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Agreement And Plan Of Merger

Agreement and Plan of Merger

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GLOBAL NET LEASE, INC. | AMERICAN REALTY CAPITAL GLOBAL II OPERATING PARTNERSHIP, LP | AMERICAN REALTY CAPITAL GLOBAL TRUST II, INC | Company Operating Partnership | GLOBAL NET LEASE OPERATING PARTNERSHIP, LP | GLOBAL NET LEASE, INC | MAYFLOWER ACQUISITION LLC | Miles Stockbridge PC | Parent Operating Partnership

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Maryland     Date: 8/8/2016
Industry: Real Estate Operations     Law Firm: Miles Stockbridge;Proskauer Rose     Sector: Services

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Exhibit 2.1

 

AGREEMENT AND PLAN OF MERGER

 

By and Among

 

GLOBAL NET LEASE, INC.,

 

GLOBAL NET LEASE OPERATING PARTNERSHIP, L.P.,

 

MAYFLOWER ACQUISITION LLC,

 

AMERICAN REALTY CAPITAL GLOBAL TRUST II, INC.

 

and

 

AMERICAN REALTY CAPITAL GLOBAL II OPERATING PARTNERSHIP, L.P.

 

Dated as of August 8, 2016

 

 

 

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

Article I

 

 

 

DEFINITIONS

 

 

 

Section 1.1

Definitions

3

 

 

 

Article II

 

 

 

THE MERGERS

 

 

 

Section 2.1

The Mergers

15

Section 2.2

Closing

16

Section 2.3

Effective Time

16

Section 2.4

Organizational Documents

17

Section 2.5

Tax Consequences

17

Section 2.6

Subsequent Actions

17

 

 

 

Article III

 

 

 

EFFECT OF THE MERGERS

 

 

 

Section 3.1

Effect of the Mergers

18

Section 3.2

Exchange Fund; Exchange Agent

20

Section 3.3

Share Transfer Books

20

Section 3.4

Dividends with Respect to Parent Common Stock

20

Section 3.5

Termination of Exchange Fund

21

Section 3.6

No Liability

21

Section 3.7

Company Restricted Stock

21

Section 3.8

Withholding Rights

21

Section 3.9

Lost Certificates

22

Section 3.10

Dissenters’ Rights

22

Section 3.11

Fractional Shares

22

 

 

 

Article IV

 

 

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

 

 

Section 4.1

Organization and Qualification; Subsidiaries

23

Section 4.2

Organizational Documents

24

Section 4.3

Capital Structure

25

Section 4.4

Authority

26

Section 4.5

No Conflict; Required Filings and Consents

27

Section 4.6

Permits; Compliance with Law

28

 

 

i

 

 

 

Section 4.7

SEC Filings; Financial Statements

29

Section 4.8

Disclosure Documents

31

Section 4.9

Absence of Certain Changes or Events

32

Section 4.10

Employee Benefit Plans and Service Providers

32

Section 4.11

Labor and Employment Matters

33

Section 4.12

Material Contracts

33

Section 4.13

Litigation

35

Section 4.14

Environmental Matters

35

Section 4.15

Intellectual Property

36

Section 4.16

Properties

37

Section 4.17

Taxes

41

Section 4.18

Insurance

44

Section 4.19

Opinion of Financial Advisor

44

Section 4.20

Takeover Statutes

44

Section 4.21

Vote Required

45

Section 4.22

Brokers

45

Section 4.23

Investment Company Act

45

Section 4.24

Affiliate Transactions

45

Section 4.25

Fees Contemplated by the Mergers

45

Section 4.26

No Other Representations or Warranties

45

 

 

 

Article V

 

 

 

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

 

 

Section 5.1

Organization and Qualification; Subsidiaries

46

Section 5.2

Organizational Documents

47

Section 5.3

Capital Structure

48

Section 5.4

Authority

49

Section 5.5

No Conflict; Required Filings and Consents

50

Section 5.6

Permits; Compliance with Law

51

Section 5.7

SEC Filings; Financial Statements

52

Section 5.8

Disclosure Documents

54

Section 5.9

Absence of Certain Changes or Events

54

Section 5.10

Employee Benefit Plans and Service Providers

55

Section 5.11

Labor and Employment Matters

55

Section 5.12

Material Contracts

56

Section 5.13

Litigation

57

Section 5.14

Environmental Matters

58

Section 5.15

Intellectual Property

59

Section 5.16

Properties

59

Section 5.17

Taxes

62

Section 5.18

Insurance

66

Section 5.19

Vote Required

66

Section 5.20

Brokers

66

Section 5.21

Investment Company Act

66

 

 

ii

 

 

 

Section 5.22

Ownership of Merger Sub; No Prior Activities

67

Section 5.23

Takeover Statutes

67

Section 5.24

Affiliate Transactions

67

Section 5.25

Fees Contemplated by the Mergers

67

Section 5.26

Opinion of Financial Advisor

67

Section 5.27

No Other Representations or Warranties

67

 

 

 

Article VI

 

 

 

COVENANTS AND AGREEMENTS

 

 

 

Section 6.1

Conduct of Business by the Company

68

Section 6.2

Conduct of Business by Parent and Merger Sub

73

Section 6.3

Preparation of Form S-4 and Joint Proxy Statement; Stockholder Meetings

76

Section 6.4

Access to Information; Confidentiality

78

Section 6.5

Company Acquisition Proposals.

79

Section 6.6

Parent Change in Recommendation

84

Section 6.7

Appropriate Action; Consents; Filings

84

Section 6.8

Notification of Certain Matters; Transaction Litigation

86

Section 6.9

Public Announcements

87

Section 6.10

Directors’ and Officers’ Indemnification and Insurance

87

Section 6.11

Certain Tax Matters

89

Section 6.12

Dividends

89

Section 6.13

Merger Sub

90

Section 6.14

Section 16 Matters

90

Section 6.15

Stock Exchange Listing

90

Section 6.16

Voting of Shares

90

Section 6.17

Termination of Plans

90

Section 6.18

FIRPTA

91

Section 6.19

Board of Directors of Parent

91

 

 

 

Article VII

 

 

 

CONDITIONS

 

 

 

Section 7.1

Conditions to the Obligations of Each Party

91

Section 7.2

Conditions to the Obligations of Parent and Merger Sub

92

Section 7.3

Conditions to the Obligations of the Company

93

 

 

 

Article VIII

 

 

 

TERMINATION, AMENDMENT AND WAIVER

 

 

 

Section 8.1

Termination

94

Section 8.2

Notice of Termination; Effect of Termination

96

Section 8.3

Termination Fee

97

 

 

iii

 

 

 

Section 8.4

Amendment

100

Section 8.5

Waiver

100

Section 8.6

Fees and Expenses

100

Section 8.7

Transfer Taxes

100

 

 

 

Article IX

 

 

 

GENERAL PROVISIONS

 

 

 

Section 9.1

Non-Survival of Representations and Warranties

101

Section 9.2

Notices

101

Section 9.3

Interpretation; Certain Definitions

102

Section 9.4

Severability

103

Section 9.5

Assignment; Delegation

103

Section 9.6

Entire Agreement

103

Section 9.7

No Third-Party Beneficiaries

103

Section 9.8

Specific Performance; Non-Recourse

104

Section 9.9

Counterparts

104

Section 9.10

Governing Law

104

Section 9.11

Consent to Jurisdiction

105

Section 9.12

WAIVER OF JURY TRIAL

106

 

 

iv

 

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER, dated as of August 8, 2016 (this “ Agreement ”), is made by and among GLOBAL NET LEASE, INC., a Maryland corporation (“ Parent ”), GLOBAL NET LEASE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership and the operating partnership of Parent (the “ Parent Operating Partnership ”), MAYFLOWER ACQUISITION LLC, a Maryland limited liability company and direct wholly owned subsidiary of Parent (“ Merger Sub ”), AMERICAN REALTY CAPITAL GLOBAL TRUST II, INC., a Maryland corporation (the “ Company ”) and AMERICAN REALTY CAPITAL GLOBAL II OPERATING PARTNERSHIP, L.P., a Delaware limited partnership and the operating partnership of the Company (the “ Company Operating Partnership ”).

 

WITNESSETH :

 

WHEREAS, the Company is a Maryland corporation operating as a real estate investment trust for U.S. federal income tax purposes that holds interests in properties through the Company Operating Partnership and is the sole general partner of the Company Operating Partnership;

 

WHEREAS, Parent is a Maryland corporation operating as a real estate investment trust for U.S. federal income tax purposes that holds interests in properties through the Parent Operating Partnership and is the sole general partner of the Parent Operating Partnership;

 

WHEREAS, the parties hereto wish to effect a business combination transaction in which (i) the Company will be merged with and into Merger Sub, with Merger Sub being the surviving entity (the “ Merger ”), and each outstanding share of common stock, $0.01 par value per share, of the Company (the “ Company Common Stock ”), will be converted into the right to receive the Merger Consideration, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the MGCL and the MLLCA, and (ii) the Company Operating Partnership will be merged with and into the Parent Operating Partnership, with the Parent Operating Partnership being the surviving entity (the “ Partnership Merger ” and together with the Merger, the “ Mergers ”), and each outstanding Company Partnership Unit will be converted into the right to receive the Partnership Merger Consideration, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DRULPA;

 

WHEREAS, the Company Board (based on the unanimous recommendation of the Company Special Committee) and the Parent Board (based on the unanimous recommendation of the Parent Special Committee) have each separately approved this Agreement, the Merger and the other transactions contemplated by this Agreement and declared that this Agreement, the Merger and the other transactions contemplated by this Agreement are advisable on substantially the terms and conditions set forth herein;

 

WHEREAS, the Company, as the sole general partner of the Company Operating Partnership, and Parent, as the sole general partner of the Parent Operating Partnership, have each separately approved this Agreement, the Partnership Merger and the other transactions contemplated by this Agreement and declared that this Agreement, the Partnership Merger and the other transactions contemplated by this Agreement are advisable;

 

 

 

 

WHEREAS, Parent, as the sole general partner of the Parent Operating Partnership, has approved this Agreement, the Partnership Merger, and the other transactions contemplated by this Agreement;

 

WHEREAS, the Company Board has directed that the Merger and, to the extent stockholder approval is required, the other transactions contemplated by this Agreement be submitted for consideration at a meeting of the Company’s stockholders and has resolved to recommend that the Company’s stockholders vote to approve the Merger and, to the extent stockholder approval is required, the other transactions contemplated by this Agreement;

 

WHEREAS, the Parent Board has directed that the issuance of shares of Parent Common Stock in connection with the Merger be submitted for consideration at a meeting of Parent’s stockholders and has resolved to recommend that Parent’s stockholders vote to approve such issuance;

 

WHEREAS, Parent, in its capacity as the sole member of Merger Sub, has taken all actions required for the execution of this Agreement by Merger Sub and to adopt and approve this Agreement and to approve the consummation by Merger Sub of the Merger and the other transactions contemplated by this Agreement;

 

WHEREAS, concurrently with the execution and delivery of this Agreement the Company, the Company Operating Partnership, the Company Advisor, and certain other parties entered into a Termination Agreement pursuant to which the parties thereto agreed to terminate, among other things, the Advisory Agreement concurrently with the consummation of the transactions contemplated by this Agreement;

 

WHEREAS, for U.S. federal income tax purposes, it is intended that the Merger shall qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Code, and this Agreement is intended to be and is adopted as a “plan of reorganization” for the Merger for purposes of Sections 354 and 361 of the Code;

 

WHEREAS, for U.S. federal income tax purposes, it is intended that the Partnership Merger shall qualify as and constitute an “asset-over” form of merger under Treasury Regulations Section 1.708-1(c)(3)(i) with the Surviving Partnership as the continuation of the Parent Operating Partnership and the termination of the Company Operating Partnership; and

 

WHEREAS, each of the parties hereto desire to make certain representations, warranties, covenants and agreements in connection with the Mergers, and also to prescribe various conditions to the Mergers.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants and subject to the conditions herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

 

2

 

 

 

Article I

DEFINITIONS

 

Section 1.1            Definitions .

 

(a)          For purposes of this Agreement:

 

Acceptable Confidentiality Agreement ” shall mean a confidentiality agreement with such terms at least as favorable in the aggregate to the Company Parties as the Confidentiality Agreement; provided that such confidentiality agreement shall permit compliance with Section 6.5 or any other provision of this Agreement and need not contain any standstill or similar provision restricting or prohibiting the making or modification of any Acquisition Proposal.

 

Action ” shall mean any claim, action, suit, proceeding, arbitration, mediation or other investigation.

 

Advisory Agreement ” shall mean the Advisory Agreement, dated as of August 26, 2014, between the Company, the Company Operating Partnership and the Advisor, as amended by the First Amendment to Advisory Agreement dated March 22, 2016, and as further amended, modified or supplemented through the date hereof.

 

Affiliate ” of a specified Person shall mean a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

 

Benefit Plan ” shall mean (a) any “employee benefit plan” (within the meaning of Section 3(3) of ERISA), or (b) any employment, consulting, termination, severance, change in control, separation, retention stock option, restricted stock, profits interest unit, outperformance, stock purchase, deferred compensation, bonus, incentive compensation, fringe benefit, health, medical, dental, disability, accident, life insurance, welfare benefit, cafeteria, vacation, paid time off, perquisite, retirement, pension, or savings or any other compensation or employee benefit plan, agreement, program, policy or other arrangement, whether or not subject to either (i) ERISA or (ii) in respect to the Company Subsidiaries (and, in respect thereto, excluding any mandatory governmental pension or welfare schemes, plans, or arrangements pursuant to the domestic laws of that jurisdiction, where applicable), any law, regulation, rule, program, or policy in any relevant jurisdiction of the European Union.

 

Business Day ” shall mean any day other than a Saturday, Sunday or a day on which all banking institutions in New York, New York are authorized or obligated by Law or executive order to close (provided that, with respect to filings made with the SEC, a day on which a filing is to be made is a Business Day only if the SEC is open to accept filings).

 

Code ” shall mean the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

Company Advisor ” shall mean American Realty Capital Global II Advisors, LLC, a Delaware limited liability company.

 

 

3

 

 

 

Company Class B Unit ” shall mean a Company Partnership Unit designated by the Company Operating Partnership as a Class B Unit under the Company Partnership Agreement.

 

Company Distribution Rate ” shall mean $0.0048497270.

 

Company GP Unit ” shall mean a Company Partnership Unit designated by the Company Operating Partnership as a GP Unit under the Company Partnership Agreement.

 

Company Intervening Event ” shall mean a material event, circumstance, change or development that was not known to the Company Board prior to the execution of this Agreement (or if known, the consequences of which were not known or reasonably foreseeable), which event or circumstance, or any material consequence thereof, becomes known to the Company Board prior to the Effective Time; provided , however , that in no event shall the receipt, existence or terms of an Acquisition Proposal or any matter relating thereto or consequence thereof constitute a Company Intervening Event.

 

Company LP Unit ” shall mean a Company Partnership Unit held by any Person other than the Company.

 

Company Material Adverse Effect ” shall mean any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, liabilities, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole or (b) that will, or would reasonably be expected to, prevent or materially impair the ability of the Company to consummate the Mergers before the Outside Date; provided , however , that for purposes of clause (a) “Company Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of the Company to meet any projections or forecasts or any decrease in the net asset value of the Company Common Stock (it being understood and agreed that any event, circumstance, change or effect giving rise to such failure or decrease shall be taken into account in determining whether there has been a Company Material Adverse Effect), (ii) any events, circumstances, changes or effects that affect the commercial real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal or regulatory conditions, (v) the commencement, escalation or worsening of a war or armed hostilities or the occurrence of acts of terrorism or sabotage, (vi) the negotiation, execution or announcement of this Agreement, or the consummation or anticipation of the Mergers or other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of the Parent Special Committee, (viii) earthquakes, hurricanes or other natural disasters, (ix) any damage or destruction of any Company Property that is substantially covered by insurance, or (x) changes in Law or GAAP, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not disproportionately affect the Company and the Company Subsidiaries, taken as a whole, relative to other similarly situated participants in the commercial real estate REIT industry in the United States, and in the case of clause (viii) do not disproportionately affect the Company and the Company Subsidiaries, taken as a whole, relative to other participants in the commercial real estate REIT industry in the geographic regions in which the Company and the Company Subsidiaries operate or own or lease properties.

 

 

4

 

 

 

Company OP Unit ” shall mean a Company Partnership Unit designated by the Company Operating Partnership as an OP Unit under the Company Partnership Agreement.

 

Company Parties ” means the Company and the Company Operating Partnership.

 

Company Partnership Agreement ” shall mean the Amended and Restated Agreement of Limited Partnership of the Company Operating Partnership, dated August 10, 2015, as amended by the First Amendment, dated March 22, 2016, as further amended, modified or supplemented from time to time.

 

Company Partnership Unit ” shall have the same meaning as Partnership Unit as set forth in the Company Partnership Agreement.

 

Company Related Party ” shall mean the Company and each of its affiliates and their and their respective affiliates’ stockholders, partners, members, officers, directors, employees, controlling persons, agents and representatives.

 

Company Restricted Stock ” shall mean any shares of Company Common Stock granted pursuant to the Company Restricted Stock Plan which are subject to restrictions on transfer or forfeiture.

 

Company Restricted Stock Plan ” shall mean the Company’s employee and director incentive restricted share plan.

 

Company Special Committee ” shall mean the special committee of the independent directors of the Company.

 

Company Stockholder Meeting ” shall mean the meeting of the holders of shares of Company Common Stock for the purpose of seeking the Company Stockholder Approval, including any postponement or adjournment thereof.

 

Company Subsidiary ” shall mean (a) any corporation of which more than fifty percent (50%) of the outstanding voting securities is, directly or indirectly, owned by the Company, and (b) any partnership, limited liability company, joint venture or other entity of which more than fifty percent (50%) of the total equity interest is, directly or indirectly, owned by the Company or of which the Company or any Company Subsidiary is a general partner, manager, managing member or the equivalent, including the Company Operating Partnership.

 

Confidentiality Agreement ” shall mean the Mutual Nondisclosure Agreement, dated February 4, 2016, as amended from time to time, between the Company and Parent.

 

control ” (including the terms “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

 

 

5

 

 

 

Debt Financing ” shall have the meaning assigned thereto in the definition of “Financing Sources”.

 

Delaware Secretary ” shall mean the Secretary of State of the State of Delaware.

 

DRULPA ” shall mean the Delaware Revised Uniform Partnership Act, as amended.

 

Environmental Law ” shall mean any Law (including common law) relating to the pollution or protection of the environment (including air, surface water, groundwater, land surface or subsurface land), or human health or safety (as such matters relate to Hazardous Substances), including Laws relating to the use, handling, presence, transportation, treatment, storage, disposal, release or discharge of Hazardous Substances.

 

Environmental Permit ” shall mean any permit, approval, license or other authorization required under any applicable Environmental Law.

 

ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

ERISA Affiliate ” shall mean any entity, trade or business (whether or not incorporated) that, together with any other entity, trade or business (whether or not incorporated), is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

 

Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

 

Exchange Ratio ” shall mean 2.27.

 

Expenses ” shall mean all expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing, and filing of the Form S-4, the preparation, printing, filing and mailing of the Joint Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Form S-4 and the Joint Proxy Statement, the solicitation of stockholder approvals, engaging the services of the Exchange Agent, obtaining third party consents, any other filings with the SEC and all other matters related to the closing of the Mergers and the other transactions contemplated by this Agreement.

 

Financing Sources ” shall mean the agents, arrangers, lenders and other entities that have committed to provide or arrange or otherwise entered into agreements in connection with all or any part of the debt financing (“Debt Financing”) contemplated to be obtained by Parent, including the parties to any joinder agreements, indentures or credit agreements entered into in connection therewith, together with their respective affiliates and their and their respective affiliates’ officers, directors, employees, partners, trustees, shareholders controlling persons, agents and representatives and their respective successors and assigns.

 

GAAP ” shall mean the United States generally accepted accounting principles.

 

 

6

 

 

 

Governmental Authority ” shall mean any United States (federal, state or local) or foreign government, arbitration panel, or any governmental or quasi-governmental, regulatory, judicial or administrative authority, board, bureau, agency, commission or self-regulatory organization.

 

Hazardous Substances ” shall mean (i) those substances listed in, defined in or regulated under any Environmental Law, including the following federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic Substances Control Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act and the Clean Air Act; (ii) petroleum and petroleum products, including crude oil and any fractions thereof; and (iii) polychlorinated biphenyls, mold, methane, asbestos, and radon.

 

Indebtedness ” shall mean, with respect to any Person, (i) all indebtedness, notes payable, accrued interest payable or other obligations for borrowed money, whether secured or unsecured, (ii) all obligations under conditional sale or other title retention agreements, or incurred as financing, in either case with respect to property acquired by such Person, (iii) all obligations issued, undertaken or assumed as the deferred purchase price for any property or assets, (iv) all obligations under capital leases, (v) all obligations in respect of bankers acceptances or letters of credit, (vi) all obligations under interest rate cap, swap, collar or similar transaction or currency hedging transactions, and (vii) any guarantee (other than customary non-recourse carve-out or “badboy” guarantees) of any of the foregoing, whether or not evidenced by a note, mortgage, bond, indenture or similar instrument.

 

Indemnitee ” shall mean any individual who, on or prior to the Effective Time, was an officer, director, partner, member, trustee or agent of the Company or served on behalf of the Company as an officer, director, partner, member or trustee of any of the Company Subsidiaries.

 

Intellectual Property ” shall mean all United States and foreign (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) trademarks, service marks, trade dress, logos, trade names, corporate names, Internet domain names, design rights and other source identifiers, together with the goodwill symbolized by any of the foregoing, (iii) copyrightable works and copyrights, (iv) confidential and proprietary information, including trade secrets, know-how, ideas, formulae, models and methodologies, (v) all rights in the foregoing and in other similar intangible assets, and (vi) all applications and registrations for the foregoing.

 

Investment Company Act ” shall mean the Investment Company Act of 1940, as amended.

 

IRS ” shall mean the United States Internal Revenue Service or any successor agency.

 

knowledge ” shall mean the actual knowledge of the following officers and employees of the Company and Parent, as applicable, after inquiry reasonable under the circumstances: (i) for the Company, each person identified as an executive officer of the Company in the Company’s 2016 Proxy Statement; and (ii) for Parent, each person identified as an executive officer of Parent on Parent’s 2016 Proxy Statement.

 

 

7

 

 

 

Law ” shall mean any and all domestic (federal, state or local) or foreign laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.

 

Lien ” shall mean with respect to any asset (including any security), any mortgage, deed of trust, claim, condition, covenant, lien, pledge, charge, security interest, preferential arrangement, option or other third party right (including right of first refusal or first offer), restriction, right of way, easement, or title defect or encumbrance of any kind in respect of such asset, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

LTIP Unit ” shall mean a Parent Partnership Unit issued under the Parent OPP Agreement designated by the Parent Operating Partnership as an LTIP Unit under the Partnership Agreement.

 

MGCL ” shall mean the Maryland General Corporation Law.

 

MLLCA ” shall mean the Maryland Limited Liability Company Act, as amended.

 

NYSE ” shall mean the New York Stock Exchange.

 

Order ” shall mean a judgment, order or decree of a Governmental Authority.

 

Parent Advisor ” shall mean the Global Net Lease Advisors, LLC.

 

Parent Advisory Agreement ” shall mean the Fourth Amended and Restated Advisory Agreement by and among Parent, the Parent Operating Partnership, and the Parent Advisor.

 

Parent Class B Unit ” shall mean a Parent Partnership Unit designated by the Parent Operating Partnership as a Class B Unit under the Parent Partnership Agreement.

 

Parent Intervening Event ” shall mean a material event, circumstance, change or development that was not known to the Parent Board prior to the execution of this Agreement (or if known, the consequences of which were not known or reasonably foreseeable), which event or circumstance, or any material consequence thereof, becomes known to the Parent Board prior to the Effective Time.

 

Parent Lease ” shall mean each lease and sublease that was in effect as of June 1, 2016 and to which Parent, Merger Sub or the other Parent Subsidiaries are parties as lessors or sublessors with respect to each of the applicable Parent Properties.

 

 

8

 

 

 

Parent Material Adverse Effect ” shall mean any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, liabilities, financial condition or results of operations of Parent, Merger Sub and the other Parent Subsidiaries, taken as a whole or (b) that will, or would reasonably be expected to, prevent or materially impair the ability of Parent or Merger Sub to consummate the Mergers before the Outside Date; provided , however , that for purposes of clause (a) “Parent Material Adverse Effect” shall not include any event, circumstance, change or effect to the extent arising out of or resulting from (i) any failure of Parent to meet any projections or forecasts or any decrease in the market price of the Parent Common Stock (it being understood and agreed that any event, circumstance, change or effect giving rise to such failure or decrease shall be taken into account in determining whether there has been a Parent Material Adverse Effect), (ii) any events, circumstances, changes or effects that affect the commercial real estate REIT industry generally, (iii) any changes in the United States or global economy or capital, financial or securities markets generally, including changes in interest or exchange rates, (iv) any changes in the legal or regulatory conditions, (v) the commencement, escalation or worsening of a war or armed hostilities or the occurrence of acts of terrorism or sabotage, (vi) the negotiation, execution or announcement of this Agreement, or the consummation or anticipation of the Mergers or other transactions contemplated hereby, (vii) the taking of any action expressly required by, or the failure to take any action expressly prohibited by, this Agreement, or the taking of any action at the written request or with the prior written consent of an executive officer of the Company, (viii) earthquakes, hurricanes or other natural disasters, (ix) any damage or destruction of any Parent Property that is substantially covered by insurance, or (x) changes in Law or GAAP, which in the case of each of clauses (ii), (iii), (iv), (v) and (x) do not disproportionately affect Parent and the Parent Subsidiaries, taken as a whole, relative to other similarly situated participants in the commercial real estate REIT industry in the United States, and in the case of clause (viii) do not disproportionately affect Parent and the Parent Subsidiaries, taken as a whole, relative to other participants in the commercial real estate REIT industry in the geographic regions in which Parent and the Parent Subsidiaries operate or own or lease properties.

 

Parent OP Unit ” shall mean a Parent Partnership Unit designated by the Parent Operating Partnership as an OP Unit under the Parent Partnership Agreement.

 

Parent OPP Agreement ” shall mean the Second Amended and Restated 2015 Advisor Multi-Year Outperformance Agreement, effective as of February 25, 2016, among Parent, Parent Operating Partnership, and Parent Advisor.

 

Parent Option Plan ” shall mean the American Realty Capital Global Daily Net Asset Value Trust, Inc. 2012 Stock Option Plan.

 

Parent Parties ” means Parent, Merger Sub and the Parent Operating Partnership.

 

Parent Partnership Agreement ” shall mean the Second Amended and Restated Agreement of Limited Partnership of Parent Operating Partnership, dated as of June 2, 2015, as amended, modified or supplemented from time to time.

 

Parent Partnership Unit ” shall have the same meaning as Partnership Unit as set forth in the Parent Partnership Agreement.

 

Parent Restricted Stock ” shall mean any shares of Parent Common Stock granted pursuant to the Parent Restricted Stock Plan which are subject to restrictions on transfer or forfeiture.

 

 

9

 

 

 

Parent Restricted Stock Plan ” shall mean the Amended and Restated Incentive Restricted Share Plan of American Realty Capital Global Trust, Inc.

 

Parent Special Committee ” shall mean the special committee of the independent directors of Parent.

 

Parent Stockholder Meeting ” shall mean the meeting of the holders of shares of Parent Common Stock for the purpose of seeking the Parent Stockholder Approval, including any postponement or adjournment thereof.

 

Parent Subsidiary ” shall mean (a) any corporation of which more than fifty percent (50%) of the outstanding voting securities is, directly or indirectly, owned by Parent, and (b) any partnership, limited liability company or other entity of which more than fifty percent (50%) of the total equity interest is, directly or indirectly, owned by Parent or of which Parent or any Parent Subsidiary is a general partner, manager, managing member or the equivalent, including the Parent Operating Partnership.

 

Parent Title Insurance Policy ” shall mean each policy of title insurance insuring Parent’s or the applicable Parent Subsidiary’s (or the applicable predecessor’s) title to or leasehold interest in Parent Properties, subject to the matters and printed exceptions set forth in the Parent Title Insurance Policies.

 

Person ” shall mean an individual, corporation, partnership, limited partnership, limited liability company, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or other entity or a Governmental Authority or a political subdivision, agency or instrumentality of a Governmental Authority.

 

Representative ” shall mean, with respect to any Person, such Person’s directors, officers, employees, consultants, advisors (including attorneys, accountants, consultants, investment bankers, and financial advisors), agents and other representatives.

 

Sarbanes-Oxley Act ” shall mean the Sarbanes-Oxley Act of 2002, as amended.

 

SEC ” shall mean the United States Securities and Exchange Commission (including the staff thereof).

 

Securities Act ” shall mean the Securities Act of 1933, as amended.

 

Service Provider ” shall mean Moor Park Capital Partners LLP.

 

Special Limited Partner ” shall mean American Realty Capital Global II Special Limited Partner, LLC.

 

Special Limited Partner Interest ” shall mean a Special Limited Partner Interest designated by the Company Operating Partnership as a Special Limited Partner Interest under the Company Partnership Agreement.

 

 

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Tax ” or “ Taxes ” shall mean any and all federal, state, local or foreign or other taxes of any kind, together with any interest, penalties and additions to tax, imposed by any Governmental Authority, including taxes on or with respect to income, franchises, gross receipts, gross income, property, sales, use, transfer, capital stock, payroll, employment, unemployment, alternative or add on minimum, estimated and net worth, and taxes in the nature of excise, withholding, backup withholding and value added taxes, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the tax liability of any other Person.

 

Tax Return ” shall mean any return, report or similar statement, together with any attached schedule, that is required to be provided to a Governmental Authority with respect to Taxes, including information returns, refunds claims, amended returns and declarations of estimated Tax.

 

Third Party ” shall mean any Person or group of Persons other than Parent, Merger Sub, the Company and their respective Affiliates.

 

(b)          The following terms shall have the respective meanings set forth in the Section set forth below opposite such term:

 

Acceptable Confidentiality Agreement

Section 1.1(a)

Acquisition Proposal

Section 6.5(h)(i)

Action

Section 1.1(a)

Advisory Agreement

Section 1.1(a)

Affiliate

Section 1.1(a)

Agreement

Preamble

Articles of Merger

Section 2.3(a)(i)

Benefit Plan

Section 1.1(a)

Book-Entry Share

Section 3.1(a)(ii)

Business Day

Section 1.1(a)

Certificate

Section 3.1(a)(ii)

Certificate of Merger

Section 2.3(a)(ii)

Closing

Section 2.2

Closing Date

Section 2.2

Code

Section 1.1(a)

Company

Preamble

Company Advisor

Section 1.1(a)

Company Board

Section 4.4(a)

Company Bylaws

Section 4.2(a)

Company Change in Recommendation

Section 6.5(b)(v)

Company Change Notice

Section 6.5(e)(ii)(C)

Company Charter

Section 4.2(a)

Company Class B Unit

Section 1.1(a)

Company Common Stock

Recitals

Company Disclosure Letter

Article IV

Company Distribution Rate

Section 1.1(a)

Company GP Unit

Section 1.1(a)

 

 

11

 

 

 

Company Insurance Policies

Section 4.18

Company Intervening Event

Section 1.1(a)

Company Leases

Section 4.16(i)

Company LP Unit

Section 1.1(a)

Company Material Adverse Effect

Section 1.1(a)

Company Material Contract

Section 4.12(a)

Company OP Unit

Section 1.1(a)

Company Operating Partnership

Preamble

Company Parties

Section 1.1(a)

Company Partnership Agreement

Section 1.1(a)

Company Partnership Unit

Section 1.1(a)

Company Permits

Section 4.6(a)

Company Permitted Liens

Section 4.16(b)

Company Preferred Stock

Section 4.3(a)

Company Properties

Section 4.16(a)

Company Property

Section 4.16(a)

Company Recommendation

Section 4.4(a)

Company REIT Representation Letter

Section 6.1(b)

Company Reorganization Representation Letter

Section 6.1(b)

Company Restricted Stock

Section 1.1(a)

Company Restricted Stock Plan

Section 1.1(a)

Company SEC Filings

Section 4.7(a)

Company Special Committee

Section 1.1(a)

Company Stockholder Approval

Section 4.21

Company Stockholder Meeting

Section 1.1(a)

Company Subsidiary

Section 1.1(a)

Company Subsidiary Partnership

Section 4.17(h)

Company Tax Protection Agreements

Section 4.17(h)

Company Title Insurance Policy

Section 4.16(o)

Confidentiality Agreement

Section 1.1(a)

control

Section 1.1(a)

D&O Insurance

Section 6.09(c)

Debt Commitment Letter

Section 9.10

Delaware Secretary

Section 1.1(a)

DRULPA

Section 1.1(a)

Effective Time

Section 2.3(a)

Environmental Law

Section 1.1(a)

Environmental Permit

Section 1.1(a)

ERISA

Section 1.1(a)

ERISA Affiliate

Section 1.1(a)

Exchange Act

Section 1.1(a)

Exchange Agent

Section 3.2(a)

Exchange Fund

Section 3.2(a)

Exchange Ratio

Section 1.1(a)

Expenses

Section 1.1(a)

Fee Recipient

Section 8.3(f)

 

 

12

 

 

 

Form S-4

Section 4.5(b)

GAAP

Section 1.1(a)

Governmental Authority

Section 1.1(a)

Go Shop Bidder

Section 6.5(a)

Go Shop Period End Time

Section 6.5(a)

Go Shop Termination Fee

Section 8.3(d)(i)

Hazardous Substances

Section 1.1(a)

Indebtedness

Section 1.1(a)

Indemnitee

Section 1.1(a)

Intellectual Property

Section 1.1(a)

Interim Period

Section 6.1(a)

Investment Company Act

Section 1.1(a)

IRS

Section 1.1(a)

Joint Proxy Statement

Section 4.5(b)

Knowledge

Section 1.1(a)

Law

Section 1.1(a)

Lien

Section 1.1(a)

LTIP Unit

Section 1.1(a)

Material Company Leases

Section 4.16(i)

Material Parent Leases

Section 5.16(h)

Merger

Recitals

Merger Consideration

Section 3.1(a)(ii)

Mergers

Recitals

Merger Sub

Preamble

Merger Sub Interests

Section 3.1(c)

MGCL

Section 1.1(a)

MLLCA

Section 1.1(a)

NYSE

Section 1.1(a)

Order

Section 1.1(a)

Other Company Subsidiary

Section 4.1(c)

Other Parent Subsidiary

Section 5.1(d)

Outside Date

Section 8.1(b)(i)

Parent

Preamble

Parent Advisor

Section 1.1(a)

Parent Advisory Agreement

Section 1.1(a)

Parent Board

Section 5.4(a)

Parent Bylaws

Section 5.2(a)

Parent Change in Recommendation

Section 6.6(a)

Parent Charge Notice

Section 6.6(b)

Parent Charter

Section 5.2(a)

Parent Class B Unit

Section 1.1(a)

Parent Common Stock

Section 3.1(a)(ii)

Parent Disclosure Letter

Article V

Parent Insurance Policies

Section 5.18

Parent Intervening Event

Section 1.1.(a)

Parent Lease

Section 1.1(a)

 

 

13

 

 

 

Parent Material Adverse Effect

Section 1.1(a)

Parent Material Contract

Section 5.12(a)

Parent Operating Partnership

Preamble

Parent OP Unit

Section 1.1(a)

Parent OPP Agreement

Section 1.1(a)

Parent Option Plan

Section 1.1(a)

Parent Parties

Section 1.1(a)

Parent Partnership Agreement

Section 1.1(a)

Parent Partnership Unit

Section 1.1(a)

Parent Permits

Section 5.6(a)

Parent Permitted Liens

Section 5.16(a)

Parent Preferred Stock

Section 5.3(a)

Parent Properties

Section 5.16(a)

Parent Property

Section 5.16(a)

Parent Recommendation

Section 5.4(a)

Parent REIT Representation Letter

Section 6.2(b)

Parent Reorganization Representation Letter

Section 6.2(b)

Parent Restricted Stock

Section 1.1(a)

Parent Restricted Stock Plan

Section 1.1(a)

Parent Recommendation

Section 5.4(a)

Parent SEC Filings

Section 5.7(a)

Parent Special Committee

Section 1.1(a)

Parent Stockholder Approval

Section 5.19

Parent Stockholder Meeting

Section 1.1(a)

Parent Subsidiary

Section 1.1(a)

Parent Subsidiary Partnership

Section 5.17(h)

Parent Tax Protection Agreements

Section 5.17(h)

Parent Title Insurance Policy

Section 1.1(a)

Partnership Certificate of Merger

Section 2.3(b)

Partnership Merger

Recitals

Partnership Merger Consideration

Section 3.1(b)

Partnership Merger Effective Time

Section 2.3(b)

Paying Party

Section 8.3(f)

Person

Section 1.1(a)

Qualified REIT Subsidiary

Section 4.1(c)

Qualifying Income

Section 8.3(f)

REIT

Section 4.17(b)

Relevant Company Partnership Interest

Section 4.17(h)

Relevant Parent Partnership Interest

Section 5.17(h)

Representative

Section 1.1(a)

Sarbanes-Oxley Act

Section 1.1(a)

SDAT

Section 2.3(a)

SEC

Section 1.1(a)

Securities Act

Section 1.1(a)

Service Provider

Section 1.1(a)

Special Limited Partner

Section 1.1(a)

 

 

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Special Limited Partner Interest

Section 1.1(a)

Superior Proposal

Section 6.5(h)(ii)

Surviving Entity

Section 2.1(a)

Surviving Partnership

Section 2.1(b)

Tax

Section 1.1(a)

Tax Return

Section 1.1(a)

Taxable REIT Subsidiary

Section 4.1(c)

Taxes

Section 1.1(a)

Termination Date

Section 8.1

Termination Fee

Section 8.3(d)(ii)

Third Party

Section 1.1(a)

Transfer Taxes

Section 8.7

 

Article II

 

THE MERGERS

 

Section 2.1            The Mergers .

 

(a)          Upon the terms and subject to the conditions of this Agreement, and in accordance with the MGCL and the MLLCA, at the Effective Time, the Company shall be merged with and into Merger Sub, whereupon the separate existence of the Company shall cease, and Merger Sub shall continue under the name “Mayflower Acquisition LLC” as the surviving entity in the Merger (the “ Surviving Entity ”) and shall be governed by the laws of the State of Maryland. The Merger shall have the effects set forth in the applicable provisions of the MGCL, the MLLCA and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, the Surviving Entity shall possess all properties, rights, privileges, powers and franchises of the Company and Merger Sub, and all of the claims, obligations, liabilities, debts and duties of the Company and Merger Sub shall become the claims, obligations, liabilities, debts and duties of the Surviving Entity.

 

(b)          Upon the terms and subject to the conditions of this Agreement, and in accordance with the DRULPA, at the Partnership Merger Effective Time, the Company Operating Partnership shall be merged with and into the Parent Operating Partnership, whereupon the separate existence of the Company Operating Partnership shall cease, and the Parent Operating Partnership shall continue under the name “Global Net Lease Operating Partnership, L.P.” as the surviving entity in the Partnership Merger (the “ Surviving Partnership ”) and shall be governed by the laws of the State of Delaware. The Partnership Merger shall have the effects set forth in the applicable provisions of the DRULPA and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after the Partnership Merger Effective Time, the Surviving Partnership shall possess all properties, rights, privileges, powers and franchises of the Company Operating Partnership and the Parent Operating Partnership, and all of the claims, obligations, liabilities, debts and duties of the Company Operating Partnership and the Parent Operating Partnership shall become the claims, obligations, liabilities, debts and duties of the Surviving Partnership (including the obligations of the Company Operating Partnership under the Company Partnership Agreement).

 

 

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Section 2.2            Closing . The closing of the Mergers (the “ Closing ”) shall occur at 10:00 a.m. (Eastern time), on the third (3 rd ) Business Day after all of the conditions set forth in Article VII (other than those conditions that by their terms are required to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived by the party entitled to the benefit of the same or at such other time and date as shall be agreed upon by the parties hereto. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date ”. The Closing shall take place at the offices of Proskauer Rose LLP, Eleven Times Square, New York, New York 10036-8299, or at such other place as agreed to by the parties hereto.

 

Section 2.3            Effective Time .

 

(a)          Prior to the Closing, Parent shall prepare and, on the Closing Date, the Company, Parent and Merger Sub shall (i) cause articles of merger with respect to the Merger (the “ Articles of Merger ”) to be duly executed and filed with the State Department of Assessments and Taxation of Maryland (the “ SDAT ”) as provided under the MGCL, and (ii) make any other filings, recordings or publications required to be made by the Company or Merger Sub under the MGCL or MLLCA in connection with the Merger. The Merger shall become effective at the later of the time the Articles of Merger are accepted for record by the SDAT on the Closing Date or on such other date and time (not to exceed 30 days from the date the Articles of Merger are accepted for record by the SDAT) as shall be agreed to by the Company and Parent and specified in the Articles of Merger (such date and time the Merger becomes effective being the “ Effective Time ”), it being understood and agreed that the parties hereto shall cause the Effective Time to occur on the Closing Date and prior to the Partnership Merger Effective Time.

 

(b)          Prior to the Closing, Parent shall prepare and, on the Closing Date, the Company Operating Partnership and the Parent Operating Partnership shall (i) cause a certificate of merger with respect to the Partnership Merger (the “ Partnership Certificate of Merger ”) to be duly executed and filed with the Delaware Secretary as provided under the DRULPA and (ii) make any other filings, recordings or publications required to be made by the Company Operating Partnership or the Parent Operating Partnership under the DRULPA in connection with the Partnership Merger. The Partnership Merger shall become effective at such time as the Partnership Certificate of Merger shall have been duly filed with the Delaware Secretary on the Closing Date or on such other date and time (not to exceed 30 days from the date the Partnership Certificate of Merger is duly filed with the Delaware Secretary) as shall be agreed to by the Company Operating Partnership and the Parent Operating Partnership and specified in the Partnership Certificate of Merger (such date and time the Partnership Merger becomes effective being “ Partnership Merger Effective Time ”), it being understood and agreed that the parties hereto shall cause the Partnership Merger Effective Time to occur on the Closing Date after the Effective Time.

 

 

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(c)          If the consummation of the Merger prior to the consummation of the Partnership Merger (and, therefore, the Effective Time occurring prior to the Partnership Merger Effective Time), as is contemplated by this Agreement, would cause any of the parties to incur a materially greater amount of Transfer Taxes than would be incurred if the Merger were consummated following the consummation of the Partnership Merger (and, therefore, if the Effective Time were to occur following the Partnership Merger Effective Time), then, notwithstanding anything in this Agreement to the contrary, and with the written consent of Parent and the Company (which consent shall not be unreasonably withheld, conditioned or delayed), the timing of the consummation of the Merger and Partnership Merger shall be re-ordered so that the Merger shall occur and be consummated following the consummation of the Partnership Merger (and, therefore, the Effective Time will occur following the Partnership Merger Effective Time).

 

Section 2.4            Organizational Documents . Subject to Section 6.10 , at the Effective Time, the articles of organization and limited liability company agreement of Merger Sub, as in effect immediately prior to the Effective Time, shall be the articles of organization and limited liability company agreement of the Surviving Entity, until thereafter amended in accordance with applicable Law and the applicable provisions of such articles of organization and limited liability company agreement. At the Partnership Merger Effective Time, the certificate of limited partnership of the Parent Operating Partnership and the Parent Partnership Agreement, each as in effect immediately prior to the Partnership Merger Effective Time shall be the certificate of limited partnership and limited partnership agreement of the Surviving Partnership, until thereafter amended in accordance with applicable Law and the applicable provisions of such certificate of limited partnership and partnership agreement.

 

Section 2.5            Tax Consequences . It is intended that, for U.S. federal income tax purposes, the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Code, and that this Agreement be, and is hereby adopted as, a plan of reorganization purposes of Sections 354 and 361 of the Code. It is further intended for U.S. federal income tax purposes that (i) the Partnership Merger shall qualify as and constitute an “asset-over” form of merger under Treasury Regulations Section 1.708-1(c)(3)(i) with the Surviving Partnership as the continuation of the Parent Operating Partnership and the termination of the Company Operating Partnership and (ii) the issuance of Parent Common Stock pursuant to the transactions contemplated by this Agreement to each Person identified on Section 2.5 of the Company Disclosure Letter be treated as the direct purchase by Parent Operating Partnership, immediately prior to the Partnership Merger, of each Person’s Company LP Units in exchange for the shares of Parent Common Stock set forth on Section 2.5 of the Company Disclosure Letter; provided, that each such Person consent to such treatment at or prior to the Partnership Merger Effective Time and Parent Operating Partnership agrees to report such issuance of Parent Common Stock consistent with this clause (ii) of Section 2.5 , all pursuant to Treasury Regulations Section 1.708-1(c)(4).

 

Section 2.6            Subsequent Actions .

 

(a)          If at any time after the Effective Time the Surviving Entity shall determine, in its sole and absolute discretion, that any actions are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Entity its right, title or interest in, to or under any of the rights or properties of the Company acquired or to be acquired by the Surviving Entity as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the members, officers and managers of the Surviving Entity shall be authorized to take all such actions as may be necessary or desirable to vest all right, title or interest in, to or under such rights or properties in the Surviving Entity or otherwise to carry out this Agreement.

 

 

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(b)          If at any time after the Partnership Merger Effective Time the Surviving Partnership shall determine, in its sole and absolute discretion, that any actions are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Partnership its right, title or interest in, to or under any of the rights or properties of the Company Operating Partnership acquired or to be acquired by the Surviving Partnership as a result of, or in connection with, the Partnership Merger or otherwise to carry out this Agreement, then the general partner(s) of the Surviving Partnership shall be authorized to take all such actions as may be necessary or desirable to vest all right, title or interest in, to or under such rights or properties in the Surviving Partnership or otherwise to carry out this Agreement.

 

Article III

 

EFFECT OF THE MERGERS

 

Section 3.1            Effect of the Mergers .

 

(a)           The Merger . At the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto or any holder of any capital stock of the Company:

 

(i)          Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is held by any wholly owned Company Subsidiary, Parent or any Parent Subsidiary shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and no payment shall be made with respect thereto.

 

(ii)         Subject to Section 3.1(d) , Section 3.7 and Section 3.8 each share of Company Common Stock (including each share of Company Restricted Stock) issued and outstanding immediately prior to the Effective Time (other than shares cancelled pursuant to Section 3.1(a)(i) ) shall be cancelled and automatically converted into the right to receive that number of validly issued, fully paid and nonassessable shares of common stock, par value $0.01 per share, of Parent (“ Parent Common Stock ”) equal to the Exchange Ratio (the “ Merger Consideration ”). All shares of Company Common Stock (including all shares of Company Restricted Stock), when so converted pursuant to this Section 3.1(a)(ii) , shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate (a “ Certificate ”) or book-entry share registered in the transfer books of the Company (a “ Book-Entry Share ”) that immediately prior to the Effective Time represented shares of Company Common Stock shall cease to have any rights with respect to such Company Common Stock other than the right to receive the Merger Consideration in accordance with Section 3.2 , including the right, if any, to receive, pursuant to Section 3.11 , cash in lieu of fractional shares of Parent Common Stock into which such shares of Company Common Stock have been converted pursuant to Section 3.1(a)(ii) , together with the amounts, if any, payable pursuant to Section 3.4 .

 

 

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(b)           The Partnership Merger . Immediately prior to the Partnership Merger Effective Time, the Parent shall contribute to the Parent Operating Partnership a number of issued, fully paid and nonassessable shares of Parent Common Stock equal to the number of issued and outstanding Company LP Units times the Exchange Ratio. At the Partnership Merger Effective Time, by virtue of the Partnership Merger and without any action on the part of the parties hereto or any holder of any equity interests of the Company Operating Partnership, (i) each Company LP Unit issued and outstanding immediately prior to the Partnership Merger Effective Time shall automatically be exchanged for a number of validly issued, fully paid and nonassessable shares of Parent Common Stock equal to the Exchange Ratio and (ii) each Company Partnership Unit other than the Company LP Units shall automatically be converted into a number of Parent OP Units equal to the Exchange Ratio (collectively, the “ Partnership Merger Consideration ”). The general partnership interest of the Parent Operating Partnership shall remain outstanding and constitute the only general partnership interest in the Surviving Partnership, and the Parent OP Units issued and outstanding immediately prior to the Partnership Merger Effective Time shall remain outstanding. All Company Partnership Units, when so exchanged or converted pursuant to this Section 3.1(b) , shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each former holder of Company Partnership Units shall cease to have any rights with respect to such Company Partnership Unit other than the right to receive the Partnership Merger Consideration in accordance with Section 3.2 .

 

(c)           Treatment of Merger Sub Membership Interests . All membership interests of Merger Sub (the “ Merger Sub Interests ”), issued and outstanding immediately prior to the Effective Time shall remain as the only membership interests of the Surviving Entity.

 

(d)           Adjustments . Without limiting the other provisions of this Agreement and subject to Section 6.1(c)(ii) and Section 6.1(c)(iii) , if at any time during the period between the date of this Agreement and the Effective Time, the Company or the Company Operating Partnership should split, combine or otherwise reclassify the Company Common Stock or Company Partnership Units, or make a dividend or other distribution in shares of Company Common Stock or Company Partnership Units (including any dividend or other distribution of securities convertible into Company Common Stock or Company Partnership Units), or engage in a reclassification, reorganization, recapitalization or exchange or other like change, then (without limiting any other rights of the Parent Parties hereunder), the Merger Consideration or Partnership Merger Consideration, as applicable, shall be ratably adjusted to reflect fully the effect of any such change. Without limiting the other provisions of this Agreement and subject to Section 6.2(c)(ii) and Section 6.2(c)(iii) , if at any time during the period between the date of this Agreement and the Effective Time, Parent or the Parent Operating Partnership should split, combine or otherwise reclassify the Parent Common Stock or Parent Partnership Units, or make a distribution in shares of Parent Common Stock or Parent Partnership Units (including any dividend or other distribution of securities convertible into Parent Common Stock or Parent Partnership Units), or engage in a reclassification, reorganization, recapitalization or exchange or other like change, then the Merger Consideration or Partnership Merger Consideration, as applicable, shall be ratably adjusted to reflect any such change.

 

 

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Section 3.2            Exchange Fund; Exchange Agent; Payment Procedures .

 

(a)          Prior to the Effective Time, Parent shall appoint a bank or trust company reasonably satisfactory to the Company to act as exchange agent (the “ Exchange Agent ”) for the payment and delivery of the Merger Consideration and Partnership Merger Consideration. On or before the Effective Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent (i) evidence of Parent Common Stock in book-entry form issuable pursuant to Section 3.1(a)(ii) equal to the Merger Consideration and (ii) cash in immediately available funds in an amount equal to any cash payable in lieu of the fractional shares pursuant to Section 3.11 (collectively, the “ Exchange Fund ”). Any interest or other income earned on cash deposited in the Exchange Fund shall be the sole and exclusive property of Parent and the Surviving Entity and shall be paid to Parent or the Surviving Entity.

 

(b)          As soon as reasonably practicable after the Effective Time and in any event not later than the fifth Business Day following the Effective Time, the Exchange Agent shall mail to each holder of record of a Certificate or Book-Entry Share immediately prior to the Effective Time a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates or Book-Entry Shares shall pass, only upon delivery of the Certificates or Book-Entry Shares to the Exchange Agent) and instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange for the Merger Consideration. Upon proper surrender of a Certificate or Book-Entry Share for exchange and cancellation to the Exchange Agent, together with a letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange therefor the Merger Consideration in respect of the shares of Company Common Stock formerly represented by such Certificate or Book-Entry Share. No interest will be paid or accrued for the benefit of holders of the Certificates or Book-Entry Shares on the Merger Consideration payable upon the surrender of the Certificates or Book-Entry Shares.

 

Section 3.3            Share Transfer Books . At the Effective Time, the share transfer books of the Company shall be closed, and thereafter there shall be no further registration of transfers of shares of Company Common Stock. From and after the Effective Time, Persons who held shares of Company Common Stock immediately prior to the Effective Time shall cease to have rights with respect to such shares, except as otherwise provided for herein. On or after the Effective Time, any Certificates or Book-Entry Shares presented to the Exchange Agent or the Surviving Entity for any reason shall be cancelled and exchanged for the Merger Consideration with respect to the shares of Company Common Stock formerly represented thereby.

 

Section 3.4            Dividends with Respect to Parent Common Stock . No dividends or other distributions with respect to Parent Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate or Book-Entry Shares with respect to the shares of Parent Common Stock issuable hereunder, and all such dividends and other distributions shall be paid by Parent to the Exchange Agent and shall be included in the Exchange Fund, in each case until the surrender of such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Shares in accordance with this Agreement. Subject to applicable Laws, following surrender of any such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Shares there shall be paid to the holder thereof, without interest, (i)  the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such shares of Parent Common Stock to which such holder is entitled pursuant to this Agreement and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and with a payment date subsequent to such surrender payable with respect to such shares of Parent Common Stock.

 

 

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Section 3.5            Termination of Exchange Fund . Any portion of the Exchange Fund (including any interest and other income received with respect thereto) which remains undistributed to the former holders of shares of Company Common Stock on the first anniversary of the Effective Time shall be delivered to Parent, upon demand, and any former holders of shares of Company Common Stock who have not theretofore received any Merger Consideration (including any cash in lieu of fractional shares and any applicable dividends or other distributions with respect to Parent Common Stock) to which they are entitled under this Agreement shall thereafter look only to Parent and the Surviving Entity for payment of their claims with respect thereto.

 

Section 3.6            No Liability . None of Parent, Merger Sub, the Company, the Parent Operating Partnership, the Company Operating Partnership, the Surviving Entity, the Surviving Partnership or the Exchange Agent, or any employee, officer, director, agent or Affiliate of any of them, shall be liable to any holder of shares of Company Common Stock in respect of any cash that would have otherwise been payable in respect of any Certificate or Book-Entry Share from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Any amounts remaining unclaimed by holders of any such shares immediately prior to the time at which such amounts would otherwise escheat to, or become property of, any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Surviving Entity, free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto.

 

Section 3.7            Company Restricted Stock . Immediately prior to the Effective Time, any then-outstanding shares of Company Restricted Stock shall become fully vested and the Company shall be entitled to deduct and withhold such number of shares of Company Common Stock otherwise deliverable upon such acceleration to satisfy any applicable income and employment withholding Taxes (assuming a fair market value of a share of Company Common Stock equal to the Exchange Ratio multiplied by the per share closing price of the Parent Common Stock on the last completed trading day immediately prior to the Closing on the NYSE, as reported in The Wall Street Journal). All shares of Company Common Stock then-outstanding as a result of the full vesting of the shares of Company Restricted Stock and the satisfaction of any applicable income and employment withholding Taxes shall have the right to receive the Merger Consideration in accordance with the terms and conditions of this Agreement. Notwithstanding anything to the contrary contained herein, prior to the Effective Time, the Company shall take all actions necessary to effectuate the provisions of this Section 3.7 .

 

Section 3.8            Withholding Rights . Each and any Parent Party, Company Party, the Surviving Entity, the Surviving Partnership or the Exchange Agent, as applicable, shall be entitled to deduct and withhold from the Merger Consideration, the Partnership Merger Consideration and/or, otherwise, any other amounts or property otherwise payable or distributable to any Person pursuant to this Agreement such amounts or property (or portions thereof) as such Parent Party, Company Party, the Surviving Entity, the Surviving Partnership or the Exchange Agent is required to deduct and withhold with respect to the making of such payment or distribution under the Code, and the rules and regulations promulgated thereunder, or any provision of applicable Tax Law. To the extent that amounts are so deducted or withheld and paid over to the appropriate Governmental Authority by a Parent Party, a Company Party, the Surviving Entity, the Surviving Partnership or the Exchange Agent, as applicable, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made by the Parent Party, the Company Party, the Surviving Entity, the Surviving Partnership or the Exchange Agent, as applicable.

 

 

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Section 3.9            Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, then upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting by such Person of a bond in such reasonable and customary amount as the Surviving Entity may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to which the holder thereof is entitled pursuant to this Article III .

 

Section 3.10          Dissenters’ Rights . No dissenters’ or appraisal rights (or rights of an objecting stockholder) shall be available with respect to the Mergers or the other transactions contemplated by this Agreement.

 

Section 3.11          Fractional Shares . No certificate or scrip representing fractional shares of Parent Common Stock shall be issued upon the surrender for exchange of Certificates or with respect to Book-Entry Shares, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Parent. Notwithstanding any other provision of this Agreement, each holder of shares of Company Common Stock or Company Partnership Units exchanged or converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock shall receive (aggregating for this purpose all the shares of Parent Common Stock such holder is entitled to receive hereunder), in lieu thereof, cash, without interest, in an amount equal to the product of (a) such fractional part of a share of Parent Common Stock, multiplied by (b) the per share closing price of Parent Common Stock on the Closing Date on the NYSE, as reported in The Wall Street Journal.

 

 

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Article IV

 

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

 

Except (a) as set forth in the disclosure letter that has been prepared by the Company Parties and delivered by the Company Parties to the Parent Parties in connection with the execution and delivery of this Agreement (the “ Company Disclosure Letter ”) (it being agreed that disclosure of any item in any Section of the Company Disclosure Letter with respect to any Section or subsection of Article IV of this Agreement shall be deemed disclosed with respect to any other Section or subsection of Article IV of this Agreement to the extent such relationship is reasonably apparent, provided that nothing in the Company Disclosure Letter is intended to broaden the scope of any representation or warranty of the Company made herein), or (b) as disclosed in publicly available Company SEC Filings, filed with, or furnished to, as applicable, the SEC on or after June 6, 2014 and prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks or other matters included in any “forward-looking statements” disclaimer or other statements that are cautionary, predictive or forward-looking in nature), the Company Parties, jointly and severally, represent and warrant to the Parent Parties that:

 

Section 4.1            Organization and Qualification; Subsidiaries.

 

(a)          The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted. The Company is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

(b)          Each Company Subsidiary is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, as the case may be, and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted, except, with respect only to each Company Subsidiary that would not constitute a “significant subsidiary” (as defined in Rule 1-02 of Regulation S-X), for such failures to be so organized, in good standing or have certain power and authority that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. Each Company Subsidiary is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

 

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(c)           Section 4.1(c) of the Company Disclosure Letter sets forth a true and complete list of the Company Subsidiaries and each other corporate or non-corporate subsidiary in which the Company owns any direct or indirect voting, capital, profits or other beneficial interest (“ Other Company Subsidiary ”), including a list of each Company Subsidiary or Other Company Subsidiary that is a “qualified REIT subsidiary” within the meaning of Section 856(i)(2) of the Code (“ Qualified REIT Subsidiary ”) or a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code (“ Taxable REIT Subsidiary ”), together with (i) the jurisdiction of incorporation or organization, as the case may be, of each Company Subsidiary and each Other Company Subsidiary, (ii) the type of and percentage of voting, equity, profits, capital and other beneficial, as well as any debt (whether as a creditor or borrower), interest held (including capital account balances for any entity treated as a partnership for U.S. federal income tax purposes), directly or indirectly, by the Company in and to each Company Subsidiary and each Other Company Subsidiary, (iii) the names of and the type of and percentage of voting, equity, profits, capital and other beneficial, as well as any debt (whether as a creditor or borrower), interest held (including capital account balances for any entity treated as a partnership for U.S. federal income tax purposes) by any Person other than the Company or a Company Subsidiary in each Company Subsidiary and, to the knowledge of the Company, each Other Company Subsidiary, and (iv) the classification for U.S. federal income tax purposes of each Company Subsidiary and, to the knowledge of the Company, each Other Company Subsidiary.

 

(d)          Except as set forth in Section 4.1(d) of the Company Disclosure Letter, neither the Company nor any Company Subsidiary, directly or indirectly, owns any interest or investment (whether equity or debt) in any Person (other than equity interests in the Company Subsidiaries or Other Company Subsidiaries, loans to any Taxable REIT Subsidiary of the Company and investments in bank time deposits and money market accounts).

 

Section 4.2            Organizational Documents . The Company has made available to Parent complete and correct copies of (a) the Company’s charter (the “ Company Charter ”) and the Company’s bylaws, as amended to date (the “ Company Bylaws ”), (b) the organizational documents of each Company Subsidiary, including the certificate of limited partnership of the Company Operating Partnership and the Company Partnership Agreement, each as in effect on the date hereof, and (c) any and all Company Tax Protection Agreements.

 

 

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Section 4.3            Capital Structure .

 

(a)          As of the date hereof, the authorized capital stock of the Company consists of 300,000,000 shares of Company Common Stock and 50,000,000 shares of preferred stock, $0.01 par value per share (the “ Company Preferred Stock ”). At the close of business on July 31, 2016, (i) 12,481,339.06 shares of Company Common Stock were issued and outstanding, including 6,931 unvested shares of Company Restricted Stock and 8,888 shares of Common Stock that are held by the special limited partner of the Company Operating Partnership, (ii) no shares of Company Preferred Stock were issued and outstanding, (iii) 623,676 shares of Company Common Stock were reserved for issuance pursuant to the terms of outstanding awards granted pursuant to the Company Restricted Stock Plan, (iv) 613,012 shares of Company Common Stock were available for grant under the Company Restricted Stock Plan, and (v) 12,614,441 Company Partnership Units were issued and outstanding consisting of 12,480,533 Company OP Units, 8,888 Company GP Units and 125,020 Company Class B Units. All issued and outstanding shares of the capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, and no class of capital stock of the Company is entitled to preemptive rights. There are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which holders of shares of Company Common Stock may vote. As of the date of this Agreement, there are no Company options outstanding. Section 4.3(a) of the Company Disclosure Letter sets forth for each holder of Company Restricted Stock outstanding as of the date of this Agreement (A) the name with respect to the holder of Company Restricted Stock, (B) the number of shares of outstanding Company Restricted Stock, (C) the date of grant of such Company Restricted Stock, and (D) the vesting schedule for such Company Restricted Stock. There are no other rights, options, stock or unit appreciation rights, phantom stock or units, restricted stock units, dividend equivalents or similar rights with respect to the Company Common Stock or Company Partnership Units other than the Company Restricted Stock and Company Partnership Units disclosed on Section 4.3(a) of the Company Disclosure Letter. Each Company Restricted Stock grant was made in accordance in all material respects with the terms of the Company Restricted Stock Plan and applicable Law. Immediately prior to the Closing, the Company will provide to Parent a complete and correct list that contains the information required to be provided in Section 4.3(a) of the Company Disclosure Letter, that is correct and complete as of the Closing Date; provided, however, delivery of such updated schedule shall not cure any breach of this Section 4.3 for purposes of determining whether the applicable closing condition has been satisfied.

 

(b)          All of the outstanding shares of capital stock of each of the Company Subsidiaries that is a corporation are duly authorized, validly issued, fully paid, and (except in respect to Company Subsidiaries formed under Luxembourg law) nonassessable. All equity interests in each of the Company Subsidiaries that is a partnership or limited liability company are duly authorized and validly issued. All shares of capital stock of (or other ownership interests in) each of the Company Subsidiaries that may be issued upon exercise of outstanding options or exchange rights are duly authorized and, upon issuance will be validly issued, fully paid and nonassessable. Except as set forth in Section 4.1(c) of the Company Disclosure Letter, the Company owns, directly or indirectly, all of the issued and outstanding capital stock and other ownership interests of each of the Company Subsidiaries, free and clear of all encumbrances other than statutory or other liens for Taxes or assessments which are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained, and there are no existing options, warrants, calls, subscriptions, convertible securities or other securities, agreements, commitments or obligations of any character relating to the outstanding capital stock or other securities of any Company Subsidiary or which would require any Company Subsidiary to issue or sell any shares of its capital stock, ownership interests or securities convertible into or exchangeable for shares of its capital stock or ownership interests.

 

 

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(c)          Except as set forth in this Section 4.3 or in Section 4.3(a) of the Company Disclosure Letter or with respect to the Company Restricted Stock Plan, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, rights of first refusal, arrangements or undertakings of any kind to which the Company or any Company Subsidiary is a party or by which any of them is bound, obligating the Company or any Company Subsidiary to issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional shares of Company Common Stock, shares of Company Preferred Stock, Company Partnership Units or other equity securities or phantom stock or other contractual rights the value of which is determined in whole or in part by the value of any equity security of the Company or any of the Company Subsidiaries or obligating the Company or any Company Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, right of first refusal, arrangement or undertaking. Except as set forth in Section 4.3(c) of the Company Disclosure Letter, as of the date of this Agreement, there are no outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of Company Common Stock, shares of Company Preferred Stock or other equity securities of the Company or any Company Subsidiary (other than in satisfaction of withholding Tax obligations pursuant to certain awards outstanding under the Company Restricted Stock Plan in the event the grantees fail to satisfy withholding Tax obligations). Neither the Company nor any Company Subsidiary is a party to or bound by any agreements or understandings concerning the voting (including voting trusts and proxies) of any capital stock of the Company or any of the Company Subsidiaries.

 

(d)          All dividends or other distributions on the shares of Company Common Stock and Company Preferred Stock and any material dividends or other distributions on any securities of any Company Subsidiary which have been authorized or declared prior to the date hereof have been paid in full (except to the extent such dividends have been publicly announced and are not yet due and payable).

 

Section 4.4            Authority .

 

(a)          Each of the Company and the Company Operating Partnership has the requisite corporate or limited partnership power and authority, as applicable, to execute and deliver this Agreement, to perform its obligations hereunder and, subject to receipt of the Company Stockholder Approval, to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by each of the Company and the Company Operating Partnership and the consummation by the Company and the Company Operating Partnership of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate and limited partnership action, and no other corporate or limited partnership proceedings on the part of the Company or the Company Operating Partnership, as applicable, are necessary to authorize this Agreement or the Mergers or to consummate the transactions contemplated hereby, subject, (i) with respect to the Merger, to receipt of the Company Stockholder Approval, the filing of the Articles of Merger with and acceptance for record of the Articles of Merger by the SDAT and (ii) with respect to the Partnership Merger, the due filing of the Partnership Certificate of Merger with the Delaware Secretary. The Company’s board of directors (the “ Company Board ”), at a duly held meeting, has, upon the recommendation of the Company Special Committee, by unanimous vote of all of the Company Board members voting, (x) duly and validly authorized the execution and delivery of this Agreement and declared advisable the Merger, the Partnership Merger and the other transactions contemplated hereby, (y) directed that the Merger and, to the extent stockholder approval is required, the other transactions contemplated hereby be submitted for consideration at the Company Stockholder Meeting, and (z) resolved to recommend that the stockholders of the Company vote in favor of the approval of the Merger and the other transactions contemplated hereby (the “ Company Recommendation ”) and to include such recommendation in the Joint Proxy Statement, subject to Section 6.5 .

 

 

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(b)          This Agreement has been duly executed and delivered by each of the Company and the Company Operating Partnership and, assuming due authorization, execution and delivery by each of Parent, Merger Sub and the Parent Operating Partnership, constitutes a legally valid and binding obligation of each of the Company and the Company Operating Partnership, enforceable against the Company and the Company Operating Partnership in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law).

 

(c)          The Company Special Committee, at a meeting duly called and held, has by unanimous vote of all its members recommended that the Company Board approve and adopt this Agreement and determined that the transactions contemplated hereby, including the Mergers, are advisable and in the best interests of, the Company and the stockholders of the Company. The Company Board, based on the unanimous recommendation of the Company Special Committee, has (i) determined that the transactions contemplated by this Agreement are advisable on substantially the terms and conditions set forth herein, and (ii) approved and adopted this Agreement and the transactions contemplated hereby, including the Mergers, and directed that this Agreement and the Merger be submitted to a vote by the Company’s stockholders. The Company Board has not subsequently rescinded or modified, in any way, its determinations and approvals discussed above.

 

Section 4.5            No Conflict; Required Filings and Consents .

 

(a)          Except as set forth in Section 4.5(a) of the Company Disclosure Letter, the execution and delivery of this Agreement by each of the Company and the Company Operating Partnership does not, and the performance of this Agreement and the consummation of the Mergers and the other transactions contemplated hereby by each of the Company and the Company Operating Partnership will not, (i) assuming receipt of the Company Stockholder Approval, conflict with or violate any provision of (A) the Company Charter, the Company Bylaws, the certificate of limited partnership of the Company Operating Partnership or the Company Partnership Agreement or (B) any equivalent organizational or governing documents of any Company Subsidiary, (ii) assuming that all consents, approvals, authorizations and permits described in Section 4.5(b) have been obtained, all filings and notifications described in Section 4.5(b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate any Law applicable to the Company, the Company Operating Partnership or any other Company Subsidiary or by which any property or asset of the Company, the Company Operating Partnership or any other Company Subsidiary is bound, or (iii) require any consent or approval (except as contemplated by Section 4.5(b) ) under, result in any breach of or any loss of any benefit or material increase in any cost or obligation of the Company, the Company Operating Partnership or any other Company Subsidiary under, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, acceleration, cancellation or payment (including disposition or similar fees) (with or without notice or the lapse of time or both) of, or give rise to any right of purchase, first offer or forced sale under or result in the creation of a Lien on any property or asset of the Company, the Company Operating Partnership or any other Company Subsidiary pursuant to, any note, bond, debt instrument, indenture, contract, agreement, ground lease, license, permit or other legally binding obligation to which the Company, the Company Operating Partnership or any other Company Subsidiary is a party, except, as to clauses (i)(B), (ii) and (iii), respectively, for any such conflicts, violations, breaches, defaults or other occurrences which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

 

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(b)          The execution and delivery of this Agreement by each of the Company and the Company Operating Partnership does not, and the performance of this Agreement by each of the Company and the Company Operating Partnership will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) the filing with the SEC of (A) joint proxy materials in preliminary and definitive form relating to the Company Stockholder Meeting and the Parent Stockholder Meeting (together with any amendments or supplements thereto, the “ Joint Proxy Statement ”) and of a registration statement on Form S-4 pursuant to which the offer and sale of shares of Parent Common Stock in the Merger will be registered pursuant to the Securities Act and in which the Joint Proxy Statement will be included as a prospectus (together with any amendments or supplements thereto, the “ Form S-4 ”), and declaration of effectiveness of the Form S-4, and (B) such reports under, and other compliance with, the Exchange Act (and the rules and regulations promulgated thereunder) and the Securities Act (and the rules and regulations promulgated thereunder) as may be required in connection with this Agreement and the transactions contemplated hereby, (ii) as may be required under the rules and regulations of the NYSE, (iii) the filing of the Articles of Merger with and the acceptance for record of the Articles of Merger by the SDAT pursuant to the MGCL, (iv) the due filing of the Partnership Certificate of Merger with the Delaware Secretary, (v) such filings and approvals as may be required by any applicable state securities or “blue sky” Laws, (vi) such filings as may be required in connection with state and local transfer Taxes, and (vii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

Section 4.6            Permits; Compliance with Law .

 

(a)          Except for the authorizations, licenses, permits, certificates, approvals, variances, exemptions, orders, franchises, certifications and clearances that are the subject of Section 4.14 or Section 4.16 , which are addressed solely in those Sections, the Company and each Company Subsidiary is in possession of all authorizations, licenses, permits, certificates, approvals, variances, exemptions, orders, franchises, certifications and clearances of any Governmental Authority and accreditation and certification agencies, bodies or other organizations, including building permits and certificates of occupancy, necessary for the Company and each Company Subsidiary to own, lease and, to the extent applicable, operate its properties or to carry on its respective business substantially as it is being conducted as of the date hereof (the “ Company Permits ”), and all such Company Permits are valid and in full force and effect, except where the failure to be in possession of, or the failure to be valid or in full force and effect of, any of the Company Permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. All applications required to have been filed for the renewal of the Company Permits have been duly filed on a timely basis with the appropriate Governmental Authority, and all other filings required to have been made with respect to such Company Permits have been duly made on a timely basis with the appropriate Governmental Authority, except in each case for failures to file which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary has received any claim or notice nor has any knowledge indicating that the Company or any Company Subsidiary is currently not in compliance with the terms of any such Company Permits, except where the failure to be in compliance with the terms of any such Company Permits, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

 

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(b)          Neither the Company nor any Company Subsidiary is or has been in conflict with, or in default or violation of (i) any Law applicable to the Company or any Company Subsidiary or by which any property or asset of the Company or any Company Subsidiary is bound (except for Laws addressed in Section 4.7 , Section 4.10 , Section 4.14 , Section 4.16 or Section 4.17 ), or (ii) any Company Permits (except for the Company Permits addressed in Section 4.14 or Section 4.16 ), except in each case for any such conflicts, defaults or violations that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

Section 4.7            SEC Filings; Financial Statements .

 

(a)          The Company has filed with, or furnished (on a publicly available basis) to, the SEC all forms, reports, schedules, statements and documents required to be filed or furnished by it under the Securities Act or the Exchange Act, as the case may be, including any amendments or supplements thereto, from and after June 6, 2014 (collectively, the “ Company SEC Filings ”). Except as set forth in Section 4.7(a) of the Company Disclosure Letter, each Company SEC Filing, as amended or supplemented, if applicable, (i) as of its date, or, if amended or supplemented, as of the date of the most recent amendment or supplement thereto, complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the applicable rules and regulations of the SEC thereunder, and (ii) did not, at the time it was filed (or became effective in the case of registration statements), or, if amended or supplemented, as of the date of the most recent amendment or supplement thereto, contain any untrue statement of a material fact or omit to state a 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 were made, not misleading. As of the date of this Agreement, no Company Subsidiary is separately subject to the periodic reporting requirements of the Exchange Act.

 

(b)          Each of the consolidated financial statements contained or incorporated by reference in the Company SEC Filings (as amended, supplemented or restated, if applicable), including the related notes and schedules, was prepared (except as indicated in the notes thereto) in accordance with GAAP applied on a consistent basis throughout the periods indicated, and each such consolidated financial statement presented fairly, in all material respects, the consolidated financial position, results of operations, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries as of the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments).

 

 

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(c)          The records, systems, controls, data and information of the Company and the Company Subsidiaries that are used in the system of internal accounting controls described in the following sentence are recorded, stored, maintained and operated under means that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants, except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a materially adverse effect on the system of internal accounting controls. The Company and the Company Subsidiaries have devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including that: (1) transactions are executed only in accordance with management’s authorization; (2) transactions are recorded as necessary to permit preparation of the financial statements of the Company and the Company Subsidiaries and to maintain accountability for the assets of the Company and the Company Subsidiaries; (3) access to such assets is permitted only in accordance with management’s authorization; (4) the reporting of such assets is compared with existing assets at regular intervals; and (5) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. The Company’s principal executive officer and its principal financial officer have disclosed to the Company’s auditors and the audit committee of the Company Board (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial data, and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls, and the Company has made available to Parent copies of any material written materials relating to the foregoing. The Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 promulgated under the Exchange Act) designed to ensure that material information relating to the Company required to be included in reports filed under the Exchange Act, including its consolidated subsidiaries, is made known to the Company’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared, and, to the knowledge of the Company, such disclosure controls and procedures are effective in timely alerting the Company’s principal executive officer and its principal financial officer to material information required to be included in the Company’s periodic reports required under the Exchange Act. Since the enactment of the Sarbanes-Oxley Act, none of the Company or any Company Subsidiary has made any prohibited loans to any director or executive officer of the Company (as defined in Rule 3b-7 promulgated under the Exchange Act).

 

(d)          Except as and to the extent disclosed or reserved against on the Company’s most recent balance sheet (or, in the notes thereto) included in the Company SEC Filings, none of the Company or its consolidated subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise), except for liabilities or obligations (i) expressly contemplated by or under this Agreement, (ii) incurred in the ordinary course of business consistent with past practice since the most recent balance sheet set forth in the Company SEC Filings made through and including the date of this Agreement, (iii) described in any section of the Company Disclosure Letter or (iv) that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

 

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(e)          Except as set forth in Section 4.7(e) of the Company Disclosure Letter, to the knowledge of the Company, none of the Company SEC Filings is the subject of ongoing SEC review and the Company has not received any comments from the SEC with respect to any of the Company SEC Filings since June 6, 2014 which remain unresolved, nor has it received any inquiry or information request from the SEC as to any matters affecting the Company which has not been adequately addressed. The Company has made available to Parent true and complete copies of all written comment letters from the staff of the SEC received since June 6, 2014 through the date of this Agreement relating to the Company SEC Filings and all written responses of the Company thereto through the date of this Agreement. None of the Company SEC Filings is the subject of any confidential treatment request by the Company.

 

Section 4.8            Disclosure Documents .

 

(a)          None of the information supplied or to be supplied in writing by or on behalf of the Company or any Company Subsidiary for inclusion or incorporation by reference in (i) the Form S-4 will, at the time such document is filed with the SEC, at any time such document is amended or supplemented or at the time such document is declared effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) the Joint Proxy Statement will, at the date it is first mailed to the stockholders of the Company and of Parent, at the time of the Company Stockholder Meeting and the Parent Stockholder Meeting, at the time the Form S-4 is declared effective by the SEC or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. All documents that the Company is responsible for filing with the SEC in connection with the transactions contemplated herein, to the extent relating to the Company or any Company Subsidiary or other information supplied by or on behalf of the Company or any Company Subsidiary for inclusion therein, will comply as to form, in all material respects, with the provisions of the Securities Act or Exchange Act, as applicable, and the rules and regulations of the SEC thereunder and each such document required to be filed with any Governmental Authority (other than the SEC) will comply in all material respects with the provisions of any applicable Law as to the information required to be contained therein.

 

(b)          The representations and warranties contained in this Section 4.8 will not apply to statements or omissions included in the Form S-4 or the Joint Proxy Statement to the extent based upon information supplied to the Company by or on behalf of Parent, Parent Operating Partnership or Merger Sub.

 

 

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Section 4.9            Absence of Certain Changes or Events . Between and including January 1, 2016 and the date hereof, except as contemplated by this Agreement or as set forth in Section 4.9 of the Company Disclosure Letter, the Company and each Company Subsidiary has conducted its business in all material respects in the ordinary course. Between and including January 1, 2016 and the date hereof, there has not been any Company Material Adverse Effect or any effect, event, development or circumstance that, individually or in the aggregate with all other effects, events, developments and changes, would reasonably be expected to result in a Company Material Adverse Effect.

 

Section 4.10          Employee Benefit Plans and Service Providers .

 

(a)          Other than the Restricted Stock Plan and as set forth in Section 4.10 of the Company Disclosure Letter, the Company and the Company Subsidiaries do not and are not required to, and have not and have never been required to, maintain, sponsor or contribute to any Benefit Plans. Neither the Company nor any Company Subsidiary has any contract, plan or commitment, whether or not legally binding, to create any Benefit Plan.

 

(b)          Except as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, none of the Company, any Company Subsidiary or any of their respective ERISA Affiliates has incurred any obligation or liability with respect to or under any employee benefit plan, program or arrangement (including any agreement, program, policy or other arrangement under which any current or former employee, director or consultant has any present or future right to benefits) which has created or will create any obligation with respect to, or has resulted in or will result in any liability to Parent, Merger Sub or any of their respective subsidiaries.

 

(c)          The Company Restricted Stock Plan was established and has been administered in all material respects in accordance with its terms and in material compliance with all applicable Laws, including the Code.

 

(d)          None of the Company, any Company Subsidiaries or any of their respective ERISA Affiliates has ever maintained, contributed to, or participated in, or otherwise has any obligation or liability in connection with: (i) a “pension plan” under Section 3(2) of ERISA that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (iii) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA), (iv) a “multiple employer plan” (as defined in Section 413(c) of the Code), or (v) in respect to the Company Subsidiaries (and, in respect thereto, the laws of any relevant jurisdiction of the European Union), any equivalent pension or similar plan, scheme, or arrangement (excluding any mandatory governmental pension schemes, plans, or arrangements pursuant to the domestic laws of that jurisdiction, where applicable).

 

(e)          Except as set forth in Section 4.10(e) of the Company Disclosure Letter, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will, individually or together with the occurrence of any other event: (i) result in any payment becoming due to any service provider of the Company or any Company Subsidiary, (ii) increase or otherwise enhance any benefits otherwise payable by the Company or any Company Subsidiary or the amount of compensation due to any service provider of the Company or any Company Subsidiary or (iii) result in the acceleration of the time of payment or vesting of any such benefits or the funding of any such compensation or benefits.

 

 

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(f)          No amount that could be received (whether in cash or property or the vesting of property or otherwise) as a result of the Mergers or any of the other transactions contemplated hereby (alone or in combination with any other event) by any Person who would reasonably be expected to be a “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) under any compensation arrangement or otherwise would be characterized as an “excess parachute payment” (as such term is defined in Section 280G(b)(1) of the Code).

 

(g)          Neither the Company nor any Company Subsidiary is a party to or has any obligation under any Contract, any Benefit Plan, or otherwise to compensate any Person for excise taxes payable pursuant to Section 4999 of the Code or for additional taxes payable pursuant to Section 409A of the Code.

 

Section 4.11          Labor and Employment Matters . Except as set forth in Section 4.11 of the Company Disclosure Letter, neither the Company nor any Company Subsidiary has, or has ever had, any employees or consultants.

 

Section 4.12          Material Contracts .

 

(a)          Except for contracts listed in Section 4.12 of the Company Disclosure Letter or filed as exhibits to the Company SEC Filings, as of the date of this Agreement, neither the Company nor any Company Subsidiary is a party to or bound by any contract that, as of the date hereof:

 

(i)          is required to be filed as an exhibit to the Company’s Annual Report on Form 10-K pursuant to Item 601(b)(2), (4), (9) or (10) of Regulation S-K promulgated by the SEC;

 

(ii)         obligates the Company or any Company Subsidiary to make non-contingent aggregate annual expenditures (other than principal and/or interest payments or the deposit of other reserves with respect to debt obligations) in excess of $1,000,000 and is not cancelable within ninety (90) days without material penalty to the Company or any Company Subsidiary, except for any Company Lease or any ground lease affecting any Company Property;

 

(iii)        contains any non-compete or exclusivity provisions with respect to any line of business or geographic area that restricts the business of the Company or any Company Subsidiary, or that otherwise restricts the lines of business conducted by the Company or any Company Subsidiary or the geographic area in which the Company or any Company Subsidiary may conduct business, other than, with respect to the Company Subsidiaries, radius and/or use restrictions contained in any Company Lease or pursuant to applicable Laws;

 

(iv)        is an agreement which obligates the Company or any Company Subsidiary to indemnify any past or present directors, officers, trustees, employees and agents of the Company or any Company Subsidiary pursuant to which the Company or any Company Subsidiary is the indemnitor, other than any operating agreements or property management agreements or any similar agreement pursuant to which a Company Subsidiary that is not wholly owned, directly or indirectly, by the Company provides such an indemnification to any such directors, officers, trustees, employees or agents in connection with the indemnification by such non-wholly owned Company Subsidiary of the Company or another Company Subsidiary thereunder;

 

 

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(v)         constitutes an Indebtedness obligation of the Company or any Company Subsidiary with a principal amount as of the date hereof greater than $1,000,000;

 

(vi)        would prohibit or materially delay the consummation of the Mergers as contemplated by this Agreement;

 

(vii)       requires the Company or any Company Subsidiary to dispose of or acquire assets or properties (other than in connection with the expiration or termination of a Company Lease or a ground lease affecting a Company Property) with a fair market value in excess of $200,000, or involves any pending or contemplated merger, consolidation or similar business combination transaction, except for any Company Lease or any ground lease affecting any Company Property;

 

(viii)      sets forth the operational terms of a joint venture, partnership, limited liability company with a Third Party member or strategic alliance of the Company or any Company Subsidiary; or

 

(ix)         constitutes a loan to any Person (other than a wholly owned Company Subsidiary) by the Company or any Company Subsidiary (other than advances made pursuant to and expressly disclosed in the Company Leases or pursuant to any disbursement agreement, development agreement, or development addendum entered into in connection with a Company Lease with respect to the development, construction, or equipping of Company Properties or the funding of improvements to Company Properties) in an amount in excess of $1,000,000.

 

Each contract listed on Section 4.12 of the Company Disclosure Letter to which the Company or any Company Subsidiary is a party or by which it is bound as of the date hereof is referred to herein as a “ Company Material Contract.

 

(b)          Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, each Company Material Contract is legal, valid, binding and enforceable on the Company and each Company Subsidiary that is a party thereto and, to the knowledge of the Company, each other party thereto, and is in full force and effect, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). Except as, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, the Company and each Company Subsidiary has performed all obligations required to be performed by it prior to the date hereof under each Company Material Contract and, to the knowledge of the Company, each other party thereto has performed all obligations required to be performed by it under such Company Material Contract prior to the date hereof. None of the Company or any Company Subsidiary, nor, to the knowledge of the Company, any other party thereto, is in material breach or violation of, or default under, any Company Material Contract, and no event has occurred that with notice or lapse of time or both would constitute a violation, breach or default under any Company Material Contract, except where in each case such breach, violation or default is not reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary has received notice of any violation or default under any Company Material Contract, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

 

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Section 4.13          Litigation . Except as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, as of the date of this Agreement, (a) there is no Action pending or, to the knowledge of the Company, threatened by or before any Governmental Authority, nor, to the knowledge of the Company, is there any investigation pending or threatened by any Governmental Authority, in each case, against the Company or any Company Subsidiary, and (b) neither the Company nor any Company Subsidiary, nor any of the Company’s or any Company Subsidiary’s respective property, is subject to any outstanding judgment, order, writ, injunction or decree of any Governmental Authority.

 

Section 4.14          Environmental Matters .

 

(a)          Except as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect or in any Phase I or Phase II report made available to Parent prior to the date hereof:

 

(i)          The Company and each Company Subsidiary are in compliance with all Environmental Laws.

 

(ii)         The Company and each Company Subsidiary have all Environmental Permits necessary to conduct their current operations and are in compliance with their respective Environmental Permits, and all such Environmental Permits are in good standing.

 

(iii)        Neither the Company nor any Company Subsidiary has received any written notice, demand, letter or claim alleging that the Company or any such Company Subsidiary is in violation of, or liable under, any Environmental Law or that any judicial, administrative or compliance order has been issued against the Company or any Company Subsidiary which remains unresolved. There is no litigation, investigation, request for information or other proceeding pending, or, to the knowledge of the Company, threatened against the Company and any Company Subsidiary under any Environmental Law.

 

(iv)        Neither the Company nor any Company Subsidiary has entered into or agreed to any consent decree or order or is subject to any judgment, decree or judicial, administrative or compliance order relating to compliance with Environmental Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Substances and no investigation, litigation or other proceeding is pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary under any Environmental Law.

 

 

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(v)         Neither the Company nor any Company Subsidiary has assumed, by contract or, to the knowledge of the Company, by operation of Law, any liability under any Environmental Law or relating to any Hazardous Substances, or is an indemnitor in connection with any threatened or asserted claim by any third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous Substances, other than environmental guaranties provided on non-recourse debt.

 

(vi)        Neither the Company nor any Company Subsidiary has caused, and to the knowledge of the Company, no Third Party has caused any release of a Hazardous Substance that would be required to be investigated or remediated by the Company or any Company Subsidiary under any Environmental Law.

 

(vii)       There is no site to which the Company or any Company Subsidiary has transported or arranged for the transport of Hazardous Substances which, to the knowledge of the Company, is or may become the subject of any Action under Environmental Law.

 

(b)          This Section 4.14 contains the exclusive representations and warranties of the Company with respect to environmental matters.

 

Section 4.15          Intellectual Property .

 

(a)           Section 4.15(a) of the Company Disclosure Letter sets forth a correct and complete list of all material Intellectual Property registrations and applications for registration owned by the Company and all material Intellectual Property that is licensed by the Company.

 

(b)          Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries own or are licensed or otherwise possess valid rights to use all Intellectual Property necessary to conduct the business of the Company and the Company Subsidiaries as it is currently conducted, (ii) the conduct of the business of the Company and the Company Subsidiaries as it is currently conducted does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any Third Party, (iii) there are no pending or, to the knowledge of the Company, threatened claims with respect to any of the Intellectual Property rights owned or licensed by the Company or any Company Subsidiary, and (iv) to the knowledge of the Company, no Third Party is currently infringing or misappropriating Intellectual Property owned by the Company or any Company Subsidiary. The Company and the Company Subsidiaries are taking all actions that are reasonably necessary to maintain and protect each material item of Intellectual Property that they own.

 

(c)          This Section 4.15 contains the exclusive representations and warranties of the Company with respect to Intellectual Property matters.

 

 

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Section 4.16          Properties .

 

(a)           Section 4.16(a) of the Company Disclosure Letter sets forth a list of the address of each real property owned, leased (as lessee or sublessee), including ground leased, by the Company or any Company Subsidiary as of the date of this Agreement (all such real property interests, together with all buildings, structures and other improvements and fixtures located on or under such real property and all easements, rights and other appurtenances to such real property, are individually referred to herein as a “ Company Property ” and collectively referred to herein as the “ Company Properties ”).

 

(b)          The Company or a Company Subsidiary owns good and marketable fee simple title or leasehold title (as applicable) to each of the Company Properties, in each case, free and clear of Liens, except for Company Permitted Liens that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. For the purposes of this Agreement, “ Company Permitted Liens ” shall mean any (i) Liens relating to any Indebtedness incurred in the ordinary course of business consistent with past practice, (ii) Liens that result from any statutory or other Liens for Taxes or assessments that are not yet subject to penalty or the validity of which is being contested in good faith by appropriate proceedings and for which there are adequate reserves on the financial statements of the Company (if such reserves are required pursuant to GAAP), (iii) any Company Material Contracts or other service contracts, management agreements, leasing commission agreements, agreements or obligations set forth in Section 4.16(l) of the Company Disclosure Letter, or Company Leases or ground leases or air rights affecting any Company Property, (iv) Liens imposed or promulgated by Law or any Governmental Authority, including zoning regulations, permits and licenses, (v) Liens that are disclosed on the existing Company Title Insurance Policies made available by or on behalf of the Company or any Company Subsidiary to Parent prior to the date hereof and, with respect to leasehold interests, Liens on the underlying fee or leasehold interest of the applicable ground lessor, lessor or sublessor, (vi) any cashiers’, landlords’, workers’, mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar Liens imposed by Law and incurred in the ordinary course of business consistent with past practice that are not yet subject to penalty or the validity of which is being contested in good faith by appropriate proceedings, and (vii) any other Liens that do not materially impair the value of the applicable Company Property or the continued use and operation of the applicable Company Property as currently used and operated.

 

(c)          The Company Properties (x) are supplied with utilities and other services reasonably required for their continued operation as they are now being operated, (y) are, to the knowledge of the Company, in working order sufficient for their normal operation in the manner currently being operated and without any material structural defects other than as may be disclosed in any physical condition reports that have been made available to Parent, and (z) are, to the knowledge of the Company, adequate and suitable for the purposes for which they are presently being used.

 

(d)          To the knowledge of the Company, each of the Company Properties has sufficient access to and from publicly dedicated streets for its current use and operation, without any constraints that interfere with the normal use, occupancy and operation thereof.

 

 

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(e)          Neither the Company nor any of the Company Subsidiaries has received (i) written notice that any certificate, permit or license from any Governmental Authority having jurisdiction over any of the Company Properties or any agreement or easement that is necessary to permit the lawful use and operation of the buildings and improvements on any of the Company Properties or that is necessary to permit the lawful use and operation of all utilities, parking areas, retention ponds, driveways, roads and other means of egress and ingress to and from any of the Company Properties is not in full force and effect as of the date of this Agreement, except for such failures to be in full force and effect that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, or of any pending written threat of modification or cancellation of any of same, that would reasonably be expected to have a Company Material Adverse Effect, or (ii) written notice of any uncured violation of any Laws affecting any of the Company Properties which, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

 

(f)          No certificate, variance, permit or license from any Governmental Authority having jurisdiction over any of the Company Properties or any agreement, easement or other right that is necessary to permit the current use of the buildings and improvements on any of the Company Properties or that is necessary to permit the current use of all parking areas, driveways, roads and other means of egress and ingress to and from any of the Company Properties has failed to be obtained or is not in full force and effect, and neither the Company nor any Company Subsidiary has received written notice of any outstanding threat of modification or cancellation of any such certificate, variance, permit or license, except for any of the foregoing as, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

 

(g)          Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, no condemnation, eminent domain or similar proceeding has occurred or is pending with respect to any owned Company Property or, to the knowledge of the Company, any Company Property leased by the Company or any Company Subsidiary, and neither the Company nor any Company Subsidiary has received any written notice to the effect that (i) any condemnation or rezoning proceedings are threatened with respect to any of the Company Properties, or (ii) any zoning regulation or ordinance (including with respect to parking), Board of Fire Underwriters rules, building, fire, health or other Law has been violated (and remains in violation) for any Company Property.

 

(h)          Except for discrepancies, errors or omissions that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, the rent rolls for each of the Company Properties, as of June 1, 2016, which rent rolls have previously been made available by or on behalf of the Company or any Company Subsidiary to Parent, and the schedules with respect to the Company Properties subject to triple-net leases, which schedules have previously been made available to Parent, correctly reference each lease or sublease that was in effect as of June 1, 2016 and to which the Company or the Company Subsidiaries are parties as lessors or sublessors with respect to each of the applicable Company Properties (all leases or subleases (including any triple-net leases), together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto, the “ Company Leases ”). Section 4.16(h) of the Company Disclosure Letter sets forth the current rent annualized and security deposit amounts currently held for each Company Lease (which security deposits are in the amounts required by the applicable Company Lease).

 

 

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(i)          True and complete in all material respects copies of (i) all ground leases affecting the interest of the Company or any Company Subsidiary in the Company Properties and (ii) all Company Leases (collectively, the “ Material Company Leases ”), in each case in effect as of the date hereof, together with all amendments, modifications, supplements, renewals and extensions through the date hereof related thereto, have been made available to Parent. Except as set forth on Section 4.16(i) of the Company Disclosure Letter or as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, (1) neither the Company nor any Company Subsidiary is and, to the knowledge of the Company, no other party is in breach or violation of, or default under, any Material Company Lease, (2) no event has occurred which would result in a breach or violation of, or a default under, any Material Company Lease by the Company or any Company Subsidiary, or, to the knowledge of the Company, any other party thereto (in each case, with or without notice or lapse of time or both) and no tenant under a Material Company Lease is in monetary default under such Material Company Lease, (3) no tenant under a Company Lease is the beneficiary or has the right to become a beneficiary of a loan or forbearance from the Company or any Company Subsidiary in excess of $250,000 in the aggregate, (4) neither the Company nor any Company Subsidiary is in receipt of any rent under any Company Lease paid more than 30 days before such rent is due and payable, and (5) to the Knowledge of the Company, each Material Company Lease is valid, binding and enforceable in accordance with its terms and is in full force and effect with respect to the Company or a Company Subsidiary and, to the knowledge of the Company, with respect to the other parties thereto, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law).

 

(j)          Except as set forth on Section 4.16(j) of the Company Disclosure Letter, there are no Tax abatements or exemptions specifically affecting the Company Properties, and the Company and the Company Subsidiaries have not received any written notice of (and the Company and the Company Subsidiaries do not have any knowledge of) any proposed increase in the assessed valuation of any of the Company Properties or of any proposed public improvement assessments that will result in the Taxes or assessments payable in the next tax period increasing except, in each case, for any such Taxes or assessments that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(k)          As of the date of this Agreement, no purchase option has been exercised under any Company Lease for which the purchase has not closed prior to the date of this Agreement.

 

(l)          Except for (1) Company Permitted Liens, (2) as set forth in Section 4.16(l) of the Company Disclosure Letter, or (3) as set forth in any Company Lease, and as set forth in contracts provided to Parent prior to the date hereof, (i) there are no unexpired option to purchase agreements, rights of first refusal or first offer or any other rights to purchase or otherwise acquire any Company Property or any portion thereof that would materially adversely affect the Company’s, or the Company Subsidiary’s, ownership, ground lease or right to use a Company Property subject to a Material Company Lease, and (ii) there are no other outstanding rights or agreements to enter into any contract for sale, ground lease or letter of intent to sell or ground lease any Company Property or any portion thereof that is owned by any Company Subsidiary, which, in each case, is in favor of any party other than the Company or a Company Subsidiary.

 

 

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(m)         Except as set forth in Section 4.16(m) of the Company Disclosure Letter or pursuant to a Company Lease or any ground lease affecting any Company Property, neither the Company nor any Company Subsidiary is a party to any agreement pursuant to which the Company or any Company Subsidiary manages or manages the development of any real property for any Third Party.

 

(n)          Neither the Company nor any Company Subsidiary is party to any oral Company Lease.

 

(o)          The Company and each Company Subsidiary, as applicable, is in possession of title insurance policies or valid marked-up title commitments evidencing title insurance with respect to each Company Property (each, a “ Company Title Insurance Policy ”). A copy of each Company Title Insurance Policy in the possession of the Company has been made available to Parent. No written claim has been made against any Company Title Insurance Policy, which, individually or in the aggregate, would be material to any Company Property.

 

(p)          To the knowledge of the Company, Section 4.16(p) of the Company Disclosure Letter lists each Company Property which is (i) under development as of the date hereof, and describes the status of such development as of the date hereof, and (ii) which is subject to a binding agreement for development or commencement of construction by the Company or a Company Subsidiary, in each case other than those pertaining to minor capital repairs, replacements and other similar correction of deferred maintenance items in the ordinary course of business or alterations or expansions being performed by any tenant under a Company Lease.

 

(q)          The Company and the Company Subsidiaries have good and valid title to, or a valid and enforceable leasehold interest in, or other right to use, all personal property owned, used or held for use by them as of the date of this Agreement (other than property owned by tenants and used or held in connection with the applicable tenancy), except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. None of the Company’s or any of the Company Subsidiaries’ ownership of or leasehold interest in any such personal property is subject to any Liens, except for Company Permitted Liens and Liens that have not had and would not reasonably be expected to have a Company Material Adverse Effect. Section 4.16(q) of the Company Disclosure Letter sets forth all leased personal property of the Company or any Company Subsidiary with monthly lease obligations in excess of $250,000 and that are not terminable upon 30 days’ notice.

 

(r)           Section 4.16(r) of the Company Disclosure Letter lists the parties currently providing third-party property management services to the Company or a Company Subsidiary and the number of facilities currently managed by each such party.

 

 

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Section 4.17          Taxes .

 

(a)          The Company and, if applicable, each Company Subsidiary has (i) duly and timely filed (or there have been filed on their behalf) with the appropriate Governmental Authority all U.S. federal and all other material Tax Returns required to be filed by them, taking into account any extensions of time within which to file such Tax Returns, and all such Tax Returns were and are true, correct and complete in all material respects, and (ii) duly and timely paid in full (or there has been duly and timely paid in full on their behalf), or made adequate provision for, all material amounts of Taxes required to be paid by them, whether or not shown (or required to be shown) on any Tax Return. True and materially complete copies of all U.S. Federal income Tax Returns that have been filed with the IRS by the Company and each Company Subsidiary with respect to the taxable years ending on or after December 31, 2014 have been provided or made available to representatives of Parent.

 

(b)          The Company (i) for all taxable years commencing with the Company’s taxable year ended December 31, 2015 (and, for purposes of Section 7.2(a), including through December 31, 2016, if the Closing Date occurs in the taxable year ending December 31, 2017), has satisfied all requirements to qualify as a real estate investment trust within the meaning of Section 856 of the Code (a “REIT”), and, upon the making of an election to be treated as a REIT on the federal income Tax Return for the Company’s taxable year ended December 31, 2015, will so qualify for U.S. federal Tax purposes for such taxable years; (ii) has operated since January 1, 2016 (and, for purposes of Section 7.2(a), January 1, 2017, if the Closing Date occurs in the taxable year ending December 31, 2017) to the date hereof in a manner consistent with the requirements for qualification and taxation as a REIT; (iii) intends to continue to operate (including with regard to the REIT distribution requirements in the taxable year that includes and/or that ends on the Closing Date) through to the Merger (and the consummation thereof) in such a manner so as to qualify as a REIT for its taxable year that will end with the Merger (and consummation thereof); and (iv) has not taken or omitted to take any action that could reasonably be expected to result in a challenge by the IRS or any other Governmental Authority to its status as a REIT, and no such challenge is pending or threatened in writing.

 

(c)          Each Company Subsidiary and Other Company Subsidiary has been since the later of its acquisition or formation and continues to be treated for U.S. federal and state income Tax purposes as (i) a partnership (or a disregarded entity) and not as a corporation or an association or publicly traded partnership taxable as a corporation, (ii) a Qualified REIT Subsidiary, or (iii) a Taxable REIT Subsidiary.

 

(d)          (i) There are no disputes, audits, examination, investigations or proceedings pending (or threatened in writing), or claims asserted, for and/or in respect of any material Taxes or material Tax Returns of the Company or any Company Subsidiary and neither the Company nor any Company Subsidiary is a party to any litigation or administrative proceeding relating to Taxes; (ii) no deficiency for Taxes of the Company or any Company Subsidiary has been claimed, proposed or assessed in writing or, to the knowledge of the Company, threatened, by any Governmental Authority, which deficiency has not yet been settled, except for such deficiencies which are being contested in good faith or with respect to which the failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect; (iii) neither the Company nor any Company Subsidiary has extended or waived (nor granted any extension or waiver of) the limitation period for the assessment or collection of any Tax that has not since expired; (iv) neither the Company nor any Company Subsidiary currently is the beneficiary of any extension of time within which to file any material Tax Return that remains unfiled; (v) neither the Company nor any Company Subsidiary has received a written claim by any Governmental Authority in any jurisdiction where any of them does not file Tax Returns or pay any Taxes that it is or may be subject to taxation by that jurisdiction and (vi) neither the Company nor any Company Subsidiary has entered into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).

 

 

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(e)          Neither the Company nor any Company Subsidiary holds any asset the disposition of which would be subject to (or to rules similar to) Section 1374 of the Code.

 

(f)          Since its inception, (i) the Company and the Company Subsidiaries have not incurred any material liability for Taxes under Sections 857(b)(1), 857(b)(6)(A), 860(c) or 4981 of the Code which have not been previously paid, and (ii) neither the Company nor any Company Subsidiary has incurred any material liability for Taxes other than (x) in the ordinary course of business or consistent with past practice, or (y) transfer or similar Taxes arising in connection with sales of property. No event has occurred, and no condition or circumstance exists, which presents a material risk that any material Tax described in the preceding sentence will be imposed upon the Company or the Company Subsidiaries.

 

(g)          The Company and the Company Subsidiaries have complied, in all material respects, with all applicable Laws, rules and regulations relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446 and 3402 of the Code or similar provisions under any state and foreign Laws) and have duly and timely withheld and, in each case, have paid over to the appropriate taxing authorities all material amounts required to be so withheld and paid over on or prior to the due date thereof under all applicable Laws.

 

(h)          There are no Company Tax Protection Agreements currently in force, and no Person has raised, or to the knowledge of the Company threatened to raise, a material claim against the Company or any Company Subsidiary for any breach of any Company Tax Protection Agreement and none of the transactions contemplated by this Agreement will give rise to any liability or obligation to make any payment under any Company Tax Protection Agreement. As used herein, “ Company Tax Protection Agreements ” means any agreement to which the Company or any Company Subsidiary is a party and pursuant to which (i) any liability to any direct or indirect holder of partnership units of the Company Operating Partnership or any other partnership interest in any Company Subsidiary Partnership (“ Relevant Company Partnership Interest ”) relating to Taxes may arise, whether or not as a result of the consummation of the transactions contemplated by this Agreement; (ii) in connection with the deferral of income Taxes of a direct or indirect holder of a Relevant Company Partnership Interest, a party to such agreement has agreed to (A) maintain a minimum level of debt or continue a particular debt, (B) retain or not dispose of assets for a period of time that has not since expired, (C) make or refrain from making Tax elections, (D) operate (or refrain from operating) in a particular manner, (E) use (or refrain from using) a specified method of taking into account book-tax disparities under Section 704(c) of the Code with respect to one or more assets of such party or any of its direct or indirect subsidiaries, (F) use (or refrain from using) a particular method for allocating one or more liabilities of such party or any of its direct or indirect subsidiaries under Section 752 of the Code and/or (G) only dispose of assets in a particular manner; (iii) any Person has been or is required to be given the opportunity to guaranty, indemnify or assume debt of such Company Subsidiary Partnership or any direct or indirect subsidiary of such Company Subsidiary Partnership or are so guarantying or indemnifying, or have so assumed, such debt; and/or (iv) any other agreement that would require any Company Subsidiary Partnership or the general partner, manager, managing member or other similarly-situated Person of such Company Subsidiary Partnership or any direct or indirect subsidiary of such Company Subsidiary Partnership to consider separately the interests of the limited partners, members or other beneficial owners of such Company Subsidiary Partnership or the holder of interests in such Company Subsidiary Partnership in connection with any transaction or other action. As used herein, “ Company Subsidiary Partnership ” means a Company Subsidiary or Other Company Subsidiary that is a partnership for U.S. federal income tax purposes.

 

 

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(i)          There are no Tax Liens upon any property or assets of the Company or any Company Subsidiary except Liens for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.

 

(j)          Neither the Company nor any Company Subsidiary has requested, has received or is subject to any written ruling of a Governmental Authority or has entered into any written agreement with a Governmental Authority with respect to any Taxes.

 

(k)          There are no Tax allocation or sharing agreements or similar arrangements with respect to or involving the Company or any Company Subsidiary, and after the Closing Date neither the Company nor any Company Subsidiary shall be bound by any such Tax allocation agreements or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date, in each case, other than customary provisions of commercial or credit agreements and Company Tax Protection Agreements.

 

(l)          Neither the Company nor any Company Subsidiary (A) has been a member of an affiliated group filing a consolidated federal income Tax Return or (B) has any liability for the Taxes of any Person (other than the Company or any Company Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

 

(m)         Neither the Company nor any Company Subsidiary has participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

(n)          Neither the Company nor any Company Subsidiary (other than Taxable REIT Subsidiaries) has or has had any earnings and profits attributable to such entity or any other corporation in any non-REIT year within the meaning of Section 857 of the Code.

 

(o)          The Company is not aware of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

 

 

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(p)          Neither the Company nor any of the Company Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (A) in the two (2) years prior to the date of this Agreement or (B) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with transactions contemplated by this Agreement.

 

(q)          No written power of attorney that has been granted by the Company or any of the Company Subsidiaries (other than to the Company or a Company Subsidiary) currently is in force with respect to any matter relating to Taxes.

 

Section 4.18          Insurance .   The Company has made available to Parent copies of all material insurance policies (including title insurance policies) and all material fidelity bonds or other material insurance service contracts in the Company’s possession providing coverage for all Company Properties (the “ Company Insurance Policies ”). The Company Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to Company and any Company Subsidiary and are sufficient for compliance with all applicable Laws to which Company or any Company Subsidiary are bound. The Company Insurance Policies include all material insurance policies and all material fidelity bonds or other material insurance service contracts required by any Material Company Lease. Except as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, there is no claim for coverage by the Company or any Company Subsidiary pending under any of the Company Insurance Policies that has been denied or disputed by the insurer. Except as individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, all premiums payable under all Company Insurance Policies have been paid, and the Company and the Company Subsidiaries have otherwise complied in all material respects with the terms and conditions of all the Company Insurance Policies. To the knowledge of the Company, such Company Insurance Policies are valid and enforceable in accordance with their terms and are in full force and effect. No written notice of cancellation or termination has been received by the Company or any Company Subsidiary with respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation.

 

Section 4.19          Opinion of Financial Advisor .   The Company Special Committee and the Company’s Board of Directors have received the opinion of BMO Capital Markets Corporation to the effect that, as of the date of such opinion and based on and subject to the assumptions, qualifications, limitations and other matters set forth in such opinion, the Exchange Ratio is fair, from a financial point of view, to the holders of Company Common Stock.

 

Section 4.20          Takeover Statutes .   The restrictions on business combinations contained in Subtitle 6 of Title 3 of the MGCL are not applicable to the Mergers. The restrictions on control share acquisitions contained in Subtitle 7 of Title 3 of the MGCL are not applicable to the Mergers. No “business combination,” “control share acquisition,” “fair price,” “moratorium” or other takeover or anti-takeover statute are applicable to this Agreement, the Mergers or the other transactions contemplated by this Agreement.

 

 

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Section 4.21          Vote Required .   The affirmative vote of the holders of not less than a majority of the outstanding shares of Company Common Stock entitled to vote thereon (the “ Company Stockholder Approval ”) is the only vote of the holders of any class or series of shares of stock of the Company necessary to adopt this Agreement and approve the Merger and the other transactions contemplated hereby. The consent of the Company as the sole general partner of the Company Operating Partnership, is the only vote of the partners of the Company Operating Partnership necessary to adopt this Agreement and approve the Partnership Merger and the other transactions contemplated hereby.

 

Section 4.22          Brokers . No broker, finder, or investment banker (other than BMO Capital Markets Corporation) is entitled to any brokerage, finder’s, or other fee or commission in connection with the Mergers based upon arrangements made by or on behalf of the Company or any Company Subsidiary.

 

Section 4.23          Investment Company Act .   Neither the Company nor any Company Subsidiary is required to be registered as an investment company under the Investment Company Act.

 

Section 4.24          Affiliate Transactions .   Except as set forth in Section 4.24 of the Company Disclosure Letter or in the Company SEC Filings made through and including the date of this Agreement or as permitted by this Agreement, from June 6, 2014 through the date of this Agreement there have been no transactions, agreements, arrangements or understandings between the Company or any Company Subsidiary, on the one hand, and any Affiliates (other than Company Subsidiaries) of the Company or the Service Provider, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC.

 

Section 4.25          Fees Contemplated by the Mergers .   Except as set forth in Section 4.25 of the Company Disclosure Letter, neither the Company nor any Company Subsidiary is required to pay any termination or other fee as a result of entering into this Agreement or carrying out the purposes of this Agreement under the Advisory Agreement or Section 5.1(d) of the Company Partnership Agreement. Additionally, neither the Company nor any Company Subsidiary is required to pay any lease surrender charges under any Company Lease or to pay any severance payments to any Person as a result of entering into this Agreement or carrying out the purposes of this Agreement.

 

Section 4.26          No Other Representations or Warranties .   Except for the representations and warranties contained in Article V , the Company acknowledges that neither Parent nor any other Person on behalf of Parent has made, and the Company has not relied upon, any representation or warranty, whether express or implied, with respect to Parent or any of the Parent Subsidiaries or their respective businesses, affairs, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or with respect to the accuracy or completeness of any other information provided or made available to the Company by or on behalf of Parent.

 

 

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Article V

REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB

 

Except (a) as set forth in the disclosure letter that has been prepared by the Parent Parties and delivered by the Parent Parties to the Company Parties in connection with the execution and delivery of this Agreement (the “ Parent Disclosure Letter ”) (it being agreed that disclosure of any item in any Section of the Parent Disclosure Letter with respect to any Section or subsection of Article V of this Agreement shall be deemed disclosed with respect to any other Section or subsection of Article V of this Agreement to the extent such relationship is reasonably apparent, provided that nothing in the Parent Disclosure Letter is intended to broaden the scope of any representation or warranty of Parent or Merger Sub made herein), or (b) as disclosed in publicly available Parent SEC Filings, filed with, or furnished to, as applicable, the SEC on or after October 27, 2011 and prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks or other matters included in any “forward-looking statements” disclaimer or other statements that are cautionary, predictive or forward-looking in nature), the Parent Parties hereby jointly and severally represent and warrant to the Company Parties that:

 

Section 5.1            Organization and Qualification; Subsidiaries .

 

(a)          Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted. Parent is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.

 

(b)          Merger Sub is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Maryland and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted. Merger Sub is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.

 

 

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(c)          Each Parent Subsidiary (other than Merger Sub) is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, as the case may be, and has the requisite organizational power and authority and any necessary governmental authorization to own, lease and, to the extent applicable, operate its properties and to carry on its business as it is now being conducted, except, with respect only to each Parent Subsidiary that would not constitute a “significant subsidiary” (as defined in Rule 1-02 of Regulation S-X), for such failures to be so organized, in good standing or have certain power and authority that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect. Each Parent Subsidiary is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.

 

(d)           Section 5.1(d) of the Parent Disclosure Letter sets forth a true and complete list of the Parent Subsidiaries and each other corporate or non-corporate subsidiary in which Parent owns any direct or indirect voting, capital, profits or other beneficial interest (“ Other Parent Subsidiary ”), including a list of each Parent Subsidiary or Other Parent Subsidiary that is a Qualified REIT Subsidiary or a Taxable REIT Subsidiary, together with (i) the jurisdiction of incorporation or organization, as the case may be, of each Parent Subsidiary and each Other Parent Subsidiary, (ii) the type of and percentage of voting, equity, profits, capital and other beneficial, as well as any debt (whether as a creditor or borrower), interest held (including capital account balances for any entity treated as a partnership for U.S. federal income tax purposes), directly or indirectly, by Parent in and to each Parent Subsidiary and each Other Parent Subsidiary, (iii) the names of and the type of and percentage of voting, equity, profits, capital and other beneficial, as well as any debt (whether as a creditor or borrower), interest held (including capital account balances for any entity treated as a partnership for U.S. federal income tax purposes) by any Person other than Parent or a Parent Subsidiary in each Parent Subsidiary and, to the knowledge of Parent, each Other Parent Subsidiary, and (iv) the classification for U.S. federal income tax purposes of each Parent Subsidiary and, to the knowledge of Parent, each Other Parent Subsidiary.

 

(e)          Except as set forth in Section 5.1(e) of the Parent Disclosure Letter, neither Parent nor any Parent Subsidiary, directly or indirectly, owns any interest or investment (whether equity or debt) in any Person (other than equity interests in the Parent Subsidiaries or Other Parent Subsidiaries, loans to any Taxable REIT Subsidiary of Parent and investments in bank time deposits and money market accounts).

 

Section 5.2            Organizational Documents

 

. Parent has made available to the Company complete and correct copies of (a) Parent’s charter (the “ Parent Charter ”), and bylaws, as amended to date (the “ Parent Bylaws ”), (b) the organizational documents of each Parent Subsidiary, each as in effect on the date hereof, including Merger Sub’s articles of organization and limited liability company agreement and the certificate of limited partnership of the Parent Operating Partnership and the Parent Partnership Agreement, and (c) any and all Parent Tax Protection Agreements.

 

 

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Section 5.3            Capital Structure .

 

(a)          As of the date hereof, the authorized capital stock of Parent consists of 300,000,000 shares of Parent Common Stock and 50,000,000 shares of preferred stock, $0.01 par value per share (the “ Parent Preferred Stock ”). At the close of business on July 31, 2016, (i) 169,124,629 shares of Parent Common Stock were issued and outstanding, including 146,664 unvested shares of Parent Restricted Stock, (ii) no shares of Parent Preferred Stock were issued and outstanding, (iii) 7,500,000 shares of Parent Common Stock were reserved for issuance pursuant to the terms of outstanding awards granted pursuant to the Parent Restricted Stock Plan, (iv) 7,353,336 shares of Parent Common Stock were available for grant under the Parent Restricted Stock Plan, (v) 9,041,801 LTIP Units were issued and outstanding under the Parent OPP Agreement and (vi) 179,976,108 Parent Partnership Units were issued and outstanding consisting of 170,934,307 Parent OP Units (of which 170,912,085 are held as limited partner interests in Parent Partnership and 22,222 are held by Parent as its general partner interest in Parent Partnership), 9,041,801 LTIP Units, and zero Parent Class B Units. There are no other rights, options, stock or unit appreciation rights, phantom stock or units, restricted stock units, dividend equivalents or similar rights with respect to the Parent Common Stock or the Parent Preferred Stock, including pursuant to the Parent Option Plan. All issued and outstanding shares of the capital stock of Parent are duly authorized, validly issued, fully paid and non-assessable, and all shares of Parent Common Stock to be issued as the Merger Consideration, when so issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. All Parent Partnership Units to be issued as the Partnership Merger Consideration, when so issued in accordance with the terms of this Agreement, will be duly authorized and validly issued. No class of capital stock is entitled to preemptive rights. Except as disclosed in Section 5.3(a) of the Parent Disclosure Letter, there are no outstanding bonds, debentures, notes or other indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which holders of shares of Parent Common Stock may vote.

 

(b)          All of the Merger Sub Interests are owned by Parent. All of the Merger Sub Interests are duly authorized, validly issued fully paid and nonassessable, and are not entitled to preemptive rights. There are no outstanding bonds, debentures, notes or other indebtedness of Merger Sub having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which holders of Merger Sub Interests may vote.

 

(c)          All of the outstanding shares of capital stock of each of the Parent Subsidiaries that is a corporation are duly authorized, validly issued, fully paid and (except in respect to Parent Subsidiary formed under Luxembourg law) nonassessable. All equity interests in each of the Parent Subsidiaries that is a partnership or limited liability company are duly authorized and validly issued. All shares of capital stock of (or other ownership interests in) each of the Parent Subsidiaries that may be issued upon exercise of outstanding options or exchange rights are duly authorized and, upon issuance will be validly issued, fully paid and nonassessable. Except as set forth in Section 5.3(c) of the Parent Disclosure Letter, Parent owns, directly or indirectly, all of the issued and outstanding capital stock and other ownership interests of each of the Parent Subsidiaries, free and clear of all encumbrances other than statutory or other liens for Taxes or assessments which are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained, and there are no existing options, warrants, calls, subscriptions, convertible securities or other securities, agreements, commitments or obligations of any character relating to the outstanding capital stock or other securities of any Parent Subsidiary or which would require any Parent Subsidiary to issue or sell any shares of its capital stock, ownership interests or securities convertible into or exchangeable for shares of its capital stock or ownership interests.

 

 

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(d)          Except as set forth in this Section 5.3 or with respect to the Parent Restricted Stock Plan, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, rights of first refusal, arrangements or undertakings of any kind to which Parent, Merger Sub or any other Parent Subsidiary is a party or by which any of them is bound, obligating Parent, Merger Sub or any other Parent Subsidiary to issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional shares of Parent Common Stock, shares of Parent Preferred Stock, Merger Sub Interests or other equity securities, rights, options, stock or unit appreciation rights, phantom stock or units, dividend equivalents or similar rights or other contractual rights the value of which is determined in whole or in part by the value of any equity security of Parent, Merger Sub or any of the other Parent Subsidiaries or obligating Parent, Merger Sub or any other Parent Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, right of first refusal, arrangement or undertaking. As of the date of this Agreement, there are no outstanding contractual obligations of Parent, Merger Sub or any other Parent Subsidiary to repurchase, redeem or otherwise acquire any shares of Parent Common Stock, Parent Preferred Stock, or other equity securities or interests of Parent, Merger Sub or any other Parent Subsidiary (other than in satisfaction of withholding Tax obligations pursuant to certain awards outstanding under the Parent Restricted Stock Plan in the event the grantees fail to satisfy withholding Tax obligations). Neither Parent, Merger Sub nor any other Parent Subsidiary is a party to or bound by any agreements or understandings concerning the voting (including voting trusts and proxies) of any Merger Sub Interests or capital stock of Parent, or equity interests in any of the other Parent Subsidiaries.

 

(e)          All dividends or other distributions on the shares of Parent Common Stock and Parent Preferred Stock and any material dividends or other distributions on any securities of any Parent Subsidiary which have been authorized or declared prior to the date hereof have been paid in full (except to the extent such


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