Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FRANKLIN STREET PROPERTIES CORP.,
BLUE LAGOON ACQUISITION CORP.,
INNSBROOK ACQUISITION CORP.,
WILLOW BEND ACQUISITION CORP.,
380 INTERLOCKEN ACQUISITION CORP.,
ELDRIDGE GREEN ACQUISITION CORP.
FSP BLUE LAGOON DRIVE CORP.,
FSP INNSBROOK CORP.,
FSP WILLOW BEND OFFICE CENTER CORP.,
FSP 380 INTERLOCKEN CORP.
AND
FSP ELDRIDGE GREEN CORP.
March 15, 2006
TABLE OF CONTENTS
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ARTICLE 1 THE MERGERS.......................................................1
1.1 The Mergers.............................................................1
1.2 The Closing.............................................................2
1.3 Effective Time..........................................................2
1.4 Additional Action.......................................................2
1.5 Dissenting Shares.......................................................2
1.6 No Further Rights.......................................................3
1.7 Withholding Rights......................................................3
ARTICLE 2 MERGER CONSIDERATION..............................................3
2.1 Cancellation of Target Stock............................................3
2.2 Merger Consideration....................................................4
2.3 Registration of Shares..................................................5
2.4 Limitations on Registration Rights......................................5
2.5 Registration Procedures.................................................6
2.6 Requirements of Target REIT Stockholders................................7
2.7 Indemnification.........................................................8
2.8 Assignment of Rights....................................................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
ACQUISITION SUBSIDIARIES.......................................8
3.1 Due Organization; Authority.............................................8
3.2 Authorization; Validity; Effect of Agreement............................9
3.3 Capitalization..........................................................9
3.4 No Violation...........................................................10
3.5 FSP Investments LLC; Due Organization..................................11
3.6 Financial Statements...................................................11
3.7 SEC Documents..........................................................11
3.8 Litigation.............................................................12
3.9 Tax Matters............................................................12
3.10 Full Disclosure.......................................................13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE TARGET REITS...............13
4.1 Due Organization; Authority............................................13
4.2 Authorization; Validity; Effect of Agreement...........................14
4.3 Financial Statements...................................................14
4.4 Contracts and Commitments..............................................14
4.5 No Violation...........................................................14
4.6 Litigation.............................................................15
4.7 Title to Assets........................................................15
4.8 Real Property..........................................................16
4.9 Real Property Leases...................................................17
4.10 Compliance with Laws; Permits; Environmental Matters..................18
4.11 Taxes.................................................................19
4.12 No Existing Discussions...............................................20
4.13 Full Disclosure.......................................................20
ARTICLE 5 COVENANTS AND ADDITIONAL AGREEMENTS..............................21
5.1 Conduct of Business....................................................21
5.2 Other Actions..........................................................21
5.3 Approval of Target REIT Stockholders...................................21
5.4 Consents and Approvals.................................................22
5.5 No Solicitation........................................................22
5.6 Dividends..............................................................25
5.7 Listing of Shares......................................................25
5.8 Indemnification........................................................25
ARTICLE 6 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGERS.....26
ARTICLE 7 TERMINATION AND WAIVER...........................................27
7.1 Termination............................................................27
7.2 Effect of Termination..................................................28
7.3 Extension; Waiver......................................................29
7.4 No Survival of Representations and Warranties..........................29
ARTICLE 8 MISCELLANEOUS....................................................29
8.1 Assignment.............................................................29
8.2 Risk of Loss...........................................................29
8.3 Fees and Expenses......................................................30
8.4 Entire Agreement; Modifications; Amendments............................30
8.5 Notices................................................................30
8.6 Interpretation.........................................................31
8.7 Captions...............................................................31
8.8 Counterparts...........................................................31
8.9 Binding Effect.........................................................32
8.10 Attorneys' Fees.......................................................32
8.11 No Waiver; Severability...............................................32
8.12 No Joint and Several Liability........................................32
8.13 Applicable Law........................................................33
Exhibit A--List of Properties
Exhibit B--Merger Consideration
Exhbiit C--Examples of Calculation of Merger Consideration
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of March 15, 2006 by and among Franklin Street Properties Corp.
(the "Company"), a Maryland corporation, the wholly-owned acquisition
subsidiaries of the Company, each a Delaware corporation (each an "Acquisition
Subsidiary" and, collectively, the "Acquisition Subsidiaries"), listed on the
signature pages hereto and the other corporations, each a Delaware corporation
(each, a "Target REIT" and, collectively, the "Target REITs"), also listed on
the signature pages hereto.
RECITALS
WHEREAS, the Target REITs are the owners of certain real properties
listed on Exhibit A hereto (each such property, including any buildings,
structures or other improvements situated thereon, a "Property" and,
collectively, the "Properties");
WHEREAS, the board of directors of the Company (the "Company
Board"), boards of directors of each of the Acquisition Subsidiaries (such
boards of directors, collectively, the "Acquisition Boards of Directors") and
the boards of the directors of each of the Target REITs (such boards of
directors, collectively, the "Target Boards of Directors") believe that it is in
the best interests of the Company, each of the Acquisition Subsidiaries and each
of the Target REITs, respectively, and their respective stockholders, to
consummate, and have approved, the business combination transaction provided for
herein, pursuant to which each Target REIT will be merged with and into an
Acquisition Subsidiary, with the respective Acquisition Subsidiary continuing as
the surviving entity (each such transaction, a "Merger" and, collectively, the
"Mergers");
WHEREAS, the Company Board, the Acquisition Boards of Directors and
the Target Boards of Directors have agreed to effect the transactions provided
for herein upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company, the Acquisition Subsidiaries and the Target
REITs desire to make certain representations, warranties and agreements in
connection with the Mergers.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1 THE MERGERS
1.1 The Mergers. Subject to the terms and conditions of this Agreement, at
the Effective Time (as hereinafter defined), each Target REIT will be merged
with and into an Acquisition Subsidiary in accordance with the applicable
provisions of the Delaware General Corporation Law ("DGCL"), and the separate
existence of each Target REIT shall thereupon cease. Each Acquisition Subsidiary
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shall continue as the surviving entity of the Mergers (each a "Surviving
Corporation" and collectively, the "Surviving Corporations"). The parties hereby
agree that FSP Blue Lagoon Drive Corp. will merge with and into Blue Lagoon
Acquisition Corp.; FSP Innsbrook Corp. will merge with and into Innsbrook
Acquisition Corp.; FSP Willow Bend Office Center Corp. will merge with and into
Willow Bend Acquisition Corp.; FSP 380 Interlocken Corp. will merge with and
into 380 Interlocken Acquisition Corp.; and FSP Eldridge Green Corp. will merge
with and into Eldridge Green Acquisition Corp.
1.2 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Mergers (the "Closing") shall take place at the offices of
Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts at 9:00 a.m., local time, on April 28, 2006 or at such other time
and date following the day on which the last of the conditions set forth in
Article 6 shall be fulfilled or waived in accordance herewith. The holders of
preferred stock, par value $0.01 per share, in the Target REITs ("Target Stock")
are hereinafter referred to as the "Target REIT Stockholders." The common stock
of the Company, $0.0001 par value per share is hereinafter referred to as the
"Common Stock". The date on which the Closing occurs is hereinafter referred to
as the "Closing Date." After giving effect to the Mergers, the Company and the
Surviving Corporations are hereinafter referred to as the "Combined Company."
1.3 Effective Time. If all of the conditions to a particular Merger set
forth in Article 6 shall have been fulfilled or waived in accordance herewith
with respect to the Company and the applicable Target REIT and this Agreement
shall not have been terminated as provided in Article 7 or Section 8.2(b), the
parties hereto shall promptly cause to be properly executed, verified and
delivered for filing on the Closing Date a certificate of merger satisfying the
requirements of the DGCL for such Merger (a "Certificate of Merger"). A Merger
shall become effective upon the acceptance for record of its Certificate of
Merger by the Secretary of State of the State of Delaware in accordance with the
DGCL or at such later time upon which the parties hereto shall have agreed and
designated in such filing in accordance with applicable law as the effective
time of the Mergers (the "Effective Time").
1.4 Additional Action. The Surviving Corporations may, at any time from
and after the Effective Time, take any action, including executing and
delivering any document, in the name and on behalf of either the respective
Target REIT or the respective Acquisition Subsidiary, in order to consummate and
give effect to the transactions contemplated by this Agreement.
1.5 Dissenting Shares.
(a) For purposes of this Agreement, "dissenting shares" means Target
Stock held as of the Effective Time by a Target REIT Stockholder who has not
voted such Target Stock in favor of the adoption of this Agreement and the
Merger with respect to such Target REIT and with respect to which appraisal
shall have been duly demanded and perfected in accordance with Section 262 of
the DGCL and not effectively withdrawn or forfeited prior to the Effective Time.
Dissenting shares shall not be converted into or represent the right to receive
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the Merger Consideration (as defined below) unless the Target REIT Stockholder
holding such dissenting shares shall have forfeited his or her right to
appraisal under the DGCL or properly withdrawn his or her demand for appraisal.
If such Target REIT Stockholder has so forfeited or withdrawn his or her right
to appraisal of dissenting shares, then (i) as of the occurrence of such event,
such holder's dissenting shares shall cease to be dissenting shares and shall be
converted into and represent the right to receive the Merger Consideration
payable in respect of such Target Stock pursuant to Section 2.2 hereof, and (ii)
promptly following the occurrence of such event, the Company or the Surviving
Corporation shall deliver to such Target REIT Stockholder shares of Common Stock
and any cash in lieu of fractional shares of Target Stock, if applicable, to
which such holder is entitled pursuant to Section 2.2 hereof.
(b) Each Target REIT shall give the Company (i) prompt notice of any
written demands for appraisal of any Target Stock, withdrawals of such demands,
and any other instruments that relate to such demands received by the respective
Target REIT and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. No Target REIT shall,
except with the prior written consent of the Company, make any payment with
respect to any demands for appraisal of Target Stock or offer to settle or
settle any such demands.
1.6 No Further Rights. From and after the Effective Time, no Target Stock
shall be deemed to be outstanding, and holders of Target Stock shall cease to
have any rights with respect thereto except as provided herein or by law.
1.7 Withholding Rights. Notwithstanding any provision of this Agreement,
each of the Company and any Acquisition Subsidiary shall be entitled to deduct
and withhold from the payments to be made pursuant to this Agreement, as
applicable, such amounts as it reasonably determines that it is required to
deduct and withhold with respect to the making of such payments under the
Internal Revenue Code of 1986, as amended (the "Code") or any other applicable
provision of law and to collect Forms W-8 or W-9, as applicable, or similar
information from the Target REIT Stockholders and any other recipients of
payments hereunder. To the extent the amounts are so withheld by either the
Company or any Acquisition Subsidiary, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Target REIT shares in respect of which such deduction and withholding was made
by the Company or the Acquisition Subsidiary.
ARTICLE 2 MERGER CONSIDERATION
2.1 Cancellation of Target Stock. As a result of the Mergers and without
any action on the part of the Target REIT Stockholders, all Target Stock in each
Target REIT with respect to which a Merger has become effective shall cease to
be outstanding, shall be cancelled and retired and shall cease to exist and each
Target REIT Stockholder shall thereafter cease to have any rights with respect
to such Target Stock (other than with respect to any dissenting shares).
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2.2 Merger Consideration.
(a) At the Effective Time, by virtue of the Mergers and without any
further action by the Company, any Acquisition Subsidiary or any Target REIT,
each Target REIT Stockholder (other than the Company) in each Target REIT with
respect to which a Merger has become effective shall receive for each share of
Target Stock of such Target REIT that such Target REIT Stockholder holds of
record, that number of shares of Common Stock in the Company as is equal to the
Exchange Ratio. (If the Target REIT Stockholder holds a fractional share of
Target Stock, the Exchange Ratio shall be multiplied by the applicable
fraction.) The Exchange Ratio for the Target Stock of a particular Target REIT
shall be the price per share of Target Stock ("Price Per Share") set forth on
Exhibit B attached hereto opposite the name of the applicable Target REIT
divided by the Market Value of the Common Stock (the "Merger Consideration").
The "Market Value" of the Common Stock means the Volume Weighted Average Price
of the Common Stock over the 20 consecutive trading days ending on the second
trading day prior to the Closing Date, rounded to the nearest whole cent. The
"Volume Weighted Average Price" means the average price at which the Common
Stock trades on the American Stock Exchange, adjusted for the size of each
trade, and is calculated by multiplying the number of shares involved in each
trade of Common Stock by the price of such trade, adding all of the values so
obtained and dividing that sum by the total number of shares of Common Stock
traded on the American Stock Exchange over the period. Notwithstanding the
foregoing, if the Market Value is less than $20.00, then the Merger
Consideration for a share of Target Stock shall equal the sum of (A) cash in the
amount of (i) the Price Per Share for such Target Stock times (ii) the
Applicable Percentage plus (B) that number of shares of Common Stock as is equal
to the product of (i) the difference resulting from the subtraction from (x)
100% of (y) the Applicable Percentage times (ii) the Exchange Ratio. The
"Applicable Percentage" means (I) the amount by which the Market Value is less
than $20.00, divided by (II) $20.00, expressed as a percentage. By way of
example, if the Market Value were $19.00 and the Price Per Share for the Target
Stock in question were $100.00, the Applicable Percentage would be 5% and the
Merger Consideration for one share of such Target Stock would consist of $5.00
in cash and five shares of Common Stock. Set forth on Exhibit C hereto are other
examples of calculations of Merger Consideration.
At the Effective Time, by virtue of the Mergers and without any
further action by any party, each share of common stock, $.0001 par value per
share, of each Target REIT held by the Company and each share of Target Stock
held by the Company shall be cancelled and shall cease to exist and no stock of
the Company or other consideration shall be delivered in exchange therefor, and
the Company hereby waives any right that it may have under the certificate of
incorporation of each Target REIT or otherwise to receive any consideration in
the Mergers in respect of such shares of Target REIT common stock or Target
Stock.
(b) No certificate or scrip representing fractional shares of Common
Stock shall be issued upon the cancellation of Target Stock, and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a stockholder of the Company. Notwithstanding any other provision of
this Agreement, each holder of shares of Target Stock converted pursuant to the
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Mergers who would otherwise have been entitled to receive a fraction of a share
of Common Stock (after taking into account all Target Stock certificates
registered in the name of or delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of a
share of Common Stock multiplied by the Market Value, such amount to be rounded
up to the nearest whole cent.
(c) The Company shall issue certificates representing shares of
Common Stock and the cash Merger Consideration upon the cancellation of Target
Stock as soon as practicable after the Effective Time.
(d) The directors and officers of each Acquisition Subsidiary
immediately prior to the Effective Time shall be the initial directors and
officers of the respective Surviving Corporations, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of such Surviving
Corporation. The certificate of incorporation and by-laws of each Acquisition
Subsidiary immediately prior to the Effective Time shall be the initial
certificate of incorporation and by-laws of the respective Surviving
Corporation, except that the name of each Surviving Corporation shall be amended
to be the name of the respective Target REIT immediately prior to the Effective
Time.
(e) The Merger Consideration, including any cash payments, shall be
adjusted to reflect any reclassification, stock split, reverse split, stock
dividend, reorganization, recapitalization or other like change with respect to
Common Stock or Target Stock occurring (or for which a record date is
established) after the date hereof and prior to the Effective Time.
2.3 Registration of Shares. The Company shall file with the Securities and
Exchange Commission ("SEC"), within 30 days following the Closing, a
registration statement on Form S-3 covering the resale to the public by the
Target REIT Stockholders of the Common Stock issued hereunder, and no other
securities (the "Stockholder Registration Statement"). The Company shall use its
best efforts to cause the Stockholder Registration Statement to be declared
effective by the SEC as soon as practicable. The parties agree that the Company
may satisfy its obligations to file the Stockholder Registration Statement by
filing a shelf registration statement on Form S-3 and to include shares therein
by filing a prospectus supplement. The Company shall cause the Stockholder
Registration Statement to remain effective until the second anniversary of the
Effective Time.
2.4 Limitations on Registration Rights.
(a) The Company may, by written notice to the Target REIT
Stockholders, (i) delay the filing or effectiveness of the Stockholder
Registration Statement or (ii) suspend the Stockholder Registration Statement
after effectiveness and require that the Target REIT Stockholders immediately
cease sales of shares pursuant to the Stockholder Registration Statement, in the
event that the Company is engaged in any activity or transaction or preparations
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or negotiations for any activity or transaction that the Company desires to keep
confidential for business reasons, if the Company determines in good faith that
the public disclosure requirements imposed on the Company under the Securities
Act of 1933, as amended (the "Securities Act"), in connection with the
Stockholder Registration Statement would require disclosure of such activity,
transaction, preparations or negotiations.
(b) If the Company delays or suspends the Stockholder Registration
Statement or requires the Target REIT Stockholders to cease sales of shares
pursuant to paragraph (a) above, the Company shall, as promptly as practicable
following the termination of the circumstance which entitled the Company to do
so, take such actions as may be necessary to file or reinstate the effectiveness
of the Stockholder Registration Statement or give written notice to all Target
REIT Stockholders authorizing them to resume sales pursuant to the Stockholder
Registration Statement. If as a result thereof the prospectus included in the
Stockholder Registration Statement has been amended to comply with the
requirements of the Securities Act, the Company shall enclose such revised
prospectus with the notice to Target REIT Stockholders given pursuant to this
paragraph (b), and the Target REIT Stockholders shall make no offers or sales of
shares pursuant to the Stockholder Registration Statement other than by means of
such revised prospectus.
(c) The Company's delay and suspension right permitted by Section
2.4(a) above may be exercised by the Company for no more than 60 consecutive
days on any one occasion and may apply for no greater than an aggregate of 120
days in any 365-day period.
2.5 Registration Procedures.
(a) In connection with the filing by the Company of the Stockholder
Registration Statement, the Company shall either (i) comply with Rule 172(b)
under the Securities Act or (ii) furnish to each Target REIT Stockholder a copy
of the prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act.
(b) The Company shall use its best efforts to register or qualify
the shares covered by the Stockholder Registration Statement under the
securities laws of each state of the United States; provided, however, that the
Company shall not be required in connection with this paragraph (b) to qualify
as a foreign corporation or execute a general consent to service of process in
any jurisdiction in which the Company is not otherwise so qualified or in which
such consent is not otherwise executed.
(c) If the Company has delivered preliminary or final prospectuses
to the Target REIT Stockholders and after having done so the prospectus is
amended or supplemented to comply with the requirements of the Securities Act,
the Company shall promptly notify the Target REIT Stockholders and, if requested
by the Company, the Target REIT Stockholders shall immediately cease making
offers or sales of shares under the Stockholder Registration Statement and
return all prospectuses to the Company. The Company shall promptly provide the
Target REIT Stockholders with revised or supplemented prospectuses and,
following receipt of the revised or supplemented prospectuses, the Target REIT
Stockholders shall be free to resume making offers and sales under the
Stockholder Registration Statement.
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(d) The Company shall pay the expenses incurred by it in complying
with its obligations under the registration rights provisions of this Agreement,
including all registration and filing fees, exchange listing fees, fees and
expenses of counsel for the Company, and fees and expenses of accountants for
the Company, but excluding all expenses of the Target REIT Stockholders, which
excluded expenses include without limitation (i) any brokerage fees, selling
commissions or underwriting discounts incurred by the Target REIT Stockholders
in connection with sales under the Stockholder Registration Statement and (ii)
the fees and expenses of any counsel retained by Target REIT Stockholders.
2.6 Requirements of Target REIT Stockholders. The Company shall not be
required to include any shares in the Stockholder Registration Statement unless:
(a) the Target REIT Stockholder owning such shares furnishes to the
Company in writing such information regarding such Target REIT Stockholder and
the proposed sale of shares by such Target REIT Stockholder as the Company may
reasonably request in writing in connection with the Stockholder Registration
Statement or as shall be required in connection therewith by the SEC or any
state securities law authorities;
(b) such Target REIT Stockholder shall have provided to the Company
its written agreement:
(i) to indemnify the Company and each of its directors and
officers against, and hold the Company and each of its directors and officers
harmless from, any losses, claims, damages, expenses or liabilities (including
reasonable attorneys fees) to which the Company or such directors and officers
may become subject by reason of any statement or omission in the Stockholder
Registration Statement made in reliance upon, or in conformity with, a written
statement by such Target REIT Stockholder furnished pursuant to this Section
2.6; and
(ii) to report to the Company sales made pursuant to the
Stockholder Registration Statement.
In the event any shares are excluded from the Stockholder Registration Statement
as a result of a Target REIT Stockholder failing to comply with the requirements
set forth in this Section 2.6, and such Target REIT Stockholder subsequently
complies with such requirements, the Company shall promptly take all action
necessary to include such Target REIT Stockholder's shares in the Stockholder
Registration Statement, including without limitation amending such Stockholder
Registration Statement or filing a prospectus supplement with respect thereto;
provided, however, that the Company shall not be required to take such action
more frequently than once in each calendar quarter.
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2.7 Indemnification. The Company agrees to indemnify and hold harmless
each Target REIT Stockholder whose shares are included in the Stockholder
Registration Statement against any losses, claims, damages, expenses or
liabilities to which such Target REIT Stockholder may become subject by reason
of any untrue statement of a material fact contained in the Stockholder
Registration Statement or any omission to state therein a fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, expenses or liabilities arise
out of or are based upon information furnished to the Company by or on behalf of
such Target REIT Stockholder for use in the Stockholder Registration Statement.
The Company shall have the right to assume the defense and settlement of any
claim or suit for which the Company may be responsible for indemnification under
this Section 2.7.
2.8 Assignment of Rights. A Target REIT Stockholder may not assign any of
its registration rights under this Agreement except in connection with the
transfer of some or all of his, her or its shares of Common Stock to one or more
family members (including trusts for the benefit of a family member or members)
in connection with estate planning or as a result of death, provided each such
transferee agrees in a written instrument delivered to the Company to be bound
by the registration rights provisions of this Agreement. The Target REIT
Stockholders and the transferees pursuant to this Section 2.8 are third party
beneficiaries of the registration rights provisions of this Agreement.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE ACQUISITION
SUBSIDIARIES
Each of the Company and the Acquisition Subsidiaries, jointly and
severally, represents and warrants to the Target REITs that the statements
contained in this Article 3 are true and correct, except as set forth in the
disclosure schedule delivered at or prior to the execution hereof to each of the
Target REITs (the "Company Disclosure Schedule"). The Company Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
letter paragraphs contained in this Article 3, and the disclosures in any
paragraph of the Company Disclosure Schedule shall also be deemed to qualify all
other paragraphs in this Article 3.
3.1 Due Organization; Authority.
(a) Each of the Company and the Acquisition Subsidiaries is a
corporation duly organized and validly existing under the laws of the state of
its incorporation. The Company (i) has the authority to conduct its business as
currently conducted and to own and operate the properties that it now owns and
operates, and (ii) is duly licensed or qualified to do business in, and is in
good standing under the laws of, all jurisdictions in which the transaction of
its business makes such qualification necessary, except where the failure to be
so licensed or qualified would not reasonably be expected to have a material
adverse effect on the business, assets, prospects, results of operations or
financial condition of the Company (a "Company Material Adverse Effect").
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(b) Each of the Company and the Acquisition Subsidiaries has
provided each Target REIT with a true and complete copy of its articles or
certificate of incorporation and bylaws, each as amended to date.
(c) Each Acquisition Subsidiary was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities or operations and owns no assets.
3.2 Authorization; Validity; Effect of Agreement. Each of the Company and
the Acquisition Subsidiaries has all requisite power, authority and legal right
to enter into this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by the Company and the Acquisition
Subsidiaries and the consummation by the Company and the Acquisition
Subsidiaries of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company and the Acquisition
Subsidiaries, respectively, and this Agreement is a legal, valid and binding
obligation of the Company and the Acquisition Subsidiaries, enforceable against
them in accordance with its terms. Without limiting the generality of the
foregoing, subject to the accuracy of the Target REITs' representation in
Article 4A hereof, no vote, consent or approval of the stockholders of the
Company is required under applicable law, rule or regulation, rule of the
American Stock Exchange, or otherwise, in order for the Company to comply with
its obligations hereunder, including without limitation the issuance of shares
of Common Stock pursuant to Section 2.2(a) hereof.
3.3 Capitalization. The authorized capital stock of the Company consists
of 180,000,000 shares of Common Stock of which approximately 59,794,608 shares
are issued and outstanding as of the date hereof and 20,000,000 shares of
preferred stock, $0.0001 par value per share, of which no shares are issued and
outstanding as of the date hereof. Immediately following the consummation of the
Mergers, approximately 71,002,390 shares of Common Stock (assuming a Market
Value of $20.50) will be issued and outstanding and no shares of preferred stock
will be issued and outstanding. The rights and privileges of each class of the
Company's capital stock are as set forth in the Company's certificate of
incorporation, as amended to date. All shares of the Company's Common Stock
issuable pursuant to this Agreement, when issued on the terms and conditions set
forth in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, not subject to or issued in violation of any purchase option,
call option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of the Maryland General Corporation Law or the
Company's articles of incorporation or by-laws.
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3.4 No Violation.
(a) Neither the execution and delivery by the Company or the
Acquisition Subsidiaries of this Agreement, nor the consummation by the Company
or the Acquisition Subsidiaries of the transactions contemplated hereby and
compliance by the Company or the Acquisition Subsidiary with the provisions
hereof, will: (i) conflict with or violate any provision of the articles or
certificates of incorporation or bylaws, each as amended to date of the Company
or the Acquisition Subsidiaries; (ii) require on the part of the Company or the
Acquisition Subsidiaries or any Subsidiary (as defined below) of the Company any
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority, except (x) filings to be made
after the Effective Time under applicable Federal and state securities laws, (y)
the filing of the Certificates of Merger in accordance with the DGCL or (z)
where the failure to obtain any such consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority would not reasonably be expected to have a Company Material Adverse
Effect and would not adversely affect the consummation of the transactions
contemplated hereby; (iii) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, result in
the acceleration of obligations under, create in any party the right to
terminate, modify or cancel, or require any notice, consent or waiver under, any
contract or instrument to which the Company or any Subsidiary of the Company is
a party or by which the Company or any Subsidiary of the Company is bound or to
which any of their assets is subject, except for (A) any conflict, breach,
default, acceleration, termination, modification or cancellation which would not
have a Company Material Adverse Effect and would not adversely affect the
consummation of the transactions contemplated hereby or (B) any notice, consent
or waiver the absence of which would not have a Company Material Adverse Effect
and would not adversely affect the consummation of the transactions contemplated
hereby; (iv) result in the imposition of any mortgage, pledge, security
interest, encumbrance, charge or other lien (whether arising by contract or by
operation of law) upon any property or assets of the Company or any Subsidiary
of the Company; or (v) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, the Acquisition Subsidiaries or
any Subsidiary of the Company or any of their properties or assets. For purposes
of this Agreement, "Subsidiary" shall mean any corporation, partnership, trust,
limited liability company or other non-corporate business enterprise in which
the Company holds stock or other ownership interests representing more than 50%
of the voting power of all outstanding stock or ownership interests of such
entity.
(b) Except as expressly contemplated by this Agreement, no other
action is required to be taken by the Company or the Acquisition Subsidiaries to
permit the execution, delivery and performance of (i) this Agreement, (ii) all
other documents and certificates expressly contemplated hereby, and (iii) the
transactions contemplated hereby, and no consent or approval of any third party
or governmental authority is or was required or appropriate in connection with
the execution of this Agreement, or to consummate the transactions expressly
contemplated hereunder, except such as have been obtained or will be obtained
prior to the Closing.
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3.5 FSP Investments LLC; Due Organization. FSP Investments LLC ("FSP
Investments"), a wholly-owned subsidiary of the Company, is a limited liability
company duly organized and validly existing under the laws of the Commonwealth
of Massachusetts. FSP Investments is duly registered with the Securities and
Exchange Commission ("SEC") as a broker/dealer pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended.
3.6 Financial Statements.
(a) The Company has previously delivered or made available to each
of the Target REITs the following financial statements (collectively, the
"Company Financial Statements"): (i) consolidated statements of income for the
twelve months ended December 31, 2005 (audited), (ii) consolidated statements of
cash flows for the twelve months ended December 31, 2005 (audited), (iii)
consolidated balance sheet as of December 31, 2005 (audited) (the "Company
Balance Sheet"). The Company Financial Statements have been prepared in
accordance with generally accepted auditing principles ("GAAP"), applied on a
basis consistent with prior periods (except as otherwise noted therein), and
present fairly the financial position and results of operations of the Company
as of their respective dates and for the periods presented therein.
(b) The Company has no liability of any nature, whether known or
unknown, accrued or unaccrued, absolute or contingent, asserted or unasserted,
except liabilities (i) stated or adequately reserved against on the Company
Balance Sheet or the notes thereto, (ii) incurred in the ordinary course of
business and not required under GAAP to be reflected on the Company Balance
Sheet, (iii) incurred after the date of the Company Balance Sheet in the
ordinary course of business consistent with the terms of this Agreement or (iv)
which would not reasonably be expected to have a Company Material Adverse
Effect.
3.7 SEC Documents. The Company has filed or will file all SEC Documents
(as defined below) on a timely basis. All of the SEC Documents (other than
preliminary materials), as of their respective filing dates, complied or will
comply in all material respects with all applicable requirements of the
Securities Act, and the Securities Exchange Act of 1934, as amended, and, in
each case, the rules and regulations promulgated thereunder applicable to such
SEC Documents. None of the SEC Documents, at the time of filing contained or
will contain any untrue statements 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 SEC Documents filed and publicly available. As used herein,
"SEC Documents" shall mean all reports, schedules, forms, statements and other
documents required to be filed, or otherwise filed, by the Company with the SEC
on or after January 1, 2005 and prior to the Closing Date. No Subsidiary is
subject to the reporting requirements of Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended.
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3.8 Litigation. There are (i) no continuing orders, injunctions or decrees
of any court, arbitrator or governmental authority to which the Company is a
party or by which it is bound or, to the knowledge of the Company, to which any
of its directors, officers, employees or agents, in such capacity, is a party
or, to the knowledge of the Company, by which any of them is bound, and (ii) no
actions, suits, investigations or proceedings pending against the Company, or,
to the knowledge of the Company, against any of its directors, officers,
employees or agents, in such capacity, or, to the knowledge of the Company,
threatened against the Company or any of its directors, officers, employees or
agents, in such capacity, at law or in equity, or before or by any federal,
state or local commission, board, bureau, agency or instrumentality that would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. For purposes of this Section 3.8, any reference to the
"Company" shall be deemed to include the Subsidiaries.
3.9 Tax Matters.
(a) The Company has paid, caused to be paid or accrued all federal,
state, local, foreign and other taxes, including without limitation, income
taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes,
use taxes, value-added taxes, gross receipt taxes, franchise taxes, capital
stock taxes, employment and payroll-related taxes, withholding taxes, stamp
taxes, transfer taxes, windfall profit taxes, property taxes and environmental
taxes, whether or not measured in whole or in part by net income, and all
deficiencies, or other additions to tax, interest, fines and penalties
(collectively, "Taxes"), required to be paid or accrued by it through the date
hereof, except where the failure to do so would not reasonably be expected to
have a Company Material Adverse Effect;
(b) The Company has timely filed or requested an extension of the
time to file all federal, state, local and foreign Tax returns required to be
filed by it through the date hereof, and all such returns completely and
accurately set forth the amount of any Taxes relating to the applicable period,
except where the failure to do so would not reasonably be expected to have a
Company Material Adverse Effect;
(c) For all periods from its inception, the Company has qualified to
be treated as a "real estate investment trust" (a "REIT") within the meaning of
Sections 856-860 of the Code. For the periods described in the preceding
sentence, the Company has met all requirements necessary to be treated as a REIT
for purposes of the income Tax provisions of those states in which the Company
is subject to income Tax and which provide for the taxation of a REIT in a
manner similar to the treatment of REITs under Sections 856-860 of the Code; and
(d) To the Company's knowledge, after consulting with its
independent auditors and tax counsel, the Company has not taken or agreed to
take any action that would prevent any Merger from constituting a transaction
qualifying as a reorganization under Section 368(a) of the Code.
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3.10 Full Disclosure. The representations of the Company contained in this
Agreement do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made herein not
misleading, and none of the information supplied or to be supplied by the
Company for inclusion in the Consent Solicitation/Offering Memorandum to be
distributed to Target REIT Stockholders, pursuant to Section 5.3 hereof (the
"Consent Solicitation/Offering Memorandum") contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Closing Date any event relating to the Company should occur that is required
to be described in an amendment of or supplement to the Consent
Solicitation/Offering Memorandum, the Company shall, together with the Target
REITS, prepare, file and disseminate such amendment or supplement. To the
Company's knowledge, all of the representations and warranties of each of the
Target REITs set forth in this Agreement are true and correct as of the date
hereof.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE TARGET REITS
Each of the Target REITs individually represents and warrants to the
Company that the statements contained in this Article 4 are true and correct as
to itself, except as set forth in the disclosure schedules delivered at or prior
to the execution hereof by each of the Target REITs to the Company (each, a
"Target REIT Disclosure Schedule" and, collectively, the "Target REITs
Disclosure Schedules"). Each Target REIT Disclosure Schedule shall be arranged
in paragraphs corresponding to the numbered and letter paragraphs contained in
this Article 4, and the disclosures in any paragraph of any Target REIT
Disclosure Schedule shall also be deemed to qualify all other paragraphs in this
Article 4 with respect to that Target REIT. In the event that at the time of the
execution of this Agreement the Company has knowledge that any of the
representations or warranties of any Target REIT contained herein are not true
and correct, such Target REIT shall not be deemed to be in breach of this
Agreement in respect thereof, including without limitation for purposes of
Sections 6(f) and 7.1(c) below.
4.1 Due Organization; Authority.
(a) The Target REIT is a corporation duly organized and validly
existing under the laws of the State of Delaware. The Target REIT (i) has the
authority to conduct its business as currently conducted and to own and operate
the properties that it now owns and operates, and (ii) is duly licensed or
qualified to do business in, and is in good standing under the laws of, all
jurisdictions in which the transaction of its business makes such qualification
necessary, except where the failure to be so licensed or qualified would not
reasonably be expected to have a material adverse effect on the business,
assets, prospects, results of operations or financial condition of the Target
REIT (a "Target REIT Material Adverse Effect").
(b) The Target REIT has provided the Company and each other Target
REIT with a true and complete copy of its certificate of incorporation and
bylaws, each as amended to date.
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4.2 Authorization; Validity; Effect of Agreement. The Target REIT has all
requisite power, authority and legal right to enter into this Agreement and to
consummate the Mergers. The execution and delivery of this Agreement by the
Target REIT and, subject to the approval of this Agreement by its Target REIT
Stockholders, the consummation by the Target REIT of its Merger have been duly
authorized by all necessary corporate action on the part of the Target REIT, and
this Agreement is a legal, valid and binding obligation of the Target REIT,
enforceable against the Target REIT in accordance with its terms.
4.3 Financial Statements.
(a) The Target REIT has previously delivered or made available to
the Company the following financial statements (collectively, the "Target REIT
Financial Statements"): (i) statement of income for the twelve months ended
December 31, 2005 (audited); (ii) statement of cash flows from date of inception
through December 31, 2005 (audited), (iii) a balance sheet as of December 31,
2005 (audited) (the "Target REIT Balance Sheet"). The Target REIT Financial
Statements have been prepared in accordance with GAAP, applied on a basis
consistent with prior periods (except as otherwise noted therein), and present
fairly the financial position and results of operations of the Target REIT as of
their respective dates and for the periods presented therein.
(b) The Target REIT has no liability of any nature, whether known or
unknown, accrued or unaccrued, absolute or contingent, asserted or unasserted,
except liabilities (i) stated or adequately reserved against on the Target REIT
Balance Sheet or the notes thereto, (ii) incurred in the ordinary course of
business and not required under GAAP to be reflected on the Target REIT Balance
Sheet, (iii) incurred after the date of the Target REIT Balance Sheet in the
ordinary course of business consistent with the terms of this Agreement or (iv)
which would not reasonably be expected to have a Target REIT Material Adverse
Effect.
4.4 Contracts and Commitments. The Target REIT has delivered or made
available to the Company a correct and complete copy of each contract to which
the Target REIT is a party that is material to the Target REIT (each a "Target
REIT Material Contract"). Each Target REIT Material Contract is in full force
and effect and neither the Target REIT nor, to the knowledge of the Target REIT,
the other party thereto is in breach or default thereunder, other than breaches
or defaults which would not, individually or in the aggregate, reasonably be
expected to have a Target REIT Material Adverse Effect.
4.5 No Violation.
(a) Neither the execution and delivery by the Target REIT of this
Agreement, nor the consummation by the Target REIT of its Merger and compliance
by the Target REIT with the provisions hereof, will: (i) conflict with or
violate any provision of its certificate of incorporation or bylaws; (ii)
require on the part of the Target REIT any consent, approval or authorization
of, or declaration, filing or registration with, any governmental or regulatory
authority, except (x) the filing of the Certificates of Merger or (y) where the
failure to obtain any such consent, approval or authorization of, or
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declaration, filing or registration with, any governmental or regulatory
authority would not reasonably be expected to have a Target REIT Material
Adverse Effect and would not adversely affect the consummation of the
transactions contemplated hereby; (iii) conflict with, result in a breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party the
right to terminate, modify or cancel, or require any notice, consent or waiver
under, any contract or instrument to which the Target REIT is a party or by
which the Target REIT is bound or to which any of its assets is subject, except
for (A) any conflict, breach, default, acceleration, termination, modification
or cancellation which would not have a Target REIT Material Adverse Effect and
would not adversely affect the consummation of the transactions contemplated
hereby or (B) any notice, consent or waiver the absence of which would not have
a Target REIT Material Adverse Effect and would not adversely affect the
consummation of the transactions contemplated hereby; (iv) result in the
imposition of any mortgage, pledge, security interest, encumbrance, charge or
other lien (whether arising by contract or by operation of law) upon any
property or assets of the Target REIT; or (v) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Target REIT or
any of its properties or assets.
(b) Except as expressly contemplated by this Agreement, no other
action is required to be taken by the Target REIT to permit the execution,
delivery and performance of (i) this Agreement, (ii) all other documents and
certificates expressly contemplated hereby, and (iii) the Mergers, and no
consent or approval of any third party or governmental authority is or was
required or appropriate in connection with the execution of this Agreement, or
to consummate the transactions expressly contemplated hereunder, except such as
have been obtained or will be obtained prior to the Closing.
4.6 Litigation. There are (i) no continuing orders, injunctions or decrees
of any court, arbitrator or governmental authority to which the Target REIT is a
party or by which it is bound or, to the knowledge of the Target REIT, to which
any of its directors, officers, employees or agents, in such capacity, is a
party or, to the knowledge of the Target REIT, by which any of them is bound,
and (ii) no actions, suits, investigations or proceedings pending against the
Target REIT, or, to the knowledge of the Target REIT, against any of its
directors, officers, employees or agents, in such capacity, or, to the knowledge
of the Target REIT, threatened against the Target REIT or any of its directors,
officers, employees or agents, in such capacity, at law or in equity, or before
or by any federal, state or local commission, board, bureau, agency or
instrumentality that would, individually or in the aggregate, reasonably be
expected to have a Target REIT Material Adverse Effect.
4.7 Title to Assets. The Target REIT has good and marketable title to the
assets reflected in the most recent Target REIT Balance Sheet and will hold good
and marketable title to such assets, and any assets acquired by the Target REIT
prior to the Effective Time, except for assets disposed of in the ordinary
course of business (which assets do not include its Property) and except as the
failure of the Target REIT to have such good and marketable title is not, in the
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aggregate, material to the Target REIT. The assets reflected on the Target REIT
Balance Sheet include its Property. Except as otherwise disclosed in the Target
REIT Balance Sheet or related notes accompanying it, all the assets referred to
in the first sentence of this Section 4.7 are owned free and clear of any and
all material adverse claims, security interests, charges or other encumbrances
or restrictions of every nature, except liens for current taxes not yet due and
payable or landlords' liens as provided for in the relevant leases, or by
applicable law.
4.8 Real Property.
With respect to each parcel of Property owned by the Target REIT,
either directly or through a wholly-owned subsidiary:
(a) the Target REIT has good and clear record and marketable title
to such parcel, insurable by a recognized national title insurance company at
standard rates, free and clear of any security interest, easement, covenant or
other restriction, except for recorded easements, covenants and other
restrictions which do not impair the uses, occupancy or value of such parcel for
its existing use as an office building (the "Intended Uses");
(b) there are no (i) pending or, to the knowledge of the Target
REIT, threatened condemnation proceedings relating to such parcel, (ii) pending
or, to the knowledge of the Target REIT, threatened litigation or administrative
actions relating to such parcel, or (iii) other matters affecting adversely the
Intended Uses or, occupancy or value thereof;
(c) the legal description for such parcel contained in the deed
thereof describes such parcel fully and adequately; the buildings and
improvements for the Intended Uses is permitted under applicable zoning and land
use laws, and such buildings and improvements are located within the boundary
lines of the described parcels of land, are not in violation of, or are
affirmatively covered by title insurance with respect to, setback requirements
applicable to them, zoning laws and ordinances and do not encroach on any
easement which may burden the land; the land does not serve any adjoining
property for any purpose inconsistent with the use of the land; and no building
is located within a special flood hazard area, except as shown in Section 4.8 of
the Target REIT Disclosure Schedule, or subject to any similar type restriction
for which any permits or licenses necessary to the use thereof have not been
obtained;
(d) there are no leases, subleases, licenses or agreements, written
or oral, granting to any party or parties (other than the Target REIT and those
tenants under leases described in Section 4.9) the right of use or occupancy of
any portion of such parcel, except for leases, subleases, licenses or agreements
which do not impair the Intended Uses;
(e) except as set forth in Section 4.8(e) in the Target REIT
Disclosure Schedule, there are no outstanding options or rights of first refusal
to purchase such parcel, or any portion thereof or interest therein;
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(f) all facilities located on such parcel are supplied with
utilities and other services necessary for the operation of such facilities,
including gas, electricity, water, telephone, sanitary sewer and storm sewer,
all of which services are adequate for the Intended Uses and in accordance with
all applicable laws, ordinances, rules and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements benefiting
such parcel;
(g) such parcel abuts on and has direct vehicular access to a public
road or access to a public road via a permanent, irrevocable, appurtenant
easement benefiting such parcel;
(h) the Target REIT has received no notice of any, and, to the
knowledge of the Target REIT, there is no, proposed or pending proceeding to
change or redefine the zoning classification of all or any portion of the
parcels;
(i) the improvements constructed on the parcels are in good
condition and proper order, free of material roof leaks, untreated material
insect infestation, and material construction defects, and all mechanical and
utility systems servicing such improvements are in good condition and proper
working order, free of material defects; and
(j) each parcel is an independent unit which does not rely on any
facilities (other than the facilities of public utility and water companies or
facilities as to which a permanent, irrevocable appurtenant easement exists
benefiting such parcel granting the use of such facilities) located on any other
property (i) to fulfill any zoning, building code or other municipal or
governmental requirement, (ii) for structural support or the furnishing of any
essential building systems or utilities, including, but not limited to electric,
plumbing, mechanical, heating, ventilating, and air conditioning systems, or
(iii) to fulfill the requirements of any lease. No building or other improvement
not included in the parcels relies on any part of the parcels to fulfill any
zoning, building code or other municipal or governmental requirement or for
structural support or the furnishing of any essential building systems or
utilities except with respect to utility or storm water facilities pursuant to
recorded easement agreements or declarations of common easements the use of
which do not impair the Intended Uses. Each of the parcels is assessed by local
property assessors as a tax parcel or parcels separate from all other tax
parcels.
4.9 Real Property Leases. The Target REIT has delivered or made available
to the Company complete and accurate copies of the leases and subleases (as
amended to date) of its Property. With respect to each such lease and sublease:
(a) the lease or sublease is legal, valid, binding, enforceable and
in full force and effect;
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(b) the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Effective
Time in accordance with the terms thereof as in effect immediately prior to the
Effective Time;
(c) neither the Target REIT nor, to the knowledge of the Target
REIT, any other party, is in breach or violation of, or default under, any such
lease or sublease, and no event has occurred, is pending or, to the knowledge of
the Target REIT, is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by the Target REIT or,
to the knowledge of the Target REIT, any other party under such lease or
sublease;
(d) the Target REIT has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
sublease-hold that have not been discharged; and
(e) the Target REIT is not aware of any security interest, easement,
covenant or other restriction applicable to the real property subject to such
lease, except for recorded easements, covenants and other restrictions which do
not materially impair the current uses or the occupancy by the Target REIT of
the property subject thereto.
4.10 Compliance with Laws; Permits; Environmental Matters.
(a) The Target REIT has complied with all applicable Environmental
Laws (as defined below), except for violations of Environmental Laws that do not
and will not, individually or in the aggregate, have a Target REIT Material
Adverse Effect. There is no pending or, to the knowledge of the Target REIT,
threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding, or investigation, inquiry or information request by
any court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity"),
relating to any Environmental Law involving the Target REIT, except for
litigation, notices of violations, formal administrative proceedings or
investigations, inquiries or information requests that will not, individually or
in the aggregate, have a Target REIT Material Adverse Effect. For purposes of
this Agreement, "Environmental Law" means any federal, state or local law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation any statute,
regulation, administrative decision or order pertaining to (i) treatment,
storage, disposal, generation and transportation of industrial, toxic or
hazardous materials or substances or solid or hazardous waste; (ii) air, water
and noise pollution; (iii) groundwater and soil contamination; (iv) the release
or threatened release into the environment of industrial, toxic or hazardous
materials or substances, or solid or hazardous waste, including without
limitation emissions, discharges, injections, spills, escapes or dumping of
pollutants, contaminants or chemicals; (v) the protection of wild life, marine
life and wetlands, including without limitation all endangered and threatened
species; (vi) storage tanks, vessels, containers, abandoned or discarded
barrels, and other closed receptacles; (vii) health and safety of employees and
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other persons; and (viii) manufacturing, processing, using, distributing,
treating, storing, disposing, transporting or handling of materials regulated
under any law as pollutants, contaminants, toxic or hazardous materials or
substances or oil or petroleum products or solid or hazardous waste. As used
above, the terms "release" and "environment" shall have the meaning set forth in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA").
(b) There have been no releases in violation of Environmental Laws
of any Materials of Environmental Concern (as defined below) into the
environment at any parcel of real property or any facility formerly or currently
owned, operated or controlled by the Target REIT. With respect to any such
releases of Materials of Environmental Concern, the Target REIT has given all
required notices to Governmental Entities (copies of which have been provided to
the Company). The Target REIT is not aware of any releases of Materials of
Environmental Concern at parcels of real property or facilities other than those
owned, operated or controlled by the Target REIT that could reasonably be
expected to have an impact on the real property or facilities owned, operated or
controlled by the Target REIT. For purposes of this Agreement, "Materials of
Environmental Concern" means any chemicals, pollutants or contaminants,
hazardous substances (as such term is defined under CERCLA), solid wastes and
hazardous wastes (as such terms are defined under the Resource Conservation and
Recovery Act), toxic materials, oil or petroleum and petroleum products or any
other material subject to regulation under any Environmental Law.
(c) A complete and accurate copy of all documents (whether in hard
copy or electronic form) that contain any environmental reports, investigations
and audits relating to premises currently or previously owned or operated by the
Target REIT (whether conducted by or on behalf of the Target REIT or a third
party, and whether done at the initiative of the Target REIT or directed by a
Governmental Entity or other third party) which were issued or conducted during
the past five years and which the Target REIT has possession of or access to has
been provided or made available to the Company.
(d) The Target REIT is not aware of any material environmental
liability of any solid or hazardous waste transporter or treatment, storage or
disposal facility that has been used by the Target REIT.
4.11 Taxes.
(a) The Target REIT has paid, caused to be paid or accrued all
federal, state, local, foreign and other Taxes, required to be paid or accrued
by it through the date hereof;
(b) The Target REIT has timely filed or requested an extension of
the time to file all federal, state, local and foreign Tax returns required to
be filed by it through the date hereof, and all such returns completely and
accurately set forth the amount of any Taxes relating to the applicable period;
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(c) The Target REIT has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other party;
(d) For all periods since its inception, the Target REIT has
qualified to be treated as a REIT within the meaning of Sections 856-860 of the
Code. For the periods described in the preceding sentence, the Target REIT has
met all requirements necessary to be treated as a REIT for purposes of the
income Tax provisions of those states in which the Target REIT is subject to
income Tax and which provide for the taxation of a REIT in a manner similar to
the treatment of REITs under Sections 856-860 of the Code;
(e) Neither the IRS nor any other governmental authority is now
asserting by written notice to the Target REIT or, to the knowledge of the
Target REIT, threatening to assert against the Target REIT any deficiency or
claim for additional Taxes. There is no dispute or claim concerning any Tax
liability of the Target REIT either claimed or raised in writing by the IRS.
There is no dispute or claim of a material nature concerning any Tax liability
of the Target REIT either claimed or raised in writing by any governmental
authority other than the IRS, or, to the knowledge of the Target REIT, which may
be claimed or raised by any federal or state governmental authority. No written
claim has ever been made by a Taxing authority in a jurisdiction where the
Target REIT does not file reports and returns asserting that the Target REIT is
or may be subject to Taxation by that jurisdiction; and
(f) To the Target REIT's knowledge, after consulting with its
independent auditors and tax counsel, the Target REIT has not taken or agreed to
take any action that would prevent its Merger from constituting a transaction
qualifying as a reorganization under Section 368(a) of the Code.
4.12 No Existing Discussions. As of the date of this Agreement, no Target
REIT is engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to an Acquisition Proposal (as defined in Section
5.5(e)).
4.13 Full Disclosure. The representations of the Target REIT contained in
this Agreement do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made herein not
misleading, and none of the information supplied or to be supplied by the Target
REIT for inclusion in the Consent Solicitation/Offering Memorandum contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Closing Date any event relating to the Target REIT should
occur that is required to be described in an amendment of or supplement to the
Consent Solicitation/Offering Memorandum, the Target REIT promptly shall inform
the Company and assist in the preparation, filing, dissemination of such
amendment or supplement.
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ARTICLE 4A ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE TARGET REITS
The Target REITs jointly and severally represent and warrant that no
person listed in Schedule 4A of the Company Disclosure Schedule will, on the
Effective Date, receive 5% or more of the aggregate Merger Consideration and
that such persons in the aggregate will not receive 10% or more of the Merger
Consideration.
ARTICLE 5 COVENANTS AND ADDITIONAL AGREEMENTS
5.1 Conduct of Business. Prior to the Effective Time, or the earlier
termination of this Agreement, the Company and each Target REIT shall use its
reasonable efforts to (i) carry on its business in the ordinary course in
substantially the same manner as previously conducted, (ii) preserve intact its
present business organization and goodwill, (iii) maintain permits, licenses and
authorizations, (iv) preserve its relationships with third parties and (v) take
all actions necessary to continue to qualify as a REIT, including, without
limitations, the payment of dividends.
5.2 Other Actions. No Target REIT shall take or omit to take any action
that would result in any of the representations and warranties of such Target
REIT made in or pursuant to this Agreement becoming untrue or incomplete, in any
of the covenants and agreements of such Target REIT being breached, or in any of
the conditions to the Closing required to be satisfied by such Target REIT not
being satisfied. Neither the Company nor any Acquisition Subsidiary shall take
or omit to take any action that would result in any of the representations and
warranties of the Company, any Acquisition Subsidiary or any Target REIT made in
or pursuant to this Agreement becoming untrue or incomplete, in any of the
covenants and agreements of the Company, any Acquisition Subsidiary or any
Target REIT being breached, or in any of the conditions to the Closing not being
satisfied.
5.3 Approval of Target REIT Stockholders. Promptly following the execution
of this Agreement, the Company, together with the Target REITs, shall prepare
and distribute to the Target REIT Stockholders the Consent Solicitation/Offering
Memorandum, asking the Target REIT Stockholders to vote upon the adoption of
this Agreement and the Mergers and including, among other things, a summary of
the Mergers and this Agreement, all of the information required under applicable
securities laws and all required information regarding appraisal rights. Except
as permitted by Section 5.5 below, (a) the Consent Solicitation/Offering
Memorandum shall contain the recommendation of the Target Boards of Directors
that the Target REIT Stockholders approve the adoption of this Agreement and the
Mergers and (b) each of the Target REITs, subject to and in accordance with
applicable law, shall use its respective reasonable best efforts to obtain such
approval described in this Section 5.3, including without limitation, by timely
mailing the Consent Solicitation/Offering Memorandum to its Target REIT
Stockholders. Subject to the requirements of the voting agreement between the
Company and FSP Blue Lagoon Drive Corp., the Company agrees (i) to vote or cause
to be voted any shares of Target REIT capital stock owned by the Company,
including without limitation any shares of Target REIT capital stock owned by a
Subsidiary of the Company, and including without limitation shares of Target
Stock and common stock, in favor of the Mergers and the adoption of this
Agreement and (ii) to not transfer or cause or allow to be transferred any such
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shares from the date hereof until following the earlier of the Effective Time or
the termination of this Agreement. If the Target REIT Stockholder approval is
obtained by means of a written consent, each Target REIT shall send, pursuant to
Sections 228 and 262(d) of the Delaware General Corporation Law, a written
notice to all stockholders of the applicable Target REIT that did not execute
such written consent informing them that this Agreement and the Merger were
adopted and approved by the stockholders of such Target REIT and that appraisal
rights are available for their Target Stock pursuant to Section 262 of the
Delaware General Corporation Law (which notice shall include a copy of such
Section 262), and shall promptly inform the Company immediately prior to the
Mergers of the date on which such notice was sent.
5.4 Consents and Approvals. The Company and the Target REITs shall each
use all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, to obtain in a timely manner all necessary
consents, waivers, approvals, authorizations and orders and to make all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
5.5 No Solicitation.
(a) Except as set forth in this Section 5.5, no Target REIT shall,
nor shall any of them authorize or permit any of their respective directors,
officers, employees, investment bankers, attorneys, accountants or other
advisors or representatives (such directors, officers, employees, investment
bankers, attorneys, accountants, other advisors and representatives,
collectively, "Representatives") to, directly or indirectly:
(i) solicit, initiate, encourage or take any other action to
facilitate any inquiries or the making of any proposal or offer that
constitutes, or could reasonably be expected to lead to, any Acquisition
Proposal, including without limitation (A) approving any transaction under
Section 203 of the DGCL that would require such approval in the absence of
Article TENTH of such Target REIT's charter, (B) approving any person becoming
an "interested stockholder" under Section 203 of the DGCL that would require
such approval in the absence of Article TENTH of such Target REIT's charter and
(C) amending or granting any waiver or release under any standstill or similar
agreement with respect to any Target Stock; or
(ii) enter into, continue or otherwise participate in any
discussions or negotiations regarding, furnish to any person any information
with respect to, assist or participate in any effort or attempt by any person
with respect to, or otherwise cooperate in any way with, any Acquisition
Proposal.
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Notwithstanding the foregoing, prior to the adoption of this Agreement by the
respective Target REIT Stockholders (the "Specified Time"), the Target REITs
may, to the extent necessary to act in a manner consistent with the respective
fiduciary obligations of the Target Board of Directors, as determined in good
faith by such respective Target Board of Directors, after consultation with
outside counsel, in response to a Superior Proposal that did not result from a
breach by the respective Target REIT of this Section 5.5, and subject to
compliance with Section 5.5(c), (x) furnish information with respect to such
Target REIT to the person making such Superior Proposal and its Representatives
pursuant to a customary confidentiality agreement and (y) participate in
discussions or negotiations with such person and its Representatives regarding
any Superior Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in this Section 5.5(a) by any
Representative of any Target REIT, whether or not such person is purporting to
act on behalf of a Target REIT or otherwise, shall be deemed to be a breach of
this Section 5.5(a) by the respective Target REIT.
(b) No Target REIT Board of Directors nor any committee thereof
shall:
(i) except as set forth in this Section 5.5, withdraw or
modify, or publicly (or in a manner designed to become public) propose to
withdraw or modify, in a manner adverse to the Company or any other Target REIT,
its approval or recommendation with respect to the adoption of this Agreement
and approval of the Mergers contemplated hereby;
(ii) cause or permit its Target REIT to enter into any letter
of intent, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement or similar agreement constituting or relating to any
Acquisition Proposal (other than a confidentiality agreement referred to in
Section 5.5(a) entered into in the circumstances referred to in Section 5.5(a));
or
(iii) adopt, approve or recommend, or publicly propose to
adopt, approve or recommend, any Acquisition Proposal.
Notwithstanding the foregoing, a Target REIT Board of Directors may, in response
to a Superior Proposal that did not result from a breach by such Target REIT of
this Section 5.5, withdraw or modify its recommendation with respect to the
adoption of this Agreement and approval of the Mergers contemplated hereby if
such Target REIT Board of Directors determines in good faith (after consultation
with outside counsel) that its fiduciary obligations require it to do so, but
only at a time that is prior to the Specified Time and is after the fifth
business day following receipt by the Company of written notice advising it that
such Target Board of Directors desires to withdraw or modify the recommendation
due to the existence of a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. Nothing in this Section 5.5 shall be deemed to (A) permit any
Target REIT to take any action described in clauses (ii) or (iii) of the first
sentence of this Section 5.5(b), (B) affect any obligation of the Company or the
Target REITs under this Agreement or (C) limit a Target REITs' respective
obligation to solicit consents from its Target REIT Stockholders, regardless of
whether such Target REIT Board of Directors has withdrawn or modified its
recommendation.
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(c) Each Target REIT shall promptly advise the Company and the other
Target REITs orally, with written confirmation to follow promptly (and in any
event within 24 hours of the receipt of the applicable Acquisition Proposal or
request for information), of any Acquisition Proposal or any request for
nonpublic information in connection with any Acquisition Proposal, or of any
inquiry with respect to, or that could reasonably be expected to lead to, any
Acquisition Proposal, the material terms and conditions of any such Acquisition
Proposal or inquiry and the identity of the person making any such Acquisition
Proposal or inquiry. No Target REIT shall provide any information to or
participate in discussions or negotiations with the person or entity making any
Superior Proposal until five business days after such Target REIT has first
notified the Company and the other Target REITs of such Acquisition Proposal as
required by the preceding sentence. The Target REIT receiving an Acquisition
Proposal or inquiry shall (i) keep the Company and the other Target REITs fully
informed, on a reasonably current basis, of the status and details (including
any change to the terms) of any such Acquisition Proposal or inquiry, (ii)
provide to the Company and the other Target REITs as soon as practicable after
receipt or delivery thereof copies of all correspondence and other written
material sent or provided to the Target REIT receiving an Acquisition Proposal
or inquiry from any third party in connection with any Acquisition Proposal or
inquiry or sent or provided by such Target REIT to any third party in connection
with any Superior Proposal, and (iii) if the Company shall make a
counterproposal, consider and cause its financial and legal advisors to
negotiate on its behalf in good faith with respect to the terms of such
counterproposal. Contemporaneously with providing any information to a third
party in connection with any such Superior Proposal or inquiry, the Target REIT
receiving a Superior Proposal shall furnish a copy of such information to the
Company and the other Target REITs.
(d) On the date hereof, each Target REIT shall, and shall cause its
Representatives to, cease immediately all discussions and negotiations regarding
any proposal that constitutes, or could reasonably be expected to lead to, an
Acquisition Proposal. Each Target REIT shall use commercially reasonable efforts
to have all copies of all nonpublic information it and its Representatives have
distributed on or prior to the date of this Agreement to other potential
purchasers returned to such Target REIT as soon as possible.
(e) For purposes of this Agreement:
"Acquisition Proposal" means, with respect to any Target REIT,
(i) any inquiry, proposal or offer for a merger, consolidation, dissolution,
sale of substantial assets, tender offer, recapitalization, share exchange or
other business combination involving such Target REIT, (ii) any proposal for the
issuance by such Target REIT of over 10% of its equity securities or (iii) any
proposal or offer to acquire in any manner, directly or indirectly, over 10% of
the equity securities or consolidated total assets of such Target REIT, in each
case other than the Mergers contemplated by this Agreement.
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"Superior Proposal" means, with respect to any Target REIT,
any unsolicited, bona fide written proposal made by a third party to acquire
substantially all of the equity securities or assets of such Target REIT,
pursuant to a tender or exchange offer, a merger, a consolidation or a sale of
its assets, (i) on terms which such Target REIT's Board of Directors determines
in its good faith judgment to be more favorable from a financial point of view
to the stockholders of such Target REIT than the transactions contemplated by
this Agreement (after taking into account the written opinion with respect
thereto of a nationally recognized independent financial advisor), taking into
account all the terms and conditions of such proposal and this Agreement
(including any proposal by either the Company or such the Target REIT to amend
the terms of this Agreement) and (ii) that in the good faith judgment of the
Target REIT Board of Directors is reasonably capable of being completed on the
terms proposed, taking into account all financial, regulatory, legal and other
aspects of such proposal; provided, however, that no Acquisition Proposal shall
be deemed to be a Superior Proposal if any financing required to consummate the
Acquisition Proposal is not committed.
5.6 Dividends. From and after the date of this Agreement, no Target REIT
shall declare or make any dividend or distribution to its stockholders without
the prior written consent of the Company; provided, however, the written consent
of the Company shall not be required for the declaration and payment by a Target
REIT of a quarterly dividend on its Target Stock in the second quarter of 2006
in respect of the first quarter of 2006. The foregoing restriction shall not
apply, however, to the extent a distribution by a Target REIT is necessary for
such Target REIT to maintain its REIT status. The Company shall assume the
obligation to pay any dividend declared by a Target REIT in accordance with this
Section 5.6, but not paid by a Target REIT prior to the Effective Date.
Following the Effective Time, in the event the Company declares a dividend in
respect of the quarter in which the Effective Time occurred, the holders of
shares of the Company issued in the Mergers who hold such shares on the record
date for such dividend shall be entitled to receive the full amount of such
dividend, and, without limiting the generality of the foregoing, such dividend
shall not be reduced to reflect the fact that such holders owned such shares for
less than the full quarter.
5.7 Listing of Shares. The Company shall use reasonable efforts to cause
the shares of Common Stock issuable hereunder to be listed for trading on the
American Stock Exchange as soon as practicable following the Closing.
5.8 Indemnification.
(a) The Company shall not, for a period of six years after the
Closing, take any action to alter or impair any exculpatory or indemnification
provisions now existing in the Certificate of Incorporation or By-laws of any
Target REIT for the benefit of any individual who served as a director or
officer of any Target REIT at any time prior to the Closing (the "Indemnified
Executives"), except for any changes which may be required to conform with
changes in applicable law and any changes which do not affect the application of
such provisions to acts or omissions of such individuals prior to the Closing.
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(b) For a period of six years after the Closing, the Company shall
maintain in effect a directors' and officers' liability insurance policy
covering the Indemnified Executives who are currently covered by the Company's
directors' and officers' liability insurance policy, including without
limitation the directors of the Target REITs, with coverage in amount and scope
at least as favorable to such persons as the Company's existing coverage and
with coverage and scope covering such Indemnified Executives' service for the
Target REITs.
(c) The Indemnified Executives are third party beneficiaries with
respect to the provisions of this Section 5.8.
ARTICLE 6 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGERS.
The respective obligations of the parties hereto to consummate the
Mergers pursuant to the terms of this Agreement are subject to satisfaction of
the following conditions precedent on or prior to the Closing Date. In the event
that one or more of these conditions are not satisfied on or prior to the
Closing Date, the party or parties whose obligations hereunder are subject to
the satisfaction of such condition or conditions may either elect to terminate
this Agreement or waive the satisfaction of such condition. The conditions are:
(a) this Agreement and the Mergers shall have been approved by the
holders of a majority of the shares of Target Stock of each Target REIT other
than a Target REIT with respect to which this Agreement has been terminated in
accordance with Section 8.2(b);
(b) all necessary consents, waivers, approvals, authorizations or
orders required to be obtained and the making of all filings required to be made
by any of the parties for the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated thereby shall
have been obtained or made, as the case may be, on or prior to (and remaining in
effect at) the Closing Date;
(c) the Company and each of the Target REITs shall have received, on
or prior to the Closing Date, an opinion from Wilmer Cutler Pickering Hale and
Dorr LLP to the effect that each Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
(it being agreed that if Wilmer Cutler Pickering Hale and Dorr LLP does not
render such opinion, this condition shall nonetheless be satisfied if another
nationally recognized law firm renders such opinion, and that the Company and
the Target REITs shall use their respective reasonable best efforts to obtain
the opinion required by this subsection). Each of the Company and each Target
REIT agrees to provide customary representations to Wilmer Cutler Pickering Hale
and Dorr LLP (or such other law firm) in connection with the issuance of such
opinion;
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(d) either the President and Chief Executive Officer or the Vice
President and Chief Operating Officer of the Company shall have delivered to
each of the Target REITs a certificate on behalf of the Company, dated as of the
Closing Date, to the effect that there have been no material adverse changes in
the financial condition of the Company between the date of the most recent
Company Financial Statements and the Closing Date, and the President of each of
the Target REITs shall have delivered to the Company a certificate on behalf of
each Target REIT, each dated as of the Closing Date, to the effect that there
have been no material adverse changes in the financial condition of such Target
REIT between the date of the most recent Target REIT Financial Statements for
such Target REIT and the Closing Date;
(e) there shall have been no statute, rule, order or regulation
enacted or issued by the United States or any State thereof, or by a court, that
prohibits the consummation of the Mergers;
(f) the representations set forth in Section 3, Section 4 and
Article 4A hereof are true and complete in all material respects; provided,
however, that the party whose representation was not true and correct shall have
no right to not consummate the Closing as a result thereof; and
(g) the Company shall have a reasonable belief that (i) the number
of Target REIT Stockholders who are not Accredited Investors (as defined in Rule
501(a) of Regulation D promulgated under the Securities Act) does not exceed 35
and (ii) that each of such Target REIT Stockholders who is not an Accredited
Investor, either alone or with his/her/its purchaser representative(s), has such
knowledge and experience in business and financial matters that he/she/it is
capable of evaluating the merits and risks of the Mergers.
The conditions described in clause (b) above, may be waived by either the
Company or the Target REITs, as the case may be, in whole or in part if, in the
opinion of either the Company or the Target REITs, as the case may be, such
waiver does not materially affect the terms of the transaction, which waiver
shall not be unreasonably withheld. The conditions described in clause (f) may
be waived, in whole or in part, by the party to which the representation that is
not true and correct is made.
ARTICLE 7 TERMINATION AND WAIVER
7.1 Termination. This Agreement may be terminated, and the Mergers may be
abandoned, at any time before the Closing Date, notwithstanding approval of the
Mergers by the Target REIT Stockholders:
(a) by the mutual written consent of the parties;
(b) by the Company or any Target REIT if the Mergers have not been
consummated by June 30, 2006 (which date may be extended by mutual agreement of
the parties);
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(c) by the Company or any Target REIT if any Target REIT or the
Company, respectively, is in material breach of its representations, warranties,
covenants or agreements contained in this Agreement, such breach would cause any
condition to the Mergers set forth in Article 6 of this Agreement not to be
satisfied and such breach is not cured within 20 days following delivery by the
terminating party to the breaching party of written notice of such breach;
(d) by the Company or any Target REIT, in the instance where the
Target REIT has received a Superior Proposal and the respective Target REIT
Board of Directors has withdrawn or modified its approval or recommendation with
respect to the adoption of this Agreement and approval of the Mergers
contemplated hereby, if at a meeting of Target REIT Stockholders (including any
adjournment or postponement thereof) or pursuant to a written consent in lieu of
a meeting, as contemplated by Section 5.3 above, the requisite vote of such
stockholders to adopt this Agreement and approve the Mergers contemplated hereby
shall not have been obtained within 30 days of mailing of the Consent
Solicitation/Offering Memorandum;
(e) by the Company if the Market Value is $19.50 or less; and
(f) by any Target REIT if the last reported sale price of Common
Stock on the American Stock Exchange as of the end of regular trading hours on
the last day of the 20-trading day period used to determine Market Value is
$18.50 or less.
The dollar amounts in subsections (e) and (f) above are subject to
proportionate adjustment for any reclassification, stock split, reverse stock
split, stock dividend, reorganization or any other like change with respect to
the Common Stock occurring after the date hereof and prior to the Effective
Time.
If a casualty occurs with respect to the Property owned by a particular
Target REIT, the Company Board has the right to terminate the Agreement with
respect to such Target REIT and to consummate the Mergers with the remaining
Target REITs as provided in Section 8.2(b) hereof. In addition, the Company
Board has the right to terminate this Agreement with respect to a Target REIT if
(i) after the receipt by any Target REIT of an Acquisition Proposal, the Company
requests that such Target REIT Board of Directors reconfirm its recommendation
of this Agreement or the Merger with the respective Target REIT and such Target
REIT Board of Directors fails to do so within five business days after its
receipt of the Company's request or (ii) such Target REIT Board of Directors (or
any committee thereof) shall have approved or recommended to its Target REIT
Stockholders an Acquisition Proposal.
7.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 7.1 hereof, this Agreement shall become void and there
shall be no liability or obligation on the part of any party hereto or its
respective affiliates, partners, directors or officers, except (i) with respect
to payment of expenses as described in Section 8.3 and (ii) to the extent that
such termination results from the willful breach of a party hereto of any of its
representations, warranties, covenants or agreements made in or pursuant to this
Agreement.
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7.3 Extension; Waiver. At any time prior to the Closing Date, the parties
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or made in connection herewith, and (iii) waive
compliance with any of the agreements of the other parties hereto contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
7.4 No Survival of Representations and Warranties. None of the
representations and warranties contained in this Agreement shall survive the
Closing Date.
ARTICLE 8 MISCELLANEOUS
8.1 Assignment. The Company may not assign its rights or obligations under
this Agreement without the consent of the applicable Target REIT. None of the
Target REITs may assign their rights or obligations under this Agreement.
8.2 Risk of Loss.
(a) Risk of loss or damage to the assets owned by each Target REIT
(the "Assets") by condemnation, eminent domain or similar proceedings (or deed
in lieu thereof), or by fire or any other casualty, from the date hereof through
the Closing Date, will be on the Target REIT owning such Assets, and thereafter
will be on the Combined Company.
(b) In the event of loss or damage to the Assets that occurs prior
to the Closing Date, the applicable Target REIT shall use its commercially
reasonable efforts to effect a timely cure of such loss or damage prior to the
Closing Date. If the Target REIT is unable to effect such a timely cure, the
Target REIT shall so notify the Company, and thereafter, if such loss or damage
results in a Target REIT Material Adverse Effect, the Company and such Target
REIT shall use good faith efforts to amend this Agreement (without the need to
obtain the consent of any other Target REIT) to (A) reflect a decrease in the
amount of Merger Consideration to be issued with respect to the Target Stock of
such Target REIT based on such loss or damage and (B) extend the term of this
Agreement as reasonably necessary taking into account all financial, regulatory,
legal and other aspects of such amendment to this Agreement, including, but not
limited to, the need to resolicit the stockholders of such Target REIT with
respect to participation in the Mergers with the Merger Consideration adjusted
to reflect such loss or damage and consummate the Merger with such Target REIT
as soon as practicable thereafter; provided, however, that in the event the
Company and such Target REIT, after a good faith effort, cannot agree on a
decrease in the amount of Merger Consideration to be issued with respect to the
Target Stock of such Target REIT based on such loss or damage within a
reasonable period of time following notice of such loss or damage, the Company
shall have the unilateral right to amend this Agreement to terminate this
agreement with respect to such Target REIT and consummate the Mergers with the
other Target REITS.
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8.3 Fees and Expenses. The costs associated with each independent
third-party appraisal of the fair market value of each Target REIT's real estate
("Appraisal") obtained by the respective Target Boards of Directors shall be
paid by the Target REIT owning the real estate that is the subject of the
Appraisal. The costs associated with investment banking advice and each fairness
opinion of each Target REIT (the "Fairness Opinions") obtained by the respective
Target Boards of Directors shall be paid by the Target REIT receiving such
advice and Fairness Opinion. The fees and expenses of each Target REIT's legal
counsel and accountants shall be paid by the respective Target REIT. All other
expenses related to the Mergers and the transactions contemplated hereby,
including, without limitation, consulting, legal, financial advisor,
registration, listing, accounting and administrative expenses, shall be paid by
the Company.
8.4 Entire Agreement; Modifications; Amendments.
(a) This Agreement embodies and constitutes the entire understanding
between the parties with respect to the transactions contemplated herein, and
all prior or contemporaneous agreements, understandings, representations and
statements, oral or written, are merged into this Agreement. Except as expressly
otherwise provided herein, neither this Agreement nor any provision hereof may
be waived, modified, amended, discharged or terminated except by an instrument
in writing signed by the party against which the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
(b) Subject to applicable law, this Agreement may be amended by the
Company and the Target REITs at any time prior to the filing of the Certificates
of Merger with the Secretary of State of the State of Delaware; provided,
however, that after approval by Target REIT Stockholders as provided in Section
6 above, without further approval of the Target REIT Stockholders of such Target
REIT, no amendment may be made that alters or changes (i) the amount or kind of
Merger Consideration which the Target REIT Stockholders in such Target REIT
shall be entitled to receive, (ii) the certificate of incorporation or bylaws of
such Target REIT or (iii) the terms and conditions of this Agreement, if such
alteration or change would have a material adverse effect on such Target REIT
Stockholders.
8.5 Notices. All notices, demands or other writings in this Agreement
provided to be given or made or sent, or which may be given or made or sent, by
either party hereto to the other may be given personally or may be delivered by
depositing the same in the U.S. mail, certified, return receipt requested,
postage prepaid or by delivering the same to an air courier service, postage
prepaid, properly addressed and sent to the address of such party as set forth
below, or such other address as either party may from time to time designate by
written notice to the other. Notice given by mail shall be considered effective
upon the expiration of five business days after deposit. Notice given in any
other manner shall be effective only if and when received by the addressee.
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If to the Company:
Franklin Street Properties Corp.
401 Edgewater Place, Suite 200
Wakefield, Massachusetts 01880
Attention: George J. Carter
President and Chief Executive Officer
Fax: (800) 950-6288
with a copy to:
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Kenneth A. Hoxsie, Esq.
Fax: (617) 526-5000
If to a Target REIT:
c/o Franklin Street Properties Corp.
401 Edgewater Place, Suite 200
Wakefield, Massachusetts 01880
Attention: William W. Gribbell and R. Scott
MacPhee, Members of the Special Committee
of the Board of Directors
Fax: (800) 950-6288
with a copy to:
Gehrke, Gish & Umana LLP
Two Faneuil Hall Marketplace
South Market Building, 4th Floor
Boston, Massachusetts 02109
Attention: William S. Gehrke, Esq.
Fax: (617) 507-8177
8.6 Interpretation. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words of a singular number
shall be held to include the plural and vice versa, unless the context requires
otherwise.
8.7 Captions. The captions used in this Agreement are for convenience only
and shall not be deemed to construe or to limit the meaning of the language of
this Agreement.
8.8 Counterparts. This Agreement may be executed in any number of
identical counterparts. If so executed, each of such counterparts is to be
deemed an original for all purposes, and all such counterparts shall
collectively constitute one agreement, but in making proof of this Agreement it
shall not be necessary to produce or account for more than one such counterpart.
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8.9 Binding Effect. Subject to the restrictions on assignment contained in
Section 8.1 hereof, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
8.10 Attorneys' Fees. Subject to the requirements of Section 8.12 hereof,
should any party hereto employ an attorney or attorneys to enforce any of the
provisions hereof or to protect its interest in any manner arising under this
Agreement, or to recover damages for the breach hereof, the nonprevailing party
or parties in any action pursued in courts of competent jurisdiction (the
finality of which action is not legally contested) agrees to pay to the
prevailing party or parties all reasonable costs, damages and expenses,
including attorneys' fees, expended or incurred in connection therewith;
provided, however, that if more than one item is disputed and the final decision
is against each party as to one or more of the disputed items, then such costs,
expenses and attorneys' fees shall be apportioned in accordance with the
monetary values of the items decided against each party.
8.11 No Waiver; Severability. The failure of any party hereto to enforce
at any time any of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision, and shall in no way affect the validity of
this Agreement or any part hereof or the right of any party thereafter to
enforce each and every such provision. No waiver of any breach of this Agreement
shall be held to be a waiver of any other or subsequent breach. If any provision
of this Agreement, or the application thereof to any person or circumstances
shall, for any reason and to any extent, be invalid or unenforceable, but the
extent of the invalidity or unenforceability does not destroy the basis of the
bargain between the parties as contained herein, the remainder of this Agreement
and the application of such provision to other persons or circumstances shall
not be affected thereby but rather shall be enforced to the greatest extent
permitted by law.
8.12 No Joint and Several Liability. If one of the Target REITs defaults
under, or is in breach of, any of its representations, warranties or covenants
contained in this Agreement, such Target REIT shall be accountable to the
Company and shall be liable for the damages caused by such default or breach to
the extent provided in Section 7.2 hereof. Each Target REIT hereunder has
undertaken obligations and made representations, warranties, disclosures and
covenants herein and in and pursuant to the exhibits hereto solely with respect
to itself and the Property and Assets owned by it. Nothing contained herein,
however, is intended to make any of the Target REITs jointly and severally
liable for the default or breach by any of the other Target REITs, and with
respect to any such default and breach such shall be solely the obligation and
responsibility of the Target REIT responsible for the default or breach, and no
Target REIT shall be liable to any other Target REIT hereunder.
-32-
8.13 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Agreement has been executed by each of the parties as
of the date first set forth above.
COMPANY:
FRANKLIN STREET PROPERTIES CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President and Chief Executive
Officer
ACQUISITION SUBSIDIARIES:
BLUE LAGOON ACQUISITION CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
INNSBROOK ACQUISITION CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
WILLOW BEND ACQUISITION CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
380 INTERLOCKEN ACQUISITION CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
ELDRIDGE GREEN ACQUISITION CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
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TARGET REITS:
FSP BLUE LAGOON DRIVE CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
FSP INNSBROOK CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
FSP WILLOW BEND OFFICE CENTER CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
FSP 380 INTERLOCKEN CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
FSP ELDRIDGE GREEN CORP.
By: /s/ George J. Carter
Name: George J. Carter
Title: President
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Exhibit A
Name and Address Property
- ---------------- --------
FSP BLUE LAGOON DRIVE CORP. Office Building in Miami, FL
5505 Blue Lagoon Drive
Miami, FL 33126
FSP INNSBROOK CORP. Three Office Buildings in Glen
5600, 5620, 5640 Cox Road Allen, VA
Glen Allen, VA 23060
FSP WILLOW BEND OFFICE CENTER CORP. Office Building in Plano, TX
2740 West Dallas Parkway
Plano, TX 75093
FSP 380 INTERLOCKEN CORP. Office Building in Broomfield, CO
380 Interlocken Crescent Blvd.
Broomfield, CO 80021
FSP ELDRIDGE GREEN CORP. Office Building in Houston, TX
1293 Eldridge Parkway
Houston, TX 77027
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Exhibit B
Name Price Per Share
- ---- ---------------
FSP BLUE LAGOON DRIVE CORP. $100,000.00
FSP INNSBROOK CORP. $105,263.16
FSP WILLOW BEND OFFICE CENTER CORP. $100,000.00
FSP 380 INTERLOCKEN CORP. $105,000.00
FSP ELDRIDGE GREEN CORP. $121,546.96
-37-
Exhibit C
FSP Willow Bend Corp.
Total Per Share
---------------------------
Purchase Price: $20,600,000 $100,000
Maximum Shares Issuable 1,030,000 5,000
Total Merger Consideration Merger Consideration Per Share
---------------------------------------- ----------------------------------------
FSP FSP FSP
Market Common Stock Cash Common Stock Cash
Value Issued Paid Total Issued Paid Total
- ------------------------ ---------------------------------------- ----------------------------------------
$18.50 1,030,000 $1,545,000 $20,600,000 5,000.00 $7,500.00 $100,000.00
$19.00 1,030,000 1,030,000 20,600,000 5,000.00 $5,000.00 100,000.00
$19.50 1,030,000 515,000 20,600,000 5,000.00 $2,500.00 100,000.00
$20.00 1,030,000 -- 20,600,000 5,000.00 -- 100,000.00
$20.50 1,004,878 -- 20,600,000 4,878.05 -- 100,000.00
$21.00 980,952 -- 20,600,000 4,761.90 -- 100,000.00
$21.50 958,140 -- 20,600,000 4,651.16 -- 100,000.00
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FSP Innsbrook Corp.
Total Per Share
--------------------------
Purchase Price: $50,000,000 $105,263.16
Maximum Shares Issuable 2,500,000 5,263
Total Merger Consideration Merger Consideration Per Share
---------------------------------------- ----------------------------------------
FSP FSP FSP
Market Common Stock Cash Common Stock Cash
Value Issued Paid Total Issued Paid Total
- ------------------------ ---------------------------------------- ----------------------------------------
$18.50 2,500,000 $3,750,000 $50,000,000 5,263.16 $7,894.74 $105,263.16
$19.00 2,500,000 2,500,000 50,000,000 5,263.16 $5,263.16 105,263.16
$19.50 2,500,000 1,250,000 50,000,000 5,263.16 $2,631.58 105,263.16
$20.00 2,500,000 -- 50,000,000 5,263.16 -- 105,263.16
$20.50 2,439,024 -- 50,000,000 5,134.79 -- 105,263.16
$21.00 2,380,952 -- 50,000,000 5,012.53 -- 105,263.16
$21.50 2,325,581 -- 50,000,000 4,895.96 -- 105,263.16
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FSP 380 Interlocken Corp.
Total Per Share
---------------------------
Purchase Price: $50,400,000 $105,000
Maximum Shares Issuable 2,520,000 5,250
Total Merger Consideration Merger Consideration Per Share
---------------------------------------- ----------------------------------------
FSP FSP FSP
Market Common Stock Cash Common Stock Cash
Value Issued Paid Total Issued Paid Total
- ------------------------ ---------------------------------------- ----------------------------------------
$18.50 2,520,000 $3,780,000 $50,400,000 5,250.00 $7,875.00 $105,000.00
$19.00 2,520,000 2,520,000 50,400,000 5,250.00 $5,250.00 105,000.00
$19.50 2,520,000 1,260,000 50,400,000 5,250.00 $2,625.00 105,000.00
$20.00 2,520,000 -- 50,400,000 5,250.00 -- 105,000.00
$20.50 2,458,537 -- 50,400,000 5,121.95 -- 105,000.00
$21.00 2,400,000 -- 50,400,000 5,000.00 -- 105,000.00
$21.50 2,344,186 -- 50,400,000 4,883.72 -- 105,000.00
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FSP Eldridge Green Corp.
Total Per Share
-----------------------------
Purchase Price: $53,784,530 $121,546.96
Maximum Shares Issuable 2,689,226 6,077
Total Merger Consideration Merger Consideration Per Share
---------------------------------------- ----------------------------------------
FSP FSP FSP
Market Common Stock Cash Common Stock Cash
Value Issued Paid Total Issued Paid Total
- ------------------------ ---------------------------------------- ----------------------------------------
$18.50 2,689,226 $4,033,840 $53,784,530 6,077.35 $9,116.02 $121,546.96
$19.00 2,689,226 2,689,226 53,784,530 6,077.35 $6,077.35 121,546.96
$19.50 2,689,226 1,344,613 53,784,530 6,077.35 $3,038.67 121,546.96
$20.00 2,689,226 -- 53,784,530 6,077.35 -- 121,546.96
$20.50 2,623,636 -- 53,784,530 5,929.12 -- 121,546.96
$21.00 2,561,168 -- 53,784,530 5,787.95 -- 121,546.96
$21.50 2,501,606 -- 53,784,530 5,653.35 -- 121,546.96
-41-
FSP Blue Lagoon Drive Corp.
Total Per Share
--------------------------
Purchase Price: $54,975,000 $100,000
Maximum Shares Issuable 2,748,750 5,000
Total Merger Consideration Merger Consideration Per Share
--------------------------------------- ---------------------------------------
FSP FSP FSP
Market Common Stock Cash Common Stock Cash
Value Issued Paid Total Issued Paid Total
- ------------------------ --------------------------------------- ---------------------------------------
$18.50 2,748,750 $4,123,236 $54,975,000 5,000.00 $7,500.00 $100,000.00
$19.00 2,748,750 2,748,750 54,975,000 5,000.00 $5,000.00 100,000.00
$19.50 2,748,750 1,374,275 54,975,000 5,000.00 $2,500.00 100,000.00
$20.00 2,748,750 -- 54,975,000 5,000.00 -- 100,000.00
$20.50 2,681,707 -- 54,975,000 4,878.05 -- 100,000.00
$21.00 2,617,857 -- 54,975,000 4,761.90 -- 100,000.00
$21.50 2,556,977 -- 54,975,000 4,651.16 -- 100,000.00
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