry credit in the
Surviving Corporation's transfer books for the account of such electing
holder one uncertificated Note, each with a face amount of $100 and with
terms and conditions as set forth in EXHIBIT C (the "NOTE TERMS"). Except
as provided otherwise in the Note Terms, the Surviving Corporation,
acting through and with the assistance of the Note Agent, shall cause the
Notes to be entered into the transfer books of the Surviving Corporation
in the name of the holder of record as soon as reasonably practicable
after the Effective Time but in no event later than the fifth business
day following the Closing Date.
(c) No Fractional Notes. No fraction of a Note shall be issued as
part of the Merger Consideration, but in lieu thereof, each holder who
otherwise would be entitled to a fraction of a Note shall receive from
the Note Agent, in lieu of such fraction of a Note, an amount of cash
(rounded to the nearest whole cent and without interest) equal to (i)
such fraction multiplied by (ii) $60.91. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
Notes in lieu of any fractional Notes, the Note Agent shall make
available such amounts to such holders as if it were the Merger
Consideration. The foregoing notwithstanding, any holder who is entitled
to receive cash as described in the first sentence of this Section
2.13(c) may, instead of receiving such cash, elect to pay the Surviving
Corporation sufficient amounts (with a price per Note equal to $60.91),
so that such holder receives a full Note instead of an entitlement to a
fraction of a Note (the "FRACTIONAL NOTE PURCHASE Right"). Notes shall be
available for purchase pursuant to the Fractional Note Purchase Right
only up to that number of Notes that the Cash Electors would have
received had they elected to receive Notes in the Note Election (such
number, the "DECLINED NOTES"). If and to the extent
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holders exercise the Fractional Note Purchase Right for Notes in an
amount in excess of the Declined Notes, the Declined Notes shall be
allocated among such holders in order of priority based on (X) the size
of the fraction of a Note to which such holders otherwise would have been
entitled to receive (with the largest fraction taking priority) and (Y)
to the extent holders are entitled to the same fraction of a Note, the
number of Notes to which such holders elected to receive in the Note
Election (with the largest number taking priority). If any holder
exercising the Fractional Note Purchase Right is allocated less than all
of the Notes that such holder wished to purchase pursuant to the
Fractional Note Purchase Right, the excess funds paid by such holder in
respect of the Notes not issued shall be returned by mail without
interest or deduction as soon as practicable after the Closing Date. Any
such holders, in connection with receiving Notes pursuant to the
Fractional Note Purchase Right, shall take priority over any holders
exercising their Shareholder Note Purchase Rights (defined below).
(d) Shareholder Note Purchase Right. Any holder of Company Common
Shares shall have the right (the "SHAREHOLDER NOTE PURCHASE RIGHT") to
purchase Notes, for a per Note purchase price of $60.91, up to that
number of Notes (such number, the "REMAINING NOTES") equal to (i) the
aggregate number of Declined Notes less (ii) the difference between (X)
the number of Notes received by holders pursuant to the Fractional Note
Purchase Right and (Y) the sum of all fractional Notes that holders
entitled to exercise the Fractional Purchase Right would otherwise have
been entitled to receive had such holders been entitled to received
fractional Notes. If and to the extent such holders exercise the
Shareholder Note Purchase Right for Notes in an amount in excess of the
Remaining Notes, the number of Notes that such holders shall receive
shall be allocated among all such holders pro rata based on the number of
Notes that such holders requested to receive in connection with
exercising the Shareholder Note Purchase Right; provided, however, that
(i) no fractional Notes shall be allocated, but, in lieu thereof, each
holder exercising the Shareholder Note Purchase Right who otherwise would
be entitled to a fraction of a Note shall receive a number of Notes
rounded down to the nearest whole number and (ii) if any holder
exercising the Shareholder Note Purchase Right is allocated less than all
of the Notes that such holder wished to purchase pursuant the Shareholder
Note Purchase Right, the excess funds paid by such holder in respect of
the Notes not issued shall be returned by mail without interest or
deduction as soon as practicable after the Closing Date.
(e) Gotham Note Purchase. Simultaneous with the Effective Time and
subject to, and upon the terms and conditions of, this Agreement, Gotham
shall transfer to GGC immediately available funds (the "GOTHAM NOTE
PAYMENT") in an amount equal to (i) $60.91 multiplied by (ii) that number
of Notes (such number, the "GOTHAM NOTES") equal to (X) the Remaining
Notes less (Y) the Notes purchased through the Shareholder Note Purchase
Right. In respect of the Gotham Note Payment and immediately upon receipt
thereof, GGC shall issue to Gotham the Gotham Notes, which shall be
deemed to be fully paid and nonassessable.
(f) Nominees. Banks, brokers and other nominees that exercise the
Note Election, Fractional Note Purchase Right or Shareholder Note
Purchase Right on behalf of beneficial owners of Company Common Shares
shall be required to certify to the Note
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Agent and the Surviving Corporation, in connection with the exercise
of each of the Note Election, Fractional Note Purchase Right or
Shareholder Note Purchase Right, as to the aggregate number of Notes to
be received pursuant to the Note Election, Fractional Note Purchase Right
or Shareholder Note Purchase Right by each beneficial owner of Company
Common Shares on whose behalf such bank, broker or other nominee holder
is acting.
Section 2.14. The Escrow Fund. (a) On the Closing Date, for the
benefit of holders of Company Common Shares as of the Effective Time or for the
benefit of the Surviving Corporation (as the case may be), the Company shall
deposit in escrow (the "ESCROW FUND") an amount of cash sufficient to satisfy
the Reasonably Expected Liabilities (as defined below) (the "ESCROW AMOUNT")
with an escrow agent acceptable to the Company in its reasonable discretion
(pursuant to an agreement in form and substance reasonably acceptable to GGC and
the Company (the "ESCROW ARRANGEMENT")). The Escrow Amount shall be determined
exclusively with reference to that amount of cash equal to the expected value of
any claims, expenses, losses, liabilities, and obligations of the Company, the
FUMI Share Trust or their respective subsidiaries whether currently known or
unknown, absolute or contingent, asserted or unasserted, direct or indirect,
arising by operation of law, equity or otherwise that would reasonably be
expected to arise after the date hereof as a result of, on account of, in
connection with or related to any fact, circumstance, condition or event
occurring prior to the Closing Date that would amount to a breach of any
representation, warranty or covenant contained herein or in any agreement
attached as an Exhibit hereto made by or on behalf of the Company, the FUMI
Share Trust or their respective subsidiaries (as if such representations,
warranties and covenants were made as of the date hereof and at and as of the
Effective Time as though made at and as of such time (or, if made as of a
specific date, at and as of such date)) (such matters, "REASONABLY EXPECTED
LIABILITIES"; provided, however, that Reasonably Expected Liabilities shall not
include such liabilities listed on Section 2.14(a) of the Gotham Disclosure
Schedule).
(b) The Escrow Amount, including any earnings or interest thereon,
shall be held and disbursed as provided in the Escrow Arrangement, which shall
provide, among other things, that (i) any fees or expenses on account of, in
connection with or related to the Escrow Arrangement shall be paid out of the
Escrow Fund; (ii) any Taxes on earnings of the Escrow Fund shall be paid out of
the Escrow Fund; (iii) funds shall be disbursed to the Surviving Corporation on
an as- and when-needed basis to satisfy the Reasonably Expected Liabilities in
the full amount of the actual liability relating to such Reasonably Expected
Liability; (iv) as of the 24-month anniversary of the Closing Date (the "ESCROW
DISTRIBUTION DATE"), an amount of cash equal to the funds remaining in the
Escrow Fund (including a ratable share of accrued interest on escrowed funds but
less any Taxes due on account thereof) (the "REMAINING ESCROW AMOUNT") less the
Escrow Distribution Costs (defined below) shall be distributed to holders of
Company Common Shares as of the Effective Time on a pro rata basis (such amount
per Company Common Share, the "ESCROW DISTRIBUTION AMOUNT"); (v) costs and
expenses arising from or related to the Escrow Distribution (the "ESCROW
DISTRIBUTION COSTS") shall be deducted from the Remaining Escrow Amount; and
(vi) the Escrow Fund shall avoid qualification (by way of exception, exemption
or otherwise) as an "investment company" under the Investment Company Act of
1940.
(c) For purposes of this Section 2.14, the Escrow Amount shall be
determined after the Company's compliance with its covenants contained in
Section 7.15 and immediately
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prior to or on the Closing Date, but in no event later than three (3) days after
the satisfaction of all of the conditions to the obligations of the parties to
consummate the transactions contemplated hereby (other than any conditions
relating to the Escrow Arrangement) by mutual agreement of Gotham and the
Company based on each of Gotham's and the Company's good-faith estimation of the
Reasonably Expected Liabilities. If, after good-faith negotiations, Gotham and
the Company cannot agree on the appropriate Escrow Amount, a single mutually
acceptable appraiser (the "ESCROW APPRAISER") shall be appointed by Gotham and
the Company to determine the appropriate Escrow Amount. In furtherance of the
Escrow Appraiser making its determination of the appropriate Escrow Amount, each
of Gotham and the Company shall submit a single dollar amount representing each
of their good-faith estimation of the aggregate amount of the Reasonably
Expected Liabilities (each a "PROPOSED DETERMINATION"). Concurrently therewith,
the Escrow Appraiser shall allow Gotham and the Company an oral hearing lasting
a total of three (3) hours (divided into equal one and a half (1.5) hour
increments for each of Gotham and the Company) and shall allow each of Gotham
and the Company to submit written arguments and supporting documentation as the
Escrow Appraiser shall determine are sufficient, in its reasonable discretion.
Promptly thereafter, but in no event later than five (5) days from the
submission of such written arguments and supporting documentation, the Escrow
Appraiser shall make its determination as to the appropriate Escrow Amount by
choosing either Gotham's or the Company's Proposed Determination. The
determination of the Escrow Appraiser shall be final, delivered orally, binding
on the parties in all respects and unappealable.
(d) Anything to the contrary contained herein notwithstanding, no
Escrow Arrangement shall be executed, no funds shall be deposited in the Escrow
Fund and no Escrow Share Holdback shall be deducted from any part of the Cash
Amount unless the Reasonably Expected Liabilities shall amount, in the
aggregate, to a sum of cash greater than or equal to $350,000. For purposes of
clarity, it is acknowledged and agreed that (i) such $350,000 is merely a
threshold after which the Escrow Fund must be established, (ii) in no event
shall such $350,000 be deemed to be a deductible from the Escrow Amount and
(iii) in the event that the Escrow Fund is established, any matter funded
thereby shall be funded dollar-for-dollar from the first dollar, without
reference to such $350,000.
ARTICLE III
THE CONTRIBUTION
Section 3.01. The Contribution. Concurrently with the Effective
Time, (i) Gotham and its controlled affiliates shall contribute or caused to be
contributed to GGC all of their respective limited partner interests in GGP,
which interests shall constitute 87.24% of the total equity interests in GGP;
(ii) FGA shall contribute or cause to be contributed to GGC all of its limited
partner interests in GGP, which interests shall constitute 4.26% of the total
equity interests in GGP; and (iii) FGPI shall contribute or caused to be
contributed to GGC all of its general partner interests in GGP, which interests
shall constitute 100% of the total general partner interests in GGP and 1% of
the total equity interests in GGP, by transferring such general partner
interests directly to Golf LLC (such equity interests described in the foregoing
clauses (i), (ii) and (iii), the "CONTRIBUTED PROPERTY"), in exchange for
Underlying Shares representing 52.55% of the issued and outstanding common stock
of the Surviving Corporation immediately following the consummation of the
transactions contemplated hereby, assuming for the purpose of this calculation
that all of the
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Subscription Rights in respect of the Basic Subscription Privilege have been
exercised in full and no additional shares of GGC common stock are sold. In
respect of the Contribution and immediately upon receipt thereof, the Surviving
Corporation shall issue or caused to be issued (X) 50.10% of its common stock to
Gotham and its controlled affiliates; (Y) 2.45% of its common stock less one
Underlying Share to FGA; and (Z) one Underlying Share to FGPI (assuming for the
purpose of this calculation that all of the Subscription Rights in respect of
the Basic Subscription Privilege have been exercised in full and no additional
shares of GGC common stock are sold), all of which common stock shall be deemed
to be fully paid and nonassessable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GOTHAM, FGPI AND FGA
Except as set forth in the disclosure schedule dated as of the date
hereof delivered by Gotham to the Company (the "GOTHAM DISCLOSURE SCHEDULE"),
Gotham, FGPI and FGA hereby represent and warrant, individually and each on its
own behalf, to the Company as follows:
Section 4.01. Organization and Qualification. Gotham and FGA are
limited partnerships, and FGPI is a corporation, each duly organized and validly
existing under the laws of the state of its formation or incorporation.
Section 4.02. Authority; Non-Contravention; Approvals. (a) Each of
Gotham, FGPI and FGA has full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. No other partnership or
corporate proceedings on the part of Gotham, FGPI or FGA are necessary to
authorize the execution and delivery of this Agreement or the consummation by
each of Gotham, FGPI and FGA of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Gotham, FGPI and FGA,
and, assuming the due authorization, execution and delivery hereof by the
parties hereto other than Gotham, FGPI and FGA, constitutes a valid and legally
binding agreement of each of Gotham, FGPI and FGA, enforceable against each of
Gotham, FGPI and FGA in accordance with its terms.
(b) Except as otherwise disclosed on Section 4.02 of the Gotham
Disclosure Schedule, and except for any filings by Gotham that may be required
by (i) the applicable requirements of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and the rules and regulations promulgated
thereunder, (ii) the applicable requirements of the Securities Act of 1933 (the
"SECURITIES ACT"), (iii) the filing and recordation of appropriate merger
documents as required by the DGCL or the BSTL and (iv) any filings with or
approvals from (x) the New York Stock Exchange (the "NYSE") and (y) the other
Governmental Authorities listed on Section 4.02 of the Gotham Disclosure
Schedule (the filings and approvals referred to in clauses (i) through (iv)
collectively referred to as the "GOTHAM REQUIRED APPROVALS"), no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any third party, Governmental Authority or regulatory body is necessary for
the execution and delivery of this Agreement by Gotham or the consummation by
Gotham of the transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or
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approvals that, if not made or obtained, as the case may be, individually and in
the aggregate, would not impair in any material respect the ability of Gotham to
perform its obligations under this Agreement or prevent or materially impede or
delay the consummation of the Mergers.
(c) The Contribution shall not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event that, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or require any offer to purchase or
any prepayment of any debt or result in the creation of any lien, security
interest or encumbrance upon any of the properties or assets of GGP under any of
the terms, condition or provisions of, except as set forth in Section 5.05 of
the GGP Disclosure Schedule, any contracts, agreements, leases, subleases,
licenses, supply contracts, purchase orders, sales orders and arrangements,
warranty rights (whether pursuant to contractual rights or otherwise), loan or
credit agreement, bond, debenture, note, mortgage, indenture, guarantee,
commitment, obligation, undertaking, concession, franchise or license (each,
including all amendments thereto (each a "CONTRACT") that are material and to
which GGP or any GGP Subsidiary is a party or by which GGP, GGP Subsidiaries or
any of their respective properties or assets may be bound or affected, other
than such violations, conflicts, breaches, defaults, terminations,
accelerations, offers, prepayments, creations of liens, security interest or
encumbrances that would not reasonably be expected to have a GGP Material
Adverse Effect.
Section 4.03. GGP Interests. Immediately prior to the Contribution,
Gotham, FPGI and FGA shall have good and marketable title to the Contributed
Property, free and clear of all liens, security interests or encumbrances. As of
the Closing, the Contributed Property shall consist of (i) the entirety of
Gotham's and its controlled affiliates', as well as FGA's limited partner
interests in GGP, amounting to 91.5% of the total equity interests in GGP and
(ii) the entirety of FGPI's general partner interests in GGP, amounting to 100%
of the total general partner interests in GGP and one percent (1%) of the total
equity interest in GGP. As of the Closing, the Contributed Property shall be
free and clear of any lien, security interest or encumbrance.
Section 4.04. Solicitation Documentation; Proxy
Statement-Prospectus. The information supplied by Gotham, FGPI and/or FGA for
inclusion in any proxy statement-prospectus (the "PROXY STATEMENT-PROSPECTUS")
to be sent to shareholders of the Company in connection with a meeting of the
Company's shareholders to consider this Agreement and the transactions
contemplated hereby (the "COMPANY MEETING") and/or any registration statement
(all such registration statements collectively, the "REGISTRATION STATEMENT")
and any required Schedule 13E-3 filing and related documents in respect of the
transactions contemplated hereby (including the offering of Underlying Shares
pursuant to the Basic Subscription Privilege and the Oversubscription Privilege,
the offering of Notes pursuant to the Note Election, the Fractional Note
Purchase Right and the Shareholder Note Purchase Right, or any right to
beneficial interest in the Escrow Fund) (such Proxy Statement-Prospectus,
Registration Statement and any required Schedule 13E-3 filing and related
documents, as amended or supplemented collectively, the "SOLICITATION
DOCUMENTATION"), on the date the Proxy Statement-Prospectus (or any amendment or
supplement thereto) is first mailed to shareholders of the Company, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which
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they are made, not misleading, and shall not, at the time of the Company Meeting
and on the Expiration Date, omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Company Meeting that shall have become false or misleading. The
foregoing notwithstanding, Gotham, FGPI and FGA make no representation or
warranty with respect to any information supplied by or on behalf of any of the
other parties other than Gotham, FGPI or FGA that is contained in the
Solicitation Documentation or any amendment or supplement thereto.
Section 4.05. Availability of Funds. Gotham (or, to the extent
applicable, a Gotham controlled affiliate) has on the date hereof sufficient
assets and shall have available at the Redemption Time (as defined in Section
7.06) sufficient funds to enable it to consummate any Post-Closing Note
Redemption (as defined in Section 7.06).
Section 4.06. No Knowledge of Certain Facts. To the knowledge of
Gotham, as of the date hereof, there are no known facts or circumstances that
relate specifically to the Company, the FUMI Share Trust and their respective
subsidiaries and that are not or have not been disclosed herein or publicly that
would reasonably be expected to have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GGP, GGC AND SUB
Except as set forth in the disclosure schedule dated as of the date
hereof delivered by GGP to the Company (the "GGP DISCLOSURE SCHEDULE"), GGP, GGC
and Sub hereby represent and warrant, individually and each on its own behalf,
to the Company as follows:
Section 5.01. Organization and Qualification. GGP is a limited
partnership, and GGC and Sub are corporations, each duly organized and validly
existing under the laws of the State of Delaware and each having the requisite
partnership or corporate power and authority, as the case may be, to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted or as contemplated herein. GGP is qualified to transact business
and, where applicable, is in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except as would not
reasonably be expected to have a GGP Material Adverse Effect. Concurrently with
the Contribution, the partners of GGP have agreed to amend and restate in full
GGP's current Amended and Restated Agreement of Limited Partnership (the
"CURRENT GGP AGREEMENT") in the form attached as EXHIBIT D, to be effective
immediately upon the Contribution (the "RESTATED GGP AGREEMENT"). The Board of
Directors and the shareholders of GGC have agreed to amend and restate GGC's
currently effective Certificate of Incorporation and Bylaws in the forms
attached as EXHIBIT E and EXHIBIT F (the "RESTATED GGC AGREEMENTS"), each to be
effective immediately as of the Effective Time.
For purposes of this Agreement, the term "GGP MATERIAL ADVERSE
EFFECT" shall mean any change or event or effect that is, or is reasonably
expected to be, materially adverse to the value of the transactions contemplated
hereby to the Company and holders of Company Common Shares, in each case taken
as a whole, except for any such change, event or effect re-
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sulting from or arising out of (i) the announcement of this Agreement and the
transactions contemplated hereby or (ii) economic events generally related to
the U.S. economy or securities markets generally.
Section 5.02. Capitalization. (a) As of the Effective Time, the
authorized and outstanding equity interests of GGP shall be as set forth in the
Current GGP Agreement. Immediately after the Contribution, the authorized and
outstanding equity interests in GGP shall be as set forth in the Restated GGP
Agreement.
(b) As of the date hereof, the authorized equity of GGC consists of
1000 shares of common stock. As of the date hereof, 1000 shares of GGC common
stock were issued and outstanding, all of which were validly issued and are
fully paid, nonassessable and free of preemptive rights. As of the date hereof,
(i) GGP owns all of the outstanding shares of GGC common stock and (ii) GGC owns
all of the Sub Shares. As of the Effective Time, GGC shall own all of the
outstanding equity interests in Golf LLC. No shares of GGC common stock were
held in GGC's treasury, and no shares of GGC common stock were reserved for
issuance upon the exercise of GGC options or warrants. Each share of GGC common
stock, Note and Mirror Series A Preferred Share issued in connection with the
transactions contemplated hereby shall, when issued in accordance with their
respective terms, be duly authorized, validly issued, fully paid and
nonassessable, with the rights set forth in the Restated GGC Agreements, the
Note Terms or the Mirror Series A Certificate of Designations, each as
applicable.
(c) Except as provided in Section 5.02 of the GGP Disclosure
Schedule, as of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement and also including
any rights plan or other anti-takeover agreement, obligating GGC to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
GGC common stock or obligating GGC to grant, extend or enter into any such
agreement or commitment.
(d) There are no bonds, debentures, notes or other indebtedness of
GGC having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of shares
of GGC common stock may vote. Other than this Agreement and the Equityholders
Agreement (the form of which is attached as EXHIBIT G) (the "EQUITYHOLDERS
AGREEMENT"), there are no voting trusts, irrevocable proxies or other agreements
or understandings to which GGC or GGP is a party or is bound with respect to the
voting of any shares of GGP equity interests.
Section 5.03. Interim Operations of GGC and Sub. Each of GGC and Sub
was formed solely for the purpose of engaging in the transactions contemplated
hereby, and, except as provided in Section 5.03 of the GGP Disclosure Schedule,
each has engaged in no business and has incurred no liabilities other than in
connection with the transactions contemplated by this Agreement.
Section 5.04. Subsidiaries. Section 5.04 of the GGP Disclosure
Schedule sets forth each direct and indirect subsidiary of GGP (each a "GGP
SUBSIDIARY"), and each GGP subsidiary is duly organized, validly existing and,
where applicable, in good standing under the
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laws of its jurisdiction of organization and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted and each GGP Subsidiary is qualified
to transact business, and is in good standing, in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in all cases as would
not reasonably be expected to have a GGP Material Adverse Effect. All of the
outstanding capital stock or other equity interests of each GGP Subsidiary are
validly issued, fully paid, nonassessable and free of preemptive rights and,
except as otherwise provided in Section 5.04 of the GGP Disclosure Schedule, are
owned directly or indirectly by GGP. There are no subscriptions, options,
warrants, voting trusts, proxies or other commitments, understandings,
restrictions or arrangements to which GGP or any GGP Subsidiaries is a party
relating to the issuance, sale, voting or transfer of any capital stock or other
equity interests of any GGP Subsidiary, including any right of conversion or
exchange under any outstanding security, instrument or agreement. Except as set
forth in Section 5.04 of the GGP Disclosure Schedule, GGP has no material
investment in any entity other than the GGP Subsidiaries.
Section 5.05. Authority; Non-Contravention; Approvals. (a) Each of
GGP, GGC and Sub has full partnership or corporate power and authority, as the
case may be, to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been approved by the Executive Committee
of GGP (as defined in the Current GGP Agreement) and unanimously approved by the
Board of Directors and shareholders of each of GGC and Sub, and no other
partnership or corporate proceedings, as the case may be, on the part of GGP,
GGC or Sub are necessary to authorize the execution and delivery of this
Agreement or the consummation by GGP, GGC or Sub of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by GGP,
GGC and Sub, and, assuming the due authorization, execution and delivery hereof
by the parties hereto other than GGP, GGC and Sub, constitutes a valid and
legally binding agreement of GGP, GGC and Sub, enforceable against GGP, GGC and
Sub in accordance with its terms.
(b) The execution, delivery and performance of this Agreement by
GGP, GGC and Sub and the consummation of the transactions contemplated hereby do
not and shall not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event that, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or require any offer to purchase or any prepayment of any
debt or result in the creation of any lien, security interest or encumbrance
upon any of the properties or assets of GGC, Sub, GGP or any GGP Subsidiaries
under any of the terms, conditions or provisions of (i) the Current GGP
Agreement and related constitutive documents of GGP or certificates of
incorporation or bylaws or similar organizational documents of the GGP
Subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or Governmental
Authority applicable to GGC, Sub, GGP or any GGP Subsidiaries or any of their
respective properties or assets, subject in the case of consummation, to
obtaining the GGP Required Approvals, or (iii) except as set forth in Section
5.05 of the GGP Disclosure Schedule, any Contract to which GGC, Sub, GGP or any
GGP Subsidiary is a party or by which GGC, Sub, GGP or any GGP Subsidiaries or
any of their respective properties or assets may be bound or affected, other
than, in the case of (ii) and (iii) above, such violations, conflicts, breaches,
defaults, terminations, accelerations, offers, prepayments or creations of
liens, security
-24-
interests or encumbrances that would not reasonably be expected to have a GGP
Material Adverse Effect.
(c) Except as disclosed on Section 5.05 of the GGP Disclosure
Schedule, and except for (i) the applicable requirements of the Exchange Act,
the Securities Act and the rules and regulations promulgated thereunder, (ii)
the filing and recordation of appropriate merger documents as required by the
DGCL and (iii) any filings with or approvals from (x) the NYSE and (y) the other
Governmental Authorities listed on Section 5.05 of the GGP Disclosure Schedule
(the filings and approvals referred to in clauses (i) through (iii) collectively
referred to as the "GGP REQUIRED APPROVALS"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
third party, any Governmental Authority or regulatory body is necessary for the
execution and delivery of this Agreement by GGP, GGC and Sub or the consummation
by GGP, GGC and Sub of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not
reasonably be expected to have a GGP Material Adverse Effect.
Section 5.06. Reports and Financial Statements. (a) Prior to the
date hereof, GGP has delivered or made available to the Company or its
representatives true, correct and complete copies of the (i) unaudited balance
sheets of GGP and the GGP Subsidiaries as of December 31, 1998 and the related
unaudited statements of income for the fiscal year then ended; (ii) unaudited
balance sheets of GGP and the GGP Subsidiaries as of December 31, 1999 and 2000
and the related unaudited statements of income and cash flows for the fiscal
years then ended; and (iii) unaudited balance sheets of GGP and the GGP
Subsidiaries as of September 30, 2001 and the related statements of income and
cash flows for the nine-month period then ended (collectively, the "GGP
REPORTS"). As of their respective dates, except as amended or supplemented prior
to the date hereof, the GGP Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The GGP Reports have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated therein or in
the notes thereto or as may be permitted by the rules and regulations applicable
to the quarterly report on Form 10-Q) and fairly present in all material
respects the financial position of GGP and the GGP Subsidiaries as of the dates
thereof and the results of their operations and changes in financial position
for the periods reported (subject, in the case of the unaudited financial
statements, to normal year-end adjustments).
(b) Not less than three business days prior to the date of filing of
the Proxy Statement-Prospectus with the SEC, GGP shall deliver or make available
to the Company or its representatives true, correct and complete copies of
audited balance sheets of GGP and its subsidiaries as of December 31, 1999, 2000
and 2001 and related audited statements of income and cash flows for the fiscal
years then ended, with related footnotes and an unqualified audit opinion, which
shall be similar in all material respects to the GGP Reports, provided, however
that (X) the audited balance sheets and statements of income and cash flows
shall not include such statements for the fiscal year that ended on December 31,
1998 and (Y) the audited balance sheets and statements of income and cash flows
for the fiscal year that ended on December 31, 2001 shall reflect a full year
rather than a nine-month period ending on September 30, 2001.
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Section 5.07. Absence of Undisclosed Liabilities; Material Adverse
Effect. Except as disclosed (i) in the unaudited financial statements of GGP for
the period ended September 30, 2001 and the notes thereto or (ii) on Section
5.07 of the GGP Disclosure Schedule, neither GGP nor any GGP Subsidiaries had at
September 30, 2001, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (a) liabilities, obligations or
contingencies that (i) are accrued or reserved against in the GGP Reports or
reflected in the notes thereto or (ii) were incurred in the ordinary course of
business, (b) liabilities, obligations or contingencies that (i) would not
reasonably be expected to have a GGP Material Adverse Effect, or (ii) have been
discharged or paid in full prior to the date hereof, and (c) liabilities,
obligations and contingencies that are of a nature not required to be reflected
in the consolidated financial statements of GGP and its subsidiaries prepared in
accordance with GAAP consistently applied. Since September 30, 2001, there has
not occurred any circumstance or event that has had or would reasonably be
expected to have a GGP Material Adverse Effect.
Section 5.08. Litigation. Except as otherwise set forth on Section
5.08 of the GGP Disclosure Schedule, as of the date hereof, there are no claims,
suits, actions, proceedings or similar events or matters pending, or, to the
knowledge of GGP, threatened in writing against, relating to or affecting GGP or
any GGP Subsidiaries, before any Governmental Authority that in any such case
would reasonably be expected to have a GGP Material Adverse Effect. Except as
otherwise set forth on Section 5.08 of the GGP Disclosure Schedule, neither GGP
nor any GGP Subsidiaries is subject to any judgment, decree, injunction, rule or
order of any Governmental Authority, or any arbitrator that prohibits the
consummation of the transactions contemplated hereby or would reasonably be
expected to have a GGP Material Adverse Effect.
Section 5.09. Solicitation Documentation; Proxy
Statement-Prospectus. The information supplied by GGP and/or GGC for inclusion
in any Solicitation Documentation , on the date the Proxy Statement-Prospectus
(or any amendment or supplement thereto) is first mailed to shareholders of the
Company, shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading, and shall not, at the time of the Company Meeting and
on the Expiration Date, omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Meeting that shall have become false or misleading. The
foregoing notwithstanding, GGP and GGC make no representation or warranty with
respect to any information supplied by or on behalf of any of the other parties
other than GGP or GGC that is contained in the Solicitation Documentation or any
amendment or supplement thereto.
Section 5.10. No Violation of Law. Except as otherwise set forth on
Section 5.10 of the GGP Disclosure Schedule, as of the date hereof, neither GGP
nor any GGP Subsidiaries is in violation of or has been given written notice of
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, any applicable Environmental Law, ordinance or regulation)
of any Governmental Authority, except for violations that would not reasonably
be expected to have a GGP Material Adverse Effect. To the knowledge of GGP, no
investigation or review relating individually to GGP or any GGP Subsidiaries by
any Governmental Authority is pending or threatened, as of the date hereof other
than, in each case, those that would not reasonably be expected to have a GGP
Material Adverse Effect. Except as otherwise set forth on Section 5.10 of the
GGP Disclosure Schedule, GGP and the GGP Subsidiaries have all permits,
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licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals, necessary to conduct their businesses as
presently conducted (collectively, the "GGP PERMITS"), except for permits,
licenses, franchises, variances, exemptions, orders, authorizations, consents
and approvals the absence of which would not reasonably be expected to have a
GGP Material Adverse Effect. GGP and the GGP Subsidiaries are not in violation
of the terms of any GGP Permit, except for violations that would not reasonably
be expected to have a GGP Material Adverse Effect.
Section 5.11. Compliance with Agreements; Certain Contracts. (a) GGP
and each of the GGP Subsidiaries are not in breach or violation of or in default
in the performance or observance of any term or provision of, and no event has
occurred that, with lapse of time or action by a third party, would result in a
default under the Current GGP Agreement and related constitutive documents and
the respective articles or certificates of incorporation, bylaws or similar
organizational instruments of the GGP Subsidiaries.
(b) Except as set forth in Section 5.11 of the GGP Disclosure
Schedule, and except as would not reasonably be expected to have a GGP Material
Adverse Effect, neither GGP nor any GGP Subsidiary is as of the date hereof a
party to any (i) agreement with any consultant or independent contractor for
professional services having a remaining term of at least one year and requiring
payments of base salary or fee in excess of $150,000 per year or aggregate
payments of base salary in excess of $200,000; (ii) material
sales-representative or agency contract that is not terminable on 12 months' (or
less) notice; (iii) joint venture or partnership agreement; (iv) agreement
materially limiting in any way GGP's or any GGP Subsidiary's ability to compete
with any person in any geographic location or any line of business; (v)
contract, plan or similar agreement with any director, officer, manager or
employee of GGP or any GGP Subsidiary (other than any employment agreements);
(vi) lease, sublease or similar contract with any person (other than GGP or any
GGP Subsidiary) under which (A) GGP or any GGP Subsidiary is lessee of, or holds
or uses, any machinery, equipment, vehicle or other tangible personal property
owned by any person or (B) GGP or any GGP Subsidiary is a lessor or sublessor
of, or makes available for use by any person, any tangible personal property
owned or leased by GGP or any GGP Subsidiary, in any such case that has an
aggregate future liability or receivable, as the case may be, in excess of
$100,000 per year and is not terminable by GGP or any GGP Subsidiary by notice
of not more than 50 days for a penalty of less than $20,000 per year; (vii)
continuing contract for the future purchase of materials, supplies or equipment
(other than purchase contracts and orders for inventory in the ordinary course
of business consistent with past practice), in any such case that has an
aggregate future liability to any person (other than GGP or any GGP Subsidiary)
in excess of $100,000 and is not terminable by GGP or any GGP Subsidiary by
notice of not more than 60 days for a penalty of less than $10,000; (viii)
contract under which GGP or any GGP Subsidiary has, directly or indirectly, made
any advance, loan, extension of credit or capital contribution to, or other
investment in, any person (including, but not limited to, employees and other
than GGP or any GGP Subsidiary) in an amount in excess of $10,000; (ix) material
contract providing for indemnification of any person with respect to liabilities
relating to any current business of GGP or any GGP Subsidiary, other than such
indemnifications made in the ordinary course of business; (x) power of attorney
(other than any power of attorney given in the ordinary course of business);
(xi) contract for the sale of any asset of GGP or any GGP Subsidiary (other than
sales in the ordinary course of business) having a sales value in excess of
$10,000; (xii) currency exchange, interest rate exchange, commodity exchange or
similar contract other
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than with customers in the ordinary course of business; or (xiii) other
contract, agreement or arrangement (other than leases for real property) entered
into other than in the ordinary course of business, requiring future payment or
payments by GGP or any GGP Subsidiary in excess of $100,000 per year. With
respect to all contracts listed on Section 5.11 of the GGP Disclosure Schedule,
except as otherwise disclosed on Section 5.11 of the GGP Disclosure Schedule,
such contracts are valid and binding against GGP or the relevant GGP Subsidiary
in all material respects (except for those expired or terminated in accordance
with their current terms) and GGP or any GGP Subsidiary is not in material
breach thereof or material default thereunder, and there does not exist under
any provision thereof any event that, with the giving of notice or the lapse of
time or both, would constitute such a material breach or default, and, to the
knowledge of GGP or any GGP Subsidiary, no other party to any such contract is
(with or without the lapse of time or the giving of notice or both) in breach or
default in any material respect thereunder. Section 5.11 of the GGP Disclosure
Schedule lists all notes, mortgages, indentures, guarantees and other
obligations and agreements and other instruments for or relating to any lending
or borrowing (including assumed debt) of $10,000 or more by GGP or any GGP
Subsidiary as of the date hereof or to which any assets of GGP or any GGP
Subsidiary are subject (except with respect to any such lending or borrowing
among GGP and any GGP Subsidiary) as of the date hereof. No officer-level
employee has, except as disclosed in Section 5.11 of the GGP Disclosure
Schedule, since December 31, 2000 and prior to the date hereof received any
notice of the intention of any party to terminate any material agreement set
forth above under clauses (i) through (xiii). The enforceability of each
material agreement set forth above under clauses (i) through (xiii) shall not be
affected in any manner by the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
(c) Section 5.11 of the GGP Disclosure Schedule sets forth (i) a
list of all employment agreements to which GGP or any GGP Subsidiary is a party
as of the date hereof having a remaining term of at least one year and requiring
payments of base salary in excess of $100,000 per year or aggregate payments of
base salary in excess of $200,000 and (ii) the number of severance and retention
agreements with employees of GGP or any GGP Subsidiary as of the date hereof to
which GGP or any GGP Subsidiary is a party and the approximate aggregate maximum
amount of the payments that would be required to be made thereunder.
Section 5.12. Taxes. GGP and the GGP Subsidiaries have (i) duly
filed with the appropriate Governmental Authorities all returns, reports or
similar statements (including any attached schedules) required to be filed with
respect to any Tax, including any information return, claim for refund, amended
return or declaration of estimated Tax ("TAX RETURNS") required to be filed by
them, and such Tax Returns are true, correct and complete, and (ii) duly paid in
full any and all federal, state, local, foreign or other taxes of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any taxing authority, including
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth, and taxes or other charges in the nature of excise, withholding,
ad valorem or value added (collectively, "TAXES") shown as due on such Tax
Returns, except in each case where the failure to file such Tax Returns or pay
such Tax or the failure of such Tax Returns to be true, correct or complete
would not reasonably be expected to have a GGP Material Adverse Effect. There
are no material liens for Taxes upon any property or asset of GGP or any GGP
Subsidiary, except for
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liens for Taxes not yet due or Taxes contested in good faith or reserved against
in accordance with GAAP. There are no unresolved issues of law or fact
specifically set forth in writing in a notice of deficiency, proposed deficiency
or assessment from the Internal Revenue Service ("IRS") or any other
governmental taxing authority with respect to Taxes of GGP or any GGP
Subsidiaries that would reasonably be expected to have a GGP Material Adverse
Effect, except as reserved against in accordance with GAAP.
Section 5.13. Employee Benefit Plans; ERISA. (a) Section 5.13 of the
GGP Disclosure Schedule includes a complete list of each material employee
benefit plan, program or policy providing benefits to any current or former
employee, officer, director or member of GGP or any the GGP Subsidiaries or any
beneficiary or dependent thereof that is sponsored or maintained by GGP or any
GGP Subsidiaries or to which GGP or any GGP Subsidiaries contributes or is
obligated to contribute, including any employee welfare benefit plan within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder ("ERISA") any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any material bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit agreement, plan, program or policy
(collectively, the "GGP PLANS").
(b) With respect to each GGP Plan, GGP has delivered or made
available to the Company or its representatives true, correct and complete copy
of: (i) all plan documents and trust agreements; (ii) the most recent Annual
Report (Form 5500 Series) and accompanying schedule, if any; (iii) the current
summary plan description, if any; (iv) the most recent annual financial report,
if any; (v) the most recent actuarial report, if any; and (vi) the most recent
determination letter from the IRS, if any.
(c) Except as would not reasonably be expected to have a GGP
Material Adverse Effect, the IRS has issued a favorable determination letter
with respect to each GGP Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code and its related trust that has not been
revoked, and, to the knowledge of GGP, there are no circumstances or events that
have occurred that would reasonably be expected to result in a revocation of
such letter, which cannot be cured without a GGP Material Adverse Effect.
(d) Except as would not reasonably be expected to have a GGP
Material Adverse Effect: (i) GGP and the GGP Subsidiaries have complied, and are
now in compliance, with all provisions of ERISA, the Code and all laws and
regulations applicable to the GGP Plans and each GGP Plan has been administered
in all material respects in accordance with its terms; (ii) none of GGP and the
GGP Subsidiaries nor, to the knowledge of GGP, any other person, including any
fiduciary, has engaged in any "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA), which could subject any of the GGP
Plans or their related trusts, GGP or any the GGP Subsidiaries, to any tax or
penalty imposed under Section 4975 of the Code or Section 502 of ERISA; (iii)
there are no pending or, to GGP's knowledge, threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations that have
been asserted or instituted against the GGP Plans that could reasonably be
expected to result in any liability of GGP or any of the GGP Subsidiaries to any
GGP Plan participant, to the Pension
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Benefit Guaranty Corporation, the Department of Treasury, the Department of
Labor, any Multiemployer Plan or any GGP Plan.
(e) Except as set forth in Section 5.13 of the GGP Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby shall (either alone or in
conjunction with any other event) result in, cause the accelerated vesting,
funding or delivery of, or increase the amount or value of, any material
payment or benefit to any employee, officer, director or member of GGP or any
of the GGP Subsidiaries.
(f) No GGP Plan is a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN") and none of GGP nor any of
the GGP Subsidiaries has, at any time since October 1, 1998, contributed to or
been obligated to contribute to any Multiemployer Plan.
Section 5.14. Environmental Matters. (a) Except as would not
reasonably be expected to have a GGP Material Adverse Effect, to the knowledge
of GGP: (i) GGP and the GGP Subsidiaries have conducted their respective
businesses in compliance with all material applicable Environmental Laws,
(ii) none of the properties owned or controlled by GGP or any of the GGP
Subsidiaries contains any Hazardous Substance as a result of any activity of
GGP or any of the GGP Subsidiaries in amounts exceeding the levels permitted
by applicable Environmental Laws, (iii) since December 31, 2000, neither GGP
nor any of the GGP Subsidiaries has received any notices, demand letters or
requests for information from any federal, state, local or foreign Governmental
Authority indicating that GGP or any of the GGP Subsidiaries may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their respective businesses, (iv) there are no civil,
criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the knowledge of GGP threatened,
against GGP or any of the GGP Subsidiaries relating to any violation, or
alleged violation, of any Environmental Law, (v) no Hazardous Substance has
been disposed of, released or transported in violation of any applicable
Environmental Law, or in a manner giving rise to any liability under
Environmental Law, from any properties owned or controlled by GGP or any of the
GGP Subsidiaries as a result of any activity of GGP or any of the GGP
Subsidiaries during the time such properties were owned, leased or operated by
GGP or any of the GGP Subsidiaries and (vi) neither GGP, the GGP Subsidiaries
nor any of their respective properties are subject to any material liabilities
or expenditures (fixed or contingent) relating to any suit, settlement, court
order, administrative order, regulatory requirement, judgment or claim asserted
or arising under any Environmental Law.
(b) As used herein, "ENVIRONMENTAL LAW" means any federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, order, judgment, decree, injunction,
requirement or agreement with any Governmental Authority relating to (x) the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or (y)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as in effect at the date
hereof.
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(c) As used herein, "HAZARDOUS SUBSTANCE" means any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated, under any Environmental Law.
Hazardous Substance includes any substance to which exposure is regulated by any
Governmental Authority or any Environmental Law including any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, or asbestos-containing material,
urea formaldehyde, foam insulation or polychlorinated biphenyls.
Section 5.15. Intellectual Property. Except as would not reasonably
be expected to have a GGP Material Adverse Effect, (i) GGP and the GGP
Subsidiaries own, or are licensed to use, all and any patents, patent rights
(including patentable subject matter, patent applications and licenses),
know-how, trade secrets, trade secret rights, trademarks (including trademark
applications), trademark rights, trade names, trade name rights, service marks,
service xxxx rights, works of authorship, inventions, discoveries, industrial
models, industrial designs, software, works, copyrightable subject matters,
copyright rights and registrations, mask works, know-how and show-how, emblems,
logos, insignia and related marks and registrations, specifications, technical
manuals and data, libraries, blueprints, drawings, proprietary processes,
product information and development work-in-process and other proprietary
intellectual property rights (collectively, "INTELLECTUAL PROPERTY") used in
and necessary for the conduct of GGP's business as it is currently conducted,
(ii) to the knowledge of GGP, the use of Intellectual Property by GGP and the
GGP Subsidiaries does not infringe on or other otherwise violate the rights of
any third party, and is in accordance in all material respects with the
applicable license pursuant to which GGP or the GGP Subsidiaries acquired the
right to use such Intellectual Property, (iii) to the knowledge of GGP, no
third party is challenging, infringing on or otherwise violating any right of
GGP or the GGP Subsidiaries in the Intellectual Property, and (iv) neither GGP
nor any of the GGP Subsidiaries has received any written notice of any pending
claim, order or proceeding with respect to any material Intellectual Property
used in and necessary for the conduct of GGP's business as it is currently
conducted, and to GGP's knowledge no Intellectual Property is being used or
enforced by GGP in a manner that would reasonably be expected to result in the
abandonment, cancellation or unenforceability of any Intellectual Property used
in and necessary for the conduct of GGP's business as it is currently conducted.
Section 5.16. Brokers and Finders. GGP has not entered into any
contract, arrangement or understanding with any person or firm that may result
in the obligation of GGP to pay any investment banking fees, finder's fees, or
brokerage commissions in connection with the transactions contemplated hereby,
other than fees payable to Mercury Partners, LLC.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
THE FUMI SHARE TRUST AND FUMI
Except as set forth in the Company SEC Reports filed on or prior to
the date hereof, or in the disclosure schedule dated as of the date hereof
delivered by the Company to Gotham, GGC and GGP (the "COMPANY DISCLOSURE
SCHEDULE"), the Company, the FUMI Share Trust and FUMI hereby jointly and
severally represent and warrant to Gotham, GGC and GGP as
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follows; provided, however, that the parties hereto have agreed that the
representations and warranties in this Article VI and the information in the
Company Disclosure Schedule, other than as set forth in Section 6.05 and as
specifically provided in Section 6.06 with respect to VenTek International,
Inc. ("VENTEK"), shall not encompass or include any information with respect to
(i) the operations of VenTek or (ii) tenant leases at the Park Plaza Mall
property and Circle Tower (as defined below); and provided further that, to the
extent the representations and warranties set forth in this Article VI relate
to the Company or its subsidiaries or otherwise to entities other than the FUMI
Share Trust, FUMI and FUMI's subsidiaries, the representations and warranties
of the FUMI Share Trust and FUMI are based solely upon, limited by, and subject
to the knowledge of the FUMI Share Trust and FUMI:
Section 6.01. Organization and Qualification. The Company is a
business trust, the FUMI Share Trust is a trust and FUMI is a corporation, each
duly organized and validly existing under the laws of the state of its
formation and each having the requisite power and authority to own, lease and
operate its assets and properties and to carry on its respective businesses as
they are now being conducted or as contemplated herein. Each of the Company,
the FUMI Share Trust and FUMI is qualified to transact business and, where
applicable, is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except as would not reasonably be expected
to have a Company Material Adverse Effect. True, accurate and complete copies
of the Company's Amended and Restated Declaration of Trust and Bylaws, the FUMI
Share Trust's Amended and Restated Declaration of Trust and FUMI's Certificate
of Incorporation and Bylaws, and, in each case, any other constitutive
documents, in each case as amended and in effect on the date hereof, including
all amendments thereto, have heretofore been filed with the SEC or delivered to
Gotham or its representatives.
For purposes of this Agreement, the term "COMPANY MATERIAL ADVERSE
EFFECT" shall mean any change or event or effect that is, or could reasonably be
expected to be, materially adverse to the business, operations, assets,
liabilities, condition (financial or otherwise) of the Company, the FUMI Share
Trust, FUMI and their respective subsidiaries taken as a whole (except for any
such change, event or effect resulting from or arising out of (i) the
announcement of this Agreement and the transactions contemplated hereby or (ii)
economic events generally related to the U.S. economy or securities markets
generally). The parties agree that the commencement of construction of a mall or
similar shopping facility in a location that competes with the Park Plaza Mall
shall not constitute a Company Material Adverse Effect. The foregoing
notwithstanding, any matter that would constitute a breach by Gotham of Section
4.06 shall not be considered for the purpose of determining whether any change
or event or effect gives rise to a Company Material Adverse Effect.
Section 6.02. Capitalization. (a) The authorized equity of the
Company consists of unlimited Company Common Shares and 2,300,000 Company
Preferred Shares. The only beneficiaries of the FUMI Share Trust are the
holders of Company Common Shares. The authorized equity of FUMI consists of 100
FUMI Shares, all of which are issued and outstanding and owned by the FUMI Share
Trust. As of the date hereof, (i) 34,805,912 Company Common Shares and 984,800
Company Preferred Shares were issued and outstanding, all of which Company
Common Shares and Company Preferred Shares were validly issued and are fully
paid, nonassessable and free of preemptive rights, (ii) -0- Company Common
Shares were held in the
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treasury of the Company, (iii) -0- Company Preferred Shares were held in the
treasury of the Company, (iv) 1,000,000 Company Common Shares were reserved for
issuance upon exercise of the option or right to purchase Company Common Shares
granted under the Company Option Plans or otherwise granted by the Company
(each, a "COMPANY OPTION") and Company Warrants issued and outstanding and
(v) 11,316,000 Company Common Shares were reserved for issuance upon conversion
of the outstanding Company Preferred Shares, all of which were validly issued
and are fully paid, nonassessable and free of preemptive rights. Between
September 30, 2001 and the date hereof, (i) no Company Common Shares or Company
Preferred Shares have been issued, except in connection with the conversion of
Company Preferred Shares or the exercise of Company Options or Warrants issued
and outstanding and (ii) no options, warrants, securities convertible into, or
commitments with respect to the issuance of, shares of beneficial interests of
the Company or the FUMI Share Trust have been issued, granted or made. As of
the Effective Time, there shall be no Company Options issued and outstanding.
(b) Except for (i) Company Preferred Shares, (ii) Company Options
issued and outstanding and (iii) Warrants to purchase a maximum of 500,000
Company Common Shares, as of the date hereof, there were no outstanding
subscriptions, options, calls, contracts, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement and also including any rights plan or other anti-takeover agreement,
obligating the Company, the FUMI Share Trust, FUMI or any of their subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
Company Common Shares, Company Preferred Shares, FUMI Shares or obligating the
Company, the FUMI Share Trust, FUMI or any of their respective subsidiaries to
grant, extend or enter into any such agreement or commitment.
(c) Except as provided in Section 6.02(c) of the Company Disclosure
Schedule, there are no and shall be no obligations, contingent or otherwise, of
the Company, the FUMI Share Trust, FUMI or their respective subsidiaries to (i)
redeem or otherwise acquire (A) any Company Common Shares, (B) any Company
Preferred Shares, (C) any FUMI Shares or (D) the beneficial interests or other
equity interests of any subsidiary of the Company, except in connection with the
exercise of (X) conversion rights on account of the Company Preferred Shares,
(Y) Company Options issued and outstanding or (Z) Warrants issued and
outstanding, (ii) pay or distribute any dividend or distribution on the Company
Preferred Shares or (iii) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution or otherwise), or
provide any guarantee with respect to the obligations of, any person. There are
no outstanding stock appreciation rights or similar derivative securities or
rights of the Company, the FUMI Share Trust, FUMI or any their respective
subsidiaries. Furthermore, since the issuance of the Company Preferred Shares,
the Company has paid dividends on the Company Preferred Shares in an amount at
least equal to $0.525 per Company Preferred Share for each Dividend Period (as
defined in the Preferred Certificate).
(d) There are no bonds, debentures, notes or other indebtedness of
the Company, the FUMI Share Trust, FUMI or their respective subsidiaries having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which holders of beneficial interests of
the Company may vote. Other than the Voting Agreement attached as EXHIBIT A,
there are no voting trusts, irrevocable proxies or other agreements or
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understandings to which the Company, the FUMI Share Trust or any of their
respective subsidiaries is a party or is bound with respect to the voting of any
Company Common Shares.
(e) The Company has filed with the SEC or previously made available
to Gotham complete and correct copies of the Stock Incentive Plan and the 1999
Share Option Plan for Trustees including all amendments thereto (the "COMPANY
OPTION PLANS"). The Company has previously made available to Gotham a complete
and correct list setting forth as of the date hereof, the number of Company
Options outstanding and the weighted average exercise price for all such
outstanding Company Options.
(f) The "CONVERSION PRICE" (as such term is defined in the
certificate of designations of the Company Preferred Shares, as amended or as
may be amended after the date hereof) is equal to $5.0824. Since March 21, 2000,
the Company has not taken any action, nor has there occurred any event or
circumstance, that has changed or caused an adjustment to, or (other than in
connection with the execution of this Agreement) could reasonably be expected to
change or cause an adjustment to, the Conversion Price. Section 6.02(f) of the
Company Disclosure Schedule sets forth, as of the date hereof, the effects of
any Adjustment Events (as defined in the Warrant Agreement) pertaining to the
Warrants that shall be required on account of the consummation of this Agreement
and the transactions contemplated hereby. In addition, Section 6.02(f) of the
Company Disclosure Schedule sets forth, as of the date hereof, the current
exercise price of the Warrants. Except for a violation of subsection (i)(B) of
Section 6.02(c), which shall be governed solely by Section 6.02(c), the
execution, delivery and performance of this Agreement by the Company and the
FUMI Share Trust and the consummation of the transactions contemplated hereby
shall not in any way violate or otherwise breach the terms of the Certificate of
Designations for the Company Preferred Shares.
(g) The execution, delivery and performance of this Agreement by the
Company, the FUMI Share Trust and FUMI and the consummation of the transactions
contemplated hereby shall not result in a liquidation of the Company.
(h) The FUMI Share Trust shall terminate and cease to exist
immediately after the Effective Time.
Section 6.03. Subsidiaries. Section 6.03 of the Company Disclosure
Schedule sets forth each direct and indirect subsidiary of the Company and the
FUMI Share Trust. Each such subsidiary is duly organized, validly existing and,
where applicable, in good standing under the laws of its jurisdiction of
organization and has the requisite power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted, and each such subsidiary is qualified to transact business, and is in
good standing, in each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary; except in all cases as would not reasonably be expected
to have a Company Material Adverse Effect. All of the outstanding capital stock
or other equity interests of each subsidiary of the Company and the FUMI Share
Trust are validly issued, fully paid, nonassessable and free of preemptive
rights and are owned directly or indirectly by the Company or the FUMI Share
Trust. There are no subscriptions, options, warrants, voting trusts, proxies or
other commitments, understandings, restrictions or arrangements to which the
Company, the FUMI Share Trust or any of their respective subsidiaries is a party
re-
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lating to the issuance, sale, voting or transfer of any capital stock or other
equity interests of any such subsidiary, including any right of conversion or
exchange under any outstanding security, instrument or agreement. Except as set
forth in Section 6.03 of the Company Disclosure Schedule, the Company and the
FUMI Share Trust have no material investment in any entity other than its
subsidiaries.
Section 6.04. Authority; Non-Contravention; Approvals. (a) Each of
the Company, the FUMI Share Trust and FUMI has full power and authority to enter
into this Agreement and, subject to the approval of the shareholders of the
Company (the "COMPANY SHAREHOLDER APPROVAL"), to consummate the transactions
contemplated hereby. This Agreement has been approved by the Board of Trustees
of the Company and the Trustee of the FUMI Share Trust and the Board of
Directors and shareholders of FUMI, and no other proceedings on the part of the
Company, the FUMI Share Trust or FUMI are necessary to authorize the execution
and delivery of this Agreement or, except for the Company Shareholder Approval
and the consummation by the Company, the FUMI Share Trust or FUMI of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company, the FUMI Share Trust and FUMI, and, assuming the due
authorization, execution and delivery hereof by the parties hereto other than
the Company, the FUMI Share Trust and FUMI, this Agreement constitutes a valid
and legally binding agreement of the Company and the FUMI Share Trust,
enforceable against the Company, the FUMI Share Trust and FUMI in accordance
with its terms.
(b) Except for violations of clause (i)(B) of Section 6.02(c), which
shall be governed solely by Section 6.02(c),the execution, delivery and
performance of this Agreement by the Company, the FUMI Share Trust and FUMI and
the consummation of the transactions contemplated hereby do not and shall not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event that, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or require any offer to purchase or any prepayment of any debt or result
in the creation of any lien, security interest or encumbrance upon any of the
properties or assets of the Company, the FUMI Share Trust, FUMI or any their
respective subsidiaries under any of the terms, conditions or provisions of (i)
the respective Amended and Restated Declarations of Trust, as amended,
certificates of incorporation or bylaws or similar organizational documents of
the Company, the FUMI Share Trust, FUMI or any of their respective subsidiaries,
(ii) the Company Preferred Shares, (iii) the Company's 8.875% Senior Notes due
September 15, 2003 (the "COMPANY DEBT"), (iv) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
Governmental Authority applicable to the Company, the FUMI Share Trust, FUMI or
any of their respective subsidiaries or any of their respective properties or
assets, subject in the case of consummation, to obtaining the Company Required
Approvals (as defined below) and the Company Shareholder Approval, or (v) except
as set forth in Section 6.04 of the Company Disclosure Schedule and except with
respect to insurance policies, which shall be governed solely by Section
6.06(c), any Contract to which the Company, the FUMI Share Trust, FUMI or any of
their respective subsidiaries is a party or by which the Company, the FUMI Share
Trust, FUMI or any of their respective subsidiaries or any of their respective
properties or assets may be bound or affected, other than, in the case of (iv)
and (v) above, such violations, conflicts, breaches, defaults, terminations,
accelerations, offers, prepayments or creations of liens, security interests or
encumbrances that would not reasonably be expected to have a Company Material
Adverse Effect.
-35-
(c) Except as disclosed in Section 6.04 of the Company Disclosure
Schedule, and except for (i) the applicable requirements of the Exchange Act,
the Securities Act and the rules and regulations promulgated thereunder, (ii)
the filing and recordation of appropriate merger documents as required by or
advisable under the DGCL and the BSTL (including, any amended declaration of
trust in respect of the Company) and (iii) any filings with or approvals from
(x) the NYSE and (y) the other Governmental Authorities listed on Section 6.04
of the Company Disclosure Schedule (the filings and approvals referred to in
clauses (i) through (iii) collectively referred to as the "COMPANY REQUIRED
APPROVALS"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any third party, any Governmental
Authority or regulatory body is necessary for the execution and delivery of this
Agreement by the Company, the FUMI Share Trust, FUMI or their respective
subsidiaries or the consummation by the Company, the FUMI Share Trust, FUMI or
their respective subsidiaries of the transactions contemplated hereby, other
than such declarations, filings, registrations, notices, authorizations,
consents or approvals that, if not made or obtained, as the case may be, would
not reasonably be expected to have a Company Material Adverse Effect.
(d) Each of the Trustee of the FUMI Share Trust, the Board of
Trustees of the Company and the Board of Directors of FUMI, at meetings duly
called and held (or, in the case of the FUMI Share Trust, by written consent of
the Trustee), adopted resolutions, which are in full force and effect as of the
date hereof, that (i) approve and declare advisable the Mergers, this Agreement
and the transactions contemplated hereby (ii) declare that the Mergers, this
Agreement and the transactions contemplated hereby are in the best interests of
the holders of Company Common Shares and FUMI Shares, (iii) (in the case of the
Company) recommend that the holders of Company Common Shares approve the FUR
Merger and approve and adopt this Agreement and the transactions contemplated
hereby; and (iv) exempt this Agreement and the transactions contemplated hereby
from any restrictions that may be contained in the FUMI Share Trust's or the
Company's Amended and Restated Declarations of Trust or the Certificate of
Incorporation and Bylaws of FUMI and related constitutive documents, each as
amended, or any restrictions imposed by applicable law.
Section 6.05. Reports and Financial Statements. Since June 30, 1998,
the Company has filed with the SEC all material forms, statements, reports and
documents (including all exhibits, post-effective amendments and supplements
thereto) (the "COMPANY SEC REPORTS") required to be filed by it under each of
the Securities Act, the Exchange Act and the respective rules and regulations
thereunder, all of which, as amended if applicable, complied in all material
respects as to form with all applicable requirements of the appropriate act and
the rules and regulations thereunder. As of their respective dates, except as
amended or supplemented prior to the date hereof, the Company SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The audited consolidated financial statements of the Company included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 (the
"COMPANY 10-K") and the unaudited financial statements of the Company included
in the Company's Quarterly Report on Form 10-Q (the "COMPANY 10-Q") for the
period ended September 30, 2001 have been prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated therein or in the
notes thereto or as may be permitted by the rules and regulations applicable to
the quarterly report on Form 10-Q) and fairly present in all material respects
the financial posi-
-36-
tion of the Company, the FUMI Share Trust and their respective subsidiaries as
of the dates thereof and the results of their operations and changes in
financial position for the periods reported (subject, in the case of the
unaudited financial statements, to normal year-end adjustments).
Section 6.06. Absence of Undisclosed Liabilities; Material Adverse
Effect. (a) (i) Except as disclosed in the unaudited financial statements
included in the Company 10-Q or the audited financial statements included in the
Company 10-K, (ii) except as disclosed in Section 6.06(a) of the Company
Disclosure Schedule, (iii) except for violations of law and environmental
matters, which shall be governed solely by Sections 6.09 and 6.14, (iv) except
for violations of clause (i)(B) of Section 6.02(c), which shall be governed
solely by Section 6.02(c), and (v) with respect to VenTek, except for such facts
and circumstances outside the knowledge of VenTek's management on the date
hereof after due inquiry by VenTek's management, neither the Company, the FUMI
Share Trust nor any of their respective subsidiaries has or had, as of September
30, 2001, any liabilities or obligations (whether absolute, accrued, contingent,
asserted, unasserted, direct, indirect, arising by operation of law, equity or
otherwise) of any nature, except (X) liabilities, obligations or contingencies
that are accrued or reserved against in the financial statements in the Company
10-Q or reflected in the notes thereto and (Y) liabilities, obligations and
contingencies that are of a nature not required to be reflected in the
consolidated financial statements of the Company, the FUMI Share Trust and their
respective subsidiaries prepared in accordance with GAAP consistently applied.
Except (i) as disclosed in Section 6.06(a) of the Company Disclosure Schedule,
(ii) for any circumstance or event relating to a violation of law or
environmental matters, which shall be governed solely by Sections 6.09 and 6.14,
(iii) for violations of clause (i)(B) of Section 6.02(c), which shall be
governed solely by Section 6.02(c), and (iv) with respect to VenTek, for facts
and circumstances outside the knowledge of VenTek's management after due inquiry
by VenTek's management, from September 30, 2001 to the date hereof, there has
not occurred any circumstance or event that has had or would reasonably be
expected to have a Company Material Adverse Effect.
(b) The Escrow Agreement (as defined below in Section 7.11) is valid
and binding against the parties thereto in all respects. The Company, the FUMI
Share Trust and FUMI are not (and have not been) in breach of the Escrow
Agreement or in default thereunder, and there does not exist under any provision
thereof any event that, with the giving of notice or the lapse of time or both,
would constitute such a breach or default, and to the knowledge of the Company,
no other party to or beneficiary of the Escrow Agreement is (with or without the
lapse of time or the giving of notice, or both) in breach or default thereunder.
The Escrow Agreement shall remain binding and in full force and effect through
and after the Effective Time. Except as disclosed in Section 6.06(b) of the
Company Disclosure Schedule, the Escrow Account (as defined in the Escrow
Agreement) contains (and shall contain, as of the Closing Date) sufficient
amounts of cash to fund and support any liabilities or obligations of the
Company, the FUMI Share Trust, FUMI or their respective subsidiaries relating
thereto.
(c) Section 6.06(c) of the Company Disclosure Schedule lists each
insurance policy provided by any third party (other than policies relating
solely to the defense and indemnifications of trustees, officers and directors),
in effect as of the date hereof for the benefit of the Company, the FUMI Share
Trust and their respective subsidiaries. Each such policy is valid and binding
and in full force and effect as of the date hereof and shall continue to be so
as of the
-37-
Closing Date except for those policies of insurance that expire in the interim
period between the date hereof and the Closing Date and with respect to such
expiring policies of insurance, the Company, the FUMI Share Trust and/or their
respective subsidiaries, as the case may be, shall use commercially reasonable
efforts to enter into new policies on terms substantially identical to the
currently effective policies.
Section 6.07. Litigation. Except as set forth in Section 6.07 of the
Company Disclosure Schedule, as of the date hereof, there are no asserted
claims, suits, actions, proceedings or similar events or matters pending, or, to
the knowledge of the Company and the FUMI Share Trust, threatened in writing
against, relating to or affecting the Company, the FUMI Share Trust or any of
their respective subsidiaries, before any Governmental Authority or any
arbitrator, that in any such case would reasonably be expected to have a Company
Material Adverse Effect. Neither the Company, the FUMI Share Trust, FUMI nor any
their respective subsidiaries is subject to any judgment, decree, injunction,
rule or order of any Governmental Authority, or any arbitrator that prohibits
the consummation of the Mergers or the transactions contemplated hereby or would
reasonably be expected to have a Company Material Adverse Effect.
Section 6.08. Solicitation Documentation; Proxy
Statement-Prospectus. The Solicitation Documentation shall not, on the date the
Proxy Statement-Prospectus (or any amendment or supplement thereto) is first
mailed to shareholders of the Company, contain any untrue statement of a
material fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading and shall not, at the
time of the Company Meeting and on the Expiration Date, omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Meeting that shall
have become false or misleading in any material respect. The Solicitation
Documentation shall, when filed with the SEC, comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, each of
the Company, the FUMI Share Trust and FUMI makes no representation or warranty
with respect to information, supplied by or on behalf of the parties hereto
other than the Company or the FUMI Share Trust, that is contained in the
Solicitation Documentation.
Section 6.09. No Violation of Law. To the knowledge of the Company,
as of the date hereof, neither the Company, the FUMI Share Trust, nor any of
their respective subsidiaries is in violation of or has been given written
notice of any violation of, any law, statute, order, rule, regulation, ordinance
or judgment (including any applicable Environmental Law, ordinance or
regulation) of any Governmental Authority, except for violations that would not
reasonably be expected to have a Company Material Adverse Effect. To the
knowledge of the Company and the FUMI Share Trust, no investigation or review
relating individually to the Company, the FUMI Share Trust or any of their
respective subsidiaries by any Governmental Authority is pending or threatened,
as of the date hereof other than, in each case, those which would not reasonably
be expected to have a Company Material Adverse Effect. The Company, the FUMI
Share Trust and their respective subsidiaries have all permits, licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct their businesses as presently
conducted (collectively, the "COMPANY PERMITS"), except for permits, licenses,
franchises, variances, exemptions, orders, authorizations, consents and ap-
-38-
provals the absence of which would not reasonably be expected to have a Company
Material Adverse Effect. The Company, the FUMI Share Trust and their respective
subsidiaries are not in violation of the terms of any Company Permit, except for
violations that would not reasonably be expected to have a Company Material
Adverse Effect.
Section 6.10. Compliance with Agreements; Certain Contracts. (a) The
Company, the FUMI Share Trust and each of their respective subsidiaries are not
in breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred that, with lapse of time or
action by a third party, would result in a default under, the respective Amended
and Restated Declarations of Trust, as amended, articles or certificates of
incorporation, bylaws or similar organizational instruments of the Company, the
FUMI Share Trust or any of their respective subsidiaries.
(b) Except as set forth in Section 6.10 of the Company Disclosure
Schedule, neither the Company, the FUMI Share Trust nor any of their respective
subsidiaries is as of the date hereof a party to any (i) agreement with any
consultant or independent contractor for professional services having a
remaining term of at least one year and requiring payments of base salary or fee
in excess of $150,000 per year or aggregate payments of base salary in excess of
$200,000; (ii) material sales representative or agency contract that is not
terminable on 12 months' (or less) notice; (iii) joint venture or partnership
agreement; (iv) agreement materially limiting in any way the Company's, the FUMI
Share Trust's or any of their respective subsidiaries' ability to compete with
any person in any geographic location or any line of business; (v) contract,
plan or similar agreement with any director, officer, manager or employee of the
Company, the FUMI Share Trust or any of their respective subsidiaries (other
than any employment agreements); (vi) lease, sublease or similar contract with
any person (other than the Company, the FUMI Share Trust or any of their
respective subsidiaries) under which (A) the Company, the FUMI Share Trust or
any of their respective subsidiaries is lessee of, or holds or uses, any
machinery, equipment, vehicle or other tangible personal property owned by any
person or (B) the Company, the FUMI Share Trust or any of their respective
subsidiaries is a lessor or sublessor of, or makes available for use by any
person, any tangible personal property owned or leased by the Company, the FUMI
Share Trust or any of their respective subsidiaries, in any such case that has
an aggregate future liability or receivable, as the case may be, in excess of
$100,000 per year and is not terminable by the Company, the FUMI Share Trust or
any of their respective subsidiaries by notice of not more than 60 days for a
penalty of less than $20,000 per year; (vii) continuing contract for the future
purchase of materials, supplies or equipment (other than purchase contracts and
orders for inventory in the ordinary course of business consistent with past
practice), in any such case that has an aggregate future liability to any person
(other than the Company, the FUMI Share Trust or any of their respective
subsidiaries) in excess of $100,000 and is not terminable by the Company, the
FUMI Share Trust or any of their respective subsidiaries by notice of not more
than 60 days for a penalty of less than $10,000; (viii) contract under which the
Company, the FUMI Share Trust or any of their respective subsidiaries has,
directly or indirectly, made any advance, loan, extension of credit or capital
contribution to, or other investment in, any person (including, but not limited
to, employees and other than the Company, the FUMI Share Trust or any of their
respective subsidiaries) in an amount in excess of $10,000; (ix) material
contract providing for indemnification of any person with respect to liabilities
relating to any current business of the Company, the FUMI Share Trust or any of
their respective subsidiaries, other than such indemnifications made in the
ordinary course of business; (x) power
-39-
of attorney (other than any power of attorney given in the ordinary course of
business); (xi) contract for the sale of any asset of the Company, the FUMI
Share Trust or any of their respective subsidiaries (other than sales in the
ordinary course of business) having a sales value in excess of $10,000; (xii)
currency exchange, interest rate exchange, commodity exchange or similar
contract other than with customers in the ordinary course of business; (xiii)
policy of insurance provided by any party for the benefit of the Company, the
FUMI Share Trust or their respective subsidiaries; or (xiv) other contract,
agreement or arrangement (other than leases for real property) entered into
other than in the ordinary course of business, requiring future payment or
payments by the Company, the FUMI Share Trust or any of their respective
subsidiaries in excess of $100,000 per year.
With respect to all contracts listed on Section 6.10 of the Company Disclosure
Schedule, except as otherwise disclosed on Section 6.10 of the Company
Disclosure Schedule, such contracts are valid and binding against the Company,
the FUMI Share Trust or their relevant respective subsidiaries in all material
respects (except for those expired or terminated in accordance with their
current terms) and the Company, the FUMI Share Trust or any of their respective
subsidiaries is not and shall not be in material breach thereof or material
default thereunder, and there does not exist under any provision thereof any
event that, with the giving of notice or the lapse of time or both, would
constitute such a material breach or default, and, to the knowledge of the
Company, the FUMI Share Trust or any of their respective subsidiaries, no other
party to any such contract is or shall be (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder. Section 6.10 of the Company Disclosure Schedule lists all notes,
mortgages, indentures, guarantees and other obligations and agreements and other
instruments for or relating to any lending or borrowing (including assumed debt)
of $10,000 or more by the Company, the FUMI Share Trust or any of their
respective subsidiaries as of the date hereof or to which any assets of the
Company, the FUMI Share Trust or any of their respective subsidiaries are
subject (except with respect to any such lending or borrowing among the Company,
the FUMI Share Trust or any of their respective subsidiaries) as of the date
hereof. No officer-level employee has, except as disclosed in Section 6.10 of
the Company Disclosure Schedule, since December 31, 2000 and prior to the date
hereof received any notice of the intention of any party to terminate any
material agreement set forth above under clauses (i) through (xiv). Except as
disclosed in Section 6.10 of the Company Disclosure Schedule, the enforceability
of each material agreement set forth above under clauses (i) through (xiv) shall
not be affected in any manner by the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
(c) The execution, delivery and performance of this Agreement by the
Company and the FUMI Share Trust and the consummation of the transactions
contemplated hereby shall not in any way affect that certain Lease Agreement by
and between Xxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx, lessors, and the German
American Trust Company, an Indiana corporation, its successors and assigns,
dated April 28, 1910 (the "CIRCLE TOWER LEASE").
(d) Section 6.10 of the Company Disclosure Schedule sets forth (i) a
list of all employment agreements to which the Company, the FUMI Share Trust or
any of their respective subsidiaries is a party as of the date hereof having a
remaining term of at least one year and requiring payments of base salary in
excess of $100,000 per year or aggregate payments of base salary in excess of
$200,000 and (ii) the number of severance and retention agreements with
employees of the Company, the FUMI Share Trust or any of their respective
subsidiaries as of the date hereof to which the Company, the FUMI Share Trust or
any of their respective subsidiaries
-40-
is a party and the approximate aggregate maximum amount of the payments that
would be required to be made thereunder.
Section 6.11. Taxes. (a) The Company, the FUMI Share Trust and their
respective subsidiaries have (i) duly filed with the appropriate Governmental
Authorities all returns, reports or similar statements (including any attached
schedules) required to be filed with respect to any material Tax, including Tax
Returns required to be filed by them, and such Tax Returns are true, correct and
complete, and (ii) duly paid in full any and all material Taxes shown as due on
such Tax Returns. There are no material liens for Taxes upon any property or
asset of the Company, the FUMI Share Trust or any of their respective
subsidiaries, except for liens for Taxes not yet due or Taxes contested in good
faith or reserved against in accordance with GAAP. There are no material
unresolved issues of law or fact specifically set forth in writing in a notice
of deficiency, proposed deficiency or assessment from the IRS or any other
governmental taxing authority with respect to Taxes of the Company, the FUMI
Share Trust or any of their respective subsidiaries.
(b) The Company is a real estate investment trust ("REIT") within
the meaning of Section 856 of the Code and, to the Company's knowledge, the
Company is a "domestically-controlled" REIT within the meaning of Section
897(h)(4)(B) of the Code.
(c) As of the end of the Company's tax year ending at the Effective
Time, the sum of (i) the net operating loss, if any, of the Company for such
taxable year, within the meaning of Section 172(c) of the Code, plus (ii) any
net operating loss carryovers of the Company from prior tax years, as specified
in Section 172(b) of the Code, shall be at least $15 million.
(d) The Company shall have no (i) distribution requirement as of the
Effective Time, under Section 857(a) of the Code, to qualify to be taxed as a
REIT for the taxable year of the Company that shall end as of the Effective Time
and to avoid the imposition of any federal income Tax, (ii) net income derived
from any prohibited transactions (within the meaning of section 857(b)(6)) or
(iii) net income from foreclosure property (within the meaning of 857(b)(4)).
Section 6.12. Employee Benefit Plans; ERISA. (a) Section 6.12(a) of
the Company Disclosure Schedule includes a complete list of each material
employee benefit plan, program or policy providing benefits to any current or
former employee, officer or trustee of the Company, the FUMI Share Trust or any
of their respective subsidiaries or any beneficiary or dependent thereof that is
sponsored or maintained by the Company, the FUMI Share Trust or any of their
respective subsidiaries or to which the Company, the FUMI Share Trust or any of
their respective subsidiaries contributes or is obligated to contribute,
including any employee welfare benefit plan within the meaning of Section 3(1)
of ERISA, any employee pension benefit plan within the meaning of Section 3(2)
of ERISA (whether or not such plan is subject to ERISA) and any material bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit agreement, plan,
program or policy (collectively, the "COMPANY PLANS").
(b) With respect to each Company Plan, the Company, the FUMI Share
Trust and their respective subsidiaries have delivered or made available to
Gotham or its representa-
-41-
tives a true, correct and complete copy of: (i) all plan documents and trust
agreements; (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (iii) the current summary plan description, if
any; (iv) the most recent annual financial report, if any; (v) the most recent
actuarial report, if any; and (vi) the most recent determination letter from the
IRS, if any.
(c) Except as set forth in Section 6.12(c) of the Company Disclosure
Schedule, as of the date hereof, (i) each of the Company, the FUMI Share Trust
and their respective subsidiaries has no employees, (ii) all Company Plans have
been terminated without obligation or other liability to the Company, the FUMI
Share Trust, their respective subsidiaries (and each of the forgoing persons'
respective successors and assigns) or to any person or governmental entity,
(iii) there are no employment agreements currently existing to which the
Company, the FUMI Share Trust or their respective subsidiaries is a party, (iv)
there have been no employment agreements to which the Company, the FUMI Share
Trust or each of their respective subsidiaries was a party that have not been
terminated pursuant to their terms, and (v) all obligations of such persons
under any such terminated employment agreements have been satisfied in full.
Further, except as set forth in Section 6.06(a) of the Company Disclosure
Schedule, as of the date hereof, neither the Company, the FUMI Share Trust nor
their respective subsidiaries has any obligations or liabilities in respect of
any employees that the Company, the FUMI Share Trust or their respective
subsidiaries may have employed prior to the date hereof.
(d) No Company Plan is intended to be qualified within the meaning
of Section 401(a) of the Code.
(e) Except as would not reasonably be expected to have a Company
Material Adverse Effect: (i) the Company, the FUMI Share Trust and their
respective subsidiaries have complied, and are now in compliance with, all
provisions of ERISA, the Code and all laws and regulations applicable to the
Company Plans and each Company Plan has been administered in all material
respects in accordance with its terms; (ii) none of the Company, the FUMI Share
Trust and their respective subsidiaries nor, to the knowledge of the Company,
the FUMI Share Trust or their respective subsidiaries, any other person,
including any fiduciary, has engaged in any "prohibited transaction" (as defined
in Section 4975 of the Code or Section 406 of ERISA), which could subject any of
the Company Plans or their related trusts, the Company, the FUMI Share Trust or
any of their respective subsidiaries, to any tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA; and (iii) there are no pending
or, to the Company's, the FUMI Share Trust's or their respective subsidiaries'
knowledge, threatened claims (other than claims for benefits in the ordinary
course), lawsuits or arbitrations that have been asserted or instituted against
the Company Plans that could reasonably be expected to result in any liability
of the Company, the FUMI Share Trust or any of their respective subsidiaries to
any Company Plan participant, to the Pension Benefit Guaranty Corporation, the
Department of Treasury, the Department of Labor, any Multiemployer Plan or any
Company Plan.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby shall (either alone or in
conjunction with any other event) result in, cause the accelerated vesting,
funding or delivery of, or increase the amount or value of, any material payment
or benefit to any current or former employee, officer or trustee of the Company,
the FUMI Share Trust or any of their respective subsidiaries.
-42-
(g) No Company Plan is a Multiemployer Plan and neither of the
Company nor any of its subsidiaries has at any time since October 1, 1998,
contributed to or been obligated to contribute to, any Multiemployer Plan.
Section 6.13. Labor Controversies. There are no controversies
pending or, to the knowledge of the Company, threatened between the Company, the
FUMI Share Trust or their respective subsidiaries and any representatives
(including unions and any bargaining unit) of any of their respective employees
that would reasonably be expected to have a Company Material Adverse Effect. To
the knowledge of the Company, the FUMI Share Trust or their respective
subsidiaries there are no material organizational efforts presently being made
involving any of the presently unorganized employees of the Company, the FUMI
Share Trust or their respective subsidiaries, except for such organizational
efforts that would not reasonably be expected to have a Company Material Adverse
Effect.
Section 6.14. Environmental Matters. To the knowledge of the
Company, except as set forth in Section 6.14 of the Company Disclosure Schedule,
and except as would not reasonably be expected to have a Company Material
Adverse Effect, as of the date hereof: (i) the Company, the FUMI Share Trust and
their respective subsidiaries have conducted their respective businesses in
compliance with all material applicable Environmental Laws, (ii) none of the
properties owned or controlled by the Company, the FUMI Share Trust or any of
their respective subsidiaries contains any Hazardous Substance as a result of
any activity of the Company, the FUMI Share Trust or any of their respective
subsidiaries in amounts exceeding the levels permitted by applicable
Environmental Laws, (iii) since December 31, 2000, neither the Company, the FUMI
Share Trust nor any of their respective subsidiaries has received any notices,
demand letters or requests for information from any federal, state, local or
foreign Governmental Authority indicating that the Company, the FUMI Share Trust
or any of their respective subsidiaries may be in violation of, or liable under,
any Environmental Law in connection with the ownership or operation of their
respective businesses, (iv) there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, investigations or proceedings pending
or, to the knowledge of the Company, the FUMI Share Trust or their respective
subsidiaries' threatened, against the Company, the FUMI Share Trust or any of
their respective subsidiaries relating to any violation, or alleged violation,
of any Environmental Law, (v) no Hazardous Substance has been disposed of,
released or transported in violation of any applicable Environmental Law, or in
a manner giving rise to any liability under Environmental Law, from any
properties owned or controlled by the Company, the FUMI Share Trust or any of
their respective subsidiaries as a result of any activity of the Company, the
FUMI Share Trust or any of their respective subsidiaries during the time such
properties were owned, leased or operated by the Company, the FUMI Share Trust
or any of their respective subsidiaries and (vi) neither the Company, the FUMI
Share Trust or their respective subsidiaries nor any of their respective
properties are subject to any material liabilities or expenditures (fixed or
contingent) relating to any suit, settlement, court order, administrative order,
regulatory requirement, judgment or claim asserted or arising under any
Environmental Law.
Section 6.15. Intellectual Property. Except as would not reasonably
be expected to have a Company Material Adverse Effect, (i) the Company, the FUMI
Share Trust and their respective subsidiaries own, or are licensed to use, all
Intellectual Property used in and necessary for the conduct of the Company's,
the FUMI Share Trust's or their respective subsidiaries' busi-
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nesses as they are currently conducted, (ii) to the knowledge of the Company,
the FUMI Share Trust or their respective subsidiaries the use of Intellectual
Property by the Company, the FUMI Share Trust and their respective subsidiaries
does not infringe on or other otherwise violate the rights of any third party,
and is in accordance in all material respects with the applicable license
pursuant to which the Company, the FUMI Share Trust or their respective
subsidiaries acquired the right to use such Intellectual Property, (iii) to the
knowledge of the Company, the FUMI Share Trust or their respective subsidiaries
no third party is challenging, infringing on or otherwise violating any right of
the Company, the FUMI Share Trust or their respective subsidiaries in the
Intellectual Property, and (iv) neither the Company, the FUMI Share Trust nor
any of their respective subsidiaries has received any written notice of any
pending claim, order or proceeding with respect to any material Intellectual
Property used in and necessary for the conduct of the Company's, the FUMI Share
Trust's or any of their respective subsidiaries' businesses as they are
currently conducted, and to the Company's, the FUMI Share Trust's or their
respective subsidiaries' knowledge, no Intellectual Property is being used or
enforced by the Company in a manner that would reasonably be expected to result
in the abandonment, cancellation or unenforceability of any Intellectual
Property used in and necessary for the conduct of the Company's, the FUMI Share
Trust's or their respective subsidiaries' businesses as they are currently
conducted.
Section 6.16. Opinion of Financial Advisor. Duff & Xxxxxx, LLC (the
"COMPANY FINANCIAL ADVISOR"), retained by the Company as financial advisor to
the Special Committee of the Board of Trustees of the Company, has delivered to
the Special Committee of the Board of Trustees of the Company an opinion, a copy
of which is attached as EXHIBIT H (the "FAIRNESS OPINION"), to the effect that
as of February 12, 2002, the Cash Consideration to be received by the holders of
the Company Common Shares (other than Gotham and its affiliates) is fair to such
holders from a financial point of view.
Section 6.17. Brokers and Finders. Neither the Company nor the FUMI
Share Trust has entered into any contract, arrangement or understanding with any
person or firm that may result in the obligation of the Company to pay any
investment banking fees, finder's fees or brokerage commissions in connection
with the transactions contemplated hereby, other than fees payable to the
Company Financial Advisor and Libra Securities, LLC.
ARTICLE VII
COVENANTS
Section 7.01. Conduct of the Company's Business Pending the Mergers.
Except as (i) otherwise contemplated by this Agreement, (ii) required by law,
(iii) disclosed in Section 7.01 of the Company Disclosure Schedule or (iv)
consented to in writing by Gotham (which shall not be unreasonably withheld or
delayed), after the date hereof and prior to the Effective Time, the Company,
the FUMI Share Trust and FUMI shall, and shall cause (or enter into any
negotiations, contracts, agreements understandings or arrangements to cause)
their respective subsidiaries to:
(a) conduct their respective businesses in the ordinary course of
business;
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(b) subject to applicable law and the fiduciary duties of the
Company's Board of Trustees and FUMI's Board of Directors, take any
action or refrain from taking any action, enter into any Contract or
refrain from entering into any Contract or make any undertaking or
refrain from making any undertaking, in each case as requested by Gotham
in its sole discretion;
(c) not (i) amend or propose to amend their respective Amended and
Restated Declarations of Trust, certificates of incorporation or bylaws or
equivalent organizational documents, (ii) split, combine or reclassify
their outstanding equity, shares of beneficial interests or capital stock
or (iii) declare, set aside or pay any dividend or distribution payable
in cash, stock, property or otherwise, except for (x) the payment of
dividends or distributions to the Company, the FUMI Share Trust or any of
their respective subsidiaries by a direct or indirect subsidiary of the
Company or the FUMI Share Trust, (y) regular quarterly cash dividends
required on account of Company Preferred Shares, with usual declaration,
record and payment dates in accordance with the Company's past dividend
policy and as required under the terms of the Company Preferred Shares
and (z) quarterly cash dividends on the Company Common Shares not to
exceed $0.10 per Company Common Share;
(d) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants
or rights of any kind to acquire any shares of, their equity, shares of
beneficial interests or capital stock of any class or any debt or equity
securities that are convertible into or exchangeable for such equity,
shares of beneficial interests or capital stock, except that (i) the
Company may issue Company Common Shares (A) upon exercise of Company
Options outstanding on the date hereof or hereafter granted in accordance
with the provisions of subclause (ii) of this clause (c) or the Company
Preferred Shares and (B) upon exercise of Warrants outstanding on the
date hereof, and (ii) the Company may grant Company Options pursuant to
existing contractual relationships and as set forth in Section 7.01
of the Company Disclosure Schedule;
(e) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than borrowings in the ordinary
course of business or borrowings under the existing credit facilities of
the Company or any of its subsidiaries as such facilities may be amended
or replaced in a manner that does not have a Company Material Adverse
Effect (the "EXISTING COMPANY CREDIT FACILITIES"), (ii) redeem, purchase,
acquire or offer to purchase or acquire any shares of its beneficial
interests or any options, warrants or rights to acquire any shares of its
beneficial interests or any security convertible into or exchangeable for
shares of beneficial interests other than in connection with (A) the
exercise of outstanding Company Options and Warrants pursuant to the
terms of the Company Option Plans and the relevant written agreements
evidencing the grant of Company Options and Warrants and (B) the
redemption or elimination of the Company Options prior to the Effective
Time, (iii) sell, pledge, dispose of or encumber any material assets or
businesses other than (X) pledges or encumbrances pursuant to Existing
Company Credit Facilities or other permitted borrowings or (Y) sales or
dispositions of businesses or assets by the Company, the FUMI Share Trust
or their respective subsidiaries to a subsidiary of the Company or as may
be required by applicable law, (iv)
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discharge, make any payments on account of or settle any Action or
otherwise waive any rights with respect to any Action or (v) enter into
any binding contract, agreement, commitment or arrangement with respect
to any of the foregoing;
(f) use reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present senior officers and key employees, and preserve the
goodwill and business relationships with customers and others having
business relationships with them;
(g) except as otherwise provided in the Company Disclosure Schedule,
not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any trustees, officers or employees,
except pursuant to (i) applicable law, (ii) the ordinary course of
business or (iii) previously existing contractual arrangements or
policies;
(h) not materially increase the salary or monetary compensation of
any senior officer or employee whose current base salary is in excess of
$25,000 as of the date hereof, except for increases in the ordinary
course of business or except pursuant to previously existing contractual
arrangements;
(i) not adopt, enter into or amend to materially increase benefits
or obligations of any Company Plan, except (i) in the ordinary course of
business, (ii) any of the foregoing involving any such then existing
plans, agreements, trusts, funds or arrangements of any company acquired
after the date hereof, (iii) as required pursuant to existing contractual
arrangements or this Agreement or (iv) as required by applicable law;
(j) not make any capital or other expenditures or enter into any
binding commitment or contract to make such expenditures;
(k) not take any action or make any undertaking that would cause
the Conversion Price to change;
(l) not enter into any contract or commitment (i) providing for
sales by the Company, the FUMI Share Trust or any of their respective
subsidiaries or (ii) providing for purchases by the Company, the FUMI
Share Trust or any of their respective subsidiaries;
(m) not make any material Tax election, settle any material Tax
claim or assessment, surrender any right to claim a material Tax refund,
consent to any extension or waiver of the limitations period applicable
to any material Tax claim or assessment, or, in the case of the Company,
take any action or fail to take any action that would reasonably be
expected to, alone or in conjunction with any other factors, result in
the loss of its status as a REIT for federal income tax purposes, in each
case to the extent that such action or inaction would be expected to have
an adverse effect on the Company or the FUMI Share Trust; and
(n) not discharge, settle or pay off any claims, liabilities or
obligations of any kind or any nature.
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Section 7.02. Certain Adjustment of Consideration. Anything
contained herein to the contrary notwithstanding, at any time prior to the
Registration Statement Effective Date, if (i) any required consents, approvals
or similar clearances with respect to the Notes (collectively, the "NOTE
CONSENTS") cannot be obtained by the Company and/or Gotham or GGC (directly or
by and on behalf of each of their respective affiliates) or (ii) the issuance of
Notes in connection with the transactions contemplated hereby shall materially
delay the consummation of the transactions contemplated hereby other than the
issuance of Notes, then, in each case the Merger Consideration shall be adjusted
to eliminate the Note Election (and any other provisions hereof relating to
Notes shall be completely ineffective) (such election, the "ADJUSTMENT EVENT").
In the event of an Adjustment Event, and subject to Section 7.02, (i) the Cash
Amount shall be adjusted to an amount equal to $2.55 less the Aggregate
Holdback; (ii) the Gotham Note Payment and Post-Closing Note Redemption shall no
longer be required; and (iii) any and all undertakings, terms or conditions
contemplated by the Note Terms shall no longer be required or effective.
Section 7.03. Preparation of Solicitation Documentation and Proxy
Statement-Prospectus; Company Meeting. (a) In connection with the Company
Meeting and the transactions contemplated hereby, the Company (and to the extent
required by applicable law, including the Securities Act and the Exchange Act,
the other parties) shall (i) promptly prepare and file with the SEC, use its
best efforts to have cleared by the SEC, and thereafter mail to its shareholders
as promptly as practicable (X) the Proxy Statement-Prospectus and (Y) to the
extent required, the Solicitation Documentation, and, in each case, any
amendments or supplements thereto and all other proxy materials for such
meeting, (ii) use its commercially reasonable efforts (including postponing or
adjourning the Company Meeting to solicit additional proxies) to obtain the
necessary approvals by holders of Company Common Shares for the FUR Merger, this
Agreement and the transactions contemplated hereby and (iii) otherwise comply
with all legal requirements applicable to such meeting and the Solicitation
Documentation. The Company (and to the extent applicable, the other parties)
shall provide the other parties and their respective legal counsel and financial
advisors with sufficient opportunity to review the form and substance of the
Solicitation Documentation (including any amendments or supplements thereto)
prior to filing such with the SEC. The Company (and to the extent applicable,
the other parties) shall provide to the other parties copies of any comments and
descriptions of any oral communications received from the SEC in connection
therewith. Subject to Section 7.03(b), the Proxy Statement-Prospectus shall
contain the unqualified recommendation of the Board of Trustees of the Company
that the holders of Company Common Shares vote in favor of the approval and
adoption of the FUR Merger, this Agreement and the transactions contemplated
hereby.
(b) The Company shall, as soon as practicable following the date the
Registration Statement of which the Proxy Statement-Prospectus forms a part is
declared effective by the SEC, duly call, give notice of, convene and hold a
Company Meeting for the purpose of seeking the Company Shareholder Approval.
Each of the parties shall use its respective reasonable efforts to take such
steps as are necessary to hold the Company Shareholders Meeting within 150 days
of the date of this Agreement. The Company shall, through the Company Board,
recommend to its shareholders that they give the Company Shareholder Approval.
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first two sentences of this Section 7.03(b) shall
not be affected by the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal (de-
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fined below). Anything contained herein to the contrary notwithstanding, it is
understood by the parties that, except as otherwise required by applicable law,
the Company Board of Trustees shall not be required to give a recommendation as
to the election with respect to the Note Election or the exercise of
Subscription Rights.
Section 7.04. No Solicitation. (a) After the date hereof and prior
to the Effective Time or earlier termination of this Agreement, other than with
respect to Gotham, the Company and the FUMI Share Trust shall not, and the
Company and the FUMI Share Trust shall not knowingly permit any trustee,
director, officer, agent or employee of the Company, the FUMI Share Trust, or
any attorney, accountant, investment banker, financial advisor or other agent
retained by the Company, the FUMI Share Trust or any of their respective
subsidiaries, to (i) initiate, solicit or encourage any inquiry, proposal or
offer to acquire any interest in, dispose of or otherwise result in a change of
control of the Company or any of its assets (including all or substantially all
of the business, properties, assets or beneficial interest of the Company),
whether by merger, purchase of assets, tender offer or otherwise, whether for
cash, securities or any other consideration or combination thereof (any such
transactions being referred to herein as an "ACQUISITION TRANSACTION"), (ii)
engage in negotiations or discussions concerning an Acquisition Transaction,
(iii) provide nonpublic or confidential information to facilitate an Acquisition
Transaction or (iv) agree to recommend any unsolicited bona fide written offer
or proposal with respect to a potential or proposed Acquisition Transaction (an
"ACQUISITION PROPOSAL").
(b) The provisions of paragraph (a) above or any other provision of
this Agreement notwithstanding, prior to the Effective Time, the Company, the
FUMI Share Trust and FUMI may, in response to an Acquisition Proposal from a
corporation, partnership, person or other entity or group (a "POTENTIAL
ACQUIROR") that the Company's Board of Trustees determines, after consultation
with its independent financial advisor and legal counsel, could reasonably be
expected to lead to a Superior Proposal, furnish confidential or nonpublic
information to, and engage in discussions and negotiate with, such Potential
Acquiror. For purposes of this Agreement, "SUPERIOR PROPOSAL" means a bona fide
Acquisition Proposal made by a Potential Acquiror (i) to acquire, for
consideration consisting of cash or publicly traded securities, more than 90% of
the Company Common Shares or all or substantially all of the assets of the
Company, the FUMI Share Trust and their respective subsidiaries and (ii) that
the Company's Board of Trustees determines, in good faith and after consultation
with its independent financial advisor and legal counsel, would be more
favorable to the holders of the Company Common Shares than the Mergers, this
Agreement and the transactions contemplated hereby and for which financing, to
the extent required, is then committed or that, in the good faith judgment of
the Company's Board of Trustees, is reasonably capable of being obtained.
(c) The Company shall promptly notify Gotham after receipt of any
Acquisition Proposal (and in any event prior to any determination of the
Company's Board of Trustees in respect of any such Acquisition Proposal). Such
notice to Gotham shall indicate in reasonable detail the identity of the
Potential Acquiror and the material terms and conditions of such Acquisition
Proposal, to the extent known.
(d) Nothing contained in this Section 7.04 or any other provision of
this Agreement shall prohibit the Company, the Company's Board of Trustees, the
FUMI Share Trust, FUMI or FUMI's Board of Directors (or any trustee, director,
officer, agent or employee
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of the foregoing) from (i) taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rule 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's shareholders as, in the good faith judgment of the
Company's Board of Trustees, the Trustee of the FUMI Share Trust or FUMI's Board
of Directors, as the case may be, in each case after consultation with outside
counsel, is required under applicable law.
Section 7.05. Access to Information; Confidentiality. (a) Except for
competitively sensitive information as to which access, use and treatment is
subject to applicable law, the Company, the FUMI Share Trust and their
respective subsidiaries shall afford to the other parties and their respective
accountants, counsel, financial advisors and other representatives reasonable
access during normal business hours upon reasonable notice throughout the period
from the date hereof through the Effective Time to their respective properties,
books, Contracts, commitments and records and, during such period, shall furnish
promptly such information concerning their businesses, properties and personnel
as such parties shall reasonably request (including for purposes of determining
the Escrow Amount); provided, however, that such investigation shall not
unreasonably disrupt the Company's, the FUMI Share Trust's or their respective
subsidiaries' operations. All nonpublic information provided to, or obtained by,
Gotham or its Representative (as defined in the Confidentiality Agreement) in
connection with the transactions contemplated hereby shall be "Confidential
Information" for purposes of the Confidentiality Agreement dated August 9, 2001
between Gotham and the Company (the "CONFIDENTIALITY AGREEMENT"), the terms of
which shall continue in force until the Effective Time; provided that Gotham,
GGC and the Company may disclose such information as may be necessary in
connection with seeking the GGP Required Approvals, the Company Required
Approvals and the Company Shareholder Approval. The foregoing notwithstanding,
the Company, the FUMI Share Trust and their respective subsidiaries shall not be
required to provide any information which it reasonably believes it may not
provide to the other parties by reason of applicable law, rules or regulations,
which constitutes information protected by attorney/client privilege, or which
the Company, the FUMI Share Trust or any of their respective subsidiaries is
required to keep confidential by reason of contract, agreement or understanding
with third parties; provided, however, that in the event the Company, the FUMI
Share Trust or their respective subsidiaries do not provide such information,
each shall provide, in writing, to the party requesting such information, the
reason or reasons for its refusal to provide such information.
(b) The foregoing notwithstanding, the Company shall promptly advise
Gotham, GGC and GGP orally and in writing of any change, circumstance or event
that, individually or in the aggregate, has caused or could reasonably be
expected to cause any of the representations and warranties of the Company and
the FUMI Share Trust on behalf of themselves and their respective subsidiaries
contained in this Agreement not to be true and correct in all material respects
at or as of the Effective Time, as though made at and as of such time (or, if
made as of a specific date, at and as of such date).
Section 7.06. Post-Closing Note Redemption. Subject to applicable
law, and as set forth more fully in the Note Terms in EXHIBIT C, any Notes
issued to any former holder of Company Common Shares who exercised his or her
Note Election to receive Notes as part of such holder's Merger Consideration
(but excluding the Notes issued to any holder in connection with such holder's
exercise of his or her Shareholder Note Purchase Right) shall automatically be
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redeemed by the issuer of the Notes (the "POST-CLOSING NOTE REDEMPTION") ninety
(90) days from and after the Closing Date (the "REDEMPTION TIME"), at a price
equal to $60.91 per Note, without interest, unless prior to the Redemption Time,
such former holder affirmatively elects to retain ownership of his or her Notes
(such redeemed Notes, the "REDEEMED NOTES"). Immediately after the redemption of
any Redeemed Notes, Gotham shall purchase from the issuer of the Notes, and the
issuer of the Notes shall sell, convey, assign, transfer and deliver to Gotham,
such Redeemed Notes at a price equal to $60.91 per Note, which shall be deemed
to be fully paid and nonassessable.
Section 7.07. Section 16 Matters. Prior to the Effective Time, the
parties shall take all steps as may be required and permitted to cause the
transactions contemplated by this Agreement, including any dispositions of
Company Common Shares (including derivative securities with respect to Company
Common Shares) by each individual who is or will be subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company,
to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.08. Public Announcements. Other than with respect to any
public announcement made by the Company in connection with Section 7.04, the
parties shall consult with each other before issuing, and provide each other the
opportunity to review and make reasonable comment upon, any press release or
making any public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with the NYSE, shall not issue any such press release or make
any such public statement prior to such consultation; provided, however, that
each of Gotham and the Company may issue a press release or make any public
statement in response to specific questions by the press, analysts, investors or
those attending industry conferences or financial analyst conference calls, so
long as any such statements are not inconsistent with previous press releases,
public disclosures or public statements made by the parties; provided further
that, subject to applicable law, in connection with the transactions
contemplated hereby, Gotham, GGP, and their respective legal and financial
advisors shall be permitted to engage in "road show" or similar and related
activities in respect of the Subscription Rights or any equity offering in
respect of the Surviving Corporation, without prior approval or review on the
part of the Company.
Section 7.09. Expenses and Fees. Except as otherwise provided herein
(including in the following two sentences), all fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees, costs and expenses,
including fees for accountants, lawyers, financial advisors, contractors and
consultants. The foregoing notwithstanding, the Company shall promptly reimburse
Gotham and its affiliates and GGP and its affiliates for their reasonable and
documented out-of-pocket expenses (including fees for accountants, lawyers,
financial advisors, contractors and consultants) incurred in connection with
this Agreement and the transactions contemplated hereby in the event that this
Agreement is terminated pursuant to Sections 9.01(b)(ii), 9.01(c) (other than
with respect to any matter described in Section 7.09 of the Gotham Disclosure
Schedule), 9.01(d) or 9.01(e). Furthermore, notwithstanding the first sentence
of this Section 7.09, in the event that the Mergers and the transactions
contemplated hereby are consummated, the transaction costs related to the
Mergers, the Contribution, this Agreement and the transactions contemplated
hereby shall be borne by the Surviving Corporation, and accordingly the
Surviving Corporation shall promptly reimburse the parties and their affiliates
for their respective reasonable expenses in-
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curred in connection with the Mergers, the Contribution, this Agreement and the
transactions contemplated hereby, including fees for accountants, counsel,
investment bankers, and financial advisors and consultants.
Section 7.10. Agreement to Cooperate. (a) Subject to the terms and
conditions of this Agreement and applicable law, each of the parties hereto
shall use its reasonable best efforts to take, or cause to be taken, all action
and do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including to obtain all necessary
or appropriate waivers, consents or approvals of third parties required in order
to preserve material contractual relationships of Gotham, GGP, the Company, the
FUMI Share Trust and their respective subsidiaries (including any amendment,
supplement or change of such material contractual relationships reasonably
necessary to effect the Mergers, this Agreement and the transactions
contemplated hereby), all necessary or appropriate waivers, consents, permits
and approvals to effect all necessary registrations, filings and submissions and
to lift any injunction or other legal bar to consummation of the Mergers (and,
in such case, to proceed with the consummation of the Mergers as expeditiously
as possible), including through all possible appeals; provided, however,
notwithstanding any other provision of this Agreement, except as set forth in
Section 7.10(a)(1) of the Gotham Disclosure Schedule (such matters set forth
therein, the "SHARED COSTS"), nothing herein shall require Gotham, Sub, GGC or
GGP or any of their respective subsidiaries or affiliates to make any
out-of-pocket expenses, accrue any liability for its account or make any
accommodation or concession to the Company, the FUMI Share Trust, FUMI or any
third party (including Governmental Authorities) in connection with this Section
7.10. Except as set forth in Section 7.10(a)(2) of the Gotham Disclosure
Schedule (such matters set forth therein, the "DUE AUTHORIZATIONS") or as
otherwise provided in Article VIII hereof, there are no waivers, consents,
permits and approvals that are conditions to consummation of the transactions
contemplated hereby.
(b) In addition to and without limitation of the foregoing, each of
the parties hereto, to the extent applicable, undertakes and agrees to file (and
each party agrees to cause any person or entity that may be deemed to be the
ultimate parent entity or otherwise to file, if such filing is required by
applicable law) as soon as practicable, any form or report required by any other
governmental agency relating to antitrust matters. Each of the parties hereto,
to the extent applicable, shall (and, in each case, shall cause any such parent
entity to) respond as promptly as practicable to any inquiries or requests
received from any federal, state, local or other governmental authority or
regulatory agency, commission, department or other governmental subdivision,
court, tribunal or body (each, a "GOVERNMENTAL AUTHORITY") for additional
information or documentation. Each of the parties hereto shall take all
reasonable steps necessary to avoid or eliminate each and every impediment under
any antitrust, competition, or trade regulation law that may be asserted by any
Governmental Authority with respect to the Mergers so as to enable the Effective
Time to occur as soon as reasonably practicable. Each party shall (i) promptly
notify the other party of any written communication to that party or its
affiliates from any Governmental Authority and, subject to applicable law,
permit the other party to review in advance any proposed written communication
to any of the foregoing; (ii) not agree to participate, or to permit its
affiliates to participate in any substantive meeting or discussion with any
Governmental Authority in respect of any filings, investigation or inquiry
concerning this Agreement or the Mergers unless it consults with the other party
in advance and, to the extent permitted by such
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Governmental Authority, gives the other party the opportunity to attend and
participate thereat; and (iii) furnish the other party with copies of all
correspondence, filings and communications (and memoranda setting forth the
substance thereof) between them and their affiliates and their respective
representatives on the one hand, and any government or regulatory authority or
members of their respective staffs on the other hand, with respect to this
Agreement and the Mergers.
Section 7.11. Trustees' and Officers' Indemnification. (a) Provided
that any funds available pursuant to that certain Escrow Agreement, dated as of
May 22, 1998, by the Company, FUMI and National City Bank (the "ESCROW
AGREEMENT"), have been utilized to the fullest extent possible, the Surviving
Corporation shall, to the fullest extent permitted by law, honor all of the
Company's and FUMI's obligations to indemnify and hold harmless (whether
pursuant to the Company's Amended and Restated Declaration of Trust, Bylaws,
individual indemnity agreements, applicable laws or otherwise), including, if
applicable, any obligations to advance funds for expenses, each present and
former trustee, director, officer, employee and agent of the Company or FUMI and
each person who served as a trustee, director, officer, member, trustee or
fiduciary of another corporation, partnership, limited liability company, joint
venture, trust, pension or other employee benefit plan or enterprise, including
the FUMI Share Trust, FUMI and FUMI's subsidiaries (each, together with such
person's heirs, executors or administrators, an "INDEMNIFIED PARTY" and
collectively, the "INDEMNIFIED PARTIES") against any costs or expenses
(including advancing attorneys' fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
actual or threatened claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative (an "ACTION"), arising out of,
relating to or in connection with any action or omission occurring or alleged to
have occurred whether before or after the Effective Time or the Mergers or the
other transactions contemplated by this Agreement or arising out of or
pertaining to the transactions contemplated by this Agreement; provided,
however, that all rights to indemnification in respect of any Action pending or
asserted or any claim made within such period shall continue until the
disposition of such Action or resolution of such claim. In the event of any such
Action, the parties hereto shall cooperate with the Indemnified Party in the
defense of any such Action; provided that no out-of-pocket expense is required
on account of such cooperation.
(b) The Surviving Corporation shall purchase a tail insurance policy
to the current policies of trustees' and officers' liability insurance
maintained by the Company for a period of at least three (3) years with respect
to matters arising on or before the Effective Time.
(c) The Surviving Corporation shall pay all reasonable expenses,
including reasonable attorneys' fees, that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided in this Section
7.11.
(d) The rights of each Indemnified Party hereunder shall be in
addition to, and not in limitation of, any other rights such Indemnified Party
may have under the Company's, the FUMI Share Trust's, FUMI's or their respective
subsidiaries' Amended and Restated Declarations of Trust, Bylaws, individual
indemnity agreements, certificates of incorporation, any other indemnification
arrangement, applicable law or otherwise. The provisions of this Section 7.11
-52-
shall survive the consummation of the Mergers and, anything else contained
herein notwithstanding, expressly are intended to benefit each of the
Indemnified Parties.
(e) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in 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, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations set forth in this Section 7.11.
Section 7.12. Supplemental Indenture. The Surviving Corporation
shall execute a supplemental indenture substantially in the form of EXHIBIT I
(the "SECOND SUPPLEMENTAL INDENTURE"), effective at the Effective Time, by which
(i) GGC shall assume the debt obligations of the Company issued under the terms
of the indenture, dated as of October 1, 1993 and supplemented by the first
supplemental indenture dated as of July 31, 1998, relating to the Company Debt
(the "COMPANY DEBT INDENTURE"), in the manner and to the extent required by the
Company Debt Indenture; and (ii) GGC shall designate, or shall cause to be
designated, a trustee to the Company Debt Indenture (such trustee, the
"INDENTURE TRUSTEE"), where (x) such Indenture Trustee may or may not be the
current trustee to the Company Debt Indenture; and (y) such Indenture Trustee is
acceptable to the Company in its reasonable discretion.
Section 7.13. Market Listing. The parties agree to cooperate and use
their respective commercially reasonable efforts to have the Underlying Shares
listed on a national securities exchange, authorized to be quoted in an
inter-dealer quotation system of a registered national securities association or
an over-the-counter market. Each party hereby agrees to perform any further acts
and to execute and deliver any documents which may be reasonably necessary to
carry out the foregoing.
Section 7.14. Certain Actions and Undertakings by the FUMI Share
Trust. The FUMI Share Trust acknowledges and agrees that, upon the consummation
of the transactions contemplated hereby, it shall terminate by its own terms
and, to the extent that it does not terminate by its own terms, the trustee or
trustees of the FUMI Share Trust shall take such actions and/or undertakings as
are necessary to terminate the FUMI Share Trust (including any amendment of the
FUMI Share Trust's Amended and Restated Declaration of Trust, as amended).
Section 7.15. Advice of Changes. After due inquiry by the Company,
its auditors and management of VenTek, and prior to the determination of the
Escrow Amount, the Company shall promptly advise Gotham in writing of (i) any
change, fact, circumstance, condition or event that has had or could reasonably
be expected to have a Company Material Adverse Effect, (ii) any failure of the
Company, the FUMI Share Trust, FUMI or their respective subsidiaries to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied hereunder or (iii) any change, fact, circumstance, condition or event
that could have an effect on the determination of the Escrow Amount pursuant to
Section 2.14.
Section 7.16. Affiliates. The Company (i) has disclosed in Section
7.16 of the Company Disclosure Schedule, all persons who are, or may be, as of
the date hereof its "affiliates" for purposes of Rule 145 under the Securities
Act, and (ii) shall use its commercially rea-
-53-
sonable efforts to cause each person who is identified as its "affiliate" in
Section 7.16 of the Company Disclosure Schedule to deliver to Gotham and the
Surviving Corporation as promptly as practicable but in no event later than 10
days prior to the Closing Date, a signed agreement in respect of any such
"affiliate" substantially in the form attached as EXHIBIT J (the "AFFILIATE
LETTER"). The Company shall notify Gotham and the Surviving Corporation from
time to time of any other person who then is, or may be, such an "affiliate" and
use its commercially reasonable efforts to cause each additional person who is
identified as an "affiliate" to execute a signed agreement as set forth in this
Section 7.16.
Section 7.17. Creation of Golf LLC. Prior to the Contribution, GGC
shall create Golf LLC, which shall be duly organized and validly existing under
the laws of the state of its formation and shall have the requisite power and
authority to execute and consummate the transactions required herein pertaining
to Golf LLC.
Section 7.18. Purchase of Underlying Shares. In connection with the
transactions contemplated hereby, Gotham agrees to (i) cause Underlying Shares
(issued not later than the Effective Time) to be purchased from GGC (either in
connection with this Agreement or otherwise) or (ii) have Subscription Rights
exercised (including in connection with (A) the exercise by any holder of
Company Common Shares of his or her Basic Subscription Privilege or
Oversubscription Privilege or (B) GGC's exercise of its Over-allotment Right),
in any case such that Underlying Shares (issued not later than the Effective
Time) are purchased from GGC, for an aggregate cash purchase price of at least
$10,000,000. For the purpose of clarity, it is acknowledged and agreed that
Gotham shall be deemed to have complied with the foregoing sentence whether the
subject Underlying Shares are purchased directly by Gotham, its affiliates, any
third party or otherwise.
ARTICLE VIII
CONDITIONS TO THE MERGERS AND CONTRIBUTION
Section 8.01. Conditions to the Obligations of Each Party. The
respective obligations of the parties to consummate the Mergers and the
transactions contemplated hereby are subject to the satisfaction on or prior to
the Closing Date of the following conditions:
(a) the FUR Merger, this Agreement and the transactions contemplated
hereby shall have been approved and adopted by no less than a majority
vote of Company Common Shares;
(b) each of the parties, to the extent applicable to such party,
shall have executed and delivered all of the documents necessary or
required to effect the Mergers and the transactions contemplated hereby,
including the Exhibits substantially in the forms attached hereto, which
include (i) the Restated GGP Agreements; (ii) the Equityholders Agreement;
(iii) the Second Supplemental Indenture; (iv) the Affiliate Letter; (v)
the Certificates of Merger and (vi) the Escrow Arrangement (including
depositing of funds related thereto as required pursuant to the terms
hereof); and the Company, Gotham, GGP and Xxxxxxx X. Xxxxxxx shall have
performed all of their respective obligations pur-
-54-
suant to that certain letter agreement, dated as of the date hereof, by
and among the Company, Gotham, GGP and Xxxxxxx X. Xxxxxxx;
(c) no judgment, injunction, order or decree of a court or
Governmental Authority or authority of competent jurisdiction shall be in
effect which has the effect of making the Mergers or the transactions
contemplated hereby illegal or otherwise restraining or prohibiting the
consummation of the Mergers or the transactions contemplated hereby
(subject to the terms of this Agreement, each party agreeing to use its
reasonable commercial efforts, including appeals to higher courts, to have
any judgment, injunction, order or decree lifted);
(d) (i) any waiting period applicable to consummation of the Mergers
under the applicable antitrust law shall have expired or terminated, (ii)
all necessary and any material registrations, filings, applications,
notices, consents, approvals, orders, qualifications and waivers relating
to the Mergers and the transactions contemplated hereby (and, subject to
Section 7.02 hereof, any securities to be issued in connection with this
Agreement and the transactions contemplated hereby) shall have been
obtained from Governmental Authorities (including any required filings,
registrations or notices required by any State's Blue Sky laws, all
material Gotham Required Approvals, GGP Required Approvals and Company
Required Approvals listed on Sections 4.02, 5.05 and 6.04 of the Gotham
Disclosure Schedule, GGP Disclosure Schedule and Company Disclosure
Schedule, respectively, and indicated therein as being a condition to the
Closing shall have been filed, made or obtained, as the case may be), and
(iii) the SEC shall have declared the Proxy Statement-Prospectus
effective; no stop order suspending the effectiveness of the Proxy
Statement-Prospectus or any part thereof shall have been issued and be in
effect; and no proceeding for that purpose, and no similar proceeding with
respect of the Proxy Statement, shall have been initiated or threatened in
writing by the SEC and not concluded or withdrawn; and
(e) each of the Due Authorizations shall have been obtained.
Section 8.02. Conditions to the Obligations of Gotham, GGP, FGPI,
FGA, GGC and Sub. The obligations of Gotham, GGP, FGPI, FGA, GGC and Sub to
consummate the Mergers are subject to the satisfaction of the following further
conditions:
(a) the Company, the FUMI Share Trust, FUMI and their respective
subsidiaries shall have performed in all material respects all of their
obligations hereunder required to be performed by them at or prior to the
Effective Time (including the Company's obligations under Sections 7.15
and 2.14);
(b) the representations and warranties of the Company, the FUMI
Share Trust, FUMI and their respective subsidiaries contained in this
Agreement shall be true and correct at and as of the Effective Time as
though made at and as of such time (or, if made as of a specific date, at
and as of such date), except for such failures to be true and correct as
would not reasonably be expected to amount, individually or in the
aggregate, to a monetary liability greater than or equal to $65 million;
provided, however, that the representations and warranties of the Company,
the FUMI Share Trust, FUMI and their re-
-55-
spective subsidiaries set forth in Sections 6.02, 6.04(a), 6.04(b)(i),
(ii) and (iii) (and, in the case of 6.04(b)(ii) and (iii), without
reference to whether a breach of such representation and warranty is
reasonably expected to have a Company Material Adverse Effect) and 6.10(c)
shall be true and correct in all respects;
(c) Gotham shall have received a certificate signed on behalf of the
Company, the FUMI Share Trust and FUMI by an executive officer or trustee,
as the case may be, of each of the foregoing indicating that the
conditions provided in Section 8.02(a) and (b) have been satisfied; and
(d) Gotham shall have received from Wachtell, Lipton, Xxxxx & Xxxx,
counsel to Gotham, a written opinion, dated the Closing Date, to the
effect that for federal income Tax purposes the Contribution shall
constitute an exchange described in Section 351(a) or 351(b) of the Code.
In rendering such opinion, counsel to Gotham shall be entitled to rely on
customary assumptions and representations reasonably satisfactory to such
counsel, including representations set forth in certificates of officers
of Gotham.
Section 8.03. Conditions to the Obligations of the Company. The
obligations of the Company, the FUMI Share Trust and FUMI to consummate the
Mergers are subject to the satisfaction of the following further conditions:
(a) each of Gotham, GGP, FGPI, FGA, GGC and Sub shall have performed
in all material respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time;
(b) the representations and warranties of Gotham, GGP, FGPI, FGA,
GGC and Sub contained in this Agreement shall be true and correct at and
as of the Effective Time, as though made at and as of such time (or, if
made as of a specific date, at and as of such date), except for such
failures to be true and correct as would not reasonably be expected to
materially impair, delay or prevent consummation of the Mergers or the
transactions contemplated hereby; and
(c) the Company shall have received separate certificates signed on
behalf of Gotham and GGP, respectively, by an authorized signatory
indicating that the conditions pertaining to Gotham and GGP respectively
in Sections 8.03(a) and (b) have been satisfied.
ARTICLE IX
TERMINATION
Section 9.01. Termination. This Agreement may be terminated and the
Mergers contemplated hereby may be abandoned at any time prior to the Effective
Time (notwithstanding any approval of this Agreement by holders of Company
Common Shares):
(a) by mutual written consent of the Company and Gotham;
(b) by either Gotham or the Company:
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(i) if any court of competent jurisdiction in the United
States or other United States Governmental Authority shall have
issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Mergers
and such order, decree, ruling or other action is or shall have
become final and nonappealable; or, if any necessary and material
registration, filing, application, notice, consent, approval, order,
qualification and waiver relating to the Mergers and the
transactions contemplated hereby (and, subject to Section 7.02, any
securities to be issued in connection with this Agreement and the
transactions contemplated hereby) has not been obtained from
Governmental Authorities (including any required filing,
registration or notice required by any State's Blue Sky laws); or
(ii) if there is a failure of the occurrence of the
conditions provided in Section 8.01(a);
(c) by Gotham if there has been a material breach by the Company of
any representation, warranty, covenant or agreement contained in this
Agreement that (i) would result in a failure of a condition set forth in
Section 8.02(a) or (b) and (ii) cannot be cured prior to November 30,
2002; provided, however, that at the time of termination Gotham and its
respective affiliates are not in breach of any material representation,
warranty or covenant contained in this Agreement;
(d) by Gotham, if the Board of Trustees of the Company shall have
withdrawn or adversely amended in any material respect its approval or
recommendation of the FUR Merger, this Agreement or the transactions
contemplated hereby (other than the exercise of Subscription Rights or the
Note Election) to the Company's shareholders, it being understood that
neither (i) disclosure of any competing proposal that is not being
recommended by the Board of Trustees of the Company nor (ii) disclosure of
any facts or circumstances, together with a statement that the Board of
Trustees of the Company continues to recommend approval and adoption of
the FUR Merger and this Agreement, shall be considered to be a withdrawal
or adverse amendment in any material respect of such approval or
recommendation;
(e) by the Company, after giving Gotham 96 hours' prior written
notice of its receipt of an Acquisition Proposal, in order to enter into a
definitive agreement providing for an Acquisition Transaction which is a
Superior Proposal, provided that (i) the Company Meeting has not yet
occurred and (ii) the Company has first complied with the provisions of
Section 7.09; or
(f) by the Company, if there has been a material breach by Gotham,
GGP, FGA, FGPI, GGC or Sub of any representation, warranty, covenant or
agreement contained in this Agreement that (i) would result in a failure
of a condition set forth in Section 8.03(a) or (b) and (ii) cannot be
cured prior to November 30, 2002; provided, however, that at the time of
termination the Company, the FUMI Share Trust and their respective
affiliates are not in breach of any material representation, warranty or
covenant contained in this Agreement.
-57-
The party desiring to terminate this Agreement pursuant to Section 9.01 (other
than pursuant to Section 9.01(a)) shall give written notice of such termination
to the other parties.
ARTICLE X
MISCELLANEOUS
Section 10.01. Effect of Termination. In the event of termination of
this Agreement by either Gotham or the Company prior to the Effective Time
pursuant to the provisions of Section 9.01, this Agreement shall forthwith
become void, and there shall be no liability or further obligation on the part
of the parties or their respective officers, trustees or directors (except as
set forth in the second sentence of Section 7.05(a), Sections 7.08 and 7.09, all
of which shall survive the termination). Nothing in this Section 10.01 shall
relieve any party from liability for any willful, fraudulent or material breach
of any covenant or agreement of such party contained in this Agreement.
Section 10.02. Non-Survival of Representations and Warranties. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or the termination
of this Agreement. This Section 10.02 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after such time.
Section 10.03. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
mailed by registered or certified mail (return receipt requested) if and when
received or sent via facsimile to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to the Company, the FUMI Share Trust or FUMI to:
Imowitz Xxxxxx & Company
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
with copies to:
Xxxx, Xxxxxx & Parks LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: F. Xxxxxx X'Xxxxx, Esq.
Facsimile: (000) 000-0000
and
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Xxxx Xxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxxx, Esq.
Facsimile: (000) 000-0000
If to GGP, FGPI, FGA, Sub or the Surviving Corporation to:
Gotham Golf Partners, L.P.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.,
General Counsel
Facsimile: (000) 000-0000
with copies to:
Xxxx and Xxxx, LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Gotham or GGC to:
Gotham Partners, L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.,
General Counsel
Facsimile: (000) 000-0000
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Section 10.04. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, (ii) "knowledge" shall mean
actual knowledge of the trustees, directors and executive officers of the
Company, the FUMI Share Trust and their respective subsidiaries, GGP and Gotham,
as the case may be, (iii) "requirement of Law" or "applicable law" shall mean
any federal, state, county or local laws, statutes, regula-
-59-
tions, rules, codes or ordinances enacted, adopted, issued or promulgated by any
Governmental Authority, (iv) the words "subsidiary" or "subsidiaries", with
respect to any party, shall mean any corporation, trust, partnership, limited
liability company, joint venture or other legal entity, whether incorporated or
unincorporated, of which (X) such party or any other subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any subsidiary of such party do not have a majority
of the voting interests in such partnership) or (Y) at least a majority of the
securities or other interests, which have by their terms ordinary voting power
to elect or appoint a majority of the Board of Directors or others performing
similar functions with respect to such corporation, trust, limited liability
company, joint venture or other entity, as applicable, is directly or indirectly
owned or controlled by such party or by any one or more of such party's
subsidiaries, and (v) any reference to an Article or a Section shall mean such
Article or Section hereof. No provision of this Agreement shall be interpreted
or construed against any party hereto solely because such party or its legal
representative drafted such provision. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation."
Section 10.05. Miscellaneous. This Agreement (including the
documents and instruments referred to herein or attached as Exhibits or
Schedules) shall not be assigned by operation of law, succession in interest or
otherwise. The parties hereto 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 the Court of Chancery or other Courts of the
State of Delaware, 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 to the personal jurisdiction of the Court of Chancery
or other Courts of the State of Delaware in the event any dispute arises out of
this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it shall not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, (c) agrees that it shall not
bring any action relating to this Agreement or the transactions contemplated by
this Agreement in any court other than the Court of Chancery or other Courts of
the State of Delaware, and each of the parties irrevocably waives the right to
trial by jury, (d) agrees to waive any bonding requirement under any applicable
law, in the case any other party seeks to enforce the terms by way of equitable
relief and (e) each of the parties irrevocably consents to service of process by
first class certified mail, return receipt requested, postage prepaid, to the
address at which such party is to receive notice. THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES OF SUCH STATE.
Section 10.06. Counterparts. This Agreement may be executed in two
or more counterparts, and by facsimile, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
Section 10.07. Amendments; Extensions. (a) This Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Boards of Trustees, Boards of Directors or similar authoritative body, at any
time before or after the Company Shareholder Approval has been obtained;
provided that, after the Company Shareholder Ap-
-60-
proval has been obtained, there shall be made no amendment that by law requires
further approval by holders of Company Common Stock without the further approval
of such holders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(b) At any time prior to the Effective Time, the parties hereto, by
action taken or authorized by their respective Boards of Trustees, Boards of
Directors or similar authoritative body, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein; provided that after the Company Shareholder Approval has been obtained,
there shall be made no waiver that by law requires further approval by holders
of Company Common Stock without the further approval of such holders. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure or delay 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.
Section 10.08. Entire Agreement. This Agreement (including the
Company, GGP and Gotham Disclosure Schedules and Exhibits hereto) and the
Confidentiality Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement. No representation, inducement,
promise, understanding, condition or warranty not set forth herein has been made
or relied upon by any party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any person other than the parties hereto any
rights or remedies hereunder except for the provisions of Section 8.11, which
are intended for the benefit of the Company's former and present officers,
trustees, employees and agents.
Section 10.09. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
Section 10.10. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
Section 10.11. No Admission. Nothing herein shall be deemed an
admission by the parties in any Action or proceeding by or on behalf of a third
party, that such third party is not in breach or violation of, or in default in,
the performance or observance of any term or provision of any contract,
agreement or understanding.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By:/s/ XXXXXX X. XXXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Trustee
THAT CERTAIN OHIO TRUST, DECLARED AS OF
OCTOBER 1, 1996, BY XXXXXX XXXXXXX,
TRUSTEE
By:/s/ XXXXXX XXXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Trustee
FIRST UNION MANAGEMENT, INC.
By:/s/ XXXXXX XXXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman
GGC MERGER SUB, INC.
By:/s/ XXXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
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GOTHAM PARTNERS, L.P.
By: Section H Partners, L.P.,
its general partner
By: Karenina Corporation,
a general partner of Section H
Partners, L.P.
By:/s/ XXXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
GOTHAM GOLF CORP.
By:/s/ XXXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
FLORIDA GOLF PROPERTIES, INC.
By:/s/ XXXX XXXXXXXXXXX
-------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: President
FLORIDA GOLF ASSOCIATES, L.P.
By: GGP, Inc.,
its general partner
By:/s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
-00-
XXXXXX XXXX PARTNERS, L.P.
By: Florida Golf Properties, Inc.,
its general partner
By:/s/ XXXX XXXXXXXXXXX
-------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: President