AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER ("Agreement"), dated
as of January 13, 2000, and as amended and restated as of May 10, 2000, but all
as of January 13, 2000, is by and among GLOBE BUSINESS RESOURCES, INC., an Ohio
corporation (the "Company"), GLOBE HOLDING CO., INC., a Delaware corporation
("Newco") and ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership
("ERP").
R E C I T A L S:
WHEREAS, the General Partner of ERP, the Board of Directors of Newco and
the Board of Directors of the Company (the "Company Board"), including the
Special Committee of the Company Board established to consider the transaction
(the "Special Committee"), have each approved the acquisition of the Company by
an indirect partially-owned subsidiary of ERP upon the terms and subject to the
conditions set forth in that certain Agreement and Plan of Merger by and between
the parties hereto dated as of January 13, 2000 (the "Original Agreement");
WHEREAS, the parties hereto elected to amend and restate the Original
Agreement as of May 10, 2000; and
WHEREAS, ERP, David D. Hoguet, Blair D. Neller and others have entered into
that certain Amended and Restated Formation and Investment Agreement dated as
May 10, 2000 (the "Formation Agreement") pursuant to which the parties have
formed Newco which will, in turn, form a wholly-owned Ohio corporation
("Acquisition");
WHEREAS, the General Partner of ERP and the Board of Directors of Newco
have approved and the Board of Directors and sole shareholder of Acquisition
will approve the merger (the "Merger") of Acquisition with and into the Company
in accordance with the Ohio General Corporation Law (the "Ohio Law") upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Company has received a fairness opinion relating to the
Merger, as more fully described herein;
WHEREAS, the Company Board, including the Special Committee, has: (i)
determined that the consideration to be paid for each issued and outstanding
share of common stock, no par value per share ("Common Stock") of the Company
(each a "Share") in the Merger (as defined below) is fair to and in the best
interests of the shareholders of the Company; and (ii) approved this Agreement
and the transactions contemplated hereby and declared their advisability and
resolved to recommend approval and adoption of this Agreement by the
shareholders of the Company;
WHEREAS, ERP, Newco and the Company desire to make certain representations,
warranties and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Newco and ERP hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger.
(a) Agreement of Merger. Prior to the Effective Time (as defined below),
and subject to and upon the terms and conditions of this Agreement, the
Agreement of Merger substantially in the form attached as Exhibit A hereto (the
"Agreement of Merger") shall be executed and delivered by the Company and
Acquisition, as soon as practicable after the date hereof, but in no event later
than the date of the meeting of the shareholders of the Company called to adopt
the Agreement of Merger, in accordance with Ohio Law. Pursuant to the terms of
the Agreement of Merger, Acquisition shall be merged with and into the Company,
the separate corporate existence of Acquisition shall cease and the Company
shall continue as the surviving corporation. The Company as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1 and subject to the satisfaction or waiver of the conditions set forth in
Article 7, the consummation of the Merger will take place on the eleventh day
following the meeting of the Company's shareholders held to vote on the approval
of the Merger; provided, however, in the event that ERP waives the condition set
forth in Section 7.2(j) then the Merger shall take place as soon as practicable
after the meeting of the Company's shareholders, but in no event later than 3
business days after satisfaction or waiver of the conditions set forth in
Article 7 (the "Closing Date"), at the offices of Piper Marbury Rudnick & Wolfe,
203 North LaSalle Street, Suite 1800, Chicago, Illinois 60601, unless another
date, time or place is agreed to in writing by the parties hereto.
SECTION 1.2 Effective Time. On the Closing Date, Newco, Acquisition and the
Company shall cause the Merger to be consummated by filing a certificate of
merger as contemplated by the Ohio Law (the "Certificate of Merger"), together
with any required related documents, with the Secretary of State of the State of
Ohio, in such form as required by, and executed in accordance with the relevant
provisions of, the Ohio Law (the time of such filing being the "Effective
Time").
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SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the Agreement of Merger and the Certificate of
Merger and the applicable provisions of the Ohio Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Acquisition shall become the debts, liabilities
and duties of the Surviving Corporation.
SECTION 1.4 Articles of Incorporation, Code of Regulations.
(a) Articles of Incorporation. At the Effective Time the Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by Ohio Law and such Articles of Incorporation.
(b) Code of Regulations. The Code of Regulations of the Company, as in
effect immediately prior to the Effective Time, shall be the Code of Regulations
of the Surviving Corporation until thereafter amended as provided by the Ohio
Law, the Articles of Incorporation of the Surviving Corporation and such Code of
Regulations.
SECTION 1.5 Directors and Officers. The directors of Acquisition
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Code of Regulations of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 1.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of ERP, Acquisition, Newco, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding immediately
prior to the Effective Time (excluding any Shares to be canceled pursuant to
Section 1.6(b)) shall be cancelled and converted into the right to receive,
subject to the terms and conditions of this Agreement, $13.00 per Share (the
"Merger Consideration") payable to the holder thereof, without interest thereon,
upon the surrender of the certificate formerly representing such Share, less any
required withholding of taxes. The Merger Consideration shall be payable in cash
without interest thereon in accordance with Section 1.7 as soon as practicable
after the Deposit Date, as defined herein.
(b) Cancellation. Each Share held in the treasury of the Company and each
Share owned by ERP, Newco, Acquisition or any direct or indirect wholly-owned
subsidiary of the Company or ERP immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
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(c) Stock Options. At the Effective Time, each outstanding option (a "Stock
Option") to purchase Common Stock granted under or pursuant to any employee
stock option plan or agreement entered into by the Company with any employee of
the Company or any subsidiary thereof or any other person listed on Schedule 2.3
of the Company Disclosure Letter or otherwise existing (the "Company Stock
Option Plans"), shall be cancelled and the holder thereof shall be entitled to
receive in cash (the "Total Option Amount") an amount (less applicable
withholding taxes) equal to the product of: the number of shares of Common Stock
previously subject to such Stock Option, whether vested or unvested, multiplied
by; the excess, if any, of the amount of the Merger Consideration over the
exercise price per share of Common Stock previously subject to such Stock
Option, payable, as soon as practicable after the Effective Time.
(d) Capital Stock of Acquisition. Each share of common stock, no par value,
of Acquisition issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, no par value, of the Surviving Corporation.
(e) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective Time and held by
a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with
Section 1701.85 of the Ohio Law ("Dissenting Shares") shall not be converted
into a right to receive the Merger Consideration, unless such holder fails to
perfect or withdraws or loses his right to appraisal, in which case such Shares
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Merger Consideration, without interest thereon. The Company
shall give ERP prompt notice of any demands received by the Company for
appraisal of Shares and, prior to the Effective Time, ERP shall have the right
to direct all negotiations and proceedings with respect to such demands. Prior
to the Effective Time, the Company shall not, except with the prior written
consent of ERP, make any payment with respect to, or settle or offer to settle,
any such demands. From and after the Effective Time, the Surviving Corporation
shall give ERP prompt notice of any demands received by the Surviving
Corporation for appraisal of Shares and, after the Effective Time, ERP shall
have the right to direct all negotiations and proceedings with respect to such
demands. After the Effective Time, the Surviving Corporation shall not, except
with the prior written consent of ERP, make any payment with respect to, or
settle or offer to settle, any such demands.
SECTION 1.7 Exchange of Certificates.
(a) Exchange Agent and Procedures. Prior to the Effective Time, a bank or
trust company reasonably acceptable to the Company shall be designated by ERP
(the "Paying Agent") to act as agent in connection with the Merger to receive
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the funds to which holders of shares shall become entitled pursuant to Section
1.6(a). Promptly after the Effective Time but in no event more than three (3)
business days after the Effective Time, the Surviving Corporation shall cause to
be mailed to each record holder, as of the Effective Time, of a certificate or
certificates (the "Certificates") that, prior to the Effective Time, represented
Shares, a form of letter of transmittal and instructions for use in effecting
the surrender of the Certificates for payment of the Merger Consideration
therefor. Upon the surrender of each such Certificate formerly representing
Shares, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the Paying Agent shall pay
the holder of such Certificate the Merger Consideration multiplied by the number
of Shares formerly represented by such Certificate, in exchange therefor, and
such Certificate shall forthwith be canceled. Until so surrendered and
exchanged, each such Certificate (other than Shares held by ERP, Newco,
Acquisition or the Company, or any direct or indirect subsidiary thereof) shall
represent solely the right to receive the Merger Consideration. No interest
shall be paid or accrue on the Merger Consideration. If the Merger Consideration
(or any portion thereof) is to be delivered to any person other than the person
in whose name the Certificate formerly representing the Shares surrendered in
exchange therefor is registered, it shall be a condition to such exchange that
the Certificate so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the person requesting such exchange shall pay
to the Paying Agent any transfer or other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered, or shall establish to the satisfaction of the
Paying Agent that such tax has been paid or is not applicable.
(b) Consideration. (i) Within three (3) business days after the Effective
Time (the "Deposit Date"), ERP or the Surviving Corporation shall deposit, or
cause to be deposited, in trust with the Paying Agent the amount of Merger
Consideration to which holders of Shares shall be entitled at the Effective Time
pursuant to Section 1.6(a) hereof.
(c) Investment of Merger Consideration. The Merger Consideration shall be
invested by the Paying Agent, as directed by ERP, provided such investments
shall be limited to direct obligations of the United States of America,
obligations for which the full faith and credit of the United States of America
is pledged to provide for the payment of principal and interest, commercial
paper rated of the highest quality by Moody's Investors Service, Inc. and
Standard & Poor's Corporation, or certificates of deposit issued by a commercial
bank having at least $10,000,000,000 in assets.
(d) Termination of Duties. Promptly following the date which is six (6)
months after the Effective Time, ERP will cause the Paying Agent to deliver to
the Surviving Corporation all cash and documents in its possession relating to
the funds to be deposited on the Deposit Date described in this Agreement, and
the Paying Agent's duties relating thereto shall terminate. Thereafter, each
holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon.
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(e) No Liability. None of ERP, Acquisition, Newco and the Company shall be
liable to any holder of Common Stock for any Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Withholding Rights. ERP or the Paying Agent shall be entitled to deduct
and withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any holder of Common Stock such amounts as ERP or the Paying Agent
is required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by ERP or the Paying Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the Shares
in respect of which such deduction and withholding was made by ERP or the Paying
Agent.
SECTION 1.8 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of the Common Stock thereafter on the records of the Company.
SECTION 1.9 No Further Ownership Rights in Common Stock. The Merger
Consideration delivered upon the surrender for exchange of Shares in accordance
with the terms hereof shall be deemed to have been issued in full satisfaction
of all rights pertaining to such Shares, and there shall be no further
registration of transfers on the records of the Surviving Corporation of Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article 1.
SECTION 1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration as may be required pursuant to Section 1.6; provided, however,
that ERP may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against ERP, the Surviving Corporation or the Paying
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
SECTION 1.11 Taking of Necessary Action; Further Action. Each of ERP,
Acquisition, Newco and the Company will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Acquisition, the officers and directors
of the Company and Acquisition immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ERP and Newco that,
except as set forth in the written letter of even date herewith signed by the
Chairman of the Board or the President of the Company, in his capacity as such,
and delivered on or prior to the date hereof by the Company to ERP (the "Company
Disclosure Letter"):
SECTION 2.1 Organization, Standing And Power of Company. The Company is a
corporation duly organized and validly existing under the laws of Ohio and has
the requisite corporate power and authority to carry on its business as now
being conducted. The Company is duly qualified or licensed to do business as a
corporation and is in good standing (or the local law equivalent) in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a material adverse effect on
the business, properties, assets, financial condition or results of operations
of the Company and the Company Subsidiaries (as defined below) taken as a whole
(a "Company Material Adverse Effect"). Schedule 2.1 of the Company Disclosure
Letter sets forth each jurisdiction in which the Company is qualified or
licensed to do business, as well as all assumed names under which the Company
conducts business in such jurisdictions. The Company has previously delivered to
ERP complete and correct copies of its Articles of Incorporation and Code of
Regulations, in each case, as amended or supplemented to the date of this
Agreement.
SECTION 2.2 Company Subsidiaries . Except as otherwise provided in the
Company Disclosure Letter:
(a) Schedule 2.2 of the Company Disclosure Letter sets forth:
(i) each subsidiary of the Company (each a "Company Subsidiary");
(ii) the legal form of each Company Subsidiary, including the
state or country of formation;
(iii) the identity and ownership interest of each owner of such
Company Subsidiary, including but not limited to the amount of
securities of such Company Subsidiary owned by such owner;
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(iv) each jurisdiction in which each Company Subsidiary is
qualified or licensed to do business; and
(v) each assumed name under which each Company Subsidiary
conducts business in any jurisdiction.
As used in this Agreement, "Subsidiary" of any Person means any corporation,
partnership, limited liability company, joint venture or other legal entity of
which such Person (either directly or through or together with another
Subsidiary of such Person) owns a majority of any of the capital stock or other
equity interests of such corporation, partnership, limited liability company,
joint venture or other legal entity. As used herein, "Person" or "person" means
an individual, corporation, partnership, limited liability company, joint
venture, association, trust, unincorporated organization or any other legal
entity.
(b) All the outstanding shares of capital stock of each Company Subsidiary
that is a corporation have been validly issued and are (A) fully paid and
nonassessable, (B) owned by the Company or by another Company Subsidiary, and
(C) owned free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens")
other than restrictions on transfer imposed by federal or state securities laws
or regulations, and all equity interests in each Company Subsidiary that is a
partnership, joint venture, limited liability company or trust which are owned
by the Company, by another Company Subsidiary or by the Company and another
Company Subsidiary are owned free and clear of all Liens other than restrictions
on transfer imposed by federal or state securities laws and regulations and by
the operating agreement of any such Company Subsidiary that is a limited
liability company. Each Company Subsidiary that is a corporation is duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted, and each Company Subsidiary that is a
partnership, limited liability company or trust is duly organized and validly
existing under the laws of its jurisdiction of organization and has the
requisite power and authority to carry on its business as now being conducted.
Each Company Subsidiary is duly qualified or licensed to do business and, with
respect to each Company Subsidiary that is a corporation, is in good standing
(or the local law equivalent) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed, individually or in the aggregate, would not have a
Company Material Adverse Effect. True and correct copies of the Articles of
Incorporation, Codes of Regulations, Bylaws, partnership agreements, joint
venture and operating agreements or similar organizational documents of each
Company Subsidiary, as amended to the date of this Agreement, have been
previously delivered to ERP.
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SECTION 2.3 Capital Structure.
(a) As of the date hereof, the authorized shares of capital stock of the
Company consist of (i) 15,000,000 shares of Common Stock (which includes all
restricted stock) of which 4,803,198 are issued and outstanding and (ii) 100,000
shares of preferred stock, none of which are issued and outstanding. As of the
date hereof, 677,638 shares of Common Stock were reserved for issuance but not
issued under the Company Stock Option Plans. On the date hereof, except as set
forth in this Section 2.3 or Schedule 2.3 of the Company Disclosure Letter, no
Common Stock or other voting securities of the Company were issued, reserved for
issuance or outstanding.
(b) Set forth in Schedule 2.3 of the Company Disclosure Letter is a true
and complete list as of the date hereof of each outstanding incentive or
nonqualified stock option outstanding under the Company Stock Option Plans and a
total thereof, all agreements to issue shares of Restricted Stock and the amount
and terms of all outstanding shares of restricted stock issued by the Company.
(c) All outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable and not subject to, and were not issued in
violation of, any preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company, or assets of any other entities exchangeable
into Common Stock having the right to vote on any matters on which shareholders
of the Company may vote.
(d) Except as set forth in this Section 2.3 or in Schedule 2.3 of the
Company Disclosure Letter, as of the date of this Agreement there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or any
Company Subsidiary is a party or by which such entity is bound, obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock, voting securities
or other ownership interests of the Company or any Company Subsidiary or
obligating the Company or any Company Subsidiary to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking.
(e) Except as set forth in Schedule 2.3 of the Company Disclosure Letter,
all dividends or distributions on Common Stock which have been authorized or
declared prior to the date of this Agreement have been paid in full.
2.4 SECTION Other Interests . Except as set forth in Schedule 2.2 or 2.4 of
the Company Disclosure Letter, neither the Company nor any Company Subsidiary
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, limited liability company, joint venture,
business trust or entity (other than investments in short-term investment
securities). With respect to such interests, the Company and each such Company
9
Subsidiary owns such interests free and clear of all Liens, pledges, security
interests, claims, options or other encumbrances. With respect to such
interests, neither the Company nor any of the Company Subsidiaries is in breach
in any material respect of any provision of any agreement, document or contract
governing its rights in or to the interests owned or held by it, all of which
agreements, documents and contracts are (a) set forth on the Company Disclosure
Letter, (b) unmodified except as described therein and (c) in full force and
effect. To the Knowledge of Company (as defined in Section 2.23), the other
parties to such agreements, documents or contracts are not in any material
breach of any of their respective obligations under such agreements, documents
or contracts.
2.5 SECTION Authority; Noncontravention; Consents .
(a) The Company has the requisite power and authority to enter into this
Agreement and, subject to the affirmative vote of holders of at least a majority
of the outstanding Common Stock entitled to vote thereon to approve the Merger
(the "Company Shareholder Approval"), to consummate the transactions
contemplated by this Agreement to which the Company is a party. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of the Company or any Company
Subsidiary, including the Special Committee of the Company's Board, subject to
the Company Shareholder Approval. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
(b) Except as set forth in Schedule 2.5 of the Company Disclosure Letter,
the execution and delivery of this Agreement by the Company do not, and the
consummation of the transactions contemplated by this Agreement by the Company
and compliance by the Company with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to loss of a material
benefit under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any Company Subsidiary under, (i) the Articles of
Incorporation or Code of Regulations, in each case as amended or supplemented to
the date of this Agreement, of the Company or the comparable charter or
organizational documents or partnership or similar agreement (as the case may
be) of any Company Subsidiary, in each case as amended or supplemented to the
date of this Agreement, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement, instrument,
permit, concession, franchise or license to which the Company or any Company
Subsidiary is a party or their respective properties or assets are bound or
(iii) subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation (collectively, "Laws") applicable to the Company or any Company
Subsidiary, or their respective properties or assets, other than, in the case of
clause (ii) or (iii), any such conflicts, violations, defaults, rights, loss or
Liens that individually or in the aggregate would not (x) have a Company
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Material Adverse Effect or (y) prevent the consummation of the transactions
contemplated by this Agreement. Except as set forth on Schedule 2.5 of the
Company Disclosure Letter, no consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or local government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to the Company or any Company Subsidiary in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated by this
Agreement, except for (i) the filing with the SEC of (x) materials relating to
the transactions contemplated by this Agreement including, but not limited to
the Proxy Statement and (y) such reports under Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (ii) the acceptance for record of the Certificate of Merger by the
Ohio Secretary of State and post-closing filings of the said Certificate of
Merger or other documents with the secretaries of state of other jurisdictions
in which the Company is qualified to do business as a foreign corporation, (iii)
the pre-merger notification of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR Act"); and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations and filings (A) as are set
forth in Schedule 2.5 of the Company Disclosure Letter or (B) which, if not
obtained or made, would not prevent or delay in any material respect the
consummation of any of the transactions contemplated by this Agreement or
otherwise prevent the Company or any Company Subsidiary from performing its
obligations under this Agreement in any material respect or have, individually
or in the aggregate, a Company Material Adverse Effect.
SECTION 2.6 SEC Documents; Financial Statements; Undisclosed Liabilities .
The Company has filed all required reports, schedules, forms, statements and
other documents with the SEC since February 7, 1996 through the date hereof (the
"Company SEC Documents"). Schedule 2.6 of the Company Disclosure Letter contains
a complete list (without exhibits) of all Company SEC Documents filed by Company
with the SEC since February 7, 1996 and on or prior to the date of this
Agreement. All of the Company SEC Documents (other than preliminary material),
as of their respective filing dates, or as of the date of the last amendment
thereof (if amended after filing), complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act and, in each case, the rules and
regulations promulgated thereunder applicable to such Company SEC Documents.
None of the Company SEC Documents at the time of filing contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except to the
extent such statements have been modified or superseded by later Company SEC
Documents filed on a non- confidential basis prior to the date of this
Agreement. The consolidated financial statements of the Company included in the
Company SEC Documents (which, solely for purposes of this sentence, shall be
deemed to include the Company's annual report on Form 10-K for the fiscal year
ended February 29, 2000, as of the date filed with the SEC) complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
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(except, in the case of unaudited statements, as permitted by the applicable
rules and regulations of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented, in accordance with the applicable requirements of GAAP and
the applicable rules and regulations of the SEC in all material respects, the
consolidated financial position of the Company and the consolidated Company
Subsidiaries, taken as a whole, as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments, any other
adjustments described therein and the fact that certain information and notes
have been condensed or omitted in accordance with the Exchange Act). Schedule
2.6 of the Company Disclosure Letter sets forth all Company Subsidiaries which
are not consolidated for accounting purposes as of the date hereof. Except for
liabilities and obligations set forth in the Company SEC Documents or in
Schedule 2.6 of the Company Disclosure Letter, neither the Company nor any of
the Company Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company or in the notes thereto and
which, individually or in the aggregate, would have a Company Material Adverse
Effect, after taking into account any assets acquired or services provided in
connection with the incurrence of such liabilities or obligations.
SECTION 2.7 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Documents, Schedule 2.7 of the Company Disclosure Letter or
Schedule 2.7A of the written letter dated May __, 2000, signed by the Chairman
of the Board or the President of the Company, in his capacity as such, and
previously delivered by the Company to ERP (the "Supplemental Disclosure
Letter"), since the date of the most recent audited financial statements
included in the Company SEC Documents (the "Company Financial Statement Date")
the Company and the Company Subsidiaries have conducted their business only in
the ordinary course (taking into account prior practices, including the
acquisition of properties and issuance of securities) and there has not been (a)
any material adverse change in the business, financial condition or results of
operations of the Company and the Company Subsidiaries taken as a whole (a
"Company Material Adverse Change"), nor has there been any occurrence or
circumstance that with the passage of time would reasonably be expected to
result in a Company Material Adverse Change, (b) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any Common Stock, (c) any split, combination or
reclassification of any Common Stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for, or giving the right to acquire by exchange or exercise, shares of its
beneficial interest or any issuance of an ownership interest in, any Company
Subsidiary except as contemplated by this Agreement, (d) any damage, destruction
or loss, whether or not covered by insurance, that has or would have caused or
created a Company Material Adverse Effect, (e) any change made prior to the date
of this Agreement in accounting methods, principles or practices by the Company
or any Company Subsidiary materially affecting its assets, liabilities or
business, except insofar as may have been disclosed in Company SEC Documents or
required by a change in GAAP, or (f) any amendment of any employment,
consulting, severance, retention or any other agreement between the Company and
any officer or director of the Company.
12
SECTION 2.8 Litigation. Except as disclosed in the Company SEC Documents,
Schedule 2.8 or Schedule 2.9 of the Company Disclosure Letter, Schedule 2.8A of
the Supplemental Disclosure Letter, and other than personal injury and other
routine tort litigation arising from the ordinary course of operations of the
Company and the Company Subsidiaries (a) which are covered by adequate insurance
or (b) for which all material costs and liabilities arising therefrom are
reimbursable pursuant to common area maintenance or similar agreements, there is
no suit, action or proceeding pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any Company Subsidiary that,
individually or in the aggregate, could reasonably be expected to (i) have a
Company Material Adverse Effect or (ii) prevent the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any Company Subsidiary having, or which could reasonably
be expected to have, any such effect. Notwithstanding the foregoing, (y)
Schedule 2.8 of the Company Disclosure Letter sets forth each and every
uninsured claim that the Company has Knowledge of involving a potential dollar
cost to the Company in excess of $50,000 and each and every equal employment
opportunity claim, claim relating to sexual harassment and/or discrimination and
claim threatened as of the date hereof, in each case with a brief summary of
such claim or threatened claim and (z) no claim is pending or has been made
since February 7, 1996 under any directors' or officers' liability insurance
policy maintained at any time by the Company or any of the Company Subsidiaries.
SECTION 2.9 Properties.
(a) Schedule 2.9 of the Company Disclosure Letter identifies all real
property owned by the Company and the Company Subsidiaries (the "Company
Properties"). Except as provided in Schedule 2.9 of the Company Disclosure
Letter, the Company and the Company Subsidiaries set forth on Schedule 2.2 of
the Company Disclosure Letter owns fee simple title to their respective Company
Properties. Except as set forth on Schedule 2.9, all such properties are owned
in each case free and clear of liens, mortgages or deeds of trust, claims
against title, charges which are liens, security interests or other encumbrances
on title securing monetary obligations ("Encumbrances"). Except as set forth in
Schedule 2.2, Schedule 2.9 or Schedule 2.18 of the Company Disclosure Letter, no
other Person has any ownership interest in any of the Company Properties, and
any such ownership interest so scheduled does not materially detract from the
value of, or materially interfere with the present use of, any of the Company
Properties subject thereto or affected thereby. The Company Properties owned by
the Company are not subject to any rights of way, written agreements, laws,
ordinances and regulations affecting building use or occupancy, or reservations
of an interest in title (collectively, "Property Restrictions") or other
Encumbrances, except for (i) Encumbrances and Property Restrictions set forth in
the Company Disclosure Letter, (ii) Property Restrictions imposed or promulgated
by law or any governmental body or authority with respect to real property,
including zoning regulations, provided they do not materially adversely affect
the current use of any Company Property, (iii) Encumbrances and Property
Restrictions of record, which Encumbrances and Property Restrictions, in any
13
event, do not materially detract from the value of, or materially interfere with
the present use of, any of the Company Properties subject thereto or affected
thereby, (iv) real estate taxes and assessments which constitute a lien but are
not yet due and payable and (v) mechanics', carriers', workmen's, repairmen's
liens, other Encumbrances and Property Restrictions, if any, which, individually
or in the aggregate, do not materially detract from the value of or materially
interfere with the present use of any of the Company Properties subject thereto
or affected thereby, and do not otherwise materially impair business operations
conducted by the Company and the Company Subsidiaries.
(b) Schedule 2.9 of the Company Disclosure Letter also identifies all real
property leased by the Company and the Company Subsidiaries and used as
showrooms, warehouses or office space (the "Company Leased Properties"). Except
as set forth in Schedule 2.9, all such properties are leased pursuant to leases
that are in full force and effect on the date of this Agreement, with the
Company and the Company Subsidiaries not being in default under such leases and
with the lessors thereof, to the Knowledge of the Company, also not being in
default thereunder. The Company Leased Properties are not, to the Knowledge of
the Company, subject to any Property Restrictions or other Encumbrances, except
for (i) Encumbrances and Property Restrictions set forth in the Company
Disclosure Letter, (ii) Property Restrictions imposed or promulgated by law or
any governmental body or authority with respect to real property, including
zoning regulations, provided they do not materially adversely affect the current
use of any Company Leased Property, (iii) Encumbrances and Property Restrictions
of record, which Encumbrances and Property Restrictions, in any event, do not
materially detract from the value of, or materially interfere with the present
use of, any of the Company Leased Properties subject thereto or affected
thereby, (iv) real estate taxes and assessments which constitute a lien but are
not yet due and payable and (v) mechanics', carriers', workmen's, repairmen's
liens, other Encumbrances and Property Restrictions, if any, which, individually
or in the aggregate, do not materially detract from the value of or materially
interfere with the present use of any of the Company Leased Properties subject
thereto or affected thereby, and do not otherwise materially impair business
operations conducted by the Company Subsidiaries.
(c) Except as provided in Schedule 2.9 of the Company Disclosure Letter,
the Company has no Knowledge that, any certificate, permit or license from any
governmental authority having jurisdiction over any of the Company Properties
owned by the Company or any agreement, easement or other right which is
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Company Properties owned by the Company or which is
necessary to permit the lawful use and operation of all driveways, roads and
other means of egress and ingress to and from any of the Company Properties
owned by the Company has not been obtained and is not in full force and effect,
or of any pending threat of modification or cancellation of any of same; of any
written notice of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement materially and adversely affecting
any of the Company Properties owned by the Company issued by any governmental
authority; of any material structural defects relating to any Company Property
owned by the Company which costs more than $50,000 to repair; of any Company
14
Property owned by the Company whose building systems are not in working order in
any material respect and costs more than $50,000 to repair; of any physical
damage to any Company Property owned by the Company in excess of $50,000 for
which there is no insurance in effect covering the cost of the restoration; of
any current renovation or uninsured restoration underway to any Company Property
owned by the Company the cost of which exceeds $50,000; or of items referred to
in Section 2.9(c)(iii)-2.9(c)(iv) which aggregate for the Company and the
Company Subsidiaries more than $250,000.
(d) Except as set forth in Schedule 2.9 of the Company Disclosure Letter,
neither the Company nor any of the Company Subsidiaries has received any written
notice to the effect that (i) any condemnation or rezoning proceedings are
pending or threatened with respect to any of the Company Properties or (ii) any
zoning, building or similar law, code, ordinance, order or regulation is or will
be violated in any material respect for any property by the continued
maintenance, operation or use of any buildings or other improvements on any of
the Company Properties or by the continued maintenance, operation or use of the
parking areas.
(e) Schedule 2.9 of the Company Disclosure Letter contains a printout which
is accurate in all material respects as of January 11, 2000 of all apartment
units leased or otherwise occupied by the Company, and the Company Subsidiaries
and used in the Company's corporate housing business activities (the "Corporate
Housing Units"), which computer printout is true and correct in all material
respects as of January 11, 2000. Except as set forth on Schedule 2.9, all such
Corporate Housing Units are leased pursuant to leases that are in full force and
effect as of January 11, 2000, with the Company and the Company Subsidiaries not
being in default under any material number of such leases, taking the Corporate
Housing Units as a whole (except insofar as such leases may have been acquired
by the Company and the Company Subsidiaries without compliance with consent to
assignment provisions included in the leases), and with the lessors thereof, to
the Knowledge of the Company, also not being in default under any material
number of such leases, taking the Corporate Housing Units as a whole.
(f) The Company and each of the Company Subsidiaries have good and
sufficient title to all their personal and non-real properties and assets
reflected in their books and records as being owned by them (including those
reflected in the consolidated balance sheet of the Company as of August 31,
1999, except as since sold or otherwise disposed of in the ordinary course of
business), free and clear of all liens and encumbrances, except such
Encumbrances reflected on Schedule 2.9 or Schedule 2.18 of the Company
Disclosure Letter or on the consolidated balance sheet of Company as of August
31, 1999, and the notes thereto, and except for liens for current taxes not yet
due and payable, and Liens or Encumbrances which are normal to the business of
the Company and the Company Subsidiaries and are not, in the aggregate, material
in relation to the assets of Company on a consolidated basis and except also for
such imperfections of title, easement and encumbrances, if any, as do not
materially interfere with the present use of the properties subject thereto or
affected thereby, or otherwise materially impair the consolidated business
operations of the Company. (g)ab Except as set forth in Schedule 2.9 of the
Company Disclosure Letter, no Company Property owned by the Company is currently
under development or subject to any agreement with respect to development, and
neither the Company nor any Company Subsidiary shall enter into any such
agreements between the date hereof and the Effective Time without the prior
written approval of ERP.
15
2.10 SECTION Environmental Matters . The Company has delivered to ERP a
true and complete copy of the environmental reports by third-party consulting
firms listed on Schedule 2.10 of the Company Disclosure Letter (the "Company
Environmental Reports"). To the Company's Knowledge, the Company Environmental
Reports constitute all final environmental reports (including, without
limitation, all final versions of environmental investigations and testing or
laboratory analysis made by or on behalf of the Company or any of the Company
Subsidiaries) with respect to the Company Properties owned by the Company in the
possession of the Company or any Company Subsidiary. With respect to each
Company Property owned by the Company, except for any condition that
individually or in the aggregate would not be reasonably likely to have a
Company Material Adverse Effect, (a) no Hazardous Substances (as defined below)
have been used, stored, manufactured, treated, processed or transported to or
from any such Company Property owned by the Company except as necessary to the
conduct of business and in compliance with Environmental Laws (as defined
below); (b) no unlawful spills, releases, discharges or disposals of Hazardous
Substances have occurred or are presently occurring on or from such Company
Property owned by the Company; (c) such Company Property owned by the Company
and the business conducted thereon are not in violation of Environmental Laws;
and (d) the Company and the Company Subsidiaries have not received and do not
reasonably expect to receive any notice of potential responsibility, letter of
inquiry or notice of alleged liability under any Environmental Law from any
Person regarding such Company Property or the business conducted thereon,
provided, however, that with respect to any Company Property covered by an
Environmental Report, the representation contained in this Section 2.10 covers
only that period following the date of such Environmental Report. For the
purposes of this Section 2.10 only, "Company Properties" shall be deemed to
include all property formerly owned by the Company or the Company Subsidiaries;
solely, however, as to the period of time when such property was so owned by the
Company or the Company Subsidiaries.
"Environmental Laws" shall mean any applicable statute, code, enactment,
ordinance, rule, regulation, permit, consent, approval, authorization, judgment,
order, common law rule (including without limitation the common law respecting
nuisance and tortious liability), decree, injunction, or other requirement
having the force and effect of law, whether local, county, state, territorial or
national, at the date of this Agreement or at any prior time in force or effect
relating to:
(a) emissions, discharges, spills, releases or threatened releases of
Hazardous Substances into ambient air, surface water, groundwater,
watercourses, publicly or privately owned treatment works, drains, sewer
systems, wetlands, septic systems or onto land;
16
(b) the use, treatment, storage, disposal, handling, manufacturing,
transportation or shipment of Hazardous Substances;
(c) the regulation of storage tanks; or
(d) otherwise relating to pollution or the protection the environment.
"Hazardous Substances" shall mean all substances, wastes, pollutants,
contaminants and materials regulated or defined or designated as hazardous,
extremely or imminently hazardous, dangerous, or toxic pursuant to any law, by
any local, county, state, territorial or federal governmental authority, or with
respect to which such a governmental authority otherwise requires environmental
investigation, monitoring, reporting, or remediation; including, but not limited
to,
(a) all substances, wastes, pollutants, contaminants and materials
regulated, or defined or designated as hazardous, extremely or imminently
hazardous, dangerous or toxic, under the following federal statutes and
their state counterparts, as well as their statutes' implementing
regulations: the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. section 9601 et. seq., the Resource Conservation
and Recovery Act, 42 U.S.C. section 6901 et. seq., the Toxic Substances
Control Act, 15 U.S.C. section 2601 et. seq., the Clean Water Act, 33
U.S.C. section 1251 et. seq., the Clean Air Act, 42 U.S.C. section 7401 et.
seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C.
section 11011 et. seq., the Safe Drinking Water Act, 33 U.S.C. section 300f
et. seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
section 136 et. seq., and the Hazardous Materials Transportation Act, 49
U.S.C. section 1501 et. seq.;
(b) petroleum and petroleum products including crude oil and any
fractions thereof;
(c) natural gas, synthetic gas, and any mixtures thereof; and
(d) radon, radioactive substances, asbestos, urea formaldehyde,
polychlorinated biphenyls and electromagnetic field radiation.
SECTION 2.11 Related Party Transactions. Set forth in Schedule 2.11 of the
Company Disclosure Letter is a list of all arrangements, agreements and
contracts entered into by the Company or any of the Company Subsidiaries under
which continuing obligations exist with (a) any consultant (other than a
consultant entitled to receive less than $10,000 annually from the Company or
any Company Subsidiary, provided, however, that if the total amount owed to
consultants by the Company and the Company Subsidiaries exceeds $100,000
annually, all such agreements shall be set forth in Schedule 2.11), (b) any
person who is an officer, director or Affiliate (as defined below) of the
Company or any of the Company Subsidiaries, any member of the "immediate family"
17
(as such term is defined in Item 404 of Regulation S-K promulgated under the
Securities Act) of any of the foregoing or any entity of which any of the
foregoing is an Affiliate or (c) any person who acquired Common Stock in a
private placement within three years preceding the date hereof, except those of
a type available to the Company employees generally. To the extent in writing,
such documents, copies of all of which have previously been delivered or made
available to ERP, are listed in Schedule 2.11 of the Company Disclosure Letter.
As used in this Agreement, the term "Affiliate" shall have the same meaning as
such term is defined in Rule 405 promulgated under the Securities Act.
SECTION 2.12 Employee Benefits . As used herein, the term "Company Employee
Plan" includes any pension, retirement, savings, disability, medical, dental,
health, life, death benefit, group insurance, profit sharing, deferred
compensation, stock option, stock loan, bonus, incentive, vacation pay, tuition
reimbursement, severance pay, or other employee benefit plan, trust, agreement,
contract, arrangement, policy or commitment (including, without limitation, any
pension plan, as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended and the rules and regulations promulgated
thereunder ("ERISA") ("Pension Plan"), and any welfare plan as defined in
Section 3(1) of ERISA ("Welfare Plan")), whether any of the foregoing is funded,
insured or self-funded, written or oral, (i) sponsored or maintained by the
Company or Company Subsidiaries (each a "Controlled Group Member") and covering
any Controlled Group Member's active or former employees (or their
beneficiaries), (ii) to which any Controlled Group Member is a party or by which
any Controlled Group Member (or any of the rights, properties or assets thereof)
is bound or (iii) with respect to which any current Controlled Group Member may
otherwise have any material liability (whether or not such Controlled Group
Member still maintains such Company Employee Plan). Each Company Employee Plan
is listed on Schedule 2.12. With respect to the Company Employee Plans:
(a) Except as disclosed in the Company SEC Documents or in Schedule 2.12 of
the Company Disclosure Letter, no Controlled Group Member has any continuing
liability under any Welfare Plan which provides for continuing benefits or
coverage for any participant or any beneficiary of a participant after such
participant's termination of employment, except as may be required by section
4980B of the Code or Section 601 (et seq.) of ERISA, or under any applicable
state law, and at the expense of the participant or the beneficiary of the
participant.
(b) Each Company Employee Plan complies in all material respects with the
applicable requirements of ERISA and any other applicable law governing such
Company Employee Plan, and each Company Employee Plan has at all times been
properly administered in all material respects in accordance with all such
requirements of law, and in accordance with its terms and the terms of any
applicable collective bargaining agreement to the extent consistent with all
such requirements of law. Each Pension Plan which is intended to be qualified is
qualified under Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service (the "IRS") stating that
such Plan meets the requirements of Section 401(a) of the Code and that the
trust associated with such Plan is tax exempt under Section 501(a) of the Code
and no event has occurred which would be likely to jeopardize the qualified
status of any such plan or the tax exempt status of any such trust under
18
Sections 401(a) and Section 501(a) of the Code, respectively. No lawsuits,
claims (other than routine claims for benefits) or complaints to, or by, any
person or governmental entity have been filed or are pending, the Company has
received no notice of such a lawsuit, claim or complaint and, to the Knowledge
of the Company, there is no fact or contemplated event which would be expected
to give rise to any such lawsuit, claim (other than routine claims for benefits)
or complaint with respect to any Company Employee Plan. Without limiting the
foregoing, except as disclosed on Schedule 2.12 of the Company Disclosure
Letter, the following are true with respect to each Company Employee Plan:
(i) except for those not yet required to be filed or distributed, all
Controlled Group Members have filed or caused to be filed every material
return, report, statement, notice, declaration and other document required
by any law or governmental agency, federal, state and local (including,
without limitation, the IRS and the United States Department of Labor) with
respect to each such Company Employee Plan, each of such filings has been
complete and accurate in all material respects and no Controlled Group
Member has incurred any material liability in connection with such filings;
(ii) except for those not yet required to be filed or distributed, all
Controlled Group Members have delivered or caused to be delivered to every
participant, beneficiary and other party entitled to such material, all
material plan descriptions, returns, reports, schedules, notices,
statements and similar materials, including, without limitation, summary
plan descriptions and summary annual reports, as are required under Title I
of ERISA, the Code, or both, and no Controlled Group Member has incurred
any material liability in connection with such deliveries;
(iii) all contributions and payments with respect to the Company
Employee Plans that are required to be made by a Controlled Group Member
with respect to periods ending on or before the Closing Date (including
periods from the first day of the current plan or policy year to the
Closing Date) have been, or will be, made or accrued before the Closing
Date in accordance with the appropriate plan document, actuarial report,
collective bargaining agreements or insurance contracts or arrangements or
as otherwise required by ERISA or the Code;
(iv) with respect to each such Company Employee Plan, to the extent
applicable, the Company has delivered to ERP true and complete copies of
(A) current plan documents, or any and all other documents that establish
the existence of the current plan, trust, arrangement, contract, policy or
commitment and all amendments thereto, (B) the most recent determination
letter, if any, received from the IRS, (C) the three most recent Form 5500
Annual Report (and all schedules and reports relating thereto) and
actuarial reports and (D) all related trust agreements, insurance contract
or other funding agreements that implement each such Company Employee Plan.
19
(c) With respect to each Company Employee Plan, there has not occurred, and
no person or entity is contractually bound to enter into, any "prohibited
transaction" within the meaning of Section 4975(c) of the Code or Section 406 of
ERISA, which transaction is not exempt under Section 4975(d) of the Code or
Section 408 of ERISA.
(d) Except as disclosed in Schedule 2.12, no Controlled Group Member has
maintained or been obligated to contribute to any Company Employee Plan subject
to Code Section 412 or Title IV of ERISA. With respect to each Company Employee
Plan set forth on Schedule 2.12A, the Company represents that each such Company
Employee Plan has been completely terminated in accordance with all Code and
ERISA requirements for a "standard termination" (as defined in 4041(b) of
ERISA), as applicable on the termination date.
(e) Except as set forth in Schedule 2.12 of the Company Disclosure Letter,
with respect to each pension plan maintained by any Controlled Group Member,
such Plans provide the Plan Sponsor the authority to amend or terminate the plan
at any time, subject to applicable requirements of ERISA and the Code.
SECTION 2.13 Employee Matters . Schedule 2.13 of the Company Disclosure
Letter lists the employee handbooks of the Company and each of the Company
Subsidiaries currently in effect. A copy of each such employee handbook has
previously been made available to ERP. Except as set forth in Schedule 2.13 of
the Company Disclosure Letter, such handbooks fairly and accurately summarize
all material employee policies, vacation policies and payroll practices of the
Company and the Company Subsidiaries. Neither the Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or other labor
organization, nor has the Company or any of the Company Subsidiaries agreed that
any unit of their employees is appropriate for collective bargaining. No union
or other labor organization has been certified as bargaining representative for
any of the Company's employees. To the Knowledge of the Company there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of the Company or
any of the Company Subsidiaries.
SECTION 21.14 Taxes.
(a) Tax Returns. For all tax years ending on or after February 28,
1995, the Company and each of the Company Subsidiaries has been or will be
included in the Affiliated Group (as defined below) and, to the extent
eligible to do so, has been or will be included in the consolidated federal
income tax returns (and any analogous combined, consolidated or unitary
group defined and required under state, local, or foreign income Tax law)
of the Company (the "Consolidated Group"). The Company and each of the
Company Subsidiaries has filed separate, consolidated or combined tax
returns, as appropriate, under state, local, or foreign income tax law as
required. Except as set forth on Schedule 2.14(a), all Tax Returns for tax
years ending on or after February 28, 1995, required to have been filed on
or prior to the date hereof or the Closing Date by the Consolidated Group,
the Company or any Company Subsidiary have been filed on or prior to the
due date for such Tax Return and such Tax Returns are true and correct in
20
all material respects. In particular, the foregoing Tax Returns are not
subject to penalties under Section 6662 of the Code, relating to
accuracy-related penalties (or any corresponding provision of the state,
local or foreign Tax law) or any predecessor provision of law. Except as
set forth on Schedule 2.14(a), an extension of time within which to file
any Tax Return that has not been filed has not been requested or granted.
As used in this Agreement, the term "Affiliated Group" shall mean an
affiliated group as defined in Section 1504 of the Code (or any analogous
combined, consolidated or unitary group defined under state, local or
foreign income Tax law) of which the Company is or has been a member.
(b) Payment of Taxes. With respect to all amounts of Taxes imposed on
the Consolidated Group, the Company, any Company Subsidiary or for which
the Consolidated Group, the Company or any Company Subsidiary is or could
be liable, whether to taxing authorities or to other persons or entities
(as, for example, under Tax allocation agreements), with respect to all
taxable periods or portions of periods ending on or before the Closing
Date, all applicable Tax laws and agreements have been fully complied with
except where the failure to comply would not have a Material Adverse Effect
on the Company and all such amounts required to be paid by the Consolidated
Group, the Company or any Company Subsidiary to taxing authorities or
others on or before the Closing Date have been paid, or have been accrued
for or fully reserved against on the Financial Statements.
(c) Audit History. Except as set forth on Schedule 2.14(c), all
federal income tax returns of the Consolidated Group for taxable years
ended prior to the date hereof, that have been examined by the Internal
Revenue Service and any deficiencies or assessments, including interest and
penalties thereon, claimed or made as a result of those examinations have
been paid or are fully reserved against on the Financial Statements. Except
as set forth on Schedule 2.14(c), no issues have been raised or, to the
Knowledge of the Company or any of the Company Subsidiaries, are currently
pending by any taxing authority in connection with any of the Tax Returns
of the Consolidated Group or the Company or any of the Company
Subsidiaries. Except as set forth on Schedule 2.14(c), to the Knowledge of
the Company, no issue has been raised by any taxing authority in any audit
of the Company or any member of the Consolidated Group that, if raised with
respect to any other period not so audited, could be expected to result in
a proposed deficiency for any period so audited. Except as set forth on
Schedule 2.14(c), no waivers of statutes of limitation with respect to the
Tax Returns have been given by or requested from the Consolidated Group,
any members of the Consolidated Group, the Company or any Affiliates of
such parties. Schedule 2.14(c) sets forth, with respect to the taxable
years of the Consolidated Group, any members of the Consolidated Group, the
Company and any of the Company Subsidiaries, those years for which
examinations have not been initiated, and those years for which required
Tax Returns have not yet been filed. Except to the extent shown on Schedule
2.14(c), all deficiencies asserted or assessments made as a result of any
examinations have been fully paid.
21
(d) Liens. There are no liens for Taxes (other than for current Taxes
not yet due and payable) on any of the assets of the Company or any of the
Company Subsidiaries.
(e) Tax-Sharing or Allocation Agreements. Any Tax-indemnity,
Tax-sharing, Tax allocation or similar agreements of the Company or any of
the Company Subsidiaries and any liability or obligation of the Company or
any of the Company Subsidiaries under such agreements will terminate as of
the Closing Date and be of no further force or effect. All such agreements
to which the Company or any of the Company Subsidiaries is a party and are
now in effect are listed on Schedule 2.14(e). Any payments pursuant to such
agreements that were not reflected in the Financial Statements, are
disclosed on Schedule 2.14(e).
(f) Prior Affiliated Groups. Except as set forth on Schedule 2.14(f),
and except for the Consolidated Group, neither the Company nor any of the
Company Subsidiaries has ever been a member of an Affiliated Group of
corporations.
(g) Tax Elections and Methods of Accounting. Except as set forth on
Schedule 2.14(c), after the date hereof, no election with respect to Taxes
of the Company will be made without the written consent of ERP which
consent will not be unreasonably withheld and, except as required by law,
no method of accounting of the Company will be changed without the written
consent of ERP, which consent will not be unreasonably withheld.
(h) Certain Consents and Elections. (i) Neither the Company nor any
Affiliated Group in which the Company is or was a member has filed a
consent pursuant to the collapsible corporation provisions of Section
341(f) of the Code (or any corresponding provision of state, local, or
foreign income Tax law) or agreed to have Section 341(f)(2) of the Code (or
any corresponding provision of state, local, or foreign income Tax law)
apply to any disposition of any asset owned by the Company or any of the
Company Subsidiaries; (ii) none of the assets of the Company or any of the
Company Subsidiaries is property that is required to be treated as being
owned by any other person pursuant to the "safe harbor lease" provisions of
former Section 168(f)(8) of the Code; (iii) to the Knowledge of the
Company, none of the assets of the Company or any of the Company
Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h) of the Code; (iv) the Company or any of the Company Subsidiaries has
not made a deemed dividend election under Regulations Section
1.1502-32(f)(2) and has not made and will not make a consent dividend
election under Section 565 of the Code; (v) the Company or any of the
Company Subsidiaries has not agreed to make nor is it required to make any
adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise; and (vi) the Company or any of the Company
Subsidiaries has not been a member of an Affiliated Group that has filed an
election to discontinue filing consolidated returns pursuant to Revenue
Procedure 91-11.
22
(i) Parachute Payment. Neither the Company nor any Company Subsidiary
is a party to any agreement, contract, arrangement, or plan that has
resulted or would result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G or 4999
of the Code and the consummation of the transactions contemplated by this
Agreement will not result in any excise tax withholding.
(j) No Withholding. The transaction contemplated herein is not subject
to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code, or of any other tax withholding
provision of U.S. federal, state, local or foreign law.
(k) Existing Partnerships. Except as set forth on Schedule 2.14(k),
neither the Company nor any Company Subsidiary is a party to any joint
venture, partnership, or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(l) Copies of Tax Returns. The Company has true, correct and complete
copies of all income Tax Returns filed by the Company and each of the
Company Subsidiaries including copies of any Tax Returns filed by the
Consolidated Group as listed on Schedule 2.14(l).
(m) Deferred Income. As a result of the transactions contemplated
under this Agreement, the Company will not recognize any deferred income
under federal consolidated return regulations (or similar provisions, if
any, of state, local or foreign Tax laws), including, but not limited to,
the deferred intercompany transaction provisions of such federal
consolidated return regulations (or similar provisions, if any, of state,
local or foreign tax laws).
(n) Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
(i) The term "Tax" shall mean any federal, state, local or
foreign income, gross receipts, franchise, estimated, alternative
minimum, add-on minimum, sales, use, transfer, registration, value
added, excise, natural resources, severance, stamp, occupation,
premium, surplus lines, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, social
security, unemployment, disability, payroll, license, employee or
other withholding, or other tax, of any kind whatsoever, including any
interest, penalties or additions to tax or additional amounts in
respect to the foregoing; the foregoing shall include any transferee
or secondary liability for a Tax and any liability assumed by
agreement or arising as a result of being (or ceasing to be) a member
of any Affiliated Group (or being included or required to be included
in any Tax Return relating thereto);
24
(ii) The terms "Tax Return(s)" shall means returns, declarations,
reports, claims for refund, information returns or other documents
(including any related or supporting schedules, statements or
information) filed or required to be filed in connection with the
determination, assessment or collection of any Taxes of the
Consolidated Group, any members of the Consolidated Group, the
Company, any Company Subsidiary or any Affiliates of such parties or
the administration of any laws, regulations or administrative
requirements relating to any Taxes; and
(iii) The term "Code" shall mean the Internal Revenue Code of
1986, as amended, and all citations to the Code or to the regulations
promulgated thereunder shall include any amendments or any substitute
or successor provisions thereof.
SECTION 2.15 No Payments to Employees, Officers, Trustees or Directors.
Set forth in Schedule 2.3 and Schedule 2.15 of the Company Disclosure Letter is
a true and complete list of all cash and non-cash payments, rights to property
or other contract rights which may become payable, accelerated or vested to or
in each current or former employee, officer or director of the Company or any
Company Subsidiary as a result of the Merger. Except as described in Schedule
2.3, Schedule 2.7 or Schedule 2.15 of the Company Disclosure Letter, or as
otherwise provided for in this Agreement, there is no employment or severance
contract, or other agreement requiring payments, cancellation of indebtedness or
other obligation to be made on a change of control or otherwise as a result of
the consummation of any of the transactions contemplated by this Agreement, with
respect to any current or former employee, officer, trustee or director of the
Company or any Company Subsidiary.
SECTION 2.16 Brokers; Schedule of Fees And Expenses. Except as disclosed in
Schedule 2.16 of the Company Disclosure Letter, no broker, investment banker,
financial advisor or other person, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company or any Company Subsidiary.
A true and correct copy of all engagement letters executed by parties
disclosed on Schedule 2.16 of the Company Disclosure Letter have been delivered
to ERP prior to the date of this Agreement.
SECTION 2.17 Compliance With Laws . Except as disclosed in the Company SEC
Documents or in Schedule 2.6 or Schedule 2.17 of the Company Disclosure Letter,
neither the Company nor any of the Company Subsidiaries has violated or failed
to comply with any statute, law, ordinance, regulation, rule, judgment, decree
or order of any Governmental Entity applicable to its business, properties,
25
operations or the Merger, except to the extent that such violation or failure
would not have a Company Material Adverse Effect.
SECTION 2.18 Contracts; Debt Instruments .
(a) To the Knowledge of the Company, except as disclosed in the Company SEC
Documents or in Schedule 2.18 of the Company Disclosure Letter, there is no
contract or agreement that purports to limit in any material respect the names
under or the geographic location in which the Company or any Company Subsidiary
may conduct its business.
(b) Neither the Company nor any Company Subsidiary has received a written
notice that the Company or any Company Subsidiary is in violation of or in
default under (nor to the Knowledge of the Company does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any material loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other material contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties or
assets is bound, except as set forth in Schedule 2.18 of the Company Disclosure
Letter, nor to the Knowledge of the Company does such a violation or default
exist, except as set forth in Schedule 2.18 of the Company Disclosure Letter, or
to the extent that such violation or default, individually or in the aggregate,
would not have a Company Material Adverse Effect.
(c) (i)Except for any of the following expressly identified in Company
SEC Documents, Schedule 2.18 of the Company Disclosure Letter sets forth a
list of each loan or credit agreement, note, bond, mortgage, indenture and
any other agreement and instrument pursuant to which any Indebtedness of
the Company or any Company Subsidiary is outstanding or may be incurred
(collectively, the "Debt Documents"), as well as, with respect to the
Indebtedness evidenced by each Debt Document as of December 31, 1999, the
outstanding principal balance, the maturity date, the applicable interest
rate (including the method or formula for calculating any interest that is
not a fixed percentage of the principal balance) and the amount of or the
method or formula for calculating any Equity Participation (as defined
herein). For purposes of this Section 2.18, "Indebtedness" shall mean (1)
indebtedness for borrowed money, whether secured or unsecured, (2)
obligations under conditional sale or other title retention agreements
relating to property purchased by such person, (3) capitalized lease
obligations, (4) obligations under interest rate cap, swap, collar or
similar transaction or currency hedging transactions (valued at the
termination value thereof), (5) obligations to pay any equity kicker or
other participation in the operating cash flow, gross revenue or other
income from the real property or other asset of the Company or any Company
Subsidiary or in the gross, net or excess sale, financing, refinancing or
other capital proceeds from any such property or other asset (whether or
not in connection with any other Indebtedness)(each an "Equity
Participation") and (6) guarantees of any such indebtedness of any other
person.
26
(ii) The Company hereby represents and warrants that the Merger
will not cause a default or event of default under any item of
Indebtedness, except as set forth in Schedule 2.18 of the Company
Disclosure Letter, and will not require the consent of or requirement
to obtain the approval or confirmation as to any matter from the
holder of any such Indebtedness or any other person. For purposes of
this Section 2.18, "default" and/or "event of default" shall mean
that, immediately or after the giving of notice or the passage of time
(or both), such Indebtedness will not, either automatically or upon
the exercise of any right or option of the holder of such Indebtedness
or any other person, be accelerated or become due and payable in whole
or in part as a result of the consummation of the transactions
contemplated by this Agreement (including, without limitation, the
Merger).
(d) To the extent not set forth in response to the requirements of Section
2.18(c), Schedule 2.18 of the Company Disclosure Letter sets forth each interest
rate cap, interest rate collar, interest rate swap, currency hedging
transaction, and any other agreement relating to a similar transaction to which
the Company or any Company Subsidiary is a party or an obligor with respect
thereto.
(e) Except as set forth in Schedule 2.18 of the Company Disclosure Letter,
neither the Company nor any of the Company Subsidiaries is party to any
agreement which would restrict any of them from prepaying any of their
Indebtedness without penalty or premium at any time or which requires any of
them to maintain any amount of Indebtedness with respect to any of the Company
Properties.
(f) Schedule 2.18 of the Company Disclosure Letter lists all agreements
entered into by the Company or any of the Company Subsidiaries providing for the
sale of, or option to sell, any Company Properties owned by the Company or the
purchase of, or option to purchase, any real estate which are currently in
effect.
(g) Except as set forth in Schedule 2.18 of the Company Disclosure Letter,
neither the Company nor any Company Subsidiary has any continuing contractual
liability (i) for indemnification or otherwise under any agreement relating to
the sale of real estate previously owned, whether directly or indirectly, by the
Company or any Company Subsidiary, except for standard indemnification
provisions entered into in the normal course of business, (ii) to pay any
additional purchase price for any of the Company Properties owned by the
Company, or (iii) to make any reprorations or adjustments to prorations that may
previously have been made with respect to any property currently or formerly
owned by the Company.
(h) Except as set forth in Schedule 2.18 of the Company Disclosure Letter
there are no material outstanding contractual obligations of the Company or any
Company Subsidiary to make any investment in the form of a loan, capital
contribution or otherwise in any Company Subsidiary or any other Person. A true
and complete copy of each Note has previously been furnished to ERP.
27
SECTION 2.19 Opinion of Financial Advisor . The Company has received the
opinion of Friedman, Billings, Ramsey & Co., Inc. (the "Financial Advisor"),
dated as of May 10, 2000, satisfactory to the Company, and a signed copy of
which has been provided to ERP, to the effect that the consideration to be
received by the holders of the Shares pursuant to the Merger is fair, from a
financial point of view, to such holders.
SECTION 2.20 Investment Company Act of 1940. Neither the Company nor any of
the Company Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
SECTION 2.21 Trademarks, Patents And Copyrights. Except as set forth in
Schedule 2.21 of the Company Disclosure Letter, or to the extent the inaccuracy
of any of the following (or the circumstances giving rise to such inaccuracy)
individually or in the aggregate would not have a Company Material Adverse
Effect, the Company and each Company Subsidiary owns or possesses adequate
licenses or other legal rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, service marks,
trade secrets, applications for trademarks and for service marks, know-how and
other proprietary rights and information used or held for use in connection with
the business of the Company and the Company Subsidiaries as currently conducted
and the Company has no Knowledge of any assertion or claim challenging the
validity of any of the foregoing. Each of the Company's material patents, patent
rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and information used or
held for use in connection with the business of the Company and the Company
Subsidiaries as currently conducted is listed on Schedule 2.21 of the Company
Disclosure Letter. The conduct of the business of the Company and the Company
Subsidiaries as currently conducted does not and will not infringe in any way
any patent, patent right, license, trademark, trademark right, trade name, trade
name right, service mark, or copyright of any third party that, individually or
in the aggregate, could have a Company Material Adverse Effect. To the Company's
Knowledge, there are no infringements of any proprietary rights owned by or
licensed by or to the Company or any Company Subsidiary that individually or in
the aggregate could have a Company Material Adverse Effect.
SECTION 2.22 Insurance. Except as set forth on Schedule 2.22 of the Company
Disclosure Letter, each of the Company and the Company Subsidiaries are, and has
been continuously since the later of February 7, 1996 or the date upon which
Company acquired ownership of such Company Subsidiary, insured with insurers in
such amounts and against such risks and losses as are customary for companies
conducting the business as conducted by Company and the Company Subsidiaries
during such time period. Except as set forth on Schedule 2.22 of the Company
Disclosure Letter, neither the Company nor any Company Subsidiary has received
any written notice of cancellations or termination with respect to any material
insurance policy of the Company or any Company Subsidiary. The insurance
policies of the Company and each Company Subsidiary are valid and enforceable
policies in all material respects. Each insurance policy of the Company and the
Company Subsidiaries in effect on the date hereof and a summary of the terms of
each such policy is listed on Schedule 2.22.
28
SECTION 2.23 Definition of Knowledge of Company. As used in this Agreement,
the phrase "to the Knowledge of Company" (or words of similar import) means the
knowledge of those individuals identified in Schedule 2.23 of the Company
Disclosure Letter.
SECTION 2.24 Vote Required. Except for the Company Shareholder Approval, no
other vote or consent by the equity holders of Company or any Company Subsidiary
(whether by agreement, under applicable law or otherwise) is required to approve
this Agreement and the transactions contemplated hereby, nor shall any such
equity holders be entitled to dissenters' rights or other rights of appraisal in
connection with the Company Shareholder Approvals or the consummation of the
transactions contemplated by this Agreement, except as provided under Ohio Law.
SECTION 2.25 Year 2000. Except as set forth in Schedule 2.25 of the
Company's Disclosure Letter, the information set forth under the caption "Year
2000" in Company's quarterly report on Form 10-Q for the quarterly period ended
August 31, 1999 is true and correct as of the date hereof.
SECTION 2.26 Chapter 1704 of the Ohio Law Not Applicable. The Company Board
has taken all actions so that the restrictions contained in Chapter 1704 of the
Ohio Law applicable to a "business combination" (as defined in Chapter 1704)
will not apply to the execution, delivery or performance of this Agreement or
the consummation of the Merger or the other transactions contemplated by this
Agreement.
SECTION 2.27 Stock Issued in Connection with Acquisitions. Each offer, sale
and issuance of Common Stock by the Company in connection with the acquisition
of or merger with another company was effected through a transaction which was
exempt from the registration requirements of the Securities Act and any
applicable state securities laws, and neither the Company nor any authorized
agent acting on the Company's behalf has taken any action since such offer, sale
and issuance that would cause the loss of such exemption.
SECTION 2.28 Contingent Earn-Outs. Except as listed in Schedule 2.28 of the
Company Disclosure Letter, the Company is not a party to any agreement, contract
or any other obligation pursuant to which the Company is or may be required to
make payments based upon an "earn-out" or similar provision. The maximum amount
payable by the Company pursuant to any "earn-out" agreements or similar
provision is set forth in Schedule 2.28 of the Company Disclosure Letter.
29
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ERP
ERP hereby represents and warrants to the Company that, except as set forth
in the letter of even date herewith signed by the President or an Executive Vice
President of ERP and delivered to the Company on or prior to the date hereof, by
ERP (the "ERP Disclosure Letter"):
SECTION 3.1 Organization, Good Standing and Power of ERP . ERP is a limited
partnership duly organized and validly existing under the laws of Illinois and
has the requisite limited partnership power and authority to carry on its
business as now being conducted. ERP is duly qualified or licensed to do
business as a foreign limited partnership and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a material adverse effect on
the business, properties, assets, financial condition or results of operations
of ERP and the subsidiaries of ERP ("ERP Subsidiaries") taken as a whole ("ERP
Material Adverse Effect").
SECTION 3.2 Authority; Noncontravention; Consents Relating to ERP .
(a) ERP has the requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement to which ERP
is a party. The execution and delivery of this Agreement by ERP and the
consummation by ERP of the transactions contemplated by this Agreement to which
ERP is a party have been duly authorized by all necessary action on the part of
ERP. This Agreement has been duly executed and delivered by ERP and constitutes
a valid and binding obligation of ERP, enforceable against ERP in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
(b) Except as set forth in Schedule 3.2 to the ERP Disclosure Letter, the
execution and delivery of this Agreement by ERP do not, and the consummation of
the transactions contemplated by this Agreement by ERP and compliance by ERP
with the provisions of this Agreement will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of ERP or any ERP
Subsidiary under, (i) ERP's Certificate of Limited Partnership or ERP's Fifth
Amended and Restated Agreement of Limited Partnership, in each case as amended
or supplemented to the date of this Agreement, or the comparable charter or
organizational documents or partnership or similar agreement (as the case may
be) of any other ERP Subsidiary, each as amended or supplemented to the date of
this Agreement, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement, instrument,
permit, concession, franchise or license to which ERP or any ERP Subsidiary is a
30
party or their respective properties or assets are bound or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any Laws applicable to ERP or any ERP Subsidiary or their respective properties
or assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights, loss or Liens that individually or in the
aggregate would not (x) have a ERP Material Adverse Effect or (y) prevent the
consummation of the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to ERP or any ERP
Subsidiary in connection with the execution and delivery of this Agreement or
the consummation by ERP of any of the transactions contemplated by this
Agreement, except for (i) the filing with the SEC of such reports under Section
13(a) of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (ii) the acceptance for
record of the Certificate of Merger by the Ohio Secretary of State, (iii) such
filings as may be required in connection with the payment of any transfer and
gains taxes, (iv) the pre-merger notification of the HSR Act; and (v) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings (A) as are set forth in Schedule 3.2 to the ERP Disclosure Letter, (B)
as may be required under federal, state or local environmental laws or (C)
which, if not obtained or made, would not prevent or delay in any material
respect the consummation of any of the transactions contemplated by this
Agreement or otherwise prevent ERP from performing its obligations under this
Agreement in any material respect or have, individually or in the aggregate, a
ERP Material Adverse Effect.
SECTION 3.3 Brokers; Schedule of Fees And Expenses. No broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
ERP or any ERP Subsidiary.
SECTION 3.4 State Takeover Statutes. ERP has taken all action necessary to
exempt transactions between ERP and the Company and its Affiliates from the
operation of any anti-takeover laws of any applicable jurisdiction designed to
restrict ERP's ability to consummate the transaction contemplated by this
Agreement.
SECTION 3.5 Definition of Knowledge of ERP. As used in this Agreement, the
phrase "to the Knowledge of ERP" or (or words of similar import) means the
knowledge of those individuals identified in Schedule 3.5 to the ERP Disclosure
Letter.
SECTION 3.6 Proxy Statement. None of the information provided by ERP or
Acquisition and/or by their auditors, attorneys, financial advisors or other
consultants or advisors in writing specifically for use in the Proxy Statement
shall, at the time filed with the SEC, at the time mailed to the Company's
shareholders, at the time of the Company Shareholder Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
31
SECTION 3.7 Financing. At the Effective Time, Acquisition will have readily
available all of the funds necessary for the acquisition of all shares of
Company Common Stock pursuant to the Merger, and to perform its obligations
under the Agreement of Merger and this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco hereby represents and warrants to the Company that, except as set
forth in the letter of even date herewith signed by the President or an
Executive Vice President of Newco and delivered to the Company on or prior to
the date hereof, by Newco (the "Newco Disclosure Letter"):
SECTION 4.1 Organization, Good Standing and Power of Newco. Newco is a
corporation duly organized and validly existing under the laws of Delaware and
has the requisite corporate power and authority to carry on its business as now
being conducted. Newco is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, would
not have a material adverse effect on the business, properties, assets,
financial condition or results of operations of Newco and the subsidiaries of
Newco ("Newco Subsidiaries") taken as a whole ("Newco Material Adverse Effect").
SECTION 4.2 Authority; Noncontravention; Consents Relating to Newco .
(a) Newco has the requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement to
which Newco is a party. The execution and delivery of this Agreement by Newco
and the consummation by Newco of the transactions contemplated by this Agreement
to which Newco is a party have been duly authorized by all necessary action on
the part of Newco. This Agreement has been duly executed and delivered by Newco
and constitutes a valid and binding obligation of Newco, enforceable against
Newco in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
(b) Except as set forth in Schedule 4.2 to the Newco Disclosure Letter, the
execution and delivery of this Agreement by Newco do not, and the consummation
of the transactions contemplated by this Agreement by Newco and compliance by
Newco with the provisions of this Agreement will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets of
32
Newco or any Newco Subsidiary under, (i) Newco's Certificate of Incorporation or
Newco's By-laws in each case as amended or supplemented to the date of this
Agreement, or the comparable charter or organizational documents or partnership
or similar agreement (as the case may be) of any other Newco Subsidiary, each as
amended or supplemented to the date of this Agreement, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, reciprocal easement agreement, lease
or other agreement, instrument, permit, concession, franchise or license to
which Newco or any Newco Subsidiary is a party or their respective properties or
assets are bound or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any Laws applicable to Newco or any Newco
Subsidiary or their respective properties or assets, other than, in the case of
clause (ii) or (iii), any such conflicts, violations, defaults, rights, loss or
Liens that individually or in the aggregate would not (x) have a Newco Material
Adverse Effect or (y) prevent the consummation of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Newco or any Newco Subsidiary in connection with the
execution and delivery of this Agreement or the consummation by Newco of any of
the transactions contemplated by this Agreement, except for (i) the filing with
the SEC of such reports under Section 13(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement, (ii) the acceptance for record of the Certificate of Merger by
the Ohio Secretary of State, (iii) such filings as may be required in connection
with the payment of any transfer and gains taxes, (iv) the pre-merger
notification of the HSR Act; and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings (A) as are set forth in
Schedule 4.2 to the Newco Disclosure Letter, (B) as may be required under
federal, state or local environmental laws or (C) which, if not obtained or
made, would not prevent or delay in any material respect the consummation of any
of the transactions contemplated by this Agreement or otherwise prevent Newco
from performing its obligations under this Agreement in any material respect or
have, individually or in the aggregate, a Newco Material Adverse Effect.
SECTION 4.3 Organization, Good Standing and Power of Acquisition.
Acquisition will on the Effective Date be a corporation duly incorporated and
validly existing under the laws of Ohio and will have the requisite corporate
power and authority to carry out the transactions contemplated by the Agreement
of Merger and hereby.
SECTION 4.4 Authority; Noncontravention; Consents Relating to Acquisition.
(a) The consummation by Acquisition of the transactions contemplated by the
Agreement of Merger and hereby to which Acquisition will be a party will, as of
the Effective Time, have been duly authorized by all necessary action on the
part of Acquisition and will constitute a valid and binding obligation of
Acquisition, enforceable against Acquisition in accordance with their terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
33
(b) Except as set forth in Schedule 4.4 to the Newco Disclosure Letter, the
consummation of the transactions contemplated by the Agreement of Merger and
this Agreement by Acquisition and compliance by Acquisition with the provisions
of the Agreement of Merger and this Agreement will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets of
Acquisition or under, (i) Acquisition's Articles of Incorporation or Code of
Regulations, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
reciprocal easement agreement, lease or other agreement, instrument, permit,
concession, franchise or license to which Acquisition is a party or its
properties or assets may be bound or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any Laws applicable to
Acquisition or its properties or assets, other than, in the case of clause (ii)
or (iii), any such conflicts, violations, defaults, rights, loss or Liens that
would prevent the consummation of the transactions contemplated by the Agreement
of Merger or this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Acquisition in connection with the execution and delivery of
this Agreement or the consummation by Acquisition of any of the transactions
contemplated by this Agreement, except for (i) the acceptance for record of the
Certificate of Merger by the Ohio Secretary of State, (ii) the pre-merger
notification of the HSR Act; and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings (A) as are set forth in
Schedule 4.4 to the Newco Disclosure Letter, (B) which, if not obtained or made,
would not prevent or delay in any material respect the consummation of any of
the transactions contemplated by the Agreement of Merger or this Agreement or
otherwise prevent Acquisition from performing its obligations under this
Agreement in any material respect.
SECTION 4.5 Brokers; Schedule of Fees And Expenses. No broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Newco or any Newco Subsidiary.
SECTION 4.6 State Takeover Statutes. Newco has taken all action necessary
to exempt transactions between Newco and the Company and its Affiliates from the
operation of any anti-takeover laws of any applicable jurisdiction designed to
restrict Newco's ability to consummate the transaction contemplated by this
Agreement.
SECTION 4.7 Definition of Knowledge of Newco. As used in this Agreement,
the phrase "to the Knowledge of Newco" or (or words of similar import) means the
knowledge of those individuals identified in Schedule 4.7 to the Newco
Disclosure Letter.
SECTION 4.8 Proxy Statement. None of the information provided by Newco or
Acquisition and/or by their auditors, attorneys, financial advisors or other
consultants or advisors in writing specifically for use in the Proxy Statement
shall, at the time filed with the SEC, at the time mailed to the Company's
shareholders, at the time of the Company Shareholder Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
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ARTICLE 5
COVENANTS
SECTION 5.1 Acquisition Proposals . Prior to the Effective Time, the
Company agrees that:
(a) neither it nor any of the Company Subsidiaries shall initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
tender offer, exchange offer, consolidation, sale of assets or similar
transaction involving all or any significant portion of the assets or any equity
securities of the Company or any of the Company Subsidiaries, other than the
transactions contemplated by this Agreement (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or engage in any
negotiations concerning or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal;
(b) it will use its best efforts not to permit any of its officers,
employees, agents or financial advisors to engage in any of the activities
described in Section 5.1(a);
(c) it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and will take the necessary steps to inform
the individuals or entities referred to in Section 5.1(b) of the obligations
undertaken in this Section 5.1; and
(d) it will notify ERP immediately if the Company receives any such
inquiries or proposals, or any requests for such information, or if any such
negotiations or discussions are sought to be initiated or continued with it;
provided, however, that nothing contained in this Section 5.1 shall prohibit the
Company Board from (i) furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited Acquisition
Proposal, if, and only to the extent that (A) the Company Board determines in
good faith that failure to do so would create a reasonable probability of a
breach of its duties to shareholders imposed by law, (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
person or entity, the Company provides written notice to ERP to the effect that
it is furnishing information to, or entering into discussions with, such person
35
or entity, and (C) subject to any confidentiality agreement with such person or
entity (which the Company determined in good faith was required to be executed
in order for the Company Board to comply with its duties to shareholders imposed
by law), the Company keeps ERP informed of the status (not the terms) of any
such discussions or negotiations; and (ii) to the extent applicable, complying
with Rule 14e-2 or Rule 14d-9 promulgated under the Exchange Act with regard to
an Acquisition Proposal. Nothing in this Section 5.1 shall (x) permit the
Company to terminate this Agreement (except as specifically provided in Article
8 hereof), (y) permit the Company to enter into an agreement with respect to an
Acquisition Proposal during the term of this Agreement (it being agreed that
during the term of this Agreement, the Company shall not enter into an agreement
with any Person that provides for, or in any way facilitates, an Acquisition
Proposal (other than a confidentiality agreement in customary form executed as
provided above)) or (z) affect any other obligation of the Company under this
Agreement; provided, however, that, subject to the provisions of Section 8.2,
the Company Board may approve and recommend a Superior Acquisition Proposal and,
in connection therewith, withdraw or modify its approval or recommendation of
this Agreement and the Merger. As used herein, "Superior Acquisition Proposal"
means a bona fide Acquisition Proposal made by a third party which a majority of
the members of the Company Board determines in good faith to be more favorable
to the Company's shareholders from a financial point of view than the Merger and
which the Company Board determines is reasonably capable of being consummated.
SECTION 5.2 Conduct of the Company's Business Pending Merger. Prior to the
Effective Time, except as (i) contemplated by this Agreement, (ii) set forth in
Schedule 5.2 of the Company Disclosure Letter, (iii) set forth in Schedule 5.2A
of the Supplemental Disclosure Letter or (iv) consented to in writing by ERP,
the Company shall, and shall cause each of the Company Subsidiaries to, conduct
its business only in the usual, regular and ordinary course and in substantially
the same manner as heretofore conducted, and, irrespective of whether or not in
the ordinary course of business, the Company shall, and shall cause each of the
Company Subsidiaries to:
(a) use its reasonable efforts to preserve intact its business
organizations and goodwill and keep available the services of its officers
and employees;
(b) confer on a regular basis with one or more representatives of ERP
to report operational matters of materiality and, subject to Section 5.1,
any proposals to engage in material transactions not otherwise expressly
permitted under Section 5.2;
(c) promptly notify ERP of any material emergency or other material
change in the condition (financial or otherwise), business, properties,
assets, liabilities, or the normal course of its businesses or in the
operation of its properties, or of any material governmental complaints,
investigations or hearings (or communications indicating that the same may
be contemplated);
(d) promptly deliver to ERP true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement;
36
(e) maintain its books and records in accordance with GAAP
consistently applied and not change in any material manner any of its
methods, principles or practices of accounting in effect at the Company
Financial Statement Date, except as may be required by the SEC, applicable
law or GAAP;
(f) duly and timely file all reports, tax returns and other documents
required to be filed with federal, state, local and other authorities,
subject to extensions permitted by law, provided the Company notifies ERP
that it is availing itself of such extensions;
(g) not make or rescind any express or deemed election relative to
Taxes (unless required by law);
(h) not amend its Articles of Incorporation or Code of Regulations or
the articles of incorporation, codes of regulations, bylaws, partnership
agreement, joint venture agreement or comparable charter or organization
document of any Company Subsidiary without ERP's prior written consent,
which shall not be unreasonably withheld or delayed;
(i) not issue or make any change in the number of, shares of, capital
stock, membership interests or units of limited partnership interest issued
and outstanding or reserved for issuance, other than pursuant to those
items disclosed in Schedule 2.3 of the Company Disclosure Letter;
(j) not grant any options or other right or commitment relating to its
shares of capital stock, or any security convertible into its shares of
capital stock, or any security the value of which is measured by shares of
capital stock, or any security subordinated to the claim of its general
creditors;
(k) except for dividends and distributions by a Company Subsidiary to
the Company or a wholly-owned Company Subsidiary, not (x) authorize,
declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock, or (y) directly or
indirectly redeem, purchase or otherwise acquire any shares of capital
stock, membership interests or units of partnership interest or any option,
warrant or right to acquire, or security convertible into, shares of
capital stock, membership interests, or units of partnership interest;
(l) not sell, lease, mortgage, subject to Lien or otherwise dispose of
any material part of its assets, individually or in the aggregate, except
for sales or leases of furniture and other personal property in the
ordinary course of business consistent with past practice and for leases of
corporate housing units to customers in the ordinary course of business
consistent with past practice;
37
(m) not make any loans, advances or capital contributions to, or
investments in, any other Person, other than (i) loans, advances and
capital contributions to wholly-owned Company Subsidiaries in existence on
the date hereof; (ii) any advances to any officer or director of the
Company made pursuant to the terms of a note, provided, however, that under
no circumstances shall the terms of any note be amended to increase the
total aggregate amount of borrowings available thereunder; and (iii)
advances of travel and other business expenses to employees in the ordinary
course of business consistent with past practice;
(n) not pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) furnished to ERP or incurred in the ordinary course of
business consistent with past practice;
(o) not enter into any commitment, contractual obligation, capital
expenditure or transaction (each, a "Commitment") which may result in total
payments or liability by or to it in excess of $200,000 or aggregate
Commitments in excess of $500,000; provided, however, that notwithstanding
the foregoing, the Company may purchase or make Commitments to purchase (i)
furniture to fill specific, bona fide customer sales orders and (ii) in
addition to those purchases and Commitments to purchase permitted by (i)
hereof, up to $2,500,000 in furniture each month;
(p) not guarantee the indebtedness of another Person, enter into any
"keep well" or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing;
(q) not enter into or amend any Commitment with any officer, director,
consultant or Affiliate of the Company or any of the Company Subsidiaries
other than Commitments with consultants involving payments of (i) less than
$10,000 per consultant and (ii) total aggregate payments to all consultants
of less than $100,000;
(r) not increase any compensation or enter into or amend any
employment agreement or other arrangement with any of its officers,
directors or employees earning more than $50,000 per annum as of the date
hereof, other than waivers by employees of benefits under such agreements,
enter into any employment agreement or arrangement with any other Person
not currently an employee of the Company or a Company Subsidiary, providing
for compensation in excess of $50,000 per annum or increase any
compensation or enter into or amend any employment agreement or other
arrangement with any new or current employee earning more than $50,000 per
annum except in the ordinary course of business and consistent with past
practice in timing and amount or pursuant to the terms of any such
agreement or arrangement; provided, however, that the Company may increase
compensation to employees in connection with promotions or otherwise, by
not more than ten percent (10%);
38
(s) not adopt any new employee benefit plan or amend any existing
plans, options or rights, except for changes which are required by law;
(t) not settle any shareholder derivative or class action claims
arising out of or in connection with any of the transactions contemplated
by this Agreement without the prior written approval of ERP, which approval
shall not be unreasonably withheld or denied (it being understood that it
is the intent of the parties to avoid, to the extent practicable, the
termination of this Agreement pursuant to Article 8 hereof);
(u) not reduce its ownership of any of the Company Subsidiaries except
pursuant to a transaction which has the same effect as a transaction
permitted by subsection 5.2(l) hereof;
(v) not accept a promissory note in payment of the exercise price
payable under any option to purchase shares of Common Stock;
(w) not enter into or amend or otherwise modify or waive any rights
under any agreement or arrangement for the persons that are Affiliates of
the Company or any Company Subsidiary or any officer, director or employee,
of the Company or any Company Subsidiary;
(x) except as provided in the Company Disclosure Letter, not directly
or indirectly or through a subsidiary, merge or consolidate with, acquire
all or substantially all of the assets of, or acquire the beneficial
ownership of a majority of the outstanding capital stock or other equity
interest in any person or entity; and
(y) take all action necessary to cause the payment of compensation
customarily made at the end of each quarter to the members of the Company
Board; and
For purposes of this Section 5.2 only, any contract, transaction or other event
for which a specific amount is not set forth above shall be deemed to be
material and to be subject to the terms hereof if it would result or is expected
to result in a net impact on the Company's consolidated income statement in
excess of $200,000, or on the Company's consolidated balance sheet in excess of
$500,000.
SECTION 5.3 Other Actions . Each of the Company on the one hand and ERP and
Newco on the other hand shall not, and shall use its reasonable best efforts to
cause its Subsidiaries not to take, any action that would result in (i) any of
the representations and warranties of such party set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) except as contemplated by Section 5.1, any of the
conditions to the Merger set forth in Article 7 not being satisfied.
39
ARTICLE 6
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of Proxy Statement; Stockholder Meeting; Comfort
Letters.
(a) Promptly following the date of this Agreement, the Company shall
prepare the Schedule 13E-3 with respect to the transactions contemplated by this
Agreement and a proxy statement (the "Proxy Statement") required to be
distributed to holders of Common Stock in connection with the Merger and include
therein the recommendation of the Company Board that the stockholders of the
Company vote in favor of the approval and adoption of this Agreement and include
therein the written opinion of the Financial Adviser that the cash consideration
to be received by the stockholders of the Company pursuant to the Merger is
fair, from a financial point of view, to such stockholders; provided, however,
that the Company Board may fail to make or may withdraw or modify such
recommendation, if, in accordance with Section 5.1, the Company Board recommends
a Superior Proposal. The Company shall use its reasonable best efforts to obtain
and furnish the information required to be included by it in the Proxy Statement
and Schedule 13E-3 and, after consultation with ERP, respond promptly to any
comments made by the Securities and Exchange Commission (the "SEC") with respect
to the Proxy Statement and Schedule 13E-3 and any preliminary version thereof,
ERP and Newco will cooperate with the Company in connection with the preparation
of the Proxy Statement and Schedule 13E-3 including, but not limited to,
furnishing to the Company any and all information regarding ERP as may be
required to be disclosed therein. The Company will use reasonable best efforts
to cause the Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable.
(b) All filings with the SEC and all mailings to the Company's stockholders
in connection with the Merger, including the Proxy Statement and Schedule 13E-3,
shall be subject to the prior review, comment and approval of ERP and Newco (and
such approval shall not be unreasonably withheld or delayed).
(c) The Company shall, as promptly as practicable following the date of
this Agreement and in consultation with ERP and Newco, duly call and give notice
of, and, provided that this Agreement has not been terminated, convene and hold,
the Company Stockholders' Meeting for the purpose of approving this Agreement
and the transactions contemplated by this Agreement to the extent required by
Ohio Law (the "Company Stockholders' Meeting"). The Company will use reasonable
best efforts to hold such meeting as soon as practicable after the date hereof.
40
(d) Upon the request of ERP, the Company shall use reasonable best efforts
to cause to be delivered to the Company and ERP a letter of
PricewaterhouseCoopers LLP, the Company's independent public accountants, dated
a date within two (2) business days before the date of mailing the Proxy
Statement to the stockholders of the Company and a letter of
PricewaterhouseCoopers LLP dated a date within two (2) business days before the
Company Stockholders' Meeting, addressed to the Company, in each case customary
in scope and substance for letters delivered by independent public accountants
in connection with proxy statements similar to the Proxy Statement; provided,
however, that such letters shall only be delivered to the extent permitted under
accounting principles and pronouncements applicable to the U.S. accounting
profession.
SECTION 6.2 HSR Act . As promptly as practicable after the date of this
Agreement, the Company, ERP and Newco shall file notifications under the HSR Act
in connection with the Merger and the transactions contemplated hereby and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") for additional information or documentation
and to respond as promptly as practicable to all inquiries and requests received
from any State Attorney General or other governmental authority in connection
with antitrust matters.
SECTION 6.3 Access to Information; Confidentiality . Subject to the
requirements of confidentiality agreements with third parties, each of the
Company, ERP and Newco shall, and shall cause each of the Company Subsidiaries
and ERP Subsidiaries, respectively, to afford to the other party and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of such other party, reasonable access during normal business
hours prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
the Company, ERP and Newco shall, and shall cause each of the Company
Subsidiaries and ERP Subsidiaries, respectively, to furnish promptly to the
other party (a) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities laws and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Each of the Company and ERP shall, and shall cause the Company Subsidiaries and
ERP Subsidiaries, respectively, to use commercially reasonable efforts to cause
its officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to, hold any nonpublic information in confidence
to the extent required by, and in accordance with, and will comply with the
provisions of the letter agreements dated as of October 11, 1999 between the
Company and ERP (the "Confidentiality Agreements").
SECTION 6.4 Best Efforts; Notification .
(a) Subject to the terms and conditions herein provided, the Company,
Newco, Acquisition and ERP shall: (i) use all reasonable best efforts to
cooperate with one another in (A) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits or
41
authorizations are required to be obtained prior to the Effective Time, from
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions and any third parties in connection with the execution
and delivery of this Agreement, and the consummation of the transactions
contemplated by such agreements and (B) timely making all such filings and
timely seeking all such consents, approvals, permits and authorizations; (ii)
use all reasonable best efforts to obtain in writing any consents required from
third parties to effectuate the Merger, such consents to be in form reasonably
satisfactory to the Company and ERP; and (iii) use all reasonable best efforts
to take, or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make effective
the transactions contemplated by this Agreement, including, but not limited to,
furnishing all information required to be included in the Proxy Statement. If,
at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
trustees of the Company, Newco and ERP shall take all such necessary action.
(b) The Company shall give prompt notice to ERP, and ERP shall give prompt
notice to the Company, (i) if any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becomes untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becomes untrue or inaccurate in any material respect or (ii) of the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 6.5 Costs of Transaction. In the event that the Merger is not
consummated, each of ERP and the Company shall pay their own costs and expenses
relating to the Merger and the other transactions contemplated by this
Agreement. This Section 6.5 shall in no way affect the rights and obligations of
the parties hereto under Article 8 hereof.
SECTION 6.6 Public Announcements. ERP, Acquisition and the Company will
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other written public statements
with respect to the transactions contemplated by this Agreement, including
(without limitation) the Merger, and shall not issue any such press release or
make any such written public statement prior to such consultation, except as may
be required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The parties agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement will be in the form agreed to by the parties
hereto prior to the execution of this Agreement. For purposes of this Section
6.6, "written public statements" shall include any written statement transmitted
to the New York Stock Exchange Inc. ("NYSE"), Nasdaq National Market or the
shareholders of ERP or the Company.
SECTION 6.7 Taxes. At ERP's expense, the Company will and will cause each
Company Subsidiary to consult with and provide ERP the opportunity to review and
comment upon all returns, questionnaires, applications or other documents to be
filed after the date hereof by the Company with respect to Taxes including,
without limitation, the Company's federal, state and local income tax returns
for its taxable year ended February 29, 2000 (collectively, the "Company Tax
Returns"), and shall not file any such returns without the prior review and
comment of ERP and Acquisition, which shall not be unreasonably delayed.
42
SECTION 6.8 Optionees.
(a) Prior to the Closing, the Company will, through its Board (or any
committee thereof), take all action required for the cancellation as of the
Effective Time of all Stock Options in consideration for cash in an amount set
forth in section 1.6(c).
(b) From and after the date hereof, the Company, through its Board or
otherwise, will not modify any Stock Option Plan or authorize, and the Company
will not grant, any Stock Options.
(c) The Company shall require each employee who exercises a Stock Option or
otherwise receives any payment from the Company as a result of the transactions
contemplated by this Agreement, to pay to the Company in cash an amount
sufficient to satisfy in full the Company's obligation to withhold Taxes
incurred by reason of such exercise, issuance or receipt.
SECTION 6.9 Declaration of Dividends and Distributions. From and after the
date of this Agreement, neither the Company, nor any of the Company Subsidiaries
shall make any dividend or distribution to its shareholders without the prior
written consent of ERP.
SECTION 6.10 Resignations. On the Closing Date, if requested by ERP, the
Company shall cause the directors of each of the Company and the Company
Subsidiaries to submit their resignations from such positions, effective as of
the Effective Time.
SECTION 6.11 Indemnification.
(a) From and after the Effective Time, ERP shall provide exculpation and
indemnification for each person who is now or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer, director of
the Company or any Company Subsidiary (the "Indemnified Parties") which is the
same as the exculpation, indemnification and advancement of expenses provided to
the Indemnified Parties by the Company (including advancement of expenses, if so
provided) immediately prior to the Effective Time in its Articles of
Incorporation or Code of Regulations as in effect at the close of business on
the date hereof; provided, that such exculpation and indemnification covers
actions on or prior to the Effective Time, including, without limitation, all
transactions contemplated by this Agreement. The Surviving Corporation shall use
commercially reasonable efforts to obtain and, if obtained, maintain in effect
from the Effective Time and continuing until the sixth anniversary thereof
43
"run-off" directors and officers liability insurance with a commercially
reasonable coverage amount and other terms and conditions, including exclusions,
as are commercially reasonable and at least as favorable as now provided by the
Company; provided, however, in no event shall the Surviving Corporation be
required to expend in respect of any year's coverage in excess of 300% of the
annual premium currently paid by the Company for such coverage with respect to
their service as such prior to the Effective Time (the "Run-Off Policy"). The
Surviving Corporation shall provide the Company with a true and complete copy of
a binder with respect to the Run-Off Policy at least 10 days prior to the
Effective Time, and shall use its reasonable best efforts to provide to the
Company a true and complete copy of the Run-Off Policy as proposed to be issued
prior to the Effective Time. The premium for such policy shall be paid in full
at the Effective Time.
(b) The provisions of this Section 6.11 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her personal representatives and shall be binding on all successors and
assigns of ERP and the Surviving Corporation. ERP agrees to pay all costs and
expenses (including fees and expenses of counsel) that may be incurred by any
Indemnified Party or his or her heirs or his or her personal representatives in
successfully enforcing the indemnity or other obligations of ERP or the
Surviving Corporation under this Section 6.11. The provisions of this Section
6.11 shall survive the Merger and are in addition to any other rights to which
an Indemnified Party may be entitled.
(c) In the event that ERP or the Surviving Corporation or any of its
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 6.11, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby.
SECTION 6.12 Certain Debt of the Company. The Company shall maintain in
full force and effect that certain loan outstanding as of the date hereof from
those lenders party to that certain Note Purchase Agreement (the "Note Purchase
Agreement") dated as of September 1, 1997 (the "Section 6.12 Debt") and there
shall be no default or event of default or any condition which upon the passage
of time or the giving of notice or both which would cause such an event of
default or a default to exist under the Note Purchase Agreement as of the
Effective Time.
SECTION 6.13 Fees and Expenses. The Company and the Company Subsidiaries
shall not incur (a) fees and expenses and (b) liabilities (collectively, the
"Transaction Expenses") in excess of the amount set forth on Schedule 7.2(g)A of
the Supplemental Disclosure Letter.
SECTION 6.14 Employee Benefits. Neither the Company nor the Surviving
Corporation shall amend, modify or revise any Employee Plan without the prior
written consent of ERP.
44
SECTION 6.15 Subordinated Debt. On or prior to the Closing Date, ERP shall
provide Newco with a subordinated debt facility of up to $9 million, which
facility shall have a one (1) year term, fifteen percent (15%) annual interest
rate (interest being payable quarterly in arrears) and the proceeds of which
shall be loaned to the Company and used solely to enable the Company to repay
any outstanding subordinated debt incurred by the Company prior to Closing, with
the prior consent of ERP.
ARTICLE 7
CLOSING CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger. The
obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Shareholder Approval. The Merger shall have been approved and adopted
by the shareholders of each of the Company and Acquisition.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated hereby
shall be in effect.
SECTION 7.2 Conditions to Obligations of ERP. The obligations of ERP to
effect the Merger and to consummate the other transactions contemplated to occur
on the Closing Date are further subject to the following conditions, any one or
more of which may be waived in writing by ERP:
(a) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall be true and correct as of the
Closing Date, as though made on and as of the Closing Date, except to the extent
the representation or warranty is expressly limited by its terms to another
date, and ERP shall have received a certificate (which certificate may be
qualified by Knowledge to the same extent as the representations and warranties
of the Company contained herein are so qualified) signed on behalf of the
Company by the chief executive officer or the chief financial officer of the
Company, in such capacity, to such effect. For the purposes of Section 7.2(a),
the representations and warranties of the Company shall be deemed true and
correct unless the breach of such representations and warranties, in the
aggregate, could reasonably be expected to have a Company Material Adverse
Effect.
(b) Performance of Obligations of The Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and ERP shall have
received a certificate signed on behalf of the Company by the chief executive
officer or the chief financial officer of the Company, in such capacity, to such
effect.
45
(c) Material Adverse Change. Since November 30, 1999, except as discussed
in Schedule 2.7 of the Company Disclosure Letter or Schedule 2.7A of the
Supplemental Disclosure Letter, there shall have been no Company Material
Adverse Change and ERP shall have received a certificate of the chief executive
officer or chief financial officer of the Company, in such capacity, certifying
to such effect.
(d) Comfort Letter. If required by ERP, ERP shall have received the letter
from the accountants for the Company required by Section 6.9 hereof.
(e) Opinion of Counsel. ERP shall have received an opinion of Keating,
Muething & Klekamp, P.L.L. or other counsel to the Company reasonably
satisfactory to ERP dated the Closing Date in form and substance reasonably
satisfactory to ERP addressing the matters set forth in Exhibit "B" hereto.
(f) Consents. Except as set forth on Schedule 7.2 to the Company Disclosure
Letter, all consents and waivers (including, without limitation, waivers of
rights of first refusal) from third parties necessary in connection with the
consummation of the transactions contemplated by this Agreement shall have been
obtained, other than such consents and waivers from third parties, which, if not
obtained, would not result, individually or in the aggregate, in an ERP Material
Adverse Effect or a Company Material Adverse Effect.
(g) Certain Fees, Expenses and Liabilities. The Transaction Expenses set
forth in Schedule 7.2(g)A of the Supplemental Disclosure Letter shall not exceed
the amounts set forth in such Schedule.
(h) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and no
restrictive order or other requirements shall have been placed on ERP or the
Surviving Corporation in connection therewith which would have a material
adverse effect on the expected benefits to ERP of the transactions contemplated
hereby.
(i) Formation Agreement. The Closing, as defined in the Formation
Agreement, shall have been consummated.
(j) Dissenters' Rights. The record holders of not more than 20% of the
issued and outstanding shares of Common Stock on the Effective Date have
properly served a demand on the Company seeking relief pursuant to the
provisions of Section 1701.85 of the Ohio Law.
46
SECTION 7.3 Conditions to Obligations of the Company . The obligation of
the Company to effect the Merger and to consummate the other transactions
contemplated to occur on the Closing Date is further subject to the following
conditions, any one or more of which may be waived in writing by the Company:
(a) Representations and Warranties. The representations and warranties of
ERP set forth in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, and the Company shall have received a certificate
(which certificate may be qualified by Knowledge to the same extent as the
representations and warranties of ERP contained herein are so qualified) signed
on behalf of ERP and Acquisition by the chief executive officer and the chief
financial officer of such party to such effect. For the purposes of this Section
7.3(a), the representations and warranties of ERP shall be deemed true and
correct unless the breach of such representations and warranties, in the
aggregate, could reasonably be expected to have an ERP Material Adverse Effect.
(b) Performance of Obligations of ERP and Acquisition. ERP and Acquisition
shall have performed in all material respects all of their respective
obligations required to be performed by them under this Agreement at or prior to
the Effective Time, and the Company shall have received a certificate of ERP
signed on behalf of ERP by the chief executive officer or the chief financial
officer of ERP, in such capacity, to such effect.
(c) Opinion of Counsel. The Company shall have received an opinion from
Piper Marbury Rudnick & Wolfe or other counsel to ERP reasonably satisfactory to
the Company dated the Closing Date in form and substance reasonably satisfactory
to the Company addressing the matters set forth in Exhibit "C" hereto dated the
Closing Date.
(d) Consents. All consents and waivers (including, without limitation,
waivers or rights of first refusal) from third parties necessary in connection
with the consummation of the transactions contemplated hereby shall have been
obtained, other than such consents and waivers from third parties, which, if not
obtained, would not result, individually or in the aggregate, in an ERP Material
Adverse Effect or a the Company Material Adverse Effect.
(e) Certain Fees, Expenses and Liabilities. The (x) fees and expenses and
(y) liabilities set forth in Schedule 7.2(g) of the Company Disclosure Letter
shall not exceed the amounts set forth in such Schedule.
(f) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and no
restrictive order or other requirements shall have been placed on ERP or the
Surviving Corporation in connection therewith which would have a material
adverse effect on the expected benefits to ERP of the transactions contemplated
hereby.
47
(g) Formation Agreement. The Closing, as defined in the Formation
Agreement, shall have been consummated.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated at any time prior
to the acceptance of the Certificate of Merger for record by the Secretary of
State of the State of Ohio, whether before or after the Shareholder Approval
have been obtained:
(a) by mutual written consent duly authorized by both the Company Board and
the General Partner of ERP;
(b) by ERP, upon a breach of any representation, warranty, covenant,
obligation or agreement on the part of the Company set forth in this Agreement,
in either case such that the conditions set forth in Section 7.2(a) or Section
7.2(b), as the case may be, would be incapable of being satisfied by August 15,
2000 (or as otherwise extended);
(c) by the Company, upon a breach of any representation, warranty, covenant
obligation or agreement on the part of ERP set forth in this Agreement, in
either case such that the conditions set forth in Section 7.3(a) or Section
7.3(b), as the case may be, would be incapable of being satisfied by August 15,
2000 (or as otherwise extended);
(d) by either ERP or the Company, if any judgment, injunction, order,
decree or action by any Governmental Entity of competent authority preventing
the consummation of the Merger shall have become final and nonappealable;
(e) by either ERP or the Company, if the Merger shall not have been
consummated before August 15, 2000; provided, that in the case of termination
pursuant to this Section 8.1(e), the terminating party shall not have breached
in any material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the occurrence of the failure referred to
in this Section;
(f) by either ERP or the Company if, upon a vote at a duly held the Company
Shareholders Meeting or any adjournment thereof, the Company Shareholder
Approval shall not have been obtained as contemplated by Section 6.1;
(g) by the Company, if prior to the conclusion of the tabulation of the
votes with respect to the Merger at the Company Shareholders Meeting, the
Company Board shall have withdrawn or modified its approval or recommendation of
the Merger or this Agreement in connection with, or approved, recommended or
entered into, a Superior Acquisition Proposal; and
48
(h) by ERP if (i) prior to the Company Shareholders Meeting, the Company
Board shall have withdrawn or modified in any manner adverse to ERP its approval
or recommendation of the Merger or this Agreement in connection with, or
approved, recommended or entered into, any Superior Acquisition Proposal, or
(ii) the Company shall have entered into a definitive agreement with respect to
any Acquisition Proposal.
(i) by ERP if the record holders of more than 20% of the issued and
outstanding shares of Common Stock on the Effective Date have properly served a
demand on the Company seeking relief pursuant to the provisions of Section
1701.85 of the Ohio Law.
SECTION 8.2 Certain Fees and Expenses . If this Agreement shall be
terminated (i) pursuant to Section 8.1(g) or 8.1(h), then the Company will pay
ERP (provided the Company was not entitled to terminate this Agreement pursuant
to Section 8.1(c) at the time of such termination) a fee equal to the Break-Up
Fee (as defined below), or (ii) pursuant to Section 8.1(b) or 8.1(f), then the
Company will pay ERP (provided the Company was not entitled to terminate this
Agreement pursuant to Section 8.1(c) at the time of such termination) an amount
equal to the ERP Liquidated Damages Amount (as defined below).
If this Agreement shall be terminated pursuant to Section 8.1(c), then ERP
(rather than Newco) will pay the Company (provided ERP was not entitled to
terminate this Agreement pursuant to Section 8.1(b) at the time of such
termination), an amount equal to the Company Liquidated Damages Amount (as
defined below).
If the Merger is not consummated (other than due to the termination of this
Agreement pursuant to Section 8.1(a) or 8.1(c), or ERP pursuant to 8.1(e)), and
at the time of the termination of this Agreement an Acquisition Proposal has
been received by the Company, and either prior to the termination of this
Agreement or within twelve (12) months thereafter the Company or any the Company
Subsidiary enters into any written Acquisition Proposal which is subsequently
consummated (whether or not such Acquisition Proposal is the same Acquisition
Proposal which had been received at the time of the termination of this
Agreement), then the Company shall pay the Break-Up Fee to ERP.
The Company and ERP agree that actual damages accruing from a termination
of the Agreement pursuant to the subsections of Section 8.1 with respect to
which the provisions of Section 8.2 provide for the payment of damages are
incapable of precise estimation and would be difficult to prove, that the
payment to ERP or the Company, as applicable, of the ERP Liquidated Damages
Amount, the Company Liquidated Damages Amount or the Break-Up Fee shall
constitute liquidated damages, that the rights to the ERP Liquidated Damages
Amount, Company Liquidated Damages Amount or Break-Up Fee, as applicable,
stipulated in this Section 8.2 bear a reasonable relationship to the potential
49
injury likely to be sustained in the event of such a termination and that such
stipulated rights to liquidated damages are intended by the parties to provide
just compensation in the event of such a termination and are not intended to
compel performance or to constitute a penalty for nonperformance. Other than as
set forth in Section 9.8 hereof, payment of the ERP Liquidated Damages Amount or
the Break-Up Fee by the Company shall terminate all of ERP's rights and remedies
at law or in equity against the Company in respect of a termination of this
Agreement pursuant to the subsections of Section 8.1 with respect to which the
provisions of Section 8.2 provide for the payment of damages. Other than as set
forth in Section 9.8 hereof, payment of the Company Liquidated Damages Amount by
ERP shall terminate all of the Company's rights and remedies at law or in equity
against ERP in respect of a termination of this Agreement pursuant to Section
8.1 (c). The ERP Liquidated Damages Amount or the Break-Up Fee shall be paid by
the Company to ERP, or the Company Liquidated Damages Amount, shall be paid by
ERP to the Company, in immediately available funds within fifteen (15) days
after the date of the event giving rise to the obligation to make such payment
occurred.
The "ERP Liquidated Damages Amount" payable to ERP by the Company shall be
$2,500,000.
The "Company Liquidated Damages Amount" payable to the Company by ERP shall
be $2,500,000.
As used in this Agreement, "Break-Up Fee" shall be an amount equal to
$5,000,000, less the ERP Liquidated Damages Amount, if such ERP Liquidated
Damages Amount has been paid in full by the Company to ERP,
SECTION 8.3 Effect of Termination. In the event of termination of this
Agreement by either the Company or ERP as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of ERP or Newco, or the Company, other than the last
sentence of Section 6.3, Section 8.2, this Section 8.3 and Article 9.
SECTION 8.4 Amendment. This Agreement may be amended by the parties in
writing by action of the Board of Trustees of the General Partner of ERP, by the
Company's Board and the Board of Directors of Newco at any time before or after
any Shareholder Approval is obtained and prior to the filing of the Certificate
of Merger with the Secretary of State of the State of Ohio; provided, however,
that, after the Shareholder Approval is obtained, no such amendment,
modification or supplement shall be made which by law requires the further
approval of shareholders without obtaining such further approval.
SECTION 8.5 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
50
delivered pursuant to this Agreement or (c) subject to the proviso of Section
8.4, waive compliance with any of the agreements or conditions of the other
party contained in this Agreement. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1 Nonsurvival of Representations and Warranties . None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement confirming the representations and warranties in this
Agreement shall survive the Effective Time. This Section 9.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
SECTION 9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) If to ERP, Acquisition or Newco:
ERP Operating Limited Partnership
Two North Riverside Plaza, Suite 400
Chicago, Illinois 60606
Telecopier No.: (312) 454-0434
Telephone No.: (312) 474-1300
Attention: Bruce C. Strohm
With a copy to:
Piper Marbury Rudnick & Wolfe
203 North LaSalle Street, Suite 1800
Chicago, Illinois 60601
Telecopier No.: (312) 236-7516
Telephone No.: (312) 368-4033
Attention: Errol R. Halperin, Esq.
51
(b) If to the Company:
Globe Business Resources, Inc.
11260 Chester Road, Suite 400
Cincinnati, Ohio 45246
Telecopier No.: (513) 771-5354
Telephone No.: (513) 771-8287
Attention: David D. Hoguet
With a copy to:
Keating, Muething & Klekamp, P.L.L.
1400 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Telecopier No.: (513) 579-6578
Telephone No.: (513) 579-6468
Attention: Edward E. Steiner, Esq.
All notices shall be deemed given only when actually received.
SECTION 9.3 Interpretation. All references made herein to any party shall
include any predecessor to such party. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
SECTION 9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Confidentiality Agreements and the other agreements entered into in
connection with the Transactions (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Agreement and (b)
except as provided in Section 6.11 ("Third Party Provisions"), are not intended
to confer upon any person other than the parties hereto any rights or remedies.
The Third Party Provisions may be enforced by the beneficiaries thereof or on
behalf of the beneficiaries thereof by the officers and directors of the Company
who had been officers and directors of the Company prior to the Effective Time.
52
The Company shall not be deemed to have made to ERP or Newco any representation
or warranty including with respect to any projections, estimates or budgets of
future revenues, expenses or expenditures or future results of operations except
other than as expressly set forth in Article 2 of this Agreement.
SECTION 9.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS THEREOF.
SECTION 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 9.8 Specific Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that (x) the parties shall be entitled to an injunction or
injunctions to prevent material breaches of this Agreement; and (y) in lieu of
and as an alternative to any and all monetary damages, including, without
limitation, the liquidated damages provided for in Section 8.2 hereof, the
parties shall be entitled to a court order to enforce specifically (by means of
a mandatory injunction or otherwise) the terms and provisions of this Agreement,
in either case in any court of the United States located in the State of
Illinois or Ohio or state court located in Illinois or Ohio. Without limiting
the generality of the foregoing, the parties agree that the Company is a unique
asset and that (i) the holders of the Shares would be irreparably injured in a
manner not adequately compensated by money damages (including without
limitation, by payment of the Company Liquidated Damages Amount) in the event
ERP refused to consummate the Merger without legal justification under this
Agreement and (ii) ERP would be irreparably injured in a manner not adequately
compensated by money damages (including without limitation, by payment of the
ERP Liquidated Damages Amount) in the event the Company refused to consummate
the Merger without legal justification under this Agreement. The parties hereto
hereby waive (to the maximum extent permitted by applicable law) all legal and
equitable defenses to a motion or other proceeding by the Company or ERP, as the
case may be, for specific performance of the Merger and the other transactions
contemplated by this Agreement as a remedy in the event ERP or the Company, as
the case may be, refuses to consummate the Merger without legal justification
under this Agreement. In addition, each of the parties hereto (a) consents to
submit itself (without making such submission exclusive) to the personal
jurisdiction of any federal court located in the State of Illinois or Ohio or
any Illinois or Ohio state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court; provided, however, that
both the Company and ERP reserve all rights to assert that legal justification
does or does not exist.
53
SECTION 9.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
SECTION 9.10 Non-Recourse to Trustees and Officers. This Agreement and all
documents, certificates, agreements, understandings and arrangements relating
hereto have been entered into or executed on behalf of the General Partner of
ERP by the undersigned in his capacity as a trustee or officer of the General
Partner of ERP, which has been formed as a Maryland real estate investment trust
pursuant to an Amended and Restated Declaration of Trust of ERP dated as of
November 2, 1992, as amended and restated, and not individually, and neither the
trustees, officers nor shareholders of the General Partner of ERP shall be
personally bound or have any personal liability hereunder. The Company shall
look solely to the assets of ERP for satisfaction of any liability of ERP with
respect to this Agreement and any other agreements to which it is a party. The
Company will not seek recourse or commence any action against any of the
shareholders of the General Partner of ERP or any of their personal assets, and
will not commence any action for money judgments against any of the trustees or
officers of the General Partner of ERP or seek recourse against any of their
personal assets, for the performance or payment of any obligation of ERP
hereunder or thereunder.
(Remainder of page intentionally blank; signature page follows)
54
IN WITNESS WHEREOF, ERP, the Company and Newco have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
ERP OPERATING LIMITED PARTNERSHIP
By: /s/ Bruce C. Strohm
__________________________________
Name: Bruce C. Strohm
Title: Executive Vice President
GLOBE BUSINESS RESOURCES, INC.
By: /s/ David d. Hoguet
_________________________________
Name: David D. Hoguet
Title: Chairman
GLOBE HOLDING CO. INC.
By:/s/ Bruce C. Strohm
__________________________________
Name: Bruce C. Strohm
Title: President
By:/s/ David D. Hoguet
__________________________________
Name: David D. Hoguet
Title: Secretary
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ERP OPERATING LIMITED PARTNERSHIP
GLOBE HOLDING CO., INC.
and
GLOBE BUSINESS RESOURCES, INC.
Dated as of January 13, 2000
As Amended and Restated as of
May 10, 2000
TABLE OF CONTENTS
ARTICLE 1 THE MERGER .. ...............................................2
SECTION 1.1 The Merger ..................................................2
SECTION 1.2 Effective Time. .............................................2
SECTION 1.3 Effect of the Merger. .......................................2
SECTION 1.4 Articles of Incorporation, Code of Regulations. .............3
SECTION 1.5 Directors and Officers. .....................................3
SECTION 1.6 Effect on Capital Stock. ....................................3
SECTION 1.7 Exchange of Certificates. ...................................4
SECTION 1.8 Stock Transfer Books. .......................................6
SECTION 1.9 No Further Ownership Rights in Common Stock. ................6
SECTION 1.10 Lost, Stolen or Destroyed Certificates. .....................6
SECTION 1.11 Taking of Necessary Action; Further Action. .................6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...............7
SECTION 2.1 Organization, Standing And Power of Company .................7
SECTION 2.2 Company Subsidiaries ........................................7
SECTION 2.3 Capital Structure ...........................................8
SECTION 2.4 Other Interests .............................................9
SECTION 2.5 Authority; Noncontravention; Consents .......................9
SECTION 2.6 SEC Documents; Financial Statements; Undisclosed
Liabilities ................................................11
SECTION 2.7 Absence of Certain Changes or Events .......................12
SECTION 2.8 Litigation .................................................12
SECTION 2.9 Properties .................................................13
SECTION 2.10 Environmental Matters ......................................15
SECTION 2.11 Related Party Transactions .................................17
SECTION 2.12 Employee Benefits ..........................................17
SECTION 2.13 Employee Matters ...........................................19
SECTION 2.14 Taxes ......................................................20
SECTION 2.15 No Payments to Employees, Officers, Trustees or Directors ..23
SECTION 2.16 Brokers; Schedule of Fees And Expenses .....................24
SECTION 2.17 Compliance With Laws .......................................24
SECTION 2.18 Contracts; Debt Instruments ................................24
SECTION 2.19 Opinion of Financial Advisor ...............................26
SECTION 2.20 Investment Company Act of 1940. ............................26
SECTION 2.21 Trademarks, Patents And Copyrights. ........................26
SECTION 2.22 Insurance. .................................................27
SECTION 2.23 Definition of Knowledge of Company .........................27
SECTION 2.24 Vote Required ..............................................27
SECTION 2.25 Year 2000 ..................................................27
SECTION 2.26 Chapter 1704 of the Ohio Law Not Applicable ................27
SECTION 2.27 Stock Issued in Connection with Acquisitions ...............27
SECTION 2.28 Contingent Earn-Outs .......................................28
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ERP ......................28
SECTION 3.1 Organization, Good Standing and Power of ERP ...............28
SECTION 3.2 Authority; Noncontravention; Consents Relating to ERP ......28
SECTION 3.3 Brokers; Schedule of Fees And Expenses .....................29
SECTION 3.4 State Takeover Statutes ....................................29
SECTION 3.5 Definition of Knowledge of ERP. ............................29
SECTION 3.6 Proxy Statement ............................................29
SECTION 3.7 Financing ..................................................30
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF NEWCO ....................30
SECTION 4.1 Organization, Good Standing and Power of Newco .............30
SECTION 4.2 Authority; Noncontravention; Consents Relating to Newco ....30
SECTION 4.3 Organization, Good Standing and Power of Acquisition .......31
SECTION 4.4 Authority; Noncontravention; Consents Relating to
Acquisition ................................................31
SECTION 4.5 Brokers; Schedule of Fees And Expenses .....................32
SECTION 4.6 State Takeover Statutes ....................................32
SECTION 4.7 Definition of Knowledge of Newco. ..........................32
SECTION 4.8 Proxy Statement ............................................33
ARTICLE 5 COVENANTS ..................................................33
SECTION 5.1 Acquisition Proposals ......................................33
SECTION 5.2 Conduct of the Company's Business Pending Merger. ..........34
SECTION 5.3 Other Actions ..............................................37
ARTICLE 6 ADDITIONAL AGREEMENTS ......................................38
SECTION 6.1 Preparation of Proxy Statement; Stockholder Meeting;
Comfort Letters ............................................38
SECTION 6.2 HSR Act ....................................................39
SECTION 6.3 Access to Information; Confidentiality .....................39
SECTION 6.4 Best Efforts; Notification .................................39
SECTION 6.5 Costs of Transaction .......................................40
SECTION 6.6 Public Announcements .......................................40
SECTION 6.7 Taxes ......................................................40
SECTION 6.8 Optionees ..................................................41
SECTION 6.9 Declaration of Dividends and Distributions .................41
SECTION 6.10 Resignations ...............................................41
SECTION 6.11 Indemnification ............................................41
SECTION 6.12 Certain Debt of the Company ................................42
SECTION 6.13 Fees and Expenses. .........................................42
SECTION 6.14 Employee Benefits. .........................................42
SECTION 6.15 Subordinated Debt. .........................................42
ARTICLE 7 CLOSING CONDITIONS .........................................43
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger .43
SECTION 7.2 Conditions to Obligations of ERP ...........................43
SECTION 7.3 Conditions to Obligations of the Company ...................44
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER ..........................46
SECTION 8.1 Termination ................................................46
SECTION 8.2 Certain Fees and Expenses ..................................47
SECTION 8.3 Effect of Termination ......................................48
SECTION 8.4 Amendment ..................................................48
SECTION 8.5 Extension; Waiver ..........................................48
ARTICLE 9 GENERAL PROVISIONS .........................................49
SECTION 9.1 Nonsurvival of Representations and Warranties ..............49
SECTION 9.2 Notices. ...................................................49
SECTION 9.3 Interpretation. ............................................50
SECTION 9.4 Counterparts. ..............................................50
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries. ............50
SECTION 9.6 Governing Law. .............................................50
SECTION 9.7 Assignment. ................................................51
SECTION 9.8 Specific Enforcement. ......................................51
SECTION 9.9 Severability. ..............................................51
SECTION 9.10 Non-Recourse to Trustees and Officers. .....................51
EXHIBIT INDEX
Exhibit A - Form of Agreement and Plan of Merger
Exhibit B - Form of Company Counsel Opinion
Exhibit C - Form of ERP's Counsel Opinion