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Section 1: 8-K (8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 17, 2018

 

 

W. P. CAREY INC.

(Exact Name of Registrant as Specified in its Charter)

 

Maryland

(State or Other Jurisdiction

of Incorporation)

 

001-13779

 

45-4549771

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

 

 

50 Rockefeller Plaza, New York, NY

 

10020

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (212) 492-1100

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

x               Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

x               Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o                 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o                 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company      o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

ITEM 1.01 - Entry into a Material Definitive Agreement.

 

Merger Agreement

 

On June 17, 2018, W. P. Carey Inc. (“W. P. Carey” or the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Corporate Property Associates 17 — Global Incorporated (“CPA®:17”), CPA17 Merger Sub LLC, an indirect subsidiary of W. P. Carey (“Merger Sub”), and, for the limited purposes set forth therein, Carey Asset Management Corp. (“CAM”), W. P. Carey & Co. B.V. (“W. P. Carey BV”) and W. P. Carey Holdings, LLC (the “Special General Partner”), each an indirect subsidiary of W. P. Carey, and CPA®: 17 Limited Partnership (“CPA17 LP”). CPA®:17 is a publicly-owned, non-listed real estate investment trust, which was sponsored by W. P. Carey and for which W. P. Carey and its affiliates serve as advisor. Upon the terms and subject to the conditions set forth in the Merger Agreement, CPA®:17 will merge with and into Merger Sub, with Merger Sub surviving the merger as an indirect wholly-owned subsidiary of W. P. Carey (the “Merger”).

 

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, $0.001 par value per share, of CPA®: 17 issued and outstanding immediately prior to the Effective Time shall be cancelled and, in exchange for cancellation of such share, the rights attaching to such share shall be converted automatically into the right to receive 0.160 shares (the “Exchange Ratio”) of W. P. Carey common stock, $0.001 par value per share (the “W. P. Carey Common Stock”). The Exchange Ratio was determined as a result of negotiations between the Board of Directors of W. P. Carey and a Special Committee of Independent Members of the Board of Directors of CPA®:17 (the “Special Committee”), with the assistance of separate financial and legal advisors.

 

The Merger Agreement contains customary representations, warranties and covenants of W. P. Carey and CPA®:17, including, among others, covenants (i) to conduct their respective businesses in the ordinary course during the period between the execution of the Merger Agreement and consummation of the Merger and (ii) not to engage in certain kinds of transactions during such period. The Merger Agreement also provides CPA®:17 with a 30-day go-shop provision.

 

The consummation of the Merger is subject to customary conditions, including, among others, (i) approval of the Merger by the stockholders of each of W. P. Carey and CPA®:17  (the stockholders of CPA®:17, the “CPA®:17 Stockholders”), (ii) the absence of any law or order prohibiting the consummation of the Merger, (iii) the effectiveness of  a registration statement on Form S-4 (the “Form S-4”) relating to the shares of W. P. Carey Common Stock to be issued to the CPA®:17 Stockholders in connection with the Merger, (iv) the approval for the listing on the New York Stock Exchange of the shares of W. P. Carey Common Stock to be issued to the CPA®:17 Stockholders in connection with the Merger, (v) all consents, approvals, permits and authorizations having been obtained and (vi) other customary closing conditions. In addition, W. P. Carey’s and CPA®:17’s respective obligations to consummate the Merger are subject to certain other conditions, including, among others, (i) subject to the standards set forth in the Merger Agreement, the accuracy of the representations and warranties of the other party, (ii) compliance of the other party with its covenants in the Merger Agreement in all material respects, (iii) the delivery of opinions from counsel relating to the U.S. federal income tax code treatment of the Merger and the tax status of certain of the parties to the Merger Agreement, and (iv) no change, event or circumstance having occurred that would constitute a material adverse effect on the other party.

 

CAM, W. P. Carey BV and certain of their affiliates provide investment and advisory services to CPA®:17 pursuant to written advisory agreements (the “Advisory Agreements”). Subject to the terms and conditions of the Merger Agreement, upon the consummation of the Merger, CAM and W. P. Carey BV have agreed to terminate the Advisory Agreements and waive any Subordinated Disposition Fees (as defined in the Advisory Agreements), but will continue to be entitled to receive any and all other accrued and unpaid fees pursuant to the Advisory Agreements.

 

Pursuant to the terms of the amended and restated limited partnership agreement of CPA17 LP dated as of January 1, 2015 (the “CPA17 LP Agreement”), by and among CPA17 LP and the Special General Partner, the Special General Partner is entitled to (i) distributions of Capital Proceeds upon a Change of Control Event, and related allocation of profits and losses, under the CPA17 LP Agreement (as such terms are defined in the CPA17 LP Agreement) (the amounts in this clause (i), the “Capital Proceeds”) and (ii) rights to amounts in respect of the

 

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Special General Partner Interest pursuant to the CPA17 LP Agreement (as such term is defined in the CPA17 LP Agreement) (the amounts in this clause (ii), the “Special GP Amount,” and together with the Capital Proceeds, the “Advisor Closing Amounts”). Subject to the terms and conditions of the Merger Agreement, upon the consummation of the Merger, the Special General Partner has agreed to waive its right to receive the Advisor Closing Amounts.

 

The Merger Agreement contains certain termination rights for both W. P. Carey and CPA®:17. Each of W. P. Carey and CPA®:17 has agreed to pay the other party’s out-of-pocket expenses if the Merger Agreement is terminated because such party breaches any of its representations, warranties, covenants or agreements made in the Merger Agreement.

 

In addition, in the event that the Merger Agreement has been terminated either (i) by CPA®:17, in the event that the Special Committee has withdrawn its recommendation of the Merger, or approved or recommended a CPA17 Superior Competing Transaction (as defined in the Merger Agreement), in each instance, in accordance with the Merger Agreement, or (ii) by W. P. Carey, in the event that either (x) the CPA®:17 Board of Directors or any committee thereof has withdrawn or modified in any manner adverse to W. P. Carey its approval or recommendation of the Merger in connection with, or approved or recommended, any CPA17 Superior Competing Transaction or (y) CPA®:17 has entered into any agreement with respect to any CPA17 Superior Competing Transaction (the events set forth in clauses (i) and (ii), the “Applicable Termination Provisions”), then in each instance, concurrently with any such termination, CPA®:17 has agreed to pay W. P. Carey a termination fee equal to $114 million; provided, however, in the event that CPA®:17 enters into an alternative acquisition agreement with a person or entity from whom it received a bona-fide written offer or other communication constituting a CPA17 Competing Transaction (as defined in the Merger Agreement) prior to the expiration of the go-shop period, the termination fee shall be reduced to $38 million (the “CPA17 Termination Fee”).

 

In the event that the Merger Agreement is terminated, the CPA17 Termination Fee is paid, and the Advisor Closing Amounts are payable as a result thereof, then (A) an amount equal to the lesser of (i) the CPA17 Termination Fee actually paid, and (ii) the Special GP Amount, shall be credited against the Advisor Closing Amounts payable pursuant to the CPA17 Advisory Agreements and the CPA17 LP Agreement, and (B) no Subordinated Disposition Fees shall be payable to W. P. Carey and its affiliates in respect of the consummation of any CPA17 Competing Transaction (as defined in the Merger Agreement) that would otherwise result in the payment of any Subordinated Disposition Fees. Additionally, in the event that the Merger Agreement is terminated pursuant to any of the Applicable Termination Provisions and a CPA17 Competing Transaction is consummated, the parties to the Merger Agreement have agreed that the Call Right (as such term is defined in the CPA17 LP Agreement) shall be deemed exercised by CPA17 LP and the payment of the Advisor Closing Amounts shall be deemed to satisfy in full all amounts payable in connection with the Special GP Amount.

 

The parties to the Merger Agreement intend that the Merger satisfy applicable requirements to qualify as a tax-deferred reorganization.

 

The foregoing descriptions of the Merger Agreement and the transactions contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K, and is incorporated herein by reference.

 

General

 

The Merger Agreement, the Merger and the other transactions contemplated in the Merger Agreement have been recommended by the Special Committee and unanimously approved by the Independent Directors of CPA®:17 on June 17, 2018 and the Board of Directors of W. P. Carey on June 16, 2018.

 

The Merger Agreement has been included to provide investors with information regarding the terms of the Merger, and the other transactions contemplated by the Merger Agreement. The Merger Agreement is not intended to provide any other factual information about W. P. Carey, CPA®:17 or their respective subsidiaries or affiliates. The Merger Agreement contains representations and warranties of W. P. Carey and CPA®:17. The assertions embodied in those representations and warranties were made for purposes of the Merger Agreement, and are qualified by information in disclosure schedules that the parties have exchanged in connection with the execution of the Merger

 

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Agreement. The disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what an investor might view as material, or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts. Accordingly, you should read the representations and warranties in the Merger Agreement not in isolation but only in conjunction with the other information about W. P. Carey, CPA®:17, and their respective subsidiaries that are included in reports, statements and other filings made with the Securities and Exchange Commission (the “SEC”).

 

Cautionary Statement Concerning Forward-Looking Statements

 

Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of the Company and can be identified by the use of words such as “may,” “will,” “should,” “would,” “will be,” “will continue,” “will likely result,” “believe,” “project,” “expect,” “anticipate,” “intend,” “estimate” and other comparable terms. These forward-looking statements include, but are not limited to, statements regarding: the anticipated benefits of the merger, including the statements made by Mr. Jason Fox; our ability to close the proposed merger; the impact of the proposed merger on our earnings and on our credit profile; the strategic rational and transaction benefits; our ability to refinance mortgage debt with unsecured bonds; capital markets; our ability to sell shares under our “at-the-market” program and the use of proceeds from that program; tenant credit quality; the general economic outlook; our expected range of Adjusted funds from operations, or AFFO, including the impact on AFFO as a result of the proposed merger; our corporate strategy; our capital structure; our portfolio lease terms; our international exposure and acquisition volume; our expectations about tenant bankruptcies and interest coverage; statements regarding estimated or future economic performance and results, including our underlying assumptions, occupancy rate, credit ratings, and possible new acquisitions and dispositions; the outlook for the investment programs that we manage, including their earnings, as well as possible liquidity events for those programs; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust, or REIT; the impact of recently issued accounting pronouncements, the Tax Cuts and Jobs Act in the United States adopted in 2017, and other regulatory activity, such as the General Data Protection Regulation in the European Union or other data privacy initiatives; the amount and timing of any future quarterly dividends; our existing or future leverage and debt service obligations; our estimated future growth; our projected assets under management; our future capital expenditure levels; our future financing transactions; and our plans to fund our future liquidity needs.

 

These statements are based on the current expectations of our management. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on our business, financial condition, liquidity, results of operations, AFFO, and prospects. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in our filings with the Securities and Exchange Commission, or the SEC from time to time, including, but not limited to those described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on February 23, 2018. Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, potential investors are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which speak only as of the date of this presentation, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements.

 

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Additional Information and Where to Find it:

 

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the federal securities laws. W. P. Carey intends to file a Registration Statement on Form S-4 and mail the Joint Proxy Statement/Prospectus and other relevant documents to its security holders in connection with the proposed Merger.

 

WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED BY W. P. CAREY AND CPA®:17 IN CONNECTION WITH THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT W. P. CAREY, CPA®:17 AND THE PROPOSED MERGER. INVESTORS ARE URGED TO READ THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY.

 

Investors will be able to obtain these materials and other documents filed with the SEC free of charge at the SEC’s website (http://www.sec.gov). In addition, these materials will also be available free of charge by accessing W. P. Carey’s website (http://www.wpcarey.com) or by accessing CPA®:17’s website (http://www.cpa17global.com). Investors may also read and copy any reports, statements and other information filed by W. P. Carey or CPA®:17 with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.

 

Participants in the Proxy Solicitation:

 

Information regarding W. P. Carey’s directors and executive officers is available in its proxy statement filed with the SEC by W. P. Carey on April 03, 2018 in connection with its 2018 annual meeting of stockholders, and information regarding CPA®:17’s directors and executive officers is available in its proxy statement filed with the SEC by CPA®:17 on April 20, 2018 in connection with its 2018 annual meeting of stockholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials filed with the SEC when they become available.

 

ITEM 7.01 - Regulation FD Disclosure.

 

Investor Presentation

 

The Company prepared an investor presentation with respect to the contemplated Merger. A copy of the investor presentation is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The investor presentation will be used by the Company during calls with investors, stockholders, analysts, brokers and other parties interested in the Merger. The investor presentation will be posted on the Company’s website at http://wpcarey.com.

 

The investor presentation shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Item 7.01, including Exhibit 99.1, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act regardless of any general incorporation language in the filing.

 

Press Release

 

On June 18, 2018, the Company issued a press release announcing the execution of the Merger Agreement and related information, a copy of which is attached to this Current Report on Form 8-K as Exhibit 99.2 and is incorporated herein by reference.

 

The press release shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The information in this Item 7.01, including Exhibit 99.2, shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act regardless of any general incorporation language in the filing.

 

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ITEM 9.01 - Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
No.

 

Description

 

 

 

2.1

 

Agreement and Plan of Merger dated as of June 17, 2018, by and between Corporate Property Associates 17 — Global Incorporated, W. P. Carey Inc., CPA17 Merger Sub LLC, and, for the limited purposes set forth therein, Carey Asset Management Corp., W. P. Carey & Co. B.V., W. P. Carey Holdings, LLC, and CPA®: 17 Limited Partnership.

 

 

 

99.1

 

Presentation by W. P. Carey Inc. to analysts and investors on June 18, 2018.

 

 

 

99.2

 

Press Release issued on June 18, 2018.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

W. P. Carey Inc.

 

 

 

Date: June 18, 2018

By:

/S/ToniAnn Sanzone

 

 

ToniAnn Sanzone

 

 

Chief Executive Officer

 

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Section 2: EX-2.1 (EX-2.1)

Exhibit 2.1

 

Execution Copy

 

 

Dated as of June 17, 2018

 

CORPORATE PROPERTY ASSOCIATES 17 - GLOBAL INCORPORATED,

 

W. P. CAREY INC.,

 

CPA17 MERGER SUB LLC

 

and, for the limited purposes set forth herein,

 

CAREY ASSET MANAGEMENT CORP.,

 

W. P. CAREY & CO. B.V.,

 

W. P. CAREY HOLDINGS, LLC

 

and

 

CPA®: 17 LIMITED PARTNERSHIP

 


 

AGREEMENT AND PLAN OF MERGER

 


 



 

TABLE OF CONTENTS

 

 

Page

 

 

ARTICLE I THE MERGER

2

Section 1.1

The Merger

2

Section 1.2

Closing

2

Section 1.3

Effective Time

2

Section 1.4

Articles of Organization and Operating Agreement

3

Section 1.5

Directors and Officers of the Surviving Company

3

Section 1.6

Per Share Merger Consideration

3

Section 1.7

Adjustments to Exchange Ratio

3

Section 1.8

Recordation of Exchange; Payment of Merger Consideration

4

ARTICLE II REPRESENTATIONS AND WARRANTIES

6

Section 2.1

Representations and Warranties of CPA17

6

Section 2.2

Representations and Warranties of W. P. Carey and Merger Sub

9

ARTICLE III COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER

24

Section 3.1

Conduct of Business by CPA17

24

Section 3.2

Conduct of Business by W. P. Carey

26

Section 3.3

No Control of Other Party’s Business

28

ARTICLE IV ADDITIONAL COVENANTS

29

Section 4.1

Preparation of the Form S-4 and the Joint Proxy Statement/Prospectus; Stockholders Meetings

29

Section 4.2

Reasonable Best Efforts

31

Section 4.3

Fees and Distributions Payable to CAM and its Affiliates

32

Section 4.4

Tax Treatment

33

Section 4.5

Solicitation of Transactions

34

Section 4.6

Public Announcements

39

Section 4.7

Transfer and Gains Taxes

39

Section 4.8

Indemnification; Directors’ and Officers’ Insurance

39

Section 4.9

Purchases and Redemptions of CPA17 Common Stock

40

Section 4.10

Purchases and Redemptions of W. P. Carey Common Stock

40

Section 4.11

Access; Confidentiality

41

Section 4.12

NYSE Listing and Deregistration

41

Section 4.13

Special GP Distribution

41

 

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Section 4.14

Assistance to CPA17

42

Section 4.15

Voting

42

ARTICLE V CONDITIONS PRECEDENT

42

Section 5.1

Conditions to Each Party’s Obligation to Effect the Merger

42

Section 5.2

Conditions to Obligations of W. P. Carey and Merger Sub

43

Section 5.3

Conditions to Obligations of CPA17

44

ARTICLE VI TERMINATION, AMENDMENT AND WAIVER

45

Section 6.1

Termination

45

Section 6.2

Expenses; Termination Fee

47

Section 6.3

Effect of Termination

48

Section 6.4

Amendment

48

Section 6.5

Extension; Waiver

48

Section 6.6

Payment of Expenses

48

ARTICLE VII GENERAL PROVISIONS

50

Section 7.1

Nonsurvival of Representations and Warranties

50

Section 7.2

Notices

50

Section 7.3

Interpretation

51

Section 7.4

Counterparts

51

Section 7.5

Entire Agreement; No Third-Party Beneficiaries

51

Section 7.6

Governing Law

51

Section 7.7

Assignment

52

Section 7.8

Enforcement

52

Section 7.9

Waiver of Jury Trial

52

Section 7.10

Exhibits; Disclosure Letters

52

Section 7.11

Conflict Waiver

52

ARTICLE VIII CERTAIN DEFINITIONS

53

Section 8.1

Certain Definitions

53

 

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EXHIBITS

 

 

 

 

 

Exhibit A

Articles of Merger

 

 

 

SCHEDULES

 

 

 

 

 

W. P. Carey Disclosure Letter:

 

 

 

Schedule 2.2(b)(ii)

Issued and Outstanding or Reserved for Issuance Securities

Schedule 2.2(b)(iii)

Registration Rights

Schedule 2.2(c)(iii)

Consents, Approvals, Authorizations, Permits, Filings, and Notifications

Schedule 2.2(e)

Certain Changes or Events

Schedule 2.2(f)

Material Liabilities

Schedule 2.2(i)

Litigation

Schedule 2.2(j)

Taxes

Schedule 2.2(k)

Pension and Benefit Plans

Schedule 2.2(n)

Environmental Matters

Schedule 2.2(o)(i)

Real Property Liens and Ownership

Schedule 2.2(o)(i)(E)

Liens on Equity Interests

Schedule 2.2(o)(ii)

Contracts for Sale, Acquisition, or Transfer, and Development and Construction Contracts

Schedule 2.2(o)(iii)

Agreements of Sale, Option Agreements, Rights of First Offer, Rights of First Refusal, and Early Termination Rights

Schedule 2.2(p)

Insurance Policies

Schedule 2.2(q)

Vote Required

Schedule 2.2(t)(i)

Material Contracts in Default

Schedule 2.2(t)(ii)

Due-on-Sale Provisions

Schedule 2.2(t)(iii)

Non-Competition Agreements

Schedule 2.2(t)(iv)

Indemnification Agreements

Schedule 2.2(u)

Related Party Transactions

Schedule 3.2(b)

Post Execution Conduct of Business

Schedule 4.14(a)

Sale and Marketed Properties

Schedule 8.1

W. P. Carey Knowledge Parties

 

CPA17 Disclosure Letter:

 

Schedule 2.1(c)(ii)

Consents, Approvals, Authorizations, Permits, Filings and Notifications

Schedule 3.1(b)

Post Execution Conduct of Business

Schedule 8.1

CPA17 Knowledge Parties

 

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INDEX OF DEFINED TERMS

 

Acceptable Confidentiality Agreement

52

 

CPA17 Superior Competing Transaction

37

Adverse Recommendation Change

35

 

CPA17 Termination Fee

53

Advisor Accrued Amounts

32

 

CPA17 Termination Fee Credit

53

Affiliate

52

 

Effective Time

2

Agreement

1

 

Environmental Law

18

Alternative Acquisition Agreement

34

 

ERISA

16

Articles of Merger

2

 

ERISA Affiliate

17

Asset Management Agreement

32

 

Exchange Act

8

Average W. P. Carey Trading Price

52

 

Exchange Fund

5

Benefit Plans

17

 

Exchange Ratio

3

Business Day

52

 

Exempted Person

54

CAM

1

 

Expense Amount

47

CERCLA

18

 

Extended Termination Date

45

Change of Recommendation Notice

36

 

Foreign Subsidiary

1

Claim

39

 

Form S-4

28

Closing

2

 

GAAP

53

Closing Date

2

 

Governmental Entity

4

Code

2

 

Hazardous Material

18

Confidentiality Agreement

52

 

Indemnified Parties

38

CPA17

1

 

IRS

54

CPA17 Advisory Agreement

32

 

Joint Proxy Statement/Prospectus

28

CPA17 Advisory Agreements

32

 

Knowledge

54

CPA17 Bylaws

6

 

Law

54

CPA17 Charter

6

 

Liens

54

CPA17 Common Stock

3

 

Marketed Properties

41

CPA17 Competing Transaction

37

 

Merger

1

CPA17 Disclosure Letter

5

 

Merger Sub

1

CPA17 Expenses

46

 

Merger Sub Articles of Organization

3

CPA17 LP

1

 

Merger Sub Operating Agreement

3

CPA17 LP Agreement

32

 

MGCL

2

CPA17 Material Adverse Effect

52

 

MLLCA

2

CPA17 Material Contract

7

 

Morgan Stanley

8

CPA17 Property

53

 

NYSE

54

CPA17 SEC Documents

53

 

Paying and Exchange Agent

4

CPA17 Special Committee

1

 

PCBs

18

CPA17 Stockholder Approvals

8

 

Pension Plans

16

CPA17 Stockholder Meeting

7

 

Per Share Merger Consideration

3

CPA17 Stockholders

3

 

Person

54

CPA17 Subsidiary

53

 

Qualifying Income

48

 

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Receiving Party

47

 

W. P. Carey Bylaws

11

REIT

2

 

W. P. Carey Charter

11

Release

18

 

W. P. Carey Common Stock

9

SDAT

2

 

W. P. Carey Disclosure Letter

9

SEC

6

 

W. P. Carey Expenses

46

Securities Act

8

 

W. P. Carey Intangible Property

17

Solicitation Period End Date

33

 

W. P. Carey Material Adverse Effect

55

Subsidiary

54

 

W. P. Carey Material Contracts

22

Surviving Company

2

 

W. P. Carey Permits

14

Takeover Statute

9

 

W. P. Carey Properties

20

Tax

54

 

W. P. Carey Property

20

Tax Protection Agreement

54

 

W. P. Carey Property Restrictions

20

Tax Return

55

 

W. P. Carey SEC Documents

12

Taxes

54

 

W. P. Carey Stockholder Approval

21

Termination Date

45

 

W. P. Carey Stockholder Meeting

11

Transaction Documents

55

 

W. P. Carey Stockholders

11

Transfer and Gains Taxes

38

 

W. P. Carey Subsidiary

56

Voting Debt

55

 

WPC Holdco

1

W. P. Carey

1

 

 

 

 

v



 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of June 17, 2018, by and among Corporate Property Associates 17 - Global Incorporated, a Maryland corporation (“CPA17”), W. P. Carey Inc., a Maryland corporation and the ultimate parent of the external manager of CPA17 (“W. P. Carey”), CPA17 Merger Sub LLC, a Maryland limited liability company and an indirect subsidiary of W. P. Carey (“Merger Sub”), and, for the limited purposes set forth herein, Carey Asset Management Corp., a Delaware corporation (“CAM”), W. P. Carey & Co. B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the Laws of the Netherlands (“Foreign Subsidiary”), and W. P. Carey Holdings, LLC, a Delaware limited liability company (“Special General Partner”), each an indirect subsidiary of W. P. Carey, and CPA®: 17 Limited Partnership, a Delaware limited partnership (“CPA17 LP”).

 

RECITALS

 

A.                                    Upon the terms and subject to the conditions set forth in this Agreement, W. P. Carey and Merger Sub intend to merge CPA17 with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a direct subsidiary of WPC Holdco LLC, a Maryland limited liability company and direct subsidiary of W. P. Carey (“WPC Holdco”).

 

B.                                    A special committee of independent directors of the Board of Directors of CPA17 (the “CPA17 Special Committee”) has unanimously (i) determined that this Agreement, and the transactions contemplated hereby and by the Transaction Documents (as defined herein), including the Merger, are advisable and in the best interests of CPA17 and the CPA17 Stockholders (as defined herein) and (ii) recommended to the Board of Directors of CPA17 that it approve and declare advisable this Agreement, and the transactions contemplated hereby and by the Transaction Documents, including the Merger, upon the terms and conditions contained herein and therein.

 

C.                                    This Agreement, and the transactions contemplated hereby and by the Transaction Documents, including the Merger, have been approved and declared advisable by the Board of Directors of CPA17, including a majority of the independent directors and a majority of the directors who are not interested in the Merger and the other transactions contemplated by the Transaction Documents, following the recommendation of the CPA17 Special Committee.

 

D.                                    The Board of Directors of W. P. Carey has unanimously determined that this Agreement, and the transactions contemplated hereby and by the Transaction Documents, including the Merger, are advisable and in the best interests of W. P. Carey and the W. P. Carey Stockholders (as defined herein).

 

E.                                     This Agreement, and the transactions contemplated hereby and by the Transaction Documents, including the Merger, have been approved by (i) the Board of Directors of W. P. Carey, including a majority of the independent directors and a majority of the directors who are not interested in the Merger and the other transactions contemplated by the Transaction Documents, and (ii) the sole member of Merger Sub.

 

F.                                      Immediately prior to the filing of the Articles of Merger, CPA17 will file the Charter Amendment with the SDAT.

 



 

G.                                    For U.S. federal income Tax purposes, it is intended that the Merger shall be characterized as a reorganization governed by Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

H.                                   The parties desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated by this Agreement.

 

AGREEMENT

 

In consideration of the premises and the mutual representations, warranties, covenants and agreements contained in this Agreement, the parties hereto hereby agree as follows:

 

ARTICLE I

 

THE MERGER

 

Section 1.1                                    The Merger.  Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the procedures set forth in Section 3-105 of the Maryland General Corporation Law (the “MGCL”) and Section 4A-702 and Section 4A-703 of the Maryland Limited Liability Company Act (the “MLLCA”), CPA17 shall merge with and into Merger Sub.  Following the Merger, Merger Sub will continue as the surviving entity (the “Surviving Company”) and a direct subsidiary of WPC Holdco, and the separate corporate existence of CPA17 will cease in accordance with Section 3-114 of the MGCL and Section 4A-709 of the MLLCA, and, from and after the Effective Time (as hereinafter defined), the Merger shall have the effects set forth in the applicable provisions of the MGCL and the MLLCA.  W. P. Carey will maintain its existence as a real estate investment trust (“REIT”) under Section 856 of the Code.

 

Section 1.2                                    Closing.  The closing (the “Closing”) of the Merger will take place commencing at 10:00 a.m., local time, on a date to be specified by the parties, which shall be no later than the third Business Day after satisfaction or waiver of the conditions set forth in Article V (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), at the offices of DLA Piper LLP (US), 1251 Avenue of the Americas, New York, New York 10020, or at such other time and place as is agreed to in writing by the parties hereto (the date on which the Closing takes place, the “Closing Date”).

 

Section 1.3                                    Effective Time.  Upon the terms and subject to the conditions set forth herein, as part of the Closing CPA17 and Merger Sub shall execute articles of merger (the “Articles of Merger”) in substantially the form attached hereto as Exhibit A and shall file such Articles of Merger in accordance with the MGCL and the MLLCA with the State Department of Assessments and Taxation of Maryland (the “SDAT”) and shall make all other filings and recordings required under the MGCL and the MLLCA with respect to the Merger.  The Merger shall become effective at such time as W. P. Carey and CPA17 shall agree should be specified in the Articles of Merger (such time as the Merger becomes effective, the “Effective Time”); provided that such time is not earlier than the time the Articles of Merger are filed and accepted

 

2



 

for record and does not exceed 30 days after the Articles of Merger are accepted for record.  Unless otherwise agreed, the parties shall cause the Effective Time to occur on the Closing Date.

 

Section 1.4                                    Articles of Organization and Operating Agreement.  The articles of organization of Merger Sub (the “Merger Sub Articles of Organization”) and the operating agreement of Merger Sub (the “Merger Sub Operating Agreement”) as in effect immediately prior to the Effective Time of the Merger shall, except for any required amendments, be the articles of organization and the operating agreement of the Surviving Company, until further amended in accordance with the respective terms of such articles of organization and operating agreement and applicable Laws of the State of Maryland.

 

Section 1.5                                    Officers of the Surviving Company.  Unless otherwise determined by W. P. Carey and CPA17, from and after the Effective Time, the officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Company immediately following the Effective Time, in each case until duly removed or replaced in accordance with the operating agreement of the Surviving Company and the MGCL and the MLLCA.

 

Section 1.6                                    Per-Share Merger Consideration.

 

(a)                                 As of the Effective Time, pursuant to this Agreement and by virtue of the Merger and without any further action on the part of W. P. Carey, CPA17, Merger Sub, any other W. P. Carey Subsidiary or any stockholder of CPA17 (the stockholders of CPA17, the “CPA17 Stockholders”), each share of common stock, $0.001 par value per share, of CPA17 (“CPA17 Common Stock”) issued and outstanding immediately prior to the Effective Time shall be cancelled and, in exchange for cancellation of such share, the rights attaching to such share shall be converted automatically into the right to receive, in accordance with the terms of this Agreement, 0.160 shares (the “Exchange Ratio”) of validly issued fully paid and non-assessable shares of W. P. Carey Common Stock (the “Per Share Merger Consideration”), payable in the manner set forth in Section 1.8.  Notwithstanding anything herein to the contrary, each share of CPA17 Common Stock that is owned by W. P. Carey or any W. P. Carey Subsidiary immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist without any conversion thereof or payment therefor.

 

(b)                                 At the Effective Time, all shares of CPA17 Common Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of CPA17 Common Stock shall cease to have any rights with respect thereto, except the right to receive the Per Share Merger Consideration or any cash pursuant to Section 1.8(e).

 

Section 1.7                                    Adjustments to Exchange Ratio.  The Exchange Ratio shall be adjusted to reflect fully the effect of any reclassification, combination, subdivision, stock split, reverse stock split, stock dividend (including any stock dividend or distribution of securities convertible into CPA17 Common Stock or W. P. Carey Common Stock, as applicable), reorganization, recapitalization or other like change with respect to CPA17 Common Stock (or for which a record date is established) and with respect to W. P. Carey Common Stock (or for which a record date is established), after the date hereof and prior to the Effective Time; provided that nothing in this Section 1.7 shall be construed to permit W. P. Carey, Merger Sub,

 

3



 

any other W. P. Carey Subsidiary or CPA17 to take any action with respect to their securities that is prohibited by the terms of this Agreement; but provided, further, that nothing in this Agreement shall prohibit W. P. Carey from taking, immediately following the date hereof, any of the actions contemplated in the Form S-4 and the Joint Proxy Statement/Prospectus (which actions (other than any administrative or ministerial actions in furtherance thereof) shall require the prior consent by the CPA17 Special Committee).

 

Section 1.8                                    Recordation of Exchange; Payment of Merger Consideration.

 

(a)                                 Delivery of W. P. Carey Common Stock.  As soon as practicable following the Effective Time, W. P. Carey shall cause the transfer agent for the W. P. Carey Common Stock to record the issuance on the stock records of W. P. Carey of the amount of W. P. Carey Common Stock issuable as Per Share Merger Consideration to each holder of CPA17 Common Stock pursuant to Section 1.6(a).

 

(b)                                 No Interest.  No interest shall be paid or shall accrue on unpaid dividends declared in respect of the CPA17 Common Stock and with a record date prior to the Effective Time and which remain unpaid at the Effective Time.

 

(c)                                  No Further Ownership Rights.  All Per Share Merger Consideration paid by W. P. Carey in accordance with the terms of this Article I shall be deemed to have been paid in full satisfaction of all rights pertaining to the CPA17 Common Stock in respect of which such Per Share Merger Consideration was paid.  At the close of business on the day on which the Effective Time occurs, the share transfer books of CPA17 shall be closed, and there shall be no further registration of transfers on the share transfer books of the Surviving Company of the shares of CPA17 Common Stock that were outstanding immediately prior to the Effective Time.

 

(d)                                 No Liability.  None of W. P. Carey, Merger Sub, or any employee, officer, director, partner, agent or Affiliate of any of them, shall be liable to any person for any part of the Per Share Merger Consideration or for dividends or distributions with respect thereto delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.  Any amounts remaining unclaimed by holders of any shares of CPA17 Common Stock five years after the Effective Time or at such earlier date as is immediately prior to the time at which such amounts would otherwise escheat to, or become the property of, any federal, state, local government, or agency or any court, regulatory or administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (a “Governmental Entity”), shall, to the extent permitted by applicable Law, become the property of W. P. Carey or its designated Affiliate free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto.

 

(e)                                  Fractional Shares.  No certificates for fractional shares of W. P. Carey Common Stock shall be issued hereunder.  To the extent that a holder of CPA17 Common Stock would otherwise be entitled to receive a fraction of a share of W. P. Carey Common Stock, computed on the basis of the aggregate number of shares of CPA17 Common Stock held by such holder, such holder shall instead receive a cash payment in lieu of such fractional share in an amount equal to such fraction multiplied by the Average W. P. Carey Trading Price.

 

4



 

(f)                                   Paying and Exchange Agent.  Prior to the Effective Time, W. P. Carey shall designate a bank or trust company reasonably acceptable to CPA17 to act as agent for the payment of the Per Share Merger Consideration (the “Paying and Exchange Agent”).  W. P. Carey shall take all steps necessary to enable, and shall cause, the Surviving Company to provide to the Paying and Exchange Agent immediately following the Effective Time the aggregate cash portion of the Per Share Merger Consideration payable upon cancellation of the CPA17 Common Stock in lieu of any fractional share of W. P. Carey Common Stock.  The funds deposited with the Paying and Exchange Agent in respect of the Per Share Merger Consideration is hereinafter referred to as the “Exchange Fund.” As soon as practicable after the Effective Time, and in any event not later than the 10th Business Day thereafter, the Paying and Exchange Agent shall pay to each holder of CPA17 Common Stock the amount of cash that such holder is entitled to receive in lieu of any fractional share of W. P. Carey Common Stock pursuant to Section 1.8(e).

 

(g)                                  Termination of Exchange Fund.  Any portion of the Exchange Fund that remains undistributed to the holders of CPA17 Common Stock one year after the Effective Time shall be delivered to W. P. Carey or its designated Affiliate, upon demand, and any holder of CPA17 Common Stock who has not theretofore complied with this Article I shall thereafter look only to W. P. Carey or its successor in interest for payment of its claim for the Per Share Merger Consideration (subject to applicable abandoned property, escheat and other similar Law).

 

(h)                                 Investment of Exchange Fund.  The Paying and Exchange Agent shall invest any cash included in the Exchange Fund, as directed by W. P. Carey, on a daily basis; provided, however, that such investments shall be in (i) obligations of or guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, (ii) commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, (iii) certificates of deposit maturing not more than 180 days after the date of purchase issued by a bank organized under the Laws of the United States or any state thereof having a combined capital and surplus of at least $3,000,000,000 or (iv) a money market fund having assets of at least $1,000,000,000.  Any interest and other income resulting from such investments shall be the property of, and paid to, W. P. Carey or its designated Affiliate.

 

(i)                                     Withholding Rights.  W. P. Carey or the Paying and Exchange Agent, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of CPA17 Common Stock, such amounts as W. P. Carey or the Paying and Exchange Agent, as applicable, is required to deduct and withhold with respect to such payments under the Code or any other provision of state, local or foreign Tax Law.  Any such amounts so deducted and withheld shall be paid over to the applicable Governmental Entity in accordance with applicable Law and shall be treated for all purposes of this Agreement as having been paid to the former holder of CPA17 Common Stock in respect of which such deduction and withholding was made.

 

5



 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

Section 2.1                                    Representations and Warranties of CPA17.  CPA17 represents and warrants to each of W. P. Carey and Merger Sub that, except as disclosed in the CPA17 disclosure letter dated as of the date of this Agreement and delivered to W. P. Carey and Merger Sub in connection with the execution hereof (the “CPA17 Disclosure Letter”), the statements set forth in this Section 2.1 are true and correct; provided that CPA17, W. P. Carey and Merger Sub agree that CPA17 shall have no liability for any breach of representations and warranties set forth in (I) this Section 2.1 to the extent due to actions or inactions of W. P. Carey or any W. P. Carey Subsidiary, in each case in its capacity as advisor to CPA17 pursuant to the CPA17 Advisory Agreements (as defined in Section 4.3), or (II) Sections 2.1(c)(ii) or 2.1(d) (excluding any information provided by or on behalf of the CPA17 Special Committee or Morgan Stanley) of which W. P. Carey has Knowledge as of the date of this Agreement in the exercise of its duties as advisor to CPA17 pursuant to the CPA17 Advisory Agreement:

 

(a)                                 Organization, Standing and Corporate Power of CPA17.  CPA17 is a corporation duly organized, validly existing and in good standing under the Laws of the State of Maryland and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted.  CPA17 has heretofore made available to W. P. Carey complete and correct copies of its charter, as amended and supplemented to the date hereof (the “CPA17 Charter”), and its bylaws, as amended to the date hereof (“CPA17 Bylaws”).

 

(b)                                 Capital Structure.

 

(i)                                     As of the close of business on the Business Day immediately prior to the date of this Agreement, the authorized capital stock of CPA17 consists of 50,000,000 shares of preferred stock, $0.001 par value per share (the “CPA17 Preferred Stock”) and 900,000,000 shares of CPA17 Common Stock, of which no shares of CPA17 Preferred Stock and 354,479,312 shares of CPA17 Common Stock are issued and outstanding and which constitute all of the issued and outstanding securities of CPA17 on the date of this Agreement.  All issued and outstanding shares of CPA17 Common Stock are duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any preemptive right, purchase option, call option, right of first refusal, subscription or any other similar right contained in the CPA17 Charter or CPA17 Bylaws or in any material contract filed as an exhibit to CPA17’s annual report on Form 10-K for the year ended December 31, 2017, or any subsequent report filed on Form 10-Q or Form 8-K, in each instance, filed with the Securities and Exchange Commission (the “SEC”).  No dividends or other distributions on securities of CPA17 or any CPA17 Subsidiary have been authorized by the Board of Directors of CPA17 or governing body of such CPA17 Subsidiary or declared by CPA17 or such CPA17 Subsidiary since December 31, 2017 other than those presented by W. P. Carey, in its capacity as advisor to CPA17, to the Board of Directors of CPA17 or governing body of such CPA17 Subsidiary for its consideration.

 

(ii)                                  Other than agreements or understandings proposed by W. P. Carey, in its capacity as advisor to CPA17, for consideration by the Board of Directors of CPA17 and

 

6



 

entered into by CPA17, the Board of Directors of CPA17 has not authorized CPA17 to enter into any (x) agreements or understandings relating to the voting of any shares of capital stock of CPA17 or any ownership interests in any CPA17 Subsidiary or (y) agreements or understandings relating to the sale or transfer of any shares of stock of CPA17 or any ownership interests in any CPA17 Subsidiary.

 

(c)                                  Authority; No Violations; Consents and Approval.

 

(i)                                     The CPA17 Special Committee, at a meeting duly called and held, unanimously (A) determined that this Agreement, and the transactions contemplated hereby and by the Transaction Documents, including the Merger and the Charter Amendment, are advisable and in the best interests of CPA17 and the CPA17 Stockholders and (B) recommended to the Board of Directors of CPA17 that it approve and declare advisable this Agreement, and the transactions contemplated hereby and by the Transaction Documents, including the Merger and the Charter Amendment, upon the terms and conditions contained herein and therein.  The Board of Directors of CPA17, including a majority of the independent directors and a majority of the directors who are not interested in the Merger and the other transactions contemplated by the Transaction Documents, has duly approved and declared advisable the Merger and the other transactions contemplated by the Transaction Documents, including the Merger and the Charter Amendment, has recommended the approval of the Merger and the Charter Amendment by the CPA17 Stockholders and has directed that the Merger and the Charter Amendment be submitted for consideration at a special meeting of the CPA17 Stockholders (the “CPA17 Stockholder Meeting”).  CPA17 has all requisite power and authority to enter into this Agreement and all other Transaction Documents to be executed in connection with the transactions contemplated hereby, including the Merger and the Charter Amendment, and, subject to receipt of the CPA17 Stockholder Approvals (as hereinafter defined), to consummate the transactions contemplated thereby.  The execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby have been, or when the Transaction Documents are executed will have been, duly authorized by all necessary action on the part of CPA17, subject to receipt of the CPA17 Stockholder Approvals, and the Transaction Documents are enforceable in accordance with their terms, subject to enforceability, bankruptcy, insolvency, reorganization, moratorium and other Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law). The Board of Directors of CPA17 has not approved or otherwise determined that the CPA17 Stockholders are or shall be entitled to exercise any rights of objecting stockholders provided for under Title 3, Subtitle 2 of the MGCL (or any successor provision) with respect to all or any classes or series of capital stock of CPA17 with respect to the Merger, the Charter Amendment or the other transactions contemplated by this Agreement or the other Transaction Documents.

 

(ii)                                  Assuming the consents, approvals, authorizations or permits and filings or notifications referred to in Schedule 2.1(c)(ii) of the CPA17 Disclosure Letter are duly and timely obtained or made and the CPA17 Stockholder Approvals have been obtained, the execution and delivery of the Transaction Documents by CPA17 do not, and the consummation of the transactions contemplated thereby and compliance with the provisions hereof or thereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any

 

7



 

material obligation under, or give rise to a right of purchase under, result in the creation of any Lien upon any of the properties or assets of CPA17 or require the consent or approval of any third party under, any provision of (A) the CPA17 Charter or the CPA17 Bylaws, (B) any material contract filed as an exhibit to CPA17’s annual report on Form 10-K for the year ended December 31, 2017, or any subsequent report filed on Form 10-Q or Form 8-K, in each instance, filed with the SEC (a “CPA17 Material Contract”) (it being understood that no representation is being given as to whether the Surviving Company will be in compliance with any financial covenants contained therein following the Merger) or (C) any judgment, order, decree, statute, Law, ordinance, rule or regulation applicable to CPA17 or any of its properties or assets, other than, in the case of clauses (B) or (C), any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate, would not reasonably be expected to have a CPA17 Material Adverse Effect.

 

(iii)                               No consent, approval, order or authorization of, or registration, declaration or filing with, or permit from any Governmental Entity, is required by or with respect to CPA17 in connection with the execution and delivery of the Transaction Documents by CPA17 or the consummation by CPA17 of the transactions contemplated thereby, except for:  (A) the filing with the SEC of (1) (a) the Joint Proxy Statement/Prospectus or (b) other documents otherwise required in connection with the transactions contemplated by the Transaction Documents and (2) such reports under Section 13(a) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), and such other reports in compliance with the Exchange Act as may be required in connection with the Transaction Documents and the transactions contemplated thereby; (B) the filing of the Articles of Merger and the Articles of Amendment with, and the acceptance for record of the Articles of Merger and the Articles of Amendment by, the SDAT; (C) such filings and approvals as may be required by any applicable Environmental Laws; and (D) any such consent, approval, order, authorization, registration, declaration, filing or permit of which the failure to obtain or make, individually or in the aggregate, would not reasonably be expected to have a CPA17 Material Adverse Effect.

 

(d)                                 Information Supplied.  The Form S-4 and the Joint Proxy Statement/Prospectus will (with respect to the disclosures therein relating to CPA17, its officers and directors and the CPA17 Subsidiaries) comply in all material respects with the applicable requirements of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), and the Exchange Act; provided that no representation is made as to statements made or incorporated by reference by W. P. Carey or Merger Sub.

 

(e)                                  Opinion of Financial Advisor.  The CPA17 Special Committee has received the opinion of Morgan Stanley & Co. LLC (“Morgan Stanley”) to the effect that, as of the date of such opinion, and based on and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in such opinion, the Exchange Ratio pursuant to this Agreement is fair to the holders of CPA17 Common Stock (other than W. P. Carey or any W. P. Carey Subsidiary) from a financial point of view, which opinion will be made available to W. P. Carey solely for informational purposes.  CPA17 has been advised that Morgan Stanley will permit the inclusion of the opinion in its entirety and, subject to prior review and consent by

 

8



 

Morgan Stanley, a reference to the opinion in the Form S-4 and the Joint Proxy Statement/Prospectus.

 

(f)                                   Vote Required.  The affirmative vote of the holders of a majority of the outstanding shares of CPA17 Common Stock that are entitled to vote is the only vote of holders of securities of CPA17 required to approve each of (i) the Merger and the other transactions contemplated by the Transaction Documents and (ii) the Charter Amendment (the “CPA17 Stockholder Approvals”).

 

(g)                                  Brokers.  Except for the fees and expenses payable to Morgan Stanley (which fees have been disclosed to W. P. Carey), no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the transactions contemplated by the Transaction Documents based upon arrangements made by or on behalf of CPA17 or any CPA17 Subsidiary.

 

(h)                                 Investment Company Act of 1940.  Neither CPA17 nor any of the CPA17 Subsidiaries is, or after giving effect to the transactions contemplated by this Agreement will be, required to be registered as an investment company under the Investment Company Act of 1940, as amended.

 

(i)                                     State Takeover Statutes; Charter Waiver.  CPA17 has taken all action necessary to exempt the transactions contemplated by this Agreement from operation of any “fair price,” “business combination,” “moratorium,” “control share acquisition” or any other anti-takeover statute or similar statute enacted under federal or state Laws of the United States or similar statute or regulation (a “Takeover Statute”).  CPA17 and the CPA17 Board of Directors have taken all appropriate and necessary actions to waive or remove, or to exempt W. P. Carey and Merger Sub and their beneficial owners from triggering, any and all limitations on ownership of CPA17 Common Stock contained in the CPA17 Charter or CPA17 Bylaws by reason of the Merger and the other transactions contemplated by this Agreement.

 

Section 2.2                                    Representations and Warranties of W. P. Carey and Merger Sub.  W. P. Carey and Merger Sub, jointly and severally, represent and warrant to CPA17 that, except as disclosed in the W. P. Carey / Merger Sub disclosure letter dated as of the date of this Agreement and delivered to CPA17 in connection with the execution hereof (the “W. P. Carey Disclosure Letter”), the statements set forth in this Section 2.2 are true and correct.

 

(a)                                 Organization, Standing and Corporate Power.  W. P. Carey is a corporation duly organized, validly existing and in good standing under the Laws of the State of Maryland.  Merger Sub is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Maryland.  Each of W. P. Carey and Merger Sub has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.  Each of W. P. Carey and Merger Sub is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of the business it is conducting, or the ownership, operation or leasing of its properties or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the

 

9



 

aggregate, would not have, or would not be reasonably likely to have, a W. P. Carey Material Adverse Effect.

 

(b)                                 Capital Structure.

 

(i)                                     As of the close of business on the Business Day immediately prior to the date of this Agreement, the authorized capital stock of W. P. Carey consists of 50,000,000 shares of preferred stock, $0.001 par value per share (the “W. P. Carey Preferred Stock”), and 450,000,000 shares of W. P. Carey Common Stock, $0.001 par value per share (“W. P. Carey Common Stock”), of which no shares of W. P. Carey Preferred Stock and 107,200,140 shares of W. P. Carey Common Stock are issued and outstanding.  All issued and outstanding shares of W. P. Carey Common Stock are duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any preemptive right, purchase option, call option, right of first refusal, subscription or any other similar right.  All dividends or other distributions on securities of W. P. Carey or any W. P. Carey Subsidiary that have been declared or authorized prior to the date of this Agreement have been paid in full.

 

(ii)                                  Except as permitted under this Agreement or as set forth in Schedule 2.2(b)(ii) of the W. P. Carey Disclosure Letter, there are issued and outstanding or reserved for issuance:  (1) no shares of stock, Voting Debt or other voting securities or equity securities of W. P. Carey or Merger Sub; (2) no securities of W. P. Carey or any W. P. Carey Subsidiary or securities or assets of any other entity convertible into or exchangeable for shares of stock, Voting Debt or other voting securities or equity securities of W. P. Carey or any W. P. Carey Subsidiary; and (3) no subscriptions, options, warrants, conversion rights, calls, performance stock awards, stock appreciation rights or phantom stock rights, rights of first refusal, rights (including preemptive rights), commitments or arrangements or agreements to which W. P. Carey or any W. P. Carey Subsidiary is a party or by which it is bound obligating W. P. Carey or any W. P. Carey Subsidiary to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, additional shares of stock, Voting Debt or other voting securities of W. P. Carey or of any W. P. Carey Subsidiary, or obligating W. P. Carey or any W. P. Carey Subsidiary to grant, extend or enter into any such subscription, option, warrant, conversion right, call, performance stock award, stock appreciation right or phantom stock right, right of first refusal, right, commitment or arrangement or agreement.

 

(iii)                               Except as set forth in Schedule 2.2(b)(iii) of the W. P. Carey Disclosure Letter, no holder of securities in W. P. Carey or any W. P. Carey Subsidiary has any right to have such securities registered under the Securities Act or under any state securities Laws by W. P. Carey or any W. P. Carey Subsidiary, as the case may be.  All prior issuances of securities by W. P. Carey or any W. P. Carey Subsidiary were, in all respects, made in compliance with all applicable federal and state securities Laws.

 

(iv)                              W. P. Carey is the sole member of, and has the sole ability to manage, WPC Holdco.

 

(v)                                 WPC Holdco is the sole member of, and has the sole ability to manage, Merger Sub.

 

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(c)           Authority; No Violations; Consents and Approval.

 

(i)            The Board of Directors of W. P. Carey, at a meeting duly called and held, unanimously determined that this Agreement, and the transactions contemplated hereby and by the Transaction Documents, including the Merger, are advisable and in the best interests of W. P. Carey and the stockholders of W. P. Carey.  The Board of Directors of W. P. Carey, including a majority of the independent directors and a majority of the directors who are not interested in the Merger and the other transactions contemplated by the Transaction Documents, has duly approved and declared advisable the Merger and the other transactions contemplated by the Transaction Documents, has resolved to recommend the approval of the issuance of W. P. Carey Common Stock in the Merger pursuant to this Agreement under Rule 312.03 of the NYSE Listed Company Manual (the “Stock Issuance”) by the stockholders of W. P. Carey (the “W. P. Carey Stockholders”) and has directed that the Stock Issuance be submitted for consideration at a special meeting (or any postponement or adjournment thereof) (the “W. P. Carey Stockholder Meeting”) of the W. P. Carey Stockholders.  The Sole Member of Merger Sub has duly approved and declared advisable this Agreement and the transactions contemplated hereby and by the Transaction Documents, including the Merger.

 

(ii)           Each of W. P. Carey and Merger Sub has all requisite power and authority to enter into this Agreement and the Transaction Documents and, subject to receipt of the W. P. Carey Stockholder Approval (as hereinafter defined), to consummate the transactions contemplated thereby.  The execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby have been, or when the Transaction Documents are executed will have been, duly authorized by all necessary action on the part of W. P. Carey and Merger Sub, subject to receipt of the W. P. Carey Stockholder Approval, and the Transaction Documents are enforceable in accordance with their terms, subject to enforceability, bankruptcy, insolvency, reorganization, moratorium and other Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

 

(iii)          Assuming the consents, approvals, authorizations or permits and filings or notifications referred to in Schedule 2.2(c)(iii) of the W. P. Carey Disclosure Letter are duly and timely obtained or made and the W. P. Carey Stockholder Approval has been obtained, the execution and delivery of the Transaction Documents by W. P. Carey and Merger Sub do not, and the consummation of the transactions contemplated thereby and compliance with the provisions hereof or thereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligation under, or give rise to a right of purchase under, result in the creation of any Lien upon any of the properties or assets of W. P. Carey, WPC Holdco or Merger Sub under or require the consent or approval of any third party under, any provision of (A) the amended and restated articles of incorporation of W. P. Carey (“W. P. Carey Charter”) or the amended and restated bylaws of W. P. Carey (the “W. P. Carey Bylaws”) (with respect to W. P. Carey), the articles of organization or operating agreement of WPC Holdco (with respect to WPC Holdco), or the Merger Sub Articles of Organization or the Merger Sub Operating Agreement (with respect to Merger Sub), (B) any W. P. Carey Material Contract or (C) any judgment, order, decree, statute, Law, ordinance, rule or regulation applicable to W. P. Carey or Merger Sub or any of their respective properties or assets, other

 

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than, in the case of clauses (B) or (C), any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.

 

(iv)          No consent, approval, order or authorization of, or registration, declaration or filing with, or permit from any Governmental Entity, is required by or with respect to W. P. Carey or any of the W. P. Carey Subsidiaries in connection with the execution and delivery of the Transaction Documents by W. P. Carey or Merger Sub or the consummation by W. P. Carey or Merger Sub or the applicable W. P. Carey Subsidiaries of the transactions contemplated thereby, except for:  (A) the filing with the SEC of (1) (a) the Joint Proxy Statement/Prospectus or (b) other documents otherwise required in connection with the transactions contemplated by the Transaction Documents and (2) such reports under Section 13(a) of the Exchange Act and such other reports in compliance with the Exchange Act as may be required in connection with the Transaction Documents and the transactions contemplated thereby; (B) the filing of the Articles of Merger with, and the acceptance for record of the Articles of Merger by, the SDAT; (C) such filings and approvals as may be required by any applicable Environmental Laws; and (D) any such consent, approval, order, authorization, registration, declaration, filing or permit of which the failure to obtain or make, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.

 

(d)           SEC Documents.

 

(i)            W. P. Carey has made available to CPA17 (by public filing with the SEC or otherwise) a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed by W. P. Carey with the SEC since January 1, 2015 (the “W. P. Carey SEC Documents”), which are all of the documents required to have been filed by W. P. Carey with the SEC since that date.  As of their respective dates, the W. P. Carey SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act or the Sarbanes-Oxley Act of 2002, as the case may be, and the rules and regulations of the SEC thereunder applicable to such W. P. Carey SEC Documents and none of the W. P. Carey SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by later W. P. Carey SEC Documents filed and publicly available prior to the date of this Agreement.  W. P. Carey does not have any outstanding and unresolved comments from the SEC with respect to the W. P. Carey SEC Documents.  The consolidated financial statements of W. P. Carey and W. P. Carey Subsidiaries, included in the W. P. Carey SEC Documents complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act) and fairly presented, in accordance with applicable requirements of GAAP and the applicable rules and regulations of the SEC (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which are material), the consolidated financial position of W. P. Carey and the W. P. Carey Subsidiaries, taken as a whole, as of their respective dates and the consolidated statements of income and the consolidated cash flows of W. P. Carey and the W. P.

 

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Carey Subsidiaries for the periods presented therein, in each case, except to the extent such financial statements have been modified or superseded by later W. P. Carey SEC Documents filed and publicly available prior to the date of this Agreement.  No W. P. Carey Subsidiary is required to make any filing with the SEC.

 

(ii)           W. P. Carey maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorizations, (B) access to assets is permitted only in accordance with management’s general or specific authorization and (C) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(iii)          W. P. Carey’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably designed to ensure that (A) all information (both financial and non-financial) required to be disclosed by W. P. Carey in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and (B) all such information is accumulated and communicated to W. P. Carey’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of W. P. Carey required under the Exchange Act with respect to such reports.

 

(iv)          Since December 31, 2017, W. P. Carey has not received any notification of a “material weakness” in W. P. Carey’s internal controls.  For purposes of this Agreement, the term “material weakness” shall have the meaning assigned to it in Release 2004-001 of the Public Company Accounting Oversight Board, as in effect on the date of this Agreement.

 

(e)           Absence of Certain Changes or Events.  Except as disclosed or reflected in the W. P. Carey SEC Documents filed with the SEC prior to the date of this Agreement or as disclosed in Schedule 2.2(e) of the W. P. Carey Disclosure Letter, since December 31, 2017 there has not been:  (i) (A) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, shares or property) with respect to any of W. P. Carey’s capital stock except for regular quarterly dividends on the W. P. Carey Common Stock; (B) any amendment of any term of any outstanding equity security of W. P. Carey or any W. P. Carey Subsidiary; (C) any repurchase, redemption or other acquisition by W. P. Carey or any W. P. Carey Subsidiary of any outstanding shares of capital stock or other equity securities of, or other ownership interests in, W. P. Carey or any W. P. Carey Subsidiary; (D) any change in any method of accounting or accounting practice or any Tax method, practice or election by W. P. Carey or any W. P. Carey Subsidiary that would materially adversely affect its assets, liabilities or business, except insofar as may have been required by a change in applicable Law or GAAP; (E) any W. P. Carey Material Adverse Effect, or (F) any incurrence, assumption or guarantee by W. P. Carey or any W. P. Carey Subsidiary of any indebtedness for borrowed money other than in the ordinary course of business consistent with past practices.

 

(f)            No Undisclosed Material Liabilities.  Except as disclosed in the W. P. Carey SEC Documents, as set forth in Schedule 2.2(f) of the W. P. Carey Disclosure Letter or as

 

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otherwise would not reasonably be expected to have a W. P. Carey Material Adverse Effect, there are no liabilities of W. P. Carey or any W. P. Carey Subsidiary of a nature that would be required under GAAP to be set forth on the financial statements of W. P. Carey or the notes thereto, other than:  (i) liabilities adequately provided for on the balance sheet of W. P. Carey dated as of December 31, 2017 (including the notes thereto) as required by GAAP, (ii) liabilities incurred in connection with the transactions contemplated by this Agreement or (iii) liabilities incurred in the ordinary course of business subsequent to December 31, 2017.

 

(g)           No Default.  None of W. P. Carey, Merger Sub or any material W. P. Carey Subsidiary is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the W. P. Carey Charter or the W. P. Carey Bylaws, or the Merger Sub Articles of Organization or the Merger Sub Operating Agreement, or any provision of the comparable charter or organizational documents of any of such W. P. Carey Subsidiaries, as applicable, (ii) any loan or credit agreement, note, or any bond, mortgage or indenture, to which W. P. Carey, Merger Sub or any of such W. P. Carey Subsidiaries is a party or by which W. P. Carey, Merger Sub or any of such W. P. Carey Subsidiaries or any of their respective properties or assets is bound, or (iii) any order, writ, injunction, decree, statute, rule or regulation applicable to W. P. Carey, Merger Sub or any of such W. P. Carey Subsidiaries, except in the case of clauses (ii) and (iii) for defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.

 

(h)           Compliance with Applicable Laws; Regulatory Matters.  Except for environmental matters, which are addressed in Section 2.2(n), W. P. Carey and the W. P. Carey Subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses (the “W. P. Carey Permits”), except where the failure so to hold such W. P. Carey Permits, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.  W. P. Carey and the W. P. Carey Subsidiaries are in compliance with the terms of the W. P. Carey Permits, except where the failure to so comply, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.  Except as disclosed in the W. P. Carey SEC Documents, the businesses of W. P. Carey and the W. P. Carey Subsidiaries are not being conducted in violation of any Law, except for violations which, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.  No investigation or review by any Governmental Entity with respect to W. P. Carey or any W. P. Carey Subsidiary is pending or, to W. P. Carey’s Knowledge, threatened, other than those the outcome of which, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.  Neither W. P. Carey nor any W. P. Carey Subsidiary is subject to any order, writ, injunction, decree, statute, rule or regulation that would, individually or in the aggregate, reasonably be expected to have a W. P. Carey Material Adverse Effect.  None of W. P. Carey or Merger Sub is subject to any judgment, decree, injunction, rule or order of any Governmental Entity that prohibits or would reasonably be expected to prohibit any of the transactions contemplated hereby or by this Agreement.  None of W. P. Carey or Merger Sub has taken any action, nor have any other steps been taken or have any legal proceedings been commenced, nor to the Knowledge of W. P. Carey, threatened, against W. P. Carey or Merger Sub, for the winding up, liquidation or dissolution of W. P. Carey or Merger Sub.

 

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(i)            Litigation.  Except as disclosed in Schedule 2.2(i) of the W. P. Carey Disclosure Letter or the W. P. Carey SEC Documents, there is no suit, action or proceeding pending or, to the Knowledge of W. P. Carey, threatened against or affecting W. P. Carey or any W. P. Carey Subsidiary or any of their respective properties or assets that, individually or in the aggregate, would reasonably be expected to have a W. P. Carey Material Adverse Effect, nor is there any such suit, action or proceeding pending against W. P. Carey or any W. P. Carey Subsidiary or any of their respective properties or assets which in any manner challenges or seeks to prevent or enjoin, alter or materially delay any of the transactions contemplated hereby.

 

(j)            Taxes.

 

(i)            Each of W. P. Carey and the W. P. Carey Subsidiaries has timely filed all material Tax Returns required to be filed by it (after giving effect to any valid extension to file).  Each such Tax Return is true, correct and complete in all material respects.  W. P. Carey and each W. P. Carey Subsidiary has paid (or W. P. Carey has paid on its behalf) all material Taxes required to be paid.  All material Taxes which W. P. Carey or the W. P. Carey Subsidiaries are required by Law to withhold or collect, including Taxes required to have been withheld in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party, and sales, gross receipts and use Taxes, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental Entities within the time period prescribed by Law.  The most recent audited financial statements contained in the W. P. Carey SEC Documents filed with the SEC prior to the date of this Agreement reflect an adequate reserve in accordance with GAAP for all material Taxes payable by W. P. Carey and the W. P. Carey Subsidiaries for all taxable periods and portions thereof through the date of such financial statements.  W. P. Carey and each W. P. Carey Subsidiary has established (and until the Closing Date shall continue to establish and maintain) on its books and records reserves that are adequate for the payment of all material Taxes not yet due and payable.  Since December 31, 2013, neither W. P. Carey nor any of the W. P. Carey Subsidiaries has incurred any material liability for Taxes other than in the ordinary course of business and other than transfer or similar Taxes arising in connection with the sales of property.  No event has occurred, and no condition or circumstance exists, which presents a material risk that any material Tax described in the preceding sentences will be imposed upon W. P. Carey or any W. P. Carey Subsidiary.  Except as disclosed in Schedule 2.2(j) of the W. P. Carey Disclosure Letter, neither W. P. Carey nor any W. P. Carey Subsidiary is the subject of any material audit, examination or other proceeding in respect of federal, state, local or foreign Taxes; to the Knowledge of W. P. Carey, no material audit, examination or other proceeding in respect of federal, state, local or foreign Taxes involving W. P. Carey or any W. P. Carey Subsidiary is being considered by any Tax authority; and no material audit, examination or proceeding in respect of federal, state, local or foreign Taxes involving W. P. Carey or any W. P. Carey Subsidiary has occurred since December 31, 2013.  No deficiencies for any Taxes have been asserted or assessed in writing (or, to the Knowledge of W. P. Carey or any W. P. Carey Subsidiary, proposed) against W. P. Carey or any of the W. P. Carey Subsidiaries, including claims by any taxing authority in a jurisdiction where W. P. Carey or any W. P. Carey Subsidiary does not file Tax Returns but in which any of them is or may be subject to taxation, which individually or in the aggregate would be material, and no requests for waivers of the time to assess any such Taxes have been granted and remain in effect or are pending.  There are no Liens for Taxes upon the assets of W. P. Carey or the W. P. Carey Subsidiaries except for statutory

 

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Liens for Taxes not yet due or payable and for which appropriate reserves have been established on their respective financial statements in accordance with GAAP.

 

(ii)           W. P. Carey (A) has been subject to taxation as a REIT within the meaning of the Code and has satisfied the requirements for qualification as a REIT beginning with its taxable year ended December 31, 2012, (B) has operated, and intends to continue to operate, in a manner consistent with the requirements for qualification and taxation as a REIT through the Effective Time and (C) has not taken or omitted to take any action which could reasonably be expected to result in the failure to qualify or continue to qualify as a REIT.  Each Subsidiary of W. P. Carey which is a partnership, joint venture or limited liability company has, during the taxable year of W. P. Carey ended December 31, 2012 and at all times thereafter, (A) been classified for federal income Tax purposes as a partnership or treated as a disregarded entity and not as an association taxable as a corporation, or a “publicly traded partnership” within the meaning of Section 7704(b) of the Code, and (B) not owned any assets (including, without limitation, securities) that would cause W. P. Carey to violate Section 856(c)(4) of the Code.  During the taxable year of W. P. Carey ended December 31, 2012 and at all times thereafter, each W. P. Carey Subsidiary which is a corporation, and each other issuer of securities in which W. P. Carey holds securities (within the meaning of Section 856(c) of the Code but excluding “straight debt” of issuers as described in Section 856(m) of the Code) having a value of more than 10 percent of the total value, or more than 10 percent of the total voting power, of the outstanding securities of such issuer has been a REIT, a qualified REIT subsidiary under Section 856(i) of the Code or a taxable REIT subsidiary under Section 856(l) of the Code.  Neither W. P. Carey nor any W. P. Carey Subsidiary holds any asset (x) the disposition of which would be subject to rules similar to Section 1374 of the Code as announced in IRS Notice 88-19 or Treasury Regulation Section 1.337(d)-5, Treasury Regulation Section 1.337(d)-6 or Treasury Regulation Section 1.337(d)-7 or (y) that is subject to a consent filed pursuant to Section 341(f) of the Code and the regulations thereunder.

 

(iii)          None of W. P. Carey or any of the W. P. Carey Subsidiaries is (A) subject, directly or indirectly, to any Tax Protection Agreement or (B) in violation of or in default under any Tax Protection Agreement.

 

(iv)          Neither W. P. Carey nor any W. P. Carey Subsidiary is a party to any Tax allocation or sharing agreement or has changed any method of accounting for Tax purposes.

 

(v)           W. P. Carey does not have any liability for the Taxes of any person other than W. P. Carey and the W. P. Carey Subsidiaries, and the W. P. Carey Subsidiaries do not have any liability for the Taxes of any person other than W. P. Carey and the W. P. Carey Subsidiaries, (A) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), (B) as a transferee or successor, (C) by contract or (D) otherwise.

 

(vi)          Neither W. P. Carey nor any W. P. Carey Subsidiary (x) has requested, received or is subject to any written ruling of a Governmental Entity related to Taxes or has entered into any written and legally binding agreement with a Governmental Entity relating to Taxes, (y) has engaged in any transaction of which it has made (or was required to make) disclosure to any Governmental Entity to avoid the imposition of any penalties related to

 

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Taxes, or (z) has participated in any transaction that could give rise to a disclosure obligation as a “listed transaction” under Section 6011 of the Code and the Treasury Regulations thereunder or any similar provision under applicable Law.

 

(k)           Pension and Benefit Plans and Employee Relations.  Schedule 2.2(k) of the W. P. Carey Disclosure Letter lists each written material “employee pension benefit plan” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) (referred to herein as “Pension Plans”) or “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), other than as set forth in the W. P. Carey SEC Documents, providing benefits to any current employee, officer or director of W. P. Carey or any of the W. P. Carey Subsidiaries or any entity that is or required under Section 414 of the Code to be treated with W. P. Carey as a single employer (an “ERISA Affiliate”) or with respect to which W. P. Carey or any ERISA Affiliate could have any liability that would reasonably be expected to have a W. P. Carey Material Adverse Effect (collectively, the “Benefit Plans”).  Each Benefit Plan has been administered in all material respects in accordance with its terms and the applicable requirements of ERISA, the Code and all other applicable Laws.  Each Pension Plan intended to be qualified under Section 401(a) of the Code has been the subject of a determination letter from the IRS to the effect that such Pension Plan is so qualified under all currently applicable provisions of Section 401(a) of the Code and, to the Knowledge of W. P. Carey, no circumstances exist that would adversely affect the qualification of any such Pension Plan.  No Benefit Plan is subject to Title IV of ERISA.  Each Benefit Plan may be amended or terminated in accordance with its terms.  Schedule 2.2(k) of the W. P. Carey Disclosure Letter lists each material employment, severance, consulting or other contract or plan with or for the benefit of any officer, director or employee of W. P. Carey or any of the W. P. Carey Subsidiaries containing a “change of control” provision that provides for any material payment, additional benefits, vesting or acceleration of benefits or rights or otherwise upon the execution of this Agreement or the consummation of any of the transactions contemplated hereby.

 

(l)            Information Supplied.  None of the information supplied or to be supplied by W. P. Carey or Merger Sub in writing for inclusion or incorporation by reference in the Form S-4, the Joint Proxy Statement/Prospectus or in any materials to be delivered by W. P. Carey or Merger Sub to potential financing sources in connection with the transactions contemplated by this Agreement will (i) in the case of the Form S-4, at the time it becomes effective, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, (ii) in the case of the Joint Proxy Statement/Prospectus, at the time of the mailing thereof or at the time the W. P. Carey Stockholder Meeting is to be held, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (iii) in the case of any materials to be delivered to potential financing sources in connection with the transactions contemplated by this Agreement, at the date such information is delivered, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading.  The Form S-4 and the Joint Proxy Statement/Prospectus will (with respect to W. P. Carey, Merger Sub, their respective officers and directors, and the W. P. Carey Subsidiaries) comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act; provided that no representation is made as to statements made or incorporated

 

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by reference by CPA17. As of the date of this Agreement, W. P. Carey, in the exercise of its duties as advisor to CPA17 pursuant to the CPA17 Advisory Agreement, does not have Knowledge of the existence of any fact, event or circumstance that constitutes a CPA17 Material Adverse Effect.

 

(m)          Intangible Property.  W. P. Carey and the W. P. Carey Subsidiaries own, possess or have adequate rights to use all trademarks, trade names, patents, service marks, brand marks, brand names, computer programs, databases, industrial designs and copyrights necessary for the operation of the businesses of each of W. P. Carey and the W. P. Carey Subsidiaries (collectively, the “W. P. Carey Intangible Property”), except where the failure to possess or have adequate rights to use such properties, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.  All of the W. P. Carey Intangible Property is owned or licensed by W. P. Carey or the W. P. Carey Subsidiaries free and clear of any and all Liens, except those that, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect, and neither W. P. Carey nor any such W. P. Carey Subsidiary has forfeited or otherwise relinquished any W. P. Carey Intangible Property which forfeiture has resulted in, individually or in the aggregate, or would reasonably be expected to result in a W. P. Carey Material Adverse Effect.  To the Knowledge of W. P. Carey, the use of W. P. Carey Intangible Property by W. P. Carey or the W. P. Carey Subsidiaries does not, in any material respect, conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including, without limitation, any intellectual property right, trademark, trade name, patent, service mark, brand mark, brand name, computer program, database, industrial design, copyright or any pending application therefor, of any other Person, and there have been no claims made, and neither W. P. Carey nor any of the W. P. Carey Subsidiaries has received any notice of any claims or otherwise has Knowledge of any claims that any of the W. P. Carey Intangible Property is invalid or conflicts with the asserted rights of any other Person or has not been used or enforced or has failed to have been used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of any of the W. P. Carey Intangible Property, except for any such conflict, infringement, violation, interference, claim, invalidity, abandonment, cancellation or unenforceability that, individually or in the aggregate, would not reasonably be expected to have a W. P. Carey Material Adverse Effect.

 

(n)           Environmental Matters.  For purposes of this Agreement, (x) “Environmental Law” means any Law of any Governmental Entity relating to human health, safety or protection of the environment, including, but not limited to, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), and (y) “Hazardous Material” means (A) any petroleum or petroleum products, regulated radioactive materials, asbestos-containing materials, urea formaldehyde foam insulation, and transformers and other equipment that contain dielectric fluid containing greater than 50 parts per million polychlorinated biphenyls (“PCBs”); or (B) any chemicals, materials, substances or wastes which are defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words of similar import, under any applicable Environmental Law.  Except as disclosed in Schedule 2.2(n) of the W. P. Carey Disclosure Letter, the W. P. Carey SEC Documents or in the environmental audits/reports

 

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listed therein or except as would not reasonably be expected to have a W. P. Carey Material Adverse Effect:

 

(i)            None of W. P. Carey or the W. P. Carey Subsidiaries has received written notice that any administrative or compliance order has been issued that is still in effect, any complaint has been filed that remains unresolved, any penalty has been assessed that has not been paid and any investigation or review is pending or threatened by any Governmental Entity with respect to any alleged failure by W. P. Carey or any W. P. Carey Subsidiary to have any permit required under any applicable Environmental Law or with respect to any treatment, storage, recycling, transportation, disposal or “release” (as defined in 42 U.S.C. (S) 9601(22) (“Release”)) by W. P. Carey or any W. P. Carey Subsidiary of any Hazardous Material in material violation of any Environmental Law.

 

(ii)           To the Knowledge of W. P. Carey, except in material compliance with applicable Environmental Laws, (A) there are no asbestos-containing materials present on any property owned or operated by W. P. Carey or any W. P. Carey Subsidiary, (B) there are no regulated levels of PCBs present on any property owned or operated by W. P. Carey or any W. P. Carey Subsidiary, and (C) there are no underground storage tanks, active or abandoned, used for the storage of Hazardous Materials currently present on any property owned or operated by W. P. Carey or any W. P. Carey Subsidiary.

 

(iii)          None of W. P. Carey or any W. P. Carey Subsidiary has received written notice of a claim, that has not been resolved, to the effect that it is liable to a third party, including a Governmental Entity, as a result of a Release of a Hazardous Material into the environment in material violation of any Environmental Law at any property currently or formerly owned, leased (including ground leases) or operated by W. P. Carey or a W. P. Carey Subsidiary.

 

(iv)          None of W. P. Carey or any W. P. Carey Subsidiary has received written notice of (A) any Liens arising under or pursuant to any applicable Environmental Law on any W. P. Carey Property or (B) any action taken which could subject any W. P. Carey Property to such Liens.  To the Knowledge of W. P. Carey, no such action is in process.  W. P. Carey and the W. P. Carey Subsidiaries currently do not have any duty under any applicable Environmental Law to place any restriction relating to the presence of Hazardous Material at any W. P. Carey Property.

 

(v)           None of W. P. Carey or the W. P. Carey Subsidiaries has transported or arranged for the transportation of any Hazardous Material to any location which, to the Knowledge of W. P. Carey, is the subject of any action, suit or proceeding that could be reasonably expected to result in claims against W. P. Carey or the W. P. Carey Subsidiaries related to such Hazardous Material for clean-up costs, remedial work, damages to natural resources or personal injury claims, including but not limited to claims under CERCLA and the rules and regulations promulgated thereunder.

 

(vi)          W. P. Carey and the W. P. Carey Subsidiaries have made notification of Releases of a Hazardous Material where required by applicable Environmental Law, and no property now or, to the Knowledge of W. P. Carey, previously owned, leased

 

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(including ground leases) or operated by W. P. Carey or the W. P. Carey Subsidiaries is listed or, to the Knowledge of W. P. Carey, proposed for listing on the National Priorities List promulgated pursuant to CERCLA or on any similar list of sites under any Environmental Law of any other Governmental Entity where such listing requires active investigation or clean-up.

 

(vii)         W. P. Carey and the W. P. Carey Subsidiaries have not entered into any agreements to provide indemnification to any third party purchaser pursuant to Environmental Laws in relation to any property or facility previously owned or operated by W. P. Carey and the W. P. Carey Subsidiaries.

 

(viii)        None of W. P. Carey or the W. P. Carey Subsidiaries has in its possession or control any environmental assessment or investigation reports prepared within the last four years that (A) have not been provided to CPA17 prior to the execution of this Agreement and (B) disclose a material environmental condition with respect to the W. P. Carey Properties which is not being addressed or remediated or has not been addressed or remediated or been made the subject of an environmental insurance policy listed in Schedule 2.2(p) of the W. P. Carey Disclosure Letter, except for such reports that reflect the results of an asbestos survey and/or abatement work performed in the ordinary course of renovation or demolition activities.

 

(o)           Properties.

 

(i)            Except as listed in Schedule 2.2(o)(i) of the W. P. Carey Disclosure Letter, W. P. Carey or a W. P. Carey Subsidiary owns fee simple title to or has a valid leasehold interest in, or has an interest (directly or indirectly) in an entity that owns fee simple title to or has a valid leasehold interest in, each of the real properties reflected on the most recent balance sheet of W. P. Carey included in the W. P. Carey SEC Documents (each, a “W. P. Carey Property” and collectively, the “W. P. Carey Properties”), which are all of the real estate properties owned or leased by them, in each case free and clear of Liens except for (1) debt and other matters identified on Schedule 2.2(o)(i) of the W. P. Carey Disclosure Letter, (2) inchoate mechanics’, workmen’s, repairmen’s and other inchoate Liens imposed for construction work in progress or otherwise incurred in the ordinary course of business, (3) mechanics’, workmen’s and repairmen’s Liens (other than inchoate Liens for work in progress) which have heretofore been bonded or insured, and landlord Liens, (4) all matters (x) disclosed on existing title policies or (y) as would be disclosed on current title reports, legal due diligence reports, landlord waivers, zoning reports or surveys and would not have a material adverse effect on the value or use of the affected property (excluding outstanding indebtedness), (5) real estate Taxes and special assessments not yet due and payable which are being contested in good faith in the ordinary course of business, and (6) Liens that would not cause a material adverse effect on the value or use of the affected property;

 

(A)          except as would not reasonably be expected to have a material adverse effect on the value or use of the affected property, the W. P. Carey Properties are not subject to any rights of way, written agreements, Laws, ordinances and regulations affecting building use or occupancy, or reservations of an interest in title (collectively, “W. P. Carey Property Restrictions”), except for (1) W. P. Carey Property Restrictions imposed or promulgated by Law with respect to real property, including zoning regulations, which would

 

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not reasonably be expected to have a material adverse effect on the value or use of the affected property, (2) landlord liens, easement agreements and all matters disclosed on existing title policies, title reports, legal due diligence reports, landlord waivers, zoning reports or surveys or as would be disclosed on current title policies, title reports, legal due diligence reports, landlord waivers, zoning reports or surveys and which would not reasonably be expected to have a material adverse effect on the value or use of the affected property (excluding outstanding indebtedness) and (3) real estate Taxes and special assessments;

 

(B)          except as would not reasonably be expected to have a material adverse effect on the value or use of the affected property, none of W. P. Carey or a W. P. Carey Subsidiary has received written notice to the effect that there are any (1) condemnation or rezoning proceedings that are pending or, to the Knowledge of W. P. Carey and the W. P. Carey Subsidiaries, threatened, with respect to any material portion of any of the W. P. Carey Properties or (2) zoning, building or similar Laws or orders that are presently being violated or will be violated by the continued maintenance, operation or use of any buildings or other improvements on any of the W. P. Carey Properties or by the continued maintenance, operation or use of the parking areas located thereon or appurtenant thereto or used in connection therewith;

 

(C)          except as would not reasonably be expected to have a material adverse effect on the value or use of the affected property, none of W. P. Carey or any W. P. Carey Subsidiary has received written notice that it is currently in default or violation of any W. P. Carey Property Restrictions;

 

(D)          except for the owners of the W. P. Carey Properties in which W. P. Carey, any W. P. Carey Subsidiary or any joint venture involving W. P. Carey or the W. P. Carey Subsidiaries has a leasehold interest, no Person (other than W. P. Carey, a W. P. Carey Subsidiary or any joint venture involving W. P. Carey or the W. P. Carey Subsidiaries) has any ownership interest in any of the W. P. Carey Properties; and

 

(E)           except as listed on Schedule 2.2(o)(i)(E) of the W. P. Carey Disclosure Letter, all equity interests held by W. P. Carey or a W. P. Carey Subsidiary in entities which directly or indirectly own or lease W. P. Carey Properties are so held free and clear of Liens.

 

(ii)           Except, individually or in the aggregate, as would not reasonably be expected to have a W. P. Carey Material Adverse Effect, all properties currently under development or construction by W. P. Carey or the W. P. Carey Subsidiaries and all properties currently under contract for acquisition, sale or transfer, development or commencement of construction as of the date of this Agreement by W. P. Carey and the W. P. Carey Subsidiaries are listed as such in Schedule 2.2(o)(ii) of the W. P. Carey Disclosure Letter.

 

(iii)          Schedule 2.2(o)(iii) of the W. P. Carey Disclosure Letter lists (1) all agreements existing as of the date of this Agreement to which W. P. Carey or any W. P. Carey Subsidiary is a party providing (x) for the sale of, or option to sell, any W. P. Carey Property or the purchase of, or option to purchase, by W. P. Carey or any W. P. Carey Subsidiary, on the one hand, or the other party thereto, on the other hand, any real estate not yet

 

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consummated as of the date hereof or (y) all rights of first offer and rights of first refusal with regard to any W. P. Carey Properties and (2) all tenants of W. P. Carey Properties who have been granted early termination rights with respect to their lease obligations.

 

(p)           Insurance.  Schedule 2.2(p) of the W. P. Carey Disclosure Letter sets forth a complete list as of the date of this Agreement of all insurance policies (but excluding title insurance policies) which W. P. Carey or any W. P. Carey Subsidiary maintains with respect to its respective businesses or properties.  W. P. Carey has not been informed that any such policies are not in full force and effect in all material respects, as of the date of this Agreement.  All premiums due and payable by W. P. Carey or any W. P. Carey Subsidiary thereof under each such policy obtained by W. P. Carey or any W. P. Carey Subsidiary have been paid.

 

(q)           Vote Required.  Schedule 2.2(q) of the W. P. Carey Disclosure Letter lists all the votes of the holders of W. P. Carey Common Stock required to approve the Merger and the Stock Issuance (the “W. P. Carey Stockholder Approval”).

 

(r)            Brokers.  Except for the fees and expenses payable to J.P. Morgan Securities LLC and Barclays Capital Inc. (which fees have been disclosed to CPA17 and which shall not increase between the date of this Agreement and the Closing Date), no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the transactions contemplated by the Transaction Documents based upon arrangements made by or on behalf of W. P. Carey or any W. P. Carey Subsidiary.

 

(s)            Investment Company Act of 1940.  Neither W. P. Carey nor any of the W. P. Carey Subsidiaries is, or after giving effect to the transactions contemplated by this Agreement will be, required to be registered as an investment company under the Investment Company Act of 1940, as amended.

 

(t)            Contracts.

 

(i)            Except as set forth in Schedule 2.2(t)(i) of the W. P. Carey Disclosure Letter or in the W. P. Carey SEC Documents, each W. P. Carey Material Contract is valid, binding and enforceable in accordance with its terms and in full force and effect with respect to W. P. Carey and the W. P. Carey Subsidiaries, as applicable, and, to the Knowledge of W. P. Carey, each of the other parties thereto, except where such failure to be so valid, binding and enforceable and in full force and effect would not, individually or in the aggregate, reasonably be expected to have a W. P. Carey Material Adverse Effect, and there are no defaults (nor does there exist any condition which upon the passage of time or the giving of notice or both would cause such a violation of or default) under any W. P. Carey Material Contract by W. P. Carey or any W. P. Carey Subsidiary, or, to the Knowledge of W. P. Carey, any of the other parties thereto, except for those defaults that would not, individually or in the aggregate, reasonably be expected to have a W. P. Carey Material Adverse Effect.  For purposes of this Agreement, “W. P. Carey Material Contracts” shall mean (A) any partnership, limited liability company or joint venture agreement between W. P. Carey or any W. P. Carey Subsidiary, on the one hand, and a third party, on the other hand, (B) any capitalized lease obligations and other indebtedness to any Person, other than individual items of indebtedness in a principal amount less than $10,000,000, (C) each material commitment, contractual obligation, borrowing, capital

 

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expenditure or transaction entered into by W. P. Carey or any W. P. Carey Subsidiary which may result in total payments by or liability of W. P. Carey or any W. P. Carey Subsidiary in excess of $10,000,000, (D) any other agreements filed or required to be filed as exhibits to the W. P. Carey SEC Documents pursuant to Item 601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations, (E) any interest rate cap, interest rate collar, interest rate swap, currency hedging transaction and any other agreement relating to a similar transaction to which W. P. Carey or any W. P. Carey Subsidiary is a party or an obligor with respect thereto, (F) the lease agreements between W. P. Carey and each of its five largest tenants measured by lease revenue, and (G) any agreement, commitment, instrument or obligation of a type described in Sections 2.2(t)(ii) through 2.2(t)(iv); in each case including all amendments, modifications and supplements to such W. P. Carey Material Contracts and all side letters to which W. P. Carey or any W. P. Carey Subsidiary is a party affecting the obligations of any party thereunder.

 

(ii)           The Merger and the other transactions contemplated by the Transaction Documents will not trigger any due-on-sale provision on any mortgages that, individually or in the aggregate, would reasonably be expected to have a W. P. Carey Material Adverse Effect, except as set forth in Schedule 2.2(t)(ii) of the W. P. Carey Disclosure Letter.

 

(iii)          Except for those agreements set forth in Schedule 2.2(t)(iii) of the W. P. Carey Disclosure Letter or agreements in which W. P. Carey agrees not to sell a W. P. Carey Property to a competitor of the W. P. Carey Property’s current tenant, there are no non-competition agreements or other contracts or agreements that contain covenants that restrict W. P. Carey’s or any W. P. Carey Subsidiary’s ability to conduct its business in any location or present a material restriction on the conduct of the business of W. P. Carey or the W. P. Carey Subsidiaries.

 

(iv)          Except as set forth in Schedule 2.2(t)(iv) of the W. P. Carey Disclosure Letter, there are no indemnification agreements entered into by and between W. P. Carey and any director or officer of W. P. Carey or any of the W. P. Carey Subsidiaries, other than in respect of independent directors as may be required in connection with financing the W. P. Carey Properties.

 

(u)           Related Party Transactions.  Except as expressly described in the W. P. Carey SEC Documents or as set forth in Schedule 2.2(u) of the W. P. Carey Disclosure Letter, there are no material arrangements, agreements or contracts entered into by W. P. Carey or any of the W. P. Carey Subsidiaries, on the one hand, and any Person who is an officer, director or Affiliate of W. P. Carey or any W. P. Carey Subsidiary, any relative of the foregoing or an entity of which any of the foregoing is an Affiliate, on the other hand.  Copies of any such documents have been previously provided to CPA17.

 

(v)           Opinion of W. P. Carey Financial Advisor. The Board of Directors of W. P. Carey has received the opinion of J.P. Morgan Securities LLC, to the effect that, as of the date of such opinion and based on and subject to the assumptions, qualifications, limitations and other matters set forth in such opinion, the Exchange Ratio is fair from a financial point of view to W. P. Carey. A copy of such opinion will be made available to CPA17 solely for informational purposes.  W. P. Carey has been advised that J.P. Morgan Securities LLC will permit the inclusion of the opinion in its entirety and, subject to prior review and consent by J.P.

 

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Morgan Securities LLC, a reference to the opinion in the Form S-4 and the Joint Proxy Statement/Prospectus.

 

ARTICLE III

 

COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER

 

Section 3.1            Conduct of Business by CPA17.

 

(a)           During the period from the date of this Agreement to the Effective Time, CPA17 shall, and shall cause each of the CPA17 Subsidiaries to, use all commercially reasonable efforts to carry on its businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and in compliance in all material respects with applicable Law and, to the extent consistent herewith, use commercially reasonable efforts to preserve intact in all material respects its current business organization, goodwill, ongoing businesses and CPA17’s qualification as a REIT within the meaning of the Code; provided that the parties hereto agree that CPA17 shall have no liability for any breach of covenants set forth in this Section 3.1 to the extent due to actions or inactions of W. P. Carey or any W. P. Carey Subsidiary in its capacity as advisor to CPA17 pursuant to the CPA17 Advisory Agreements.  CPA17 will promptly notify W. P. Carey of any litigation involving CPA17 having, to the Knowledge of CPA17, a reasonable likelihood of potential liability to CPA17 or any of the CPA17 Subsidiaries in excess of $2,500,000 or any complaint, investigation or hearing, of which CPA17 has Knowledge, by a Governmental Entity involving CPA17 or any of the CPA17 Subsidiaries, other than with respect to any such matter which W. P. Carey or any W. P. Carey Subsidiary was notified prior to the notification of the independent directors of CPA17.

 

(b)           Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the termination of this Agreement in accordance with Section 6.1 and the Effective Time, except (i) as disclosed on Schedule 3.1(b) of the CPA17 Disclosure Letter, (ii) as otherwise contemplated by, or necessary to carry out the transactions described in, this Agreement or (iii) to the extent consented to by W. P. Carey, which consent shall not be unreasonably withheld, conditioned or delayed, CPA17 and any of the CPA17 Subsidiaries shall not engage in, authorize or agree to any of the following:

 

(i)            amend the CPA17 Charter or CPA17 Bylaws, except as required by this Agreement and the other Transaction Documents or required by applicable Law;

 

(ii)           exempt any Person, other than W. P. Carey and Merger Sub or any of their Affiliates or Subsidiaries or, if applicable, and subject to the provisions of Section 4.5, any Person that enters into an Alternative Acquisition Agreement with CPA17 or any CPA17 Subsidiary, from any limits or restrictions contained in the CPA17 Charter or CPA17 Bylaws with respect to the ownership of any equity securities of CPA17;

 

(iii)          except as otherwise expressly contemplated by this Agreement, merge, consolidate or enter into any other similar extraordinary corporate transaction with any Person; acquire or agree to acquire (by merger, consolidation or acquisition) any corporation,

 

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partnership or other entity; or purchase any equity interest in, or all or substantially all of the assets of, any Person or any division or business thereof;

 

(iv)          make or rescind any express or deemed election relating to Taxes (unless CPA17 reasonably determines after consultation with W. P. Carey that such action is required by Law or necessary to preserve CPA17’s qualification as a REIT or the tax classification of any other CPA17 Subsidiary which files Tax Returns as a partnership for federal Tax purposes, in which event CPA17 shall make such election in a timely manner); provided that nothing in this Agreement shall preclude CPA17 from designating dividends paid by it as “capital gain dividends” within the meaning of Section 857 of the Code, with the prior written consent of W. P. Carey, which will not be unreasonably withheld;

 

(v)           (A) change in any material respect that is adverse to CPA17 any of its methods, principles or practices of accounting (including any method of accounting for Tax purposes) in effect, (B) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed, individually or in the aggregate, $2,000,000, or (C) change any of its methods of reporting income or deductions for federal income Tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ended December 31, 2017, except as to clauses (A) and (B) as may be required by the SEC, applicable Law or GAAP;

 

(vi)          authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of CPA17;

 

(vii)         enter into, assume or acquire any asset subject to any Tax Protection Agreement;

 

(viii)        take any action or fail to take any action that could reasonably be expected to prevent, materially delay or materially impede the ability of the parties to consummate the Merger or that could reasonably be expected to prevent or impede the Merger from being governed by Section 368(a) of the Code pursuant to this Agreement and the Joint Proxy Statement/Prospectus;

 

(ix)          issue, deliver, sell, grant, pledge or encumber, or agree to issue, deliver, sell, grant, pledge or encumber, any stock, Voting Debt or other voting securities or equity securities of CPA17 or any CPA17 Subsidiary, any option or other material right in respect of any CPA17 Common Stock or capital stock, any other voting or redeemable securities of CPA17 or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible or redeemable securities, including, for the avoidance of doubt, pursuant to CPA 17’s existing dividend reinvestment program or in payment of fees to W. P. Carey or its any of its Subsidiaries or any of the Directors of CPA17;

 

(x)           approve or otherwise determine that the CPA17 Stockholders are or shall be entitled to exercise any rights of an objecting stockholders provided for under Title 3, Subtitle 2 of the MGCL (or any successor provision) with respect to all or any classes or series of

 

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capital stock of CPA17 with respect to the Merger, the Charter Amendment or the other transactions contemplated by this Agreement or the other Transaction Documents; or

 

(xi)          authorize, commit or agree to take, or take any action inconsistent with, any of the foregoing.

 

Section 3.2            Conduct of Business by W. P. Carey.

 

(a)           During the period from the date of this Agreement to the Effective Time, W. P. Carey shall, and shall cause each of the W. P. Carey Subsidiaries to, (i) use all commercially reasonable efforts to carry on its businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and in compliance in all material respects with applicable Law and, to the extent consistent herewith, use commercially reasonable efforts to preserve intact in all material respects its current business organization, goodwill, ongoing businesses and W. P. Carey’s qualification as a REIT within the meaning of the Code, and (ii) in its capacity as advisor pursuant to the CPA17 Advisory Agreements, not cause CPA17 and the CPA17 Subsidiaries to take any actions or fail to take any actions, as a result of which actions or failure to take actions CPA17 would be unable to satisfy the conditions set forth in Section 5.2 or would be in breach of this Agreement.  W. P. Carey will promptly notify CPA17 of any litigation involving either W. P. Carey having, to the Knowledge of W. P. Carey, a reasonable likelihood of potential liability to W. P. Carey or any of the W. P. Carey Subsidiaries in excess of $5,000,000 or any complaint, investigation or hearing, of which W. P. Carey has Knowledge, by a Governmental Entity involving W. P. Carey or any of the W. P. Carey Subsidiaries.

 

(b)           Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement in accordance with Section 6.1, except (i) as disclosed on Schedule 3.2(b) of the W. P. Carey Disclosure Letter, (ii) as otherwise contemplated by, or necessary to carry out the transactions described in, this Agreement, or (iii) to the extent consented to by the CPA17 Special Committee, which consent shall not be unreasonably withheld, conditioned or delayed, neither W. P. Carey nor any of the W. P. Carey Subsidiaries shall engage in, authorize or agree to any of the following:

 

(i)            (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, W. P. Carey Common Stock or stock or other equity interests in any W. P. Carey Subsidiary that is not directly or indirectly wholly-owned by W. P. Carey, except (1) the authorization and payment of regular quarterly dividends that are consistent with past practices and (2) the authorization and payment of any dividend or distribution necessary for W. P. Carey to maintain its qualification as a REIT under Section 856(c) of the Code, in each case with respect to the W. P. Carey Common Stock; provided that W. P. Carey shall notify CPA17 of the proposed record date for any such distribution prior to such date, (B) split, combine, adjust or reclassify any W. P. Carey Common Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for W. P. Carey Common Stock or (C) other than as permitted under Section 4.10, purchase, redeem or otherwise acquire any W. P. Carey Common Stock or any options, warrants or rights to acquire, or security convertible into, W. P. Carey Common Stock;

 

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(ii)           issue, deliver, sell, grant, pledge or encumber, or agree to issue, deliver, sell, grant, pledge or encumber, any stock, Voting Debt or other voting securities or equity securities of W. P. Carey or any W. P. Carey Subsidiary, any option or other material right in respect of any W. P. Carey Common Stock or capital stock, any other voting or redeemable securities of W. P. Carey or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible or redeemable securities, except pursuant to W. P. Carey’s distribution reinvestment plan;

 

(iii)          directly or indirectly sell, transfer, lease, pledge, mortgage, encumber or otherwise dispose of properties or assets representing more than 5%, individually or in the aggregate, of the total carrying value of the consolidated real property assets of W. P. Carey (excluding the assets of CPA17) as of December 31, 2017, other than in the ordinary course of business;

 

(iv)          amend the W. P. Carey Charter or W. P. Carey Bylaws or any provision of the comparable charter or organizational documents of any of the W. P. Carey Subsidiaries, except as required by this Agreement or applicable Law;

 

(v)           amend the Merger Sub Articles of Organization or Merger Sub Operating Agreement, except as contemplated in the Form S-4 and the Joint Proxy Statement/Prospectus (which actions contemplated therein (other than any administrative or ministerial actions in furtherance thereof) shall require the prior consent by the CPA17 Special Committee, which consent may be withheld, delayed or conditioned at the sole discretion of the CPA17 Special Committee) or as required by this Agreement or applicable Law;

 

(vi)          merge, consolidate or enter into any other similar extraordinary corporate transaction with any Person; acquire, agree to acquire or agree to be acquired by (by merger, consolidation or acquisition) any corporation, partnership or other entity; or purchase any equity interest in, or assets of, any Person or any division or business thereof, other than in connection with its acquisitions of properties in the ordinary course of business;

 

(vii)         incur, create, assume or otherwise become liable for any indebtedness for borrowed money or assume, guarantee, endorse or otherwise as an accommodation become responsible or liable for the financial obligations of any other Person, except (x) pursuant to W. P. Carey’s credit facilities that are currently in place as of the date hereof; (y) in the ordinary course of business consistent with past practice; or (z) in connection with the offering, issuance, or sale of any bonds or other indebtedness (in each instance, that does not constitute Voting Debt) in the public markets; provided that after giving effect to any incurrence of indebtedness described in clauses (x), (y) or (z), it is not reasonably likely that W. P. Carey’s corporate credit rating will be downgraded by either Standard & Poors or Moody’s Investors Service;

 

(viii)        (A) change in any material respect that is adverse to W. P. Carey any of its methods, principles or practices of accounting (including any method of accounting for Tax purposes) in effect, (B) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed,

 

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individually or in the aggregate, $4,000,000, or (C) change any of its methods of reporting income or deductions for federal income Tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ended December 31, 2017, except as to clauses (A) and (B) as may be required by the SEC, applicable Law or GAAP;

 

(ix)          waive, release, assign, settle or compromise any pending or threatened litigation, action or claim, including any shareholder derivative or class action claims other than settlements or compromises for litigation providing solely for the payment of money damages where the amount paid (after reduction by any insurance proceeds actually received or appropriate credits are applied from self-insurance reserves), in settlement or compromise, exceeds, individually or in the aggregate, $4,000,000, except where such settlement or compromise provides for a complete release of W. P. Carey and each applicable W. P. Carey Subsidiary for all claims and which do not provide for any admission of liability by W. P. Carey or any W. P. Carey Subsidiary;

 

(x)           amend or terminate, or waive compliance with the terms of or breaches under, any W. P. Carey Material Contract if, after giving effect to the Merger, such amendment, termination or waiver would have a W. P. Carey Material Adverse Effect;

 

(xi)          authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution or consolidation, restructuring or recapitalization of W. P. Carey, Merger Sub or any W. P. Carey Subsidiary (except, in the case of a W. P. Carey Subsidiary, either in the ordinary course of business consistent with past practice or as contemplated in the Form S-4 and the Joint Proxy Statement/Prospectus (which actions contemplated therein (other than any administrative or ministerial actions in furtherance thereof) shall require the prior consent by the CPA17 Special Committee, which consent may be withheld, delayed or conditioned at the sole discretion of the CPA17 Special Committee);

 

(xii)         enter into, assume or acquire any asset subject to any Tax Protection Agreement;

 

(xiii)        take any action or fail to take any action that could reasonably be expected to prevent, materially delay or materially impede the ability of the parties to consummate the Merger or that could reasonably be expected to prevent or impede the Merger from being governed by Section 368(a) of the Code pursuant to this Agreement and the Joint Proxy Statement/Prospectus; or

 

(xiv)        authorize, commit or agree to take, or take any action inconsistent with, any of the foregoing.

 

Section 3.3            No Control of Other Party’s Business.     Nothing contained in this Agreement shall give CPA17, directly or indirectly, the right to control or direct W. P. Carey’s or any W. P. Carey Subsidiary’s operations prior to the Effective Time, and nothing contained in this Agreement shall give W. P. Carey or Merger Sub, directly or indirectly (other than in connection with and pursuant to the CPA17 Advisory Agreements), the right to control or direct CPA17’s or any CPA17 Subsidiary’s operations prior to the Effective Time.  Prior to the Effective Time, each of CPA17 and W. P. Carey shall exercise, consistent with the terms and

 

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conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.

 

ARTICLE IV

 

ADDITIONAL COVENANTS

 

Section 4.1            Preparation of the Form S-4 and the Joint Proxy Statement/Prospectus; Stockholders Meetings.

 

(a)           As soon as practicable following the date of this Agreement, CPA17 and W. P. Carey shall jointly prepare and file with the SEC mutually acceptable preliminary proxy materials, and any amendments or supplements thereto, which shall constitute the Joint Proxy Statement/Prospectus relating to the matters to be submitted to the CPA17 Stockholders at the CPA17 Stockholder Meeting and the W. P. Carey Stockholders at the W. P. Carey Meeting (such Joint Proxy Statement/Prospectus, and any amendments or supplements thereto, the “Joint Proxy Statement/Prospectus”), and W. P. Carey shall prepare and file with the SEC the Registration Statement on Form S-4, with respect to the Stock Issuance (the “Form S-4”), in which the Joint Proxy Statement/Prospectus will be included as a prospectus.  The Form S-4 and the Joint Proxy Statement/Prospectus shall comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act.  The parties shall cooperate fully with each other in the preparation of the Form S-4 and the Joint Proxy Statement/Prospectus and shall furnish each other with all information reasonably requested by the other for inclusion therein or otherwise in respect thereof.  Each of CPA17 and W. P. Carey shall use all reasonable best efforts to have the Joint Proxy Statement/Prospectus cleared by the SEC and the Form S-4 declared effective under the Securities Act as promptly as practicable after filing such materials with the SEC and to keep the Form S-4 effective as long as necessary to consummate the Merger.  The parties shall promptly provide copies to each other, consult with each other and jointly prepare written responses with respect to any written comments received from the SEC with respect to the Form S-4 and the Joint Proxy Statement/Prospectus and promptly advise the other party of any oral comments received from the SEC.  The parties shall cooperate and provide each other with a reasonable opportunity to review and comment on any amendment or supplement to the Joint Proxy Statement/Prospectus and Form S-4 prior to filing such materials with the SEC and will provide each other a copy of all such filings made with the SEC.  Notwithstanding any other provision herein to the contrary, no amendment or supplement (including by incorporation by reference) to the Joint Proxy Statement/Prospectus or Form S-4 shall be made without the approval of both parties, which approval shall not be unreasonably withheld, conditioned or delayed.  The parties shall use all reasonable best efforts to cause the Joint Proxy Statement/Prospectus and all other customary proxy or other materials for meetings such as the CPA17 Stockholder Meeting and the W. P. Carey Stockholder Meeting to be mailed to their respective stockholders as promptly as practicable after the Form S-4 is declared effective under the Securities Act.  Each of CPA17 and W. P. Carey shall comply in all respects with the requirements of the Exchange Act and the Securities Act applicable to the Joint Proxy Statement/Prospectus and the solicitation of proxies for their respective meetings of stockholders.  W. P. Carey shall also take any action required to be taken under any applicable state securities Laws in connection with the issuance of the W. P. Carey Common Stock in the Merger (other than qualifying to do business in any jurisdiction in which it is not now so

 

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qualified or to file a general consent to service of process) and CPA17 shall furnish all information concerning CPA17 and the CPA17 Stockholders as may be reasonably requested by W. P. Carey in connection with any such action.

 

(b)           CPA17 shall, in accordance with applicable Law, the CPA17 Charter and the CPA17 Bylaws, as soon as practicable following the date of this Agreement, establish a record date for, duly call, give notice of, convene and hold the CPA17 Stockholder Meeting solely for the purposes of obtaining the CPA17 Stockholder Approvals and, subject to the provisions of Section 4.5, shall, through its Board of Directors, recommend to the CPA17 Stockholders the approval of the Merger and the Charter Amendment.  Subject to the foregoing, CPA17 shall use its reasonable best efforts to obtain the CPA17 Stockholder Approvals as promptly as practicable.

 

(c)           W. P. Carey shall, in accordance with applicable Law, the W. P. Carey Charter and the W. P. Carey Bylaws, as soon as practicable following the date of this Agreement, establish a record date for, duly call, give notice of, convene and hold the W. P. Carey Stockholder Meeting solely for the purposes of obtaining the W. P. Carey Stockholder Approval and shall, through its Board of Directors, recommend to the W. P. Carey Stockholders the approval of the Stock Issuance.  Subject to the foregoing, W. P. Carey shall use its reasonable best efforts to obtain the W. P. Carey Stockholder Approval as promptly as practicable.

 

(d)           The CPA17 Stockholder Meeting and the W. P. Carey Stockholder Meeting shall take place on the same date to the extent practicable.

 

(e)           If at any time prior to the Effective Time any information with respect to W. P. Carey, Merger Sub or any other W. P. Carey Subsidiary (including their respective officers and directors or any W. P. Carey Subsidiary) shall be discovered or any event shall occur that in the determination of W. P. Carey is required to be described in an amendment of or a supplement to the Joint Proxy Statement/Prospectus or the Form S-4, W. P. Carey shall notify CPA17 thereof and such event shall be so described.  Any such amendment or supplement shall be promptly filed with the SEC and, as and to the extent required by Law, disseminated to the W. P. Carey Stockholders, and such amendment or supplement shall comply in all material respects with all provisions of applicable Law.

 

(f)            If at any time prior to the Effective Time any information with respect to CPA17 (including its officers and directors and any of the CPA17 Subsidiaries) shall be discovered or any event shall occur that in the determination of CPA17 is required to be described in an amendment of or a supplement to the Joint Proxy Statement/Prospectus or the Form S-4, CPA17 shall notify W. P. Carey thereof and such event shall be so described.  Any such amendment or supplement shall be promptly filed with the SEC and, as and to the extent required by Law, disseminated to the CPA17 Stockholders, and such amendment or supplement shall comply in all material respects with all provisions of applicable Law.

 

(g)           The foregoing actions are subject to compliance with applicable Law and the other terms of this Agreement.

 

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(h)           If, on the date of the CPA17 Stockholder Meeting, CPA17 has not received proxies representing a sufficient number of shares of CPA17 Common Stock to approve the Merger or the Charter Amendment, CPA17 shall adjourn the CPA17 Stockholder Meeting until such date as shall be mutually agreed upon by CPA17 and W. P. Carey, which date shall not be less than five (5) days nor more than ten (10) days after the date of adjournment, and subject to the terms and conditions of this Agreement shall continue to use its reasonable best efforts, together with its proxy solicitor, to assist in the solicitation of proxies from stockholders relating to the CPA17 Stockholder Approvals.

 

(i)            If, on the date of the W. P. Carey Stockholder Meeting, W. P. Carey has not received proxies representing a sufficient number of W. P. Carey Common Stock to approve the Stock Issuance, W. P. Carey shall postpone or adjourn the W. P. Carey Stockholder Meeting until such date as shall be mutually agreed upon by W. P. Carey and CPA17, which date shall not be less than five (5) days nor more than ten (10) days after the date of such postponement or adjournment, and subject to the terms and conditions of this Agreement shall continue to use its reasonable best efforts, together with its proxy solicitor, to assist in the solicitation of proxies from stockholders relating to the W. P. Carey Stockholder Approval.

 

Section 4.2            Reasonable Best Efforts.

 

(a)           Upon the terms and subject to the conditions set forth in this Agreement and compliance with applicable Law and the other terms of this Agreement, each of W. P. Carey, Merger Sub and CPA17 agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other in doing, all things necessary, proper or advisable to fulfill all conditions applicable to such party or its Subsidiaries pursuant to this Agreement and to consummate and make effective, in the most expeditious manner practicable, the Merger and the other transactions contemplated by the Transaction Documents, including (i) the obtaining of all necessary actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings and the taking of all reasonable steps as may be necessary to obtain an approval, waiver or exemption from any Governmental Entity, (ii) the obtaining of all necessary consents, approvals, waivers or exemptions from non-governmental third parties, and (iii) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement.  In addition, each of W. P. Carey, Merger Sub and CPA17 agrees to use its reasonable best efforts to defend any lawsuits or other legal proceedings, whether judicial or administrative, challenging the Merger, this Agreement or the transactions contemplated by the Transaction Documents, including seeking to have any stay, temporary restraining order, injunction, or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated by the Transaction Documents entered by any court or other Governmental Entity vacated or reversed.  If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purpose of this Agreement, the proper officers and directors of CPA17, W. P. Carey and Merger Sub shall take all such necessary action.  From the date of this Agreement through the Effective Time, CPA17 shall timely file, or cause to be filed, with the SEC all CPA17 SEC Documents required to be so filed.

 

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(b)           Each of CPA17, W. P. Carey and Merger Sub shall give prompt notice to each other party if (i) any representation or warranty made by it contained in this Agreement that is qualified as to materiality becomes untrue or inaccurate in any respect or any such representation or warranty that is not so qualified becomes untrue or inaccurate in any material respect or (ii) it fails to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided that the delivery of any notice pursuant to Section 4.2(a) shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice; and provided, further, that failure to give such notice shall not be treated as a breach of covenant for the purposes of Sections 5.2(b) or 5.3(b), as the case may be.

 

Section 4.3            Fees and Distributions Payable to W. P. Carey and its Affiliates.

 

(a)           In connection with the Merger and the other transactions contemplated hereby (and not any CPA17 Competing Transaction), and conditioned upon the closing of the Merger and the other transactions contemplated hereby, W. P. Carey hereby waives, on behalf of itself and its Affiliates, all rights to receive any and all Advisor Closing Amounts to which W. P. Carey and any of its Affiliates may be entitled in connection with the closing of the Merger and the other transactions contemplated hereby.  In addition, the parties agree that no Subordinated Disposition Fees shall be payable by CPA17 to W. P. Carey and its Affiliates in respect of the consummation of the Merger and the other transactions contemplated hereby.

 

(b)           The parties agree that the waiver of Advisor Closing Amounts set forth in Section 4.3(a) is conditioned on the closing of the Merger and the other transactions contemplated hereby, and in the event that the Merger and the other transactions contemplated hereby are not consummated and this Agreement is terminated in accordance with Section 6.1, subject to the CPA17 Termination Fee Credit described in the following sentence, none of W. P. Carey or any of its Affiliates hereby waives any Advisor Closing Amounts or Subordinated Disposition Fees.  Notwithstanding the foregoing, if (i) this Agreement is terminated in accordance with either Section 6.1(g) or Section 6.1(h), (ii) a CPA17 Termination Fee is actually paid in accordance with Section 6.2(d), and (iii) the Advisor Closing Amounts become payable as a result thereof, then (I) an amount equal to the CPA17 Termination Fee Credit shall be credited against the Advisor Closing Amounts payable to W. P. Carey and its Affiliates and (II) no Subordinated Disposition Fees shall be payable to W. P. Carey and its Affiliates in respect of the consummation of any CPA17 Competing Transaction that would otherwise result in the payment of any Subordinated Disposition Fees.  Notwithstanding anything contained herein, in the CPA LP Agreement or otherwise, the CPA17 Termination Fee Credit shall be the only credit against the Advisory Closing Amounts, and the CPA17 Termination Fee Credit provided for in this Section 4.3(b) supersedes, and is in lieu of, any credit provided in Section 11.7 of the CPA LP Agreement.

 

(c)           Concurrently with and conditioned upon the closing of the transactions contemplated by this Agreement or any CPA17 Competing Transaction (and provided that CPA17 has paid W. P. Carey and its Affiliates the CPA17 Termination Fee and the Advisory Closing Amounts to the extent required under this Agreement), the Amended and Restated Advisory Agreement dated as of January 1, 2015, among CPA17, CPA17 LP and CAM (as amended, the “CPA17 Advisory Agreement”), and the Amended and Restated Asset

 

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Management Agreement dated as of May 13, 2015, among CPA17, CPA17 LP and Foreign Subsidiary (as amended, the “Asset Management Agreement” and together with the CPA17 Advisory Agreement, the “CPA17 Advisory Agreements”), shall automatically terminate without any action by any of the parties thereto and without any requirement for prior notice.  In addition, if (i) this Agreement is terminated in accordance with either Section 6.1(g) or Section 6.1(h) and (ii) a CPA17 Competing Transaction is consummated, then the Call Right (as such term is defined in the Amended and Restated Agreement of Limited Partnership of CPA17 LP dated as of January 1, 2015, by and between CPA17 and Special General Partner (the “CPA17 LP Agreement”), shall be deemed exercised by CPA17 LP and the payment of the Special GP Amount (after giving effect to the CPA17 Termination Fee Credit), shall be deemed to satisfy in full all amounts owed and payable to W. P. Carey and its Affiliates at the closing of the CPA17 Competing Transaction pursuant to Section 11.7 of the CPA17 LP Agreement.

 

(d)           The parties agree that W. P. Carey and its Affiliates shall continue to be entitled to receive any and all fees and distributions accrued, pursuant to the CPA17 Advisory Agreements and the CPA17 LP Agreement (collectively, the “Advisor Accrued Amounts”), prior to the closing of the transactions contemplated by this Agreement or any CPA17 Competing Transaction.  Advisor Accrued Amounts shall not include Advisor Closing Amounts or Subordinated Disposition Fees that the parties have agreed in Sections 4.3(b) or (c) shall not be payable thereunder.

 

(e)           Each of CAM, Foreign Subsidiary, Merger Sub and the Special General Partner agrees to be bound by the provisions of this Section 4.3.

 

Section 4.4            Tax Treatment; Cooperation.

 

(a)           CPA17 shall prepare or cause to be prepared, and file or cause to be filed, on a timely basis all Tax Returns and amendments thereto required to be filed prior to the Closing Date (after electing all available automatic extensions of time to file such Tax Returns) by CPA17 or any of the CPA17 Subsidiaries, in a manner consistent with past practice (unless an alternative manner is required to avoid imposition of any penalties, fines or additions to Tax).  Prior to filing any such Tax Returns, CPA17 shall deliver draft copies (together with supporting documentation, including Tax Return work papers) to W. P. Carey for W. P. Carey’s review and comment, and CPA17 shall accept all reasonable comments of W. P. Carey with respect to such Tax Returns.  CPA17 shall pay all Taxes required to be paid by CPA17 prior to the Effective Time.  W. P. Carey shall have a reasonable period of time (but in no event less than 30 days) to review and comment on such Tax Returns and amendments prior to filing.  If the parties do not agree on the draft Tax Returns or amendments, the parties shall hire a nationally recognized accounting firm reasonably acceptable to CPA17 and W. P. Carey to prepare the contested Tax Returns or amendments.

 

(b)           CPA17 will take all necessary actions, including but not limited to making sufficient distributions prior to Closing if needed, to assure that CPA17 will qualify as a REIT for its Tax year ending on the Closing Date.  During the period from the date of this Agreement to the Effective Time, CPA17 shall, and shall cause each CPA17 Subsidiary to, facilitate all reasonable requests of W. P. Carey with respect to the maintenance of CPA17’s REIT qualification.

 

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(c)           Merger Sub, W. P. Carey and CPA17 shall report the Merger for U.S. federal income tax purposes and all relevant state and local income tax purposes as a reorganization governed by Section 368(a)(1) of the Code, unless otherwise required by Law or administrative action, and shall comply with any applicable Tax reporting requirements.

 

(d)           The parties agree to use their commercially reasonable efforts in order to structure the transactions contemplated by the Form S-4 and the Joint Proxy Statement/Prospectus, as mutually agreed by the parties, in a manner so as to reduce transfer taxes and other governmental charges related to the matters described therein.

 

Section 4.5            Solicitation of Transactions.

 

(a)           Notwithstanding anything to the contrary contained in this Agreement, during the period beginning upon the first Business Day after the date hereof and continuing until 11:59 p.m. (New York City time) on the 30th day thereafter (the “Solicitation Period End Date”), CPA17, acting directly or indirectly through any of its officers, directors, investment advisors, agents, investment bankers, financial advisors, attorneys, accountants, brokers, finders, representatives or controlled Affiliates of CPA17 or any CPA17 Subsidiary shall have the right to directly or indirectly (i) initiate, solicit, induce, cause, encourage and facilitate any CPA17 Competing Transaction, including by way of providing access to the properties, offices, assets, books, records and personnel of CPA17 and any CPA17 Subsidiary and furnishing non-public information pursuant to (but only pursuant to) one or more Acceptable Confidentiality Agreements; provided, however, that any such non-public information shall, to the extent not previously provided to W. P. Carey, Merger Sub or their respective representatives, be provided to W. P. Carey or Merger Sub prior to or substantially concurrently with it being provided to any Person given such access, (ii) enter into, continue or otherwise participate in any discussions or negotiations with respect to any CPA17 Competing Transaction, or any inquiry, proposal or offer that constitutes or may reasonably be expected to lead to a CPA17 Competing Transaction or otherwise cooperate with or assist or participate in, or facilitate any such inquiries, proposals, offers, discussions or negotiations or the making of any CPA17 Competing Transaction and (iii) grant a waiver under any standstill, confidentiality or similar agreement entered into by CPA17 to the extent necessary to allow the other party thereto to submit any CPA17 Competing Transaction or inquire, propose or make an offer that may lead to a CPA17 Competing Transaction to the CPA17 Special Committee in compliance with this Section 4.5.  W. P. Carey agrees that neither it nor any Affiliate of W. P. Carey shall, and that it shall use its reasonable best efforts to cause its and their respective representatives not to, participate in discussions with (other than at the request of the CPA17 Special Committee), any person that it knows has made, or is considering or participating in discussions or negotiations with CPA17 or its representatives regarding, a CPA17 Competing Transaction: provided, however, that nothing in this sentence shall prohibit or restrict W. P. Carey from making or conducting public communications or solicitations regarding a CPA17 Competing Transaction or the transactions contemplated by this Agreement.

 

(b)           Except (i) as expressly permitted by this Section 4.5, or (ii) with respect to any Exempted Person until receipt of the CPA17 Stockholder Approval, from the Solicitation Period End Date until the Effective Time or, if earlier, the termination of this Agreement in accordance with Section 6.1, CPA17, acting directly or indirectly through any of its officers,

 

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directors, investment advisors, agents, investment bankers, financial advisors, attorneys, accountants, brokers, finders, representatives or controlled Affiliates of CPA17 or any CPA17 Subsidiary, shall cease and cause to be terminated any solicitation, discussion or negotiation with any Persons with respect to any CPA17 Competing Transaction and request the immediate return or destruction of all confidential information previously furnished.  Except as specifically provided in this Section 4.5, from the Solicitation Period End Date until the Effective Time or, if earlier, the termination of this Agreement in accordance with Section 6.1, CPA17, acting directly or indirectly through any of its officers, directors, investment advisors, agents, investment bankers, financial advisors, attorneys, accountants, brokers, finders or representatives, or any controlled Affiliates of CPA17 or any CPA17 Subsidiary, shall not (i) initiate, solicit, propose, cause (including by providing information) or take any action designed to, or which would reasonably be expected to, facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a CPA17 Competing Transaction, other than with respect to any Exempted Person, (ii) engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any information or data concerning, CPA17 or any CPA17 Subsidiary, including their properties, books and records, to any Person (other than with respect to any Exempted Person) relating to, or otherwise cooperate with, any CPA17 Competing Transaction or any proposal or offer that would reasonably be expected to lead to a CPA17 Competing Transaction, (iii) approve, publicly endorse, publicly recommend or enter into any CPA17 Competing Transaction or any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or similar agreement with respect to any CPA17 Competing Transaction (other than an Acceptable Confidentiality Agreement entered into in accordance with this Section 4.5) (an “Alternative Acquisition Agreement”), (iv) publicly propose, agree or publicly announce an intention to take any of the foregoing actions, (v) take any action to make the provisions of any Takeover Statute inapplicable to any transaction contemplated by a CPA17 Competing Transaction, other than with respect to any Exempted Person until receipt of the CPA17 Stockholder Approval, or (vi) except to the extent waived pursuant to Section 4.5(a)(iii) above and with respect to any Exempted Person until receipt of the CPA17 Stockholder Approval, terminate, amend, release, modify or fail to enforce any provision of, or grant any permission, waiver or request under, any standstill, confidentiality or similar agreement entered into by CPA17 in respect of or in contemplation of a CPA17 Competing Transaction.  The foregoing will not prevent CPA17 from, after the end of the Solicitation Period End Date, (x) communicating with a prospective acquirer to request clarification of the terms and conditions of a possible CPA17 Competing Transaction so as to determine whether such CPA17 Competing Transaction could reasonably be expected to lead to a CPA17 Superior Competing Transaction or (y) providing non-public information about CPA17 or any CPA17 Subsidiary (subject to an Acceptable Confidentiality Agreement) to, and engaging in discussions and negotiations regarding a possible CPA17 Competing Transaction with, a prospective acquirer in response to a proposal or offer that could reasonably be expected to lead to a CPA17 Competing Transaction, in either instance, which CPA17 received prior to the Solicitation Period End Date, or which CPA17 receives after the Solicitation Period End Date that did not result in whole or in part from a breach of this Section 4.5(b), and which the CPA17 Special Committee determines in good faith after consultation with its independent financial advisor and outside legal counsel, would result (if consummated in accordance with its terms) in, or is reasonably likely to result in, a CPA17 Superior Competing Transaction.

 

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(c)           Except as expressly provided by Section 4.5(d), at any time after the date hereof, the CPA17 Special Committee shall not (i) (A) publicly withhold or withdraw (or qualify or modify in a manner adverse to W. P. Carey or Merger Sub), or publicly propose to withhold or withdraw (or qualify or modify in a manner adverse to W. P. Carey or Merger Sub), its recommendation of this Agreement and the Merger or otherwise publicly repudiate the adoption, approval, recommendation or declaration of advisability by the CPA17 Special Committee of this Agreement, the Merger or the other transactions contemplated hereby, (B) adopt, approve, publicly declare advisable or recommend or publicly propose to adopt, approve, declare advisable or recommend any CPA17 Competing Transaction, (C) allow its recommendation of this Agreement and the Merger to be excluded from the Joint Proxy Statement/Prospectus, (D) fail to recommend against any CPA17 Competing Transaction within ten (10) Business Days after such CPA17 Competing Transaction is publicly announced, or (E) if a tender or exchange offer relating to equity securities of CPA17 is commenced by a Person unaffiliated with W. P. Carey, fail to send to the CPA17 Stockholders pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10) Business Days after such tender or exchange offer is first published, a statement disclosing that the CPA17 Special Committee recommends rejection of such tender or exchange offer (any action described in clauses (A), (B), (C), (D) or (E), an “Adverse Recommendation Change”), or (ii) adopt, approve, recommend or declare advisable, or propose to adopt, approve, recommend or declare advisable, or cause or permit CPA17 or any CPA17 Subsidiary to execute or enter into an Alternative Acquisition Agreement (other than an Acceptable Confidentiality Agreement entered into in accordance with this Section 4.5).

 

(d)           Notwithstanding anything to the contrary set forth in this Agreement, at any time prior to receipt of the CPA17 Stockholder Approvals, the CPA17 Special Committee shall be permitted to either (i) terminate this Agreement in order to enter into an Alternative Acquisition Agreement with respect to a CPA17 Superior Competing Transaction, subject to compliance with Section 6.1(g) and Section 6.2, or (ii) effect an Adverse Recommendation Change, in each instance, if and only if (A) the CPA17 Special Committee has received a CPA17 Competing Transaction (whether or not from an Exempted Person) that, in the good faith determination of the CPA17 Special Committee, after consultation with its financial advisor and outside legal counsel, constitutes a CPA17 Superior Competing Transaction, after having complied with this Section 4.5(d), and (B) with respect to any Person who is not an Exempted Person, the CPA17 Special Committee determines in good faith, after consultation with outside legal counsel, that a failure to take such action would be inconsistent with the duties of the members of the CPA17 Special Committee under applicable Law.  Notwithstanding the foregoing, prior to either terminating this Agreement or effecting an Adverse Recommendation Change, in each instance in accordance with this Section 4.5(d), (x) the CPA17 Special Committee shall provide a written notice to W. P. Carey and Merger Sub that it intends to take such action and describing (1) the basis for its determination, and (2) the material terms and conditions of the CPA17 Superior Competing Transaction that is the basis of such action (including the identity of the party making the CPA17 Superior Competing Transaction and any financing commitments related thereto, which shall include any fee letters, which letters may be redacted to omit the numerical amounts provided therein, as applicable) (a “Change of Recommendation Notice”); (y) during the three (3) Business Day period following W. P. Carey’s and Merger Sub’s receipt of the Change of Recommendation Notice, CPA17 shall, and shall cause its officers, directors, investment advisors, agents, investment bankers, financial advisors, attorneys, accountants, brokers, finders or representatives, or any controlled Affiliates

 

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of CPA17 or any CPA17 Subsidiary to, negotiate with W. P. Carey and Merger Sub in good faith (to the extent that W. P. Carey and Merger Sub desire to negotiate) to make amendments to the terms and conditions of this Agreement so as to obviate the need for the proposed termination of this Agreement or the proposed Adverse Recommendation Change, as applicable; and (z) following the close of business on the last day of the three (3) Business Day period or such greater period of time as may be permitted by the CPA17 Special Committee in its sole discretion, the CPA17 Special Committee shall have determined in good faith, after consultation with its financial advisor and outside legal counsel, and taking into account any amendments to this Agreement proposed in writing by W. P. Carey and Merger Sub in response to the Change of Recommendation Notice, that such CPA17 Competing Transaction continues to constitute a CPA17 Superior Competing Transaction (whether or not from an Exempted Person), and with respect to any Person who is not an Exempted Person a failure to effect an Adverse Recommendation Change would be inconsistent with the duties of the members of the CPA17 Special Committee under applicable Law.  If any amendment to the financial terms or any material term of any CPA17 Superior Competing Transaction is made, the CPA17 Special Committee shall deliver a new Change of Recommendation Notice to W. P. Carey and Merger Sub, and CPA17 shall be required to comply again with the requirements of this Section 4.5(d); provided that with respect to any and all such new Change of Recommendation Notices, the references in this Section 4.5(d) to “three (3) Business Days” shall be deemed to be references to “one (1) Business Day”.

 

(e)           Within forty-eight (48) hours after the expiration of the Solicitation Period End Date, CPA17 shall (i) notify W. P. Carey in writing of the identity of each person, if any, that, in accordance with this Agreement, the CPA17 Special Committee has determined to be an Exempted Person and (ii) provide W. P. Carey with the material terms and conditions of any CPA17 Competing Transaction received from any Exempted Person prior to the Solicitation Period End Date. CPA17 shall keep W. P. Carey reasonably and promptly informed of any material changes in the status, terms or conditions of any CPA17 Competing Transaction received from any Exempted Person. Except as may relate to an Exempted Person, from and after the Solicitation Period End Date, CPA17 shall (i) as promptly as reasonably practicable (and in any event within forty-eight (48) hours of receipt), advise W. P. Carey of receipt by CPA17 or any of its Affiliates of (A) any CPA17 Competing Transaction or (B) any request for information that would reasonably be expected to lead to any CPA17 Competing Transaction, the terms and conditions of any such CPA17 Competing Transaction or request (including the identity of the party making such CPA17 Competing Transaction), (ii) keep W. P. Carey fully and promptly informed (and in any event within twenty-four (24) hours) of any material changes in the status, terms or conditions of any such CPA17 Competing Transaction (it being understood that any change or modification to any financial term or condition of any CPA17 Competing Transaction shall be deemed to be a material change) or request, and (iii) provide W. P. Carey promptly with (a) an unredacted copy of any such CPA17 Competing Transactions made in writing (including any financing commitments relating thereto, which shall include any fee letters (it being understood that any such fee letter may be redacted to omit the numerical amounts provided therein)) and (b) a written summary of the material terms of any CPA17 Competing Transactions not made in writing (including any financing commitments and any fee letters relating thereto (it being understood that any such fee letter may be redacted to omit the numerical amounts provided therein)).

 

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(f)            So long as this Agreement has not been terminated, no Adverse Recommendation Change shall change the approval of the CPA17 Special Committee for purposes of causing any Takeover Statute to be inapplicable to the transactions contemplated by this Agreement.

 

(g)           Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in this Section 4.5 by CPA17, acting directly or indirectly through any of its officers, directors, investment advisors, agents, investment bankers, financial advisors, attorneys, accountants, brokers, finders or other agents or representatives, or any controlled Affiliates of CPA17 or any CPA17 Subsidiary, shall be deemed to be a breach of this Section 4.5 by CPA17.

 

(h)           For purposes of this Agreement, a “CPA17 Competing Transaction” shall mean any proposal or offer for, whether in one transaction or a series of transactions, any of the following (other than the transactions expressly provided for in this Agreement):  (i) any merger, consolidation, share exchange, business combination or similar transaction involving CPA17 (or any of the material CPA17 Subsidiaries); (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 50% or more of the assets of CPA17 and the CPA17 Subsidiaries, taken as a whole, excluding any bona fide financing transactions which do not, individually or in the aggregate, have as a purpose or effect the sale or transfer of control of such assets; (iii) any issue, sale or other disposition of (including by way of merger, consolidation, share exchange, business combination or similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing fifty percent (50%) or more of the voting power of CPA17 and the CPA17 Subsidiaries; (iv) any recapitalization, restructuring, liquidation, dissolution or other similar type of transaction with respect to CPA17 and the CPA17 Subsidiaries in which a Person shall acquire beneficial ownership of fifty percent (50%) or more of the outstanding shares of any class of voting securities of CPA17 and the CPA17 Subsidiaries; or (v) any tender offer or exchange offer for 50% or more of the voting power in the election of directors exercisable by the holders of outstanding CPA17 Common Stock (or any of the CPA17 Subsidiaries).

 

(i)            For purposes of this Agreement, a “CPA17 Superior Competing Transaction” means a bona fide proposal for a CPA17 Competing Transaction made by a third party which the CPA17 Special Committee determines (after taking into account any amendment of the terms of the Transaction Documents or the Merger by W. P. Carey and/or any proposal by W. P. Carey to amend the terms of the Transaction Documents or the Merger), in good faith and after consultation with its financial and legal advisors, (i) is on terms which are more favorable from a financial point of view to the CPA17 Stockholders than the Merger and the other transactions contemplated by this Agreement, (ii) would result in such third party owning, directly or indirectly, at least 90% of the CPA17 Common Stock then outstanding (or all or substantially all of the equity of the surviving entity in a merger) or at least 90% of the assets of CPA17 and the CPA17 Subsidiaries taken as a whole, (iii) is reasonably capable of being consummated and (iv) was not solicited by CPA17, any CPA17 Subsidiary or any of their respective officers, directors, investment advisors, investment bankers, financial advisors, attorneys, accountants, brokers, finders, representatives or controlled Affiliates in breach of this Section 4.5.

 

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(j)            Nothing contained in this Section 4.5 or elsewhere in this Agreement shall prohibit CPA17 or the CPA17 Special Committee, directly or indirectly through its Representatives, from disclosing to CPA17’s stockholders a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or making any disclosure to its stockholders if the CPA17 Special Committee has determined, after consultation with outside legal counsel, that the failure to do so would be inconsistent with applicable Law; provided that the foregoing shall in no way eliminate or modify the effect that any such disclosure would otherwise have under this Agreement.

 

Section 4.6            Public Announcements.    CPA17 and W. P. Carey shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or any of the transactions contemplated by the Transaction Documents, except as otherwise required by Law in a manner which makes consultation impracticable.

 

Section 4.7            Transfer and Gains Taxes.    W. P. Carey or Merger Sub shall, with CPA17’s good faith cooperation and assistance, prepare, execute and file, or cause to be prepared, executed and filed, all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added stock transfer and stamp Taxes, any transfer, recording, registration and other fees and any similar Taxes which become payable in connection with the transactions contemplated by this Agreement (together, with any related interest, penalties or additions to Tax, “Transfer and Gains Taxes”).  From and after the Effective Time, W. P. Carey or the Surviving Company shall pay or cause to be paid all Transfer and Gains Taxes without deductions withheld from any amounts payable to the holders of the CPA17 Common Stock.

 

Section 4.8            Indemnification; Directors’ and Officers’ Insurance.

 

(a)           It is understood and agreed that CPA17 shall indemnify and hold harmless, and, after the Effective Time, the Surviving Company and W. P. Carey shall indemnify and hold harmless, each director and officer of CPA17 or any of the CPA17 Subsidiaries (the “Indemnified Parties”), to no less than the extent that such Indemnified Parties are indemnified by CPA17 or the CPA17 Subsidiaries as of the date hereof.  Any Indemnified Party wishing to claim indemnification under this Section 4.8(a), upon learning of any such claim, action, suit, demand, proceeding or investigation, shall notify CPA17 and, after the Effective Time, the Surviving Company and W. P. Carey, promptly thereof; provided that the failure to so notify shall not affect the obligations of CPA17, the Surviving Company and W. P. Carey except to the extent such failure to notify materially prejudices such party.

 

(b)           W. P. Carey agrees that it shall maintain in full force and effect for a period of six years from the Effective Time all rights to indemnification existing in favor of, and all limitations of the personal liability of, the directors and officers of CPA17 and the CPA17 Subsidiaries provided for in the CPA17 Charter or CPA17 Bylaws or any provision of the comparable charter or organizational documents of any of the CPA17 Subsidiaries, as in effect as of the date hereof, with respect to matters occurring prior to the Effective Time, including the Merger; provided, however, that all rights to indemnification in respect of any claims (each a “Claim”) asserted or made within such period shall continue until the disposition of such Claim.  Prior to the Effective Time, W. P. Carey shall purchase directors’ and officers’ liability insurance

 

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coverage for CPA17’s and CPA17 Subsidiaries’ directors and officers, in a form reasonably acceptable to CPA17, which shall provide such directors and officers with runoff coverage for six years following the Effective Time of not less than the existing coverage under, and have other terms not materially less favorable on the whole to the insured persons than, the directors’ and officers’ liability insurance coverage presently maintained by CPA17 and the CPA17 Subsidiaries.

 

(c)           This Section 4.8(c) is intended for the irrevocable benefit of, and to grant third party rights to, the Indemnified Parties and shall be binding on all successors and assigns of W. P. Carey, CPA17 and the Surviving Company.  Each of the Indemnified Parties shall be entitled to enforce the covenants contained in this Section 4.8(c).

 

(d)           In the event that W. P. Carey or the Surviving Company or any of their successors or assigns (i) consolidates with or merges into any other person or entity and shall not be the continuing or surviving company or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person or entity, then, and in each such case, proper provision shall be made so that the successors and assigns of W. P. Carey and the Surviving Company, as the case may be, assume the obligations set forth in this Section 4.8(d).

 

Section 4.9            Purchases and Redemptions of CPA17 Common Stock.   During the period from the date of this Agreement to the earlier of the termination of this Agreement in accordance with Section 6.1 or the Effective Time of the Merger, CPA17 agrees that it will not purchase, redeem or otherwise acquire any CPA17 Common Stock or stock or other equity interests in any CPA17 Subsidiary or any options, warrants or rights to acquire, or security convertible into, shares of CPA17 Common Stock or stock or other equity interests in any CPA17 Subsidiary, except that CPA17 may complete any (i) qualified redemptions pending as of the date of this Agreement and (ii) such redemptions or other actions that the CPA17 Board of Directors deems advisable in accordance with Article VI (Restrictions on Transfer and Ownership of Shares) of the CPA17 Charter to enable CPA17 to maintain its qualification as a REIT, in each case to the extent permitted by applicable Law.

 

Section 4.10          Purchases and Redemptions of W. P. Carey Common Stock.    During the period from the date of this Agreement to the earlier of the termination of this Agreement in accordance with Section 6.1 or the Effective Time of the Merger, W. P. Carey agrees that it will not, other than in the ordinary course of business and in compliance with U.S. federal securities Laws, purchase, redeem or otherwise acquire any shares of W. P. Carey Common Stock or stock or other equity interests in any W. P. Carey Subsidiary or any options, warrants or rights to acquire, or security convertible into, shares of W. P. Carey Common Stock or stock or other equity interests in any W. P. Carey Subsidiary, in each case other than (i) repurchases from employees or Affiliates of W. P. Carey or any W. P. Carey Subsidiary (including, for purposes of this Section 4.10, as of the date hereof, any holder of ten percent (10%) or more of (a) W. P. Carey Common Stock or (b) stock or equity interests of any such W. P. Carey Subsidiary) and (ii) such redemptions or other actions that the W. P. Carey Board of Directors deems advisable in accordance with Article VI (Restrictions on Transfer and Ownership of Shares) of the W. P. Carey Charter to enable W. P. Carey to maintain its qualification as a REIT, to the extent permitted by applicable Law.

 

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Section 4.11          Access; Confidentiality.    To the extent applicable, CPA17 and W. P. Carey agree that upon reasonable notice, and except as may otherwise be required or restricted by applicable Law, each shall (and shall cause its Subsidiaries to) afford the other’s officers, employees, counsel, accountants and other authorized representatives, reasonable access, during normal business hours throughout the period prior to the Effective Time, to its executive officers and to its properties, books, contracts and records and, during such period, each shall (and each shall cause its Subsidiaries to) furnish promptly to the other all information concerning its business, properties, personnel and litigation claims as may reasonably be requested but only to the extent such access does not unreasonably interfere with the business or operations of such party; provided that no investigation pursuant to this Section 4.11 shall affect or be deemed to modify any representation or warranty made in this Agreement; provided, further, that the parties hereto shall not be required to provide information (i) in breach of applicable Law or (ii) that is subject to confidentiality obligations.  Unless otherwise required by Law, the parties shall hold all information of the other party which is confidential and is reasonably identified as such or should reasonably be known to be confidential in confidence until such time as such information otherwise becomes publicly available through no wrongful act of the receiving party.  If this Agreement is terminated for any reason, each party shall promptly return to such other party or destroy, providing reasonable evidence of such destruction, all such confidential information obtained from any other party, and any copies made of (and other extrapolations from or work product or analyses based on) such documents. Notwithstanding anything set forth in this Agreement to the contrary, from and after the date hereof until the consummation of the transactions contemplated hereunder or the earlier termination of this Agreement, W. P. Carey and its Affiliates shall be permitted to, in their capacity as the external advisor to CPA17 and the CPA17 Subsidiaries, share, furnish or otherwise provide non-public information or data concerning the Sale Properties and the Marketed Properties to any Person; provided that W. P. Carey shall keep the CPA17 Special Committee reasonably well informed regarding the status of the potential sales of any of the Sale Properties or Marketed Properties.

 

Section 4.12          NYSE Listing and Deregistration.    W. P. Carey shall use its reasonable best efforts to cause the W. P. Carey Common Stock issued in the Merger to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date.  W. P. Carey shall use reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary to enable the deregistration of the CPA17 Common Stock under the Exchange Act as promptly as practicable after the Effective Time (and in any event no more than ten (10) days after the Closing Date).

 

Section 4.13          Assistance to CPA17.    W. P. Carey will, except as otherwise instructed in writing by the CPA17 Special Committee, cause CAM, Foreign Subsidiary and Merger Sub to assist and cooperate in good faith to cause CPA17 to fulfill all its obligations in this Article IV and elsewhere in this Agreement.  Each of CAM, Foreign Subsidiary and Merger Sub shall, at the request of the CPA17 Special Committee, assist and cooperate in good faith to facilitate CPA17’s efforts to actively seek and solicit CPA17 Competing Transactions prior to the Solicitation Period End Date, in accordance with the go-shop protocol agreed by the parties.  In addition, each of CAM, Foreign Sub and Merger Sub shall, at the request of the CPA17 Special Committee, assist and cooperate in good faith at all times following the Solicitation Period End Date to facilitate CPA17’s discussions, negotiations, providing of information and any other actions or inactions that CPA17 is permitted to do or not do with respect to possible

 

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CPA17 Competing Transactions and related Alternative Acquisition Agreements under the terms of, and as defined in, this Agreement.

 

Section 4.14          Sale of CPA17 Properties.    W. P. Carey and its Subsidiaries shall not cause CPA17 or any CPA17 Subsidiary to sell or dispose of any real estate assets of CPA17 or any CPA17 Subsidiary without the prior consent of the CPA17 Special Committee, except that, from and after the date hereof until the consummation of the transactions contemplated hereunder or the earlier termination of this Agreement, (i) W. P. Carey and its Affiliates are authorized to market for sale and/or cause CPA17 or any CPA17 Subsidiary to sell, without the prior consent of the CPA17 Special Committee, the real estate assets listed in Schedule 4.14(a) of the W. P. Carey Disclosure Letter (the “Sale Properties”) at prices equal to or greater than the respective release price listed for each such asset in Schedule 4.14(a); and (ii) W. P. Carey and its Affiliates are authorized to market for sale all other real estate assets of CPA17 and the CPA17 Subsidiaries (the “Marketed Properties”); provided, however, that W. P. Carey shall provide written notice (which may be in the form of email communication to the chair of the CPA 17 Special Committee) to CPA17 substantially concurrently with the commencement of any active marketing of the Marketed Properties and shall keep CPA17 reasonably informed of the prices at which any Marketed Properties being actively marketed for sale are, in W. P. Carey’s reasonable judgment, likely to be sold; and provided, further, that no sale of any Marketed Properties may occur prior to the Closing without the prior written consent of the CPA17 Special Committee.

 

Section 4.15          Voting.    In accordance with the restrictions in the CPA17 Charter, neither W. P. Carey nor any of its Affiliates shall vote for or consent to the Merger and the other transactions contemplated by the Transaction Documents in connection with the CPA17 Stockholder Approvals.

 

ARTICLE V

 

CONDITIONS PRECEDENT

 

Section 5.1            Conditions to Each Party’s Obligation to Effect the Merger.    The respective obligations of the parties to this Agreement to effect the Merger and to consummate the other transactions contemplated by the Transaction Documents on the Closing Date are subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:

 

(a)           Stockholders’ Approvals.  The CPA17 Stockholder Approvals and the W. P. Carey Stockholder Approval shall have been obtained.

 

(b)           Registration Statement.  The Form S-4 shall have become effective in accordance with the provisions of the Securities Act.  No stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and remain in effect and no proceeding to that effect shall have been commenced or threatened.  All necessary state securities or blue sky authorizations shall have been received.

 

(c)           No Injunctions or Restraints.  No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction

 

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or other legal restraint or prohibition preventing the consummation of the Merger or any of the other transactions or agreements contemplated by the Transaction Documents shall be in effect.

 

(d)           Other Approvals.  All consents, approvals, permits and authorizations required to be obtained from any Governmental Entity as indicated in Schedule 2.1(c)(ii) of the CPA17 Disclosure Letter or Schedule 2.2(c)(iii) of the W. P. Carey Disclosure Letter in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated thereby shall have been made or obtained (as the case may be).

 

Section 5.2            Conditions to Obligations of W. P. Carey and Merger Sub.    The obligations of W. P. Carey and Merger Sub to effect the Merger and to consummate the other transactions contemplated by the Transaction Documents on the Closing Date are further subject to the following conditions, any one or more of which may be waived by W. P. Carey:

 

(a)           Representations and Warranties.  The representations and warranties of CPA17 set forth in this Agreement shall be true and correct on and as of the Closing Date, as though made on and as of the Closing Date (except (x) for such changes resulting from actions permitted under Section 3.1 and (y) to the extent that any representation or warranty expressly speaks as of a specified date or time, in which case such representation or warranty need only be true and correct as of such specified date or time), except where the failure of such representations and warranties to be true and correct (without giving effect to any materiality, CPA17 Material Adverse Effect or any similar qualification or limitation), in the aggregate, would not reasonably be likely to have a CPA17 Material Adverse Effect, and W. P. Carey and Merger Sub shall have received a certificate signed on behalf of CPA17 by the Chief Executive Officer and the Chief Financial Officer of CPA17 to such effect.

 

(b)           Performance of Covenants and Obligations of CPA17.  CPA17 shall have performed in all material respects all covenants and obligations required to be performed by it under this Agreement at or prior to the Effective Time, and W. P. Carey and Merger Sub shall have received a certificate signed on behalf of CPA17 by the Chief Executive Officer and the Chief Financial Officer of CPA17 to such effect.

 

(c)           Material Adverse Change.  Since the date of this Agreement, there shall have occurred no changes, events or circumstances which, individually or in the aggregate, constitute a CPA17 Material Adverse Effect.  W. P. Carey and Merger Sub shall have received a certificate signed on behalf of CPA17 by the Chief Executive Officer and the Chief Financial Officer of CPA17 to such effect.

 

(d)           Opinion Relating to REIT Qualification.  W. P. Carey and Merger Sub shall have received an opinion, dated as of the Closing Date, of Clifford Chance US LLP to the effect that, at all times since its taxable year ended December 31, 2015 through the Closing Date, CPA17 has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code.  For purposes of such opinion, which shall be in a form customary for transactions of this nature, Clifford Chance US LLP may rely on customary assumptions and representations of CPA17 reasonably acceptable to W. P. Carey.

 

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(e)           Consents.  All necessary consents and waivers from third parties in connection with the consummation of the Merger and the other transactions contemplated by the Transaction Documents shall have been obtained, other than such consents and waivers from third parties which, if not obtained, would not reasonably be expected to have, individually or in the aggregate, a CPA17 Material Adverse Effect.

 

(f)            FIRPTA Certificate. W. P. Carey shall have received a certificate, duly completed and executed by CPA17, pursuant to Section 1.1445-2(b)(2) of the U.S. Treasury Regulations, certifying that CPA17 is not a “foreign person” within the meaning of Section 1445 of the Code.

 

(g)           Opinion Relating to the Merger.  W. P. Carey and Merger Sub shall have received an opinion of DLA Piper LLP (US), dated as of the Closing Date, to the effect that for U.S. federal income tax purposes the Merger will qualify as a reorganization within the meaning of Section 368(a)(1) of the Code.  For purposes of the foregoing opinion, which shall be in a form customary for transactions of this nature, DLA Piper LLP (US) shall be entitled to rely upon customary assumptions and representations of CPA17, W. P. Carey and Merger Sub.

 

Section 5.3            Conditions to Obligations of CPA17.    The obligations of CPA17 to effect the Merger and to consummate the other transactions contemplated by the Transaction Documents on the Closing Date are further subject to the following conditions, any one or more of which may be waived by CPA17:

 

(a)           Representations and Warranties.  The representations and warranties of W. P. Carey and Merger Sub set forth in this Agreement shall be true and correct on and as of the Closing Date, as though made on and as of the Closing Date (except (x) for such changes resulting from actions permitted under Section 3.2 and (y) to the extent that any representation or warranty expressly speaks as of a specified date or time, in which case such representation or warranty need only be true and correct as of such specified date or time), except where the failure of such representations and warranties to be true and correct (without giving effect to any materiality, W. P. Carey Material Adverse Effect or any similar qualification or limitation), in the aggregate, would not reasonably be likely to have a W. P. Carey Material Adverse Effect, and CPA17 shall have received a certificate signed on behalf of W. P. Carey and Merger Sub by the respective Chief Executive Officer and the Chief Financial Officer of W. P. Carey and Merger Sub to such effect.

 

(b)           Performance of Covenants or Obligations of W. P. Carey.  W. P. Carey shall have performed in all material respects all covenants and obligations required to be performed by it under this Agreement at or prior to the Effective Time, and CPA17 shall have received a certificate signed on behalf of W. P. Carey by the Chief Executive Officer and the Chief Financial Officer of W. P. Carey to such effect.

 

(c)           NYSE Listing.  W. P. Carey Common Stock shall have been approved for listing on the NYSE, subject to official notice of issuance.

 

(d)           Material Adverse Change.  Since the date of this Agreement, there shall have occurred no change, events or circumstances which, individually or in the aggregate,

 

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constitute a W. P. Carey Material Adverse Effect.  CPA17 shall have received a certificate signed on behalf of W. P. Carey by the Chief Executive Officer and Chief Financial Officer to such effect.

 

(e)           Opinion Relating to REIT Qualification.  CPA17 shall have received an opinion, dated as of the Closing Date, of DLA Piper LLP (US) to the effect that, commencing with its taxable year ended December 31, 2015, W. P. Carey has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and its current and proposed method of operation as described in the Joint Proxy Statement/Prospectus and Form S-4 will enable W. P. Carey to continue to meet the requirements for qualification and taxation as a REIT under the Code.  For purposes of such opinion, DLA Piper LLP (US) may rely on customary assumptions and representations of W. P. Carey reasonably acceptable to CPA17, and the opinion set forth in Section 5.2(d).

 

(f)            Consents.  All necessary consents and waivers from third parties in connection with the consummation of the Merger and the other transactions contemplated by the Transaction Documents shall have been obtained, other than (i) those required to be delivered pursuant to Section 5.2(e) and (ii) such consents and waivers from third parties which, if not obtained, would not reasonably be expected to have, individually or in the aggregate, a W. P. Carey Material Adverse Effect.

 

(g)           Opinion Relating to the Merger.  CPA17 shall have received an opinion of Clifford Chance US LLP, dated as of the Closing Date, to the effect that for U.S. federal income tax purposes the Merger will qualify as a reorganization under Section 368(a)(1) of the Code.  For purposes of the foregoing opinion, which shall be in a form customary for transactions of this nature, Clifford Chance US LLP shall be entitled to rely upon customary assumptions and representations of CPA17, W. P. Carey and Merger Sub.

 

ARTICLE VI

 

TERMINATION, AMENDMENT AND WAIVER

 

Section 6.1            Termination.    This Agreement may be terminated at any time prior to the Effective Time of the Merger, whether before or after the CPA17 Stockholder Approvals and the W. P. Carey Stockholder Approval are obtained:

 

(a)           by mutual written consent duly authorized by the Boards of Directors of each of CPA17 and W. P. Carey;

 

(b)           by W. P. Carey, upon a breach of any representation, warranty, covenant or agreement on the part of CPA17 set forth in this Agreement, or if any representation or warranty of CPA17 shall have become untrue, in either case such that the conditions set forth in Sections 5.2(a) or 5.2(b), as the case may be, would be incapable of being satisfied by January 31, 2019 (the “Termination Date”); provided that CPA17 shall not be deemed to have breached a representation, warranty, covenant or agreement set forth in this Agreement to the extent the actions or inactions of W. P. Carey or any W. P. Carey Subsidiary in its capacity as advisor to CPA17 pursuant to the CPA17 Advisory Agreements resulted in such breach;

 

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(c)           by CPA17, upon a breach of any representation, warranty, covenant or agreement on the part of W. P. Carey or Merger Sub set forth in this Agreement, or if any representation or warranty of W. P. Carey or Merger Sub shall have become untrue, in either case such that the conditions set forth in Sections 5.3(a) or 5.3(b), as the case may be, would be incapable of being satisfied by the Termination Date;

 

(d)           by either W. P. Carey or CPA17, if any judgment, injunction, order, decree or action by any Governmental Entity of competent authority preventing the consummation of the Merger shall have become final and nonappealable after the parties have used reasonable best efforts to have such judgment, injunction, order, decree or action removed, repealed or overturned;

 

(e)           by either W. P. Carey or CPA17, if the Merger shall not have been consummated before the Termination Date; provided, however, that (i) a party that has materially breached a representation, warranty, covenant or agreement of such party set forth in this Agreement shall not be entitled to exercise its right to terminate under this Section 6.1(e) and (ii) W. P. Carey shall not be entitled to exercise its right to terminate under this Section 6.1(e) to the extent it or any of its Subsidiaries’ actions or inactions in its capacity as advisor to CPA17 pursuant to the CPA17 Advisory Agreements resulted in a breach by CPA17 or a failure of CPA17 to perform its obligations under this Agreement; provided, further, that the Termination Date shall be automatically extended until February 28, 2019 (the “Extended Termination Date”), if the condition to Closing set forth in Section 5.1(d) is not capable of being satisfied as of the Termination Date but is reasonably likely to be satisfied by the Extended Termination Date;

 

(f)            by W. P. Carey or CPA17 if, upon a vote at a duly held CPA17 Stockholder Meeting or any postponement or adjournment thereof, the CPA17 Stockholder Approvals shall not have been obtained, as contemplated by Section 4.1;

 

(g)           by CPA17, if the CPA17 Special Committee shall have withdrawn its recommendation of the Merger or this Agreement, or approved or recommended a CPA17 Superior Competing Transaction, in each instance (i) in accordance with the provisions of Section 4.5 and (ii) CPA17 has paid the CPA17 Termination Fee;

 

(h)           by W. P. Carey, if (i) prior to the CPA17 Stockholder Meeting, the Board of Directors of CPA17 or any committee thereof shall have withdrawn or modified in any manner adverse to W. P. Carey its approval or recommendation of the Merger or this Agreement in connection with, or approved or recommended, any CPA17 Superior Competing Transaction or (ii) CPA17 shall have entered into any agreement with respect to any CPA17 Superior Competing Transaction; or

 

(i)            by W. P. Carey or CPA17 if, upon a vote at a duly held W. P. Carey Stockholder Meeting or any postponement or adjournment thereof, the W. P. Carey Stockholder Approval shall not have been obtained, as contemplated by Section 4.1.

 

The right of any party hereto to terminate this Agreement pursuant to this Section 6.1 shall remain operative and in full force and effect regardless of any investigation

 

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made by or on behalf of any party hereto, any Affiliate of any such party or any of their respective officers or directors, whether prior to or after the execution of this Agreement.  A terminating party shall provide written notice of termination to the other parties specifying with particularity the reason for such termination.  If more than one provision in this Section 6.1 is available to a terminating party in connection with a termination, a terminating party may rely on any and all available provisions in this Section 6.1 for any such termination.

 

Section 6.2            Expenses; Termination Fee.

 

(a)           Except as otherwise specified in this Section 6.2 or agreed in writing by the parties, all out-of-pocket costs and expenses incurred in connection with this Agreement, the Merger and the other transactions contemplated hereby shall be paid by the party incurring such cost or expense; provided that CPA17 and W. P. Carey shall each bear one half of the costs of filing, printing and mailing the Joint Proxy Statement/Prospectus and the Form S-4.

 

(b)           CPA17 agrees that if this Agreement shall be terminated pursuant to Section 6.1(b) then CPA17 will pay to W. P. Carey, or as directed by W. P. Carey, an amount equal to the W. P. Carey Expenses; provided that such amount shall be paid promptly, but in no event later than two Business Days after such termination.  For purposes of this Agreement, the “W. P. Carey Expenses” shall be an amount equal to W. P. Carey’s reasonable and documented out-of-pocket expenses incurred in connection with this Agreement and the other transactions contemplated hereby (including, without limitation, all outside attorneys’, accountants’ and investment bankers’ fees and expenses).

 

(c)           W. P. Carey agrees that if this Agreement shall be terminated pursuant to Section 6.1(c) then W. P. Carey will pay to CPA17, or as directed by CPA17, an amount equal to the CPA17 Expenses; provided that such amount shall, subject to the provisions of Section 6.6, be paid promptly, but in no event later than two Business Days after such termination.  For purposes of this Agreement, the “CPA17 Expenses” shall be an amount equal to CPA17’s out-of-pocket expenses incurred in connection with this Agreement and the other transactions contemplated hereby (including, without limitation, all attorneys’, accountants’ and investment bankers’ fees and expenses and fees and expenses of the CPA17 Special Committee).

 

(d)           CPA17 agrees that if this Agreement shall be terminated either by (i) CPA17 pursuant to Section 6.1(g), or (ii) W. P. Carey pursuant to Section 6.1(h), in each instance, CPA17 shall pay the CPA17 Termination Fee to W. P. Carey prior to or concurrently with such termination, by wire transfer of same day funds to one or more accounts designated by W. P. Carey.

 

(e)           The foregoing provisions of this Section 6.2 have been agreed to by CPA17 and W. P. Carey in order to induce the other parties to enter into this Agreement and to consummate the Merger and the other transactions contemplated by this Agreement, it being agreed and acknowledged by each of them that the execution of this Agreement by them constitutes full and reasonable consideration for such provisions.

 

(f)            In the event that either W. P. Carey or CPA17 is required to file suit to seek all or a portion of the amounts payable under this Section 6.2, and such party prevails in

 

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such litigation, such party shall be entitled to reasonable and documented out-of-pocket expenses, including reasonable outside attorneys’ fees and expenses, which it has incurred in enforcing its rights under this Section 6.2.

 

Section 6.3            Effect of Termination.    In the event of termination of this Agreement by either CPA17 or W. P. Carey as provided in Section 6.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of W. P. Carey, Merger Sub or CPA17, other than Section 6.2, this Section 6.3, Section 6.6 and Article VII and except to the extent that such termination results from a willful breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement or a failure or refusal by such party to consummate the transactions contemplated hereby when such party was obligated to do so in accordance with the terms hereof.

 

Section 6.4            Amendment.    This Agreement may be amended by the parties in writing by action of their respective Boards of Directors at any time before or after the CPA17 Stockholder Approvals are obtained and prior to the filing of the Articles of Merger for the Merger with, and the acceptance for record of such Articles of Merger by, the SDAT; provided, however, that after the CPA17 Stockholder Approvals are obtained, no such amendment, modification or supplement shall alter the amount of the Per Share Merger Consideration to be delivered to the CPA17 Stockholders or alter or change any of the terms or conditions of this Agreement if such alteration or change would adversely affect the CPA17 Stockholders.

 

Section 6.5            Extension; Waiver.    At any time prior to the Effective Time, each of CPA17 and W. P. Carey may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained in this Agreement or in any document delivered pursuant to this Agreement or (c) subject to the provisions of Section 6.4, waive compliance with any of the agreements or conditions of the other party contained in this Agreement.  Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.  The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights.

 

Section 6.6            Payment of Expenses.

 

(a)           In the event that CPA17 or W. P. Carey becomes obligated to pay any expenses under Section 6.2 (the “Expense Amount”), CPA17 or W. P. Carey, as applicable, shall pay to the party entitled to receive such payment (the “Receiving Party”) from the amount deposited into escrow in accordance with this Section 6.6(a), an amount equal to the lesser of (i) the Expense Amount and (ii) the sum of (A) the maximum amount that can be paid to the Receiving Party without causing the Receiving Party to fail to meet the requirements of Sections 856(c)(2) and (c)(3) of the Code for the year in which the Expense Amount would otherwise be payable, for this purpose treating such amount as income that does not qualify for purposes of Sections 856(c)(2) and (c)(3) of the Code, as determined by the Receiving Party’s independent certified public accountants, plus (B) if the Receiving Party receives either (1) a letter from the Receiving Party’s counsel indicating that the Receiving Party has received a ruling from the IRS described in Section 6.6(b) or (2) an opinion from the Receiving Party’s counsel as described in Section 6.6(b), an amount equal to the Expense Amount less the amount payable

 

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under clause (A) above.  To the extent the entire Expense Amount is not paid to the Receiving Party in the year in which such amount would otherwise be payable as a result of the restrictions set forth in this Section 6.6(a), the Expense Amount shall be carried forward to the succeeding year and shall be payable (as described above) in such succeeding year by applying the same formula and by deeming such Expense Amount as payable in such succeeding year.  To the extent the full Expense Amount has not been paid in the initial and succeeding year, the amount shall similarly be carried forward for each of the next three taxable years.  To the extent that the entire Expense Amount has not been paid in the initial year, the succeeding year and the three following years, the Expense Amount shall be forfeited by the Receiving Party.  To secure the obligation of CPA17 or W. P. Carey, as applicable, to pay these amounts, CPA17 or W. P. Carey, as applicable, shall deposit into escrow an amount in cash equal to the Expense Amount with an escrow agent selected by CPA17 or W. P. Carey, as applicable, and on such terms (subject to Section 6.6(b)) as shall be mutually agreed upon by CPA17 or W. P. Carey, as applicable, the Receiving Party and the escrow agent.  The payment or deposit into escrow of the Expense Amount pursuant to this Section 6.6(a) shall be made at the time CPA17 or W. P. Carey, as applicable, would otherwise be obligated to pay the Receiving Party pursuant to Section 6.2.

 

(b)           The escrow agreement shall provide that the Expense Amount in escrow or any portion thereof shall not be released to the Receiving Party unless the escrow agent receives any of the following:  (i) a letter from the Receiving Party’s independent certified public accountants indicating the maximum amount that can be paid by the escrow agent to the Receiving Party without causing the payee to fail to meet the requirements of Sections 856(c)(2) and (c)(3) of the Code determined as if the payment of such amount did not constitute income that qualifies for purposes of Sections 856(c)(2) and (c)(3) of the Code (“Qualifying Income”) or a subsequent letter from the Receiving Party’s accountants revising that amount, in which case the escrow agent shall release such amount to the Receiving Party, or (ii) a letter from the Receiving Party’s counsel indicating that the Receiving Party received a ruling from the IRS holding that the receipt by the Receiving Party of the Expense Amount would either constitute Qualifying Income or would be excluded from gross income for purposes of Code Sections 856(c)(2) and (3) (or alternatively, the Receiving Party’s counsel has rendered a legal opinion to the effect that the receipt by the Receiving Party of the Expense Amount would either constitute Qualifying Income or would be excluded from gross income for purposes of Sections 856(c)(2) and (c)(3) of the Code), in which case the escrow agent shall release the remainder of the Expense Amount to the Receiving Party.  CPA17 and W. P. Carey each agree to amend this Section 6.6 at the request of the Receiving Party in order to (A) maximize the portion of the Expense Amount that may be distributed to the Receiving Party hereunder without causing the Receiving Party to fail to meet the requirements of Sections 856(c)(2) and (c)(3) of the Code, (B) improve the likelihood of the Receiving Party securing a ruling described in this Section 6.6(b), or (C) assist the Receiving Party in obtaining a legal opinion from its counsel as described in this Section 6.6(b).  The escrow agreement shall also provide that any portion of the Expense Amount not paid to the Receiving Party in the initial year and the four succeeding years shall be released by the escrow agent to CPA17 or W. P. Carey, as applicable.  Unless such party is the Receiving Party, none of CPA17 or W. P. Carey shall be a party to such escrow agreement and neither shall bear any cost of or have liability resulting from the escrow agreement.

 

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ARTICLE VII

 

GENERAL PROVISIONS

 

Section 7.1            Nonsurvival of Representations and Warranties.    None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time.  This Section 7.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time or, if earlier, the termination of this Agreement in accordance with the terms hereof (including but not limited to Section 6.2).

 

Section 7.2            Notices.    All notices, requests, claims, consents, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, sent by overnight courier (providing proof of delivery) to the parties or sent by facsimile (providing confirmation of transmission) at the following addresses or facsimile numbers (or at such other address or facsimile number for a party as shall be specified by like notice):

 

(a)           if to CPA17, to:

 

Corporate Property Associates 17 - Global Incorporated
50 Rockefeller Plaza
New York, New York  10020
Attn:  Chair of the Special Committee
Fax:  (212) 492-8922

 

with a copy to:

 

Clifford Chance US LLP
31 West 52nd Street
New York, New York  10019
Attn:  Kathleen L. Werner, Esq.
Fax:  (212) 878-8375

 

with a further copy to:

 

Pepper Hamilton LLP

3000 Two Logan Square

Eighteenth and Arch Streets

Philadelphia, Pennsylvania  19103

Attn:  Barry M. Abelson, Esq.

Fax:  (215) 689-4803

 

(b)           if to W. P. Carey or Merger Sub, to:

 

W. P. Carey Inc.
50 Rockefeller Plaza
New York, New York  10020

 

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Attn:  Chief Executive Officer and Chief Financial Officer
Fax:  (212) 492-8922

 

with a copy to:

 

W. P. Carey Inc.
50 Rockefeller Plaza
New York, New York  10020
Attn:  Paul Marcotrigiano, Esq.
Fax:  (212) 492-8922

 

with a further copy to:

 

DLA Piper LLP (US)
1251 Avenue of the Americas
New York, New York  10020
Attn:  Christopher P. Giordano, Esq.
Fax:  (212) 884-8522

 

Section 7.3            Interpretation.    When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including” is used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

Section 7.4            Counterparts.    This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. Delivery of an executed counterpart of a signature page by facsimile or other electronic transmission (including via .pdf) shall be as effective as delivery of a manually executed counterpart.

 

Section 7.5            Entire Agreement; No Third-Party Beneficiaries.    This Agreement and the other agreements entered into in connection with the transactions (i) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement and, (ii) except for the provisions of Article I and Section 4.8, which shall inure to the benefit of the Persons expressly specified therein, are not intended to confer upon any Person other than the parties hereto any rights or remedies.  The rights of such third-party beneficiaries expressly specified under the provisions of Article I and Section 4.8 shall not arise unless and until the Effective Time occurs.

 

Section 7.6            Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

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Section 7.7            Assignment.    Except as mutually agreed by the parties hereto, neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned or delegated, in whole or in part, by operation of Law or otherwise by any of the parties without the prior written consent of the other parties.  This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and permitted assigns.

 

Section 7.8            Enforcement.    The parties agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor.  It is accordingly agreed that, prior to the termination of this Agreement pursuant to Article VI, the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Maryland or in any Maryland State court and each party hereto hereby waives any requirement for the securing or posting of any bond in connection with such remedy, this being in addition to any other remedy to which they are entitled at Law or in equity.  In addition, each of the parties hereto (i) consents to submit itself (without making such submission exclusive) to the personal jurisdiction of any federal court located in the State of Maryland or any Maryland State court if any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement and (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court.

 

Section 7.9            Waiver of Jury Trial.    EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  Each party hereto (a) certifies that no representative of any other party has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement, by, among other things, the mutual waiver and certifications in this Section 7.9.

 

Section 7.10          Exhibits; Disclosure Letters.    All Exhibits referred to herein, in the CPA17 Disclosure Letter and in the W. P. Carey Disclosure Letter are intended to be and hereby are specifically made a part of this Agreement.

 

Section 7.11          Conflict Waiver.    Recognizing that Clifford Chance US LLP has acted as legal counsel to CPA17 in connection with the transactions contemplated by this Agreement, and that Clifford Chance US LLP has represented W. P. Carey in unrelated matters, CPA17, W. P. Carey and Merger Sub each hereby waives, on its own behalf and agrees to cause its Affiliates to waive, any conflicts that may arise in connection with Clifford Chance US LLP representing CPA17.  This Section 7.11 shall survive the consummation of the Merger.

 

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ARTICLE VIII

 

CERTAIN DEFINITIONS

 

Section 8.1            Certain Definitions.

 

Acceptable Confidentiality Agreement” shall mean a customary confidentiality agreement containing terms no less favorable to CPA17 than the terms set forth in the Confidentiality Agreement.

 

Advisor Closing Amounts” shall mean all fees and distributions payable to W. P. Carey and its Affiliates in connection with the consummation of the transactions contemplated hereby or any CPA17 Competing Transaction, including, without limitation, all (i) distributions of Capital Proceeds upon a Change of Control Event, and related allocation of profits and losses, under the CPA17 LP Agreement (as such terms are defined in the CPA17 LP Agreement) and (ii) rights to amounts in respect of the Special General partner Interest pursuant to Section 11.7 of the CPA17 LP Agreement (the amounts included in this clause (ii), the “Special GP Amount”); provided, however, that for the avoidance of doubt, Advisor Closing Amounts shall not include Advisor Accrued Amounts or Subordinated Disposition Fees.

 

Affiliate” of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

 

Articles of Amendment” shall mean the Articles of Amendment of the CPA17 Charter giving effect to the Charter Amendment.

 

Average W. P. Carey Trading Price” shall mean the volume-weighted average trading price of a share of W. P. Carey Common Stock, as reported on the NYSE, for the five (5) consecutive trading days ending on the third (3rd) trading day preceding the Closing Date.

 

Business Day” means any day other than a Saturday, Sunday or any day on which banks located in New York, New York are authorized or required to be closed for the conduct of regular banking business.

 

Charter Amendment” shall mean an amendment of the CPA17 Charter providing that a “Roll-Up Transaction” as such term is defined therein, shall exclude a transaction involving securities of an entity that have been for at least 12 months listed on a national securities exchange.

 

Confidentiality Agreement” shall mean that certain letter agreement, dated as of August 15, 2017, by and between CPA17 and W. P. Carey.

 

CPA17 Material Adverse Effect” means a material adverse effect (A) on the business, properties, financial condition or results of operations of CPA17 and the CPA17 Subsidiaries taken as a whole or (B) that would, or would be reasonably likely to, prevent or materially delay the performance by CPA17 of its material obligations under this Agreement or the consummation of the Merger or any other transactions contemplated by this Agreement. Notwithstanding anything to the contrary set forth in this definition,

 

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the parties agree that a CPA17 Material Adverse Effect shall not include any effect or event with respect to CPA17 or any CPA17 Subsidiary to the extent resulting from or attributable to (a) general national, international or regional economic, financial or political conditions or events, including, without limitation, the effects of an outbreak or escalation of hostilities, any acts of war, sabotage or terrorism that do not result in the destruction or material physical damage of a material portion of the CPA17 Properties, taken as a whole, (b) the announcement, pendency or consummation of this Agreement or the other Transaction Documents or the transactions contemplated thereby, (c) conditions generally affecting the securities markets or the industries in which CPA17 and the CPA17 Subsidiaries operate, except to the extent such conditions have a materially disproportionate effect on CPA17 and the CPA17 Subsidiaries, taken as a whole, relative to others in the industries in which CPA17 and the CPA17 Subsidiaries operate, (d) any failure, in and of itself, by CPA17 or the CPA17 Subsidiaries to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a CPA17 Material Adverse Effect), (e) any change in applicable Law, regulation or U.S. generally accepted accounting principles (“GAAP”) (or authoritative interpretation thereof), except to the extent such effect has a materially disproportionate effect on CPA17 and the CPA17 Subsidiaries, taken as a whole, relative to others in the industries in which CPA17 and the CPA17 Subsidiaries operate or (f) any hurricane, tornado, flood, earthquake or other natural disaster that does not result in the destruction or material physical damage of a material portion of the CPA17 Properties, taken as a whole.

 

CPA17 Property” means each of the real properties reflected on the most recent balance sheet of CPA17 included in the CPA17 SEC Documents in which CPA17 or a CPA17 Subsidiary owns fee simple title to or has a valid leasehold interest in, or has an interest (directly or indirectly) in an entity that owns fee simple title to or has a valid leasehold interest.

 

CPA17 SEC Documents” means each report, schedule, registration statement and definitive proxy statement filed by CPA17 with the SEC since January 1, 2009.

 

CPA17 Subsidiary” means each Subsidiary of CPA17, other than Subsidiaries of CPA17 with no assets that are in the process of being dissolved.

 

CPA17 Termination Fee” shall mean an amount in cash equal to $114 million; provided, however, in the event that (i) this Agreement is terminated pursuant to Section 6.1(g) or Section 6.1(h), and (ii) CPA17 enters into an Alternative Acquisition Agreement with an Exempted Person with respect to a CPA17 Superior Competing Transaction in connection and compliance with Section 4.5, the CPA17 Termination Fee shall be an amount in cash equal to $38 million.

 

CPA17 Termination Fee Credit” shall equal the lesser of (i) the CPA17 Termination Fee actually paid in accordance with Section 6.2(d), and (ii) the Special GP Amount.

 

Exempted Person” shall mean any Person, group of Persons or group that includes any Person (so long as in each case such Person and the other members of such group, if any, who

 

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were members of such group immediately prior to the Solicitation Period End Date constitute at least fifty percent (50%) of the equity financing of such group at all times following the Solicitation Period End Date and prior to the termination of this Agreement) who has submitted a bona-fide-written offer or communication constituting a CPA17 Competing Transaction to CPA17 prior to the Solicitation Period End Date.

 

IRS” means the United States Internal Revenue Service.

 

Knowledge” (A) where used herein with respect to CPA17 and any CPA17 Subsidiary shall mean the actual (and not constructive or imputed) knowledge of the persons named in Schedule 8.1 of the CPA17 Disclosure Letter and (B) where used herein with respect to W. P. Carey and any W. P. Carey Subsidiary shall mean the actual (and not constructive or imputed) knowledge of the persons named in Schedule 8.1 of the W. P. Carey Disclosure Letter.

 

Law” means any statute, law, common law, regulation, rule, order, decree, code, judgment, ordinance or any other applicable requirement of any Governmental Entity applicable to W. P. Carey or CPA17 or any of their respective Subsidiaries.

 

Liens” means pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever.

 

NYSE” means the New York Stock Exchange.

 

Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity.

 

Subordinated Disposition Fees” shall have the meaning given to such term in the CPA17 Advisory Agreements.

 

Subsidiary” of any Person means any corporation, partnership, limited liability company, joint venture or other legal entity of which such Person (either directly or through or together with another Subsidiary of such Person) owns either (A) a general partner, managing member or other similar interest or (B) 50% or more of the voting stock, value of or other equity interests (voting or non-voting) of such corporation, partnership, limited liability company, joint venture or other legal entity.

 

Tax” or “Taxes” shall mean any federal, state, local and foreign income, gross receipts, license, withholding, property, recording, stamp, transfer, sales, use, abandoned property, escheat, franchise, employment, payroll, excise, environmental and other taxes, tariffs or governmental charges of any nature whatsoever, together with penalties, interest or additions thereto.

 

Tax Protection Agreement” shall mean any agreement, oral or written, (i) that has as one of its purposes to permit a Person to take the position that such Person could defer taxable income that otherwise might have been recognized upon a transfer of property to any CPA17 Subsidiary that is treated as a partnership for U.S. federal income Tax purposes, and that (A) prohibits or restricts in any manner the disposition of any assets of CPA17 or any CPA17 Subsidiary, (B) requires that CPA17 or any CPA17 Subsidiary maintain, put in place, or replace

 

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indebtedness, whether or not secured by one or more of the CPA17 Properties, or (C) requires that CPA17 or any CPA17 Subsidiary offer to any Person at any time the opportunity to guarantee or otherwise assume, directly or indirectly (including, without limitation, through a “deficit restoration obligation,” guarantee (including, without limitation, a “bottom” guarantee), indemnification agreement or other similar arrangement), the risk of loss for federal income Tax purposes for indebtedness or other liabilities of CPA17 or any CPA17 Subsidiary, (ii) that specifies or relates to a method of taking into account book-Tax disparities under Section 704(c) of the Code with respect to one or more assets of CPA17 or a CPA17 Subsidiary, or (iii) that requires a particular method for allocating one or more liabilities of CPA17 or any CPA17 Subsidiary under Section 752 of the Code.

 

Tax Return” shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

Transaction Documents” means this Agreement and all other documents to be executed in connection with the transactions contemplated hereby, including the Merger and the Charter Amendment.

 

Voting Debt” shall mean bonds, debentures, notes or other indebtedness having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of equity interests in CPA17, any CPA17 Subsidiary or W. P. Carey, as applicable, may vote.

 

W. P. Carey Material Adverse Effect” means a material adverse effect (A) on the business, properties, financial condition or results of operations of W. P. Carey and the W. P. Carey Subsidiaries taken as a whole or (B) that would, or would be reasonably likely to, prevent or materially delay the performance by W. P. Carey or any W. P. Carey Subsidiary of its material obligations under this Agreement or the consummation of the Merger or any other transactions contemplated by this Agreement.  Notwithstanding anything to the contrary set forth in this definition, the parties agree that, a W. P. Carey Material Adverse Effect shall not include any effect or event with respect to W. P. Carey or any W. P. Carey Subsidiary to the extent resulting from or attributable to (a) general national, international or regional economic, financial or political conditions or events, including, without limitation, the effects of an outbreak or escalation of hostilities, any acts of war, sabotage or terrorism that do not result in the destruction or material physical damage of a material portion of the W. P. Carey Properties, taken as a whole, (b) the announcement, pendency or consummation of this Agreement or the other Transaction Documents or the transactions contemplated thereby, (c) conditions generally affecting the securities markets or the industries in which W. P. Carey and the W. P. Carey Subsidiaries operate, except to the extent such conditions have a materially disproportionate effect on W. P. Carey and the W. P. Carey Subsidiaries, taken as a whole, relative to others in the industries in which W. P. Carey and the W. P. Carey Subsidiaries operate, (d) any failure, in and of itself, by W. P. Carey or the W. P. Carey Subsidiaries to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a W. P. Carey Material Adverse Effect), (e) any change in applicable Law, regulation or GAAP (or authoritative interpretation

 

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thereof), except to the extent such effect has a materially disproportionate effect on W. P. Carey and the W. P. Carey Subsidiaries, taken as a whole, relative to others in the industries in which W. P. Carey and the W. P. Carey Subsidiaries operate, or (f) any hurricane, tornado, flood, earthquake or other natural disaster that does not result in the destruction or material physical damage of a material portion of the W. P. Carey Properties, taken as a whole.

 

W. P. Carey Subsidiary” means each Subsidiary of W. P. Carey.

 

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.

 

 

CORPORATE PROPERTY ASSOCIATES 17 - GLOBAL INCORPORATED

 

 

 

 

 

 

By:

/s/ Susan C. Hyde

 

 

Name: Susan C. Hyde

 

 

Title:  Chief Administrative Officer and Corporate Secretary

 

 

 

 

 

CPA17 MERGER SUB LLC

 

 

 

 

 

 

By:

/s/ ToniAnn Sanzone

 

 

Name: ToniAnn Sanzone

 

 

Title:   Chief Financial Officer

 

 

 

 

 

W. P. CAREY INC.

 

 

 

 

 

 

By:

/s/ Jason E. Fox

 

 

Name: Jason E. Fox

 

 

Title:   Chief Executive Officer

 

[Merger Agreement]

 



 

AND, FOR THE LIMITED PURPOSES SET FORTH HEREIN:

 

 

CAREY ASSET MANAGEMENT CORP.

 

 

 

 

 

 

By:

/s/ Jason E. Fox

 

 

Name: Jason E. Fox

 

 

Title:   President and Chief Executive Officer

 

 

 

 

 

W. P. CAREY & CO. B.V.

 

 

 

 

 

 

By:

/s/ Brooks G. Gordon

 

 

Name: Brooks G. Gordon

 

 

Title:   Managing Director B

 

 

 

 

 

 

By:

/s/ Ramses Van Toor

 

 

Name: Ramses Van Toor

 

 

Title:   Director A.

 

 

 

 

 

W. P. CAREY HOLDINGS, LLC

 

 

 

 

 

 

By:

/s/ Jason E. Fox

 

 

Name: Jason E. Fox

 

 

Title:   President and Chief Executive Officer

 

 

 

 

 

CPA®: 17 LIMITED PARTNERSHIP

 

 

 

By:

CORPORATE PROPERTY ASSOCIATES 17 - GLOBAL INCORPORATED, ITS GENERAL PARTNER

 

 

 

 

 

 

By:

/s/ Susan C. Hyde

 

 

Name: Susan C. Hyde

 

 

Title:  Chief Administrative Officer and Corporate Secretary

 

[Merger Agreement]

 


(Back To Top)

Section 3: EX-99.1 (EX-99.1)

Exhibit 99.1

Proposed Merger with CPA® :17 – Global June 2018

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Transaction Overview 100% stock acquisition by W. P. Carey (NYSE: WPC) of CPA®: – 17 Global (CPA:17) Fixed exchange ratio of 0.160x shares of WPC common stock for each share of CPA:17 common stock Implied price of $10.72 per each share of CPA:17 common stock based on WPC’s closing price of $67.03 (1) Transaction Consideration Pro Forma Ownership Post-closing CPA:17 stockholders will own approximately 33% of the combined company (2) W. P. Carey Management and Board No changes to WPC’s management team or Board of Directors Dividend WPC expects to maintain its current quarterly dividend of $1.020 per share Expected Close Expected to close in Q4 2018 subject to customary closing conditions, including obtaining the requisite WPC and CPA:17 shareholder approvals Transaction Value Total transaction value of approximately $5.9B including assumption of CPA:17’s debt of $2.1B (as of 3/31/18) Implies an approximate 7% cap rate for net lease Real Estate assets As of market close on 6/15/18. Excludes the ~4% of CPA:17 shares owned by WPC. Earnings Impact Transaction significantly increases WPC’s Real Estate AFFO derived from long-term, recurring lease revenues, partially replacing Investment Management AFFO derived from finite fee streams Increased earnings quality expected to result in a higher overall multiple on pro forma earnings

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Strategic Rationale and Transaction Benefits Further simplifies WPC’s business and accelerates its strategy to focus exclusively on net lease investing for its balance sheet Higher-multiple Real Estate segment is expected to generate approximately 96% of total pro forma AFFO (up from 83% currently) (1) Accelerates “Pure-Play” Strategy Enhanced Portfolio Addition of a high-quality diversified portfolio aligned with WPC’s existing portfolio Enhances portfolio metrics, including extending the weighted-average lease term to 10.4 years Increases tenant and industry diversification and reduces top 10 concentration to 25% of ABR (3) Minimal integration risk given WPC’s management of CPA:17’s portfolio Sector Leading Diversified Net Lease REIT Considerably increases size, scale and prominence with pro forma equity market capitalization of ~$10.9B and pro forma enterprise value of ~$17.3B (2) Second largest net lease REIT with significantly elevated ranking in the MSCI US REIT Index (into top 25) G&A spread over larger asset base Positioned for Growth Transformational event with potential to drive re-weighting of WPC as a leading pure-play net lease REIT Additional growth opportunities through improved cost of capital resulting from a simplified business with increased contribution from higher-multiple Real Estate segment Flexible and Conservative Balance Sheet Improves overall credit profile and reduces debt to gross assets Expect to maintain BBB and Baa2 ratings with a clear path to reducing secured debt Expected to increase stock liquidity and positions WPC for enhanced access to capital Note: WPC share price of $67.03 based on 6/15/18 market close. Current Real Estate AFFO based on 3/31/18 actuals. Illustrative pro forma Real Estate AFFO based on AFFO for WPC and MFFO, adjusted for CPA:17 for the three months ended 3/13/18 and adjusted for select transaction adjustments. Pro forma enterprise value based on 3/31/18 public filings. Share count assumes the issuance of approximately 54 million shares at a 0.16x exchange ratio. WPC share count as of 4/27/18. Annualized Base Rent (“ABR”). Please see revised ABR definition under “Disclosures” at the end of this communication.

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Real Estate Inv. Mgmt. AFFO by Segment Current (1) Pro Forma (2) Real Estate earnings are generally ascribed a higher multiple by investors given the long-term, recurring nature of the underlying income relative to finite Investment Management earnings Improved earnings mix results in a higher pro forma AFFO multiple, even at implied multiples currently ascribed to WPC’s Real Estate and Investment Management segments More Valuable Earnings Source: SNL; market data as of 6/15/18. Note: Analysis is intended to be for illustrative purposes. Current Real Estate AFFO based on 3/31/18 actuals. Illustrative pro forma Real Estate AFFO based on AFFO for WPC and MFFO, adjusted for CPA:17 for the three months ended 3/13/18 and adjusted for select transaction adjustments. AFFO multiple for Real Estate segment based on average consensus 2018 AFFO multiple for office, industrial and retail net lease REITs with equity market capitalizations exceeding $2.5B (STAG, O, NNN, STORE, SRC and VER). Investment Management multiple implied from Blended AFFO multiple and Real Estate AFFO multiple assuming the Investment Management segment comprises 17% of AFFO. Blended 2018E AFFO based on midpoint of previously issued AFFO guidance for 2018 of $5.40 per share. Pro forma blended multiple assumes the Real Estate AFFO multiple and Investment Management AFFO multiple remain constant and AFFO is comprised of 96% Real Estate and 4% Investment Management AFFO. Real Estate AFFO multiple (3) 14.2x 14.2x Investment Management AFFO multiple (4) 3.9x 3.9x Blended 2018E AFFO multiple (5) 12.4x 13.7x (6) +1.3x +10.5% AFFO Multiple Re-weighting 83% 17% 96% 4%

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Significantly Increases Size, Scale and Prominence Largest REITs in the MSCI US REIT index ($B) Largest Net Lease REITs by Equity Market Capitalization ($B) (2) Source: FactSet, SNL, Market data as of 6/15/18. Based on WPC stock price of $67.03 as of 6/15/18. Includes select net lease REITs with equity market capitalizations greater than $2.5B. Pro forma enterprise value based on 3/31/18 public filings. Share count assumes the issuance of approximately 54 million shares at a 0.16x exchange ratio. WPC share count as of 4/27/18. Based on rental revenue (excluding reimbursables); WPC current and pro forma metrics include operating property revenues. WPC becomes a top 25 REIT Annual Rental Revenue ($B) – FY 2017 (3) Company Equity Market Cap . Net lease REITs $15 $11 $7 $7 $6 $5 $4 $3 O WPC (PF) WPC (Current) VER NNN STOR SRC STAG $1.2 $1.2 $1.1 $0.7 $0.6 $0.6 $0.4 $0.3 O VER WPC (PF) WPC (Current) SRC NNN STOR STAG Company Equity market cap 1 Simon Property Group, Inc. $50.9 2 Public Storage 37.3 3 Prologis, Inc. 34.1 4 Equinix, Inc. 31.7 5 Equity Residential 23.4 6 AvalonBay Communities, Inc. 23.3 7 Digital Realty Trust, Inc. 21.9 8 Welltower, Inc. 21.4 9 GGP Inc. 19.8 10 Ventas, Inc. 19.3 11 Boston Properties, Inc. 18.5 12 Host Hotels & Resorts, Inc. 15.8 13 Essex Property Trust, Inc. 15.5 14 Realty Income Corporation 15.1 15 Vornado Realty Trust 13.7 16 Alexandria Real Estate Equities, Inc. 13.2 17 Extra Space Storage Inc. 12.2 18 Invitation Homes 11.7 19 HCP, Inc. 11.3 20 Mid-America Apartment Communities, Inc. 11.0 21 W.P. Carey (Pro forma) 1 10.9 22 Duke Realty Corporation 10.2 23 Regency Centers Corporation 10.1 24 UDR, Inc. 9.9 25 Iron Mountain Incorporated 9.5 26 Federal Realty Investment Trust 8.8 27 SL Green Realty Corp. 8.8 28 Camden Property Trust 8.4 29 Equity LifeStyle Properties, Inc. 8.1 30 Macerich Company 7.9 33 W.P. Carey (Standalone) 7.3

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Overview of CPA:17 CPA:17 is the largest fund advised by WPC and owns a high-quality, diversified, primarily net lease portfolio Net Lease Assets by Property Type (1) Industrial 15% Self-Storage 1% Other (2) 5% Warehouse 28% Office 28% Retail 23% Net Lease Assets by Geography (1) International 44% United States 56% Based on ABR as of 3/31/18. Please see revised ABR definition under “Disclosures” at the end of this communication. Includes education facilities, fitness facilities, hotel, ground leases, and net leased student housing. Based on WPC stock price of $67.03 as of 6/15/18 and a 0.16x exchange ratio. Purchase Price Per Share (3) $10.72 Shares Outstanding (MM) 354 Equity Market Capitalization $3,799 Mortgage Debt, pro rata 2,140 Senior Credit Facility 92 Total Debt $2,232 Less: Cash and Equivalents (102) Enterprise Value $5,929 Total Debt / Gross Assets 39% Net Lease ABR $379MM Operating Self-storage Assets NOI (TTM) $23MM Cold Storage Equity Investment (book value) $39MM Other Investments (book value) $213MM Capitalization ($MM) March 31, 2018 Other Metrics 28% 28% 23% 15% 1% 5% 56% 44%

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Combined Company Portfolio Overview Pro Forma 411 1,159 Number of Properties (1) 886 $379 $1,068 ABR ($MM) (2) $689 99.7% 99.7% Occupancy (%) 99.7% 11.5 years 10.4 years Weighted-Average Lease Term (2) 9.7 years 31.0% 28.8% % of Investment Grade Tenants (2) 27.6% 41.8% 25.3% Top 10 Tenant Concentration (2) 32.4% 98.1% 96.2% CPI-based / Fixed Rental Increases (2) 95.1% 44 129 Square Footage (MM) 85 114 302 Number of Tenants (1) 208 Note: Portfolio metrics as of 3/31/18 for net lease properties only. Excludes operating properties and other Real Estate investments. Combined pro forma metric consolidates existing joint ventures between WPC and CPA:17 and will not reflect the summation of standalone companies. Based on ABR as of 3/31/18. Please see revised ABR definition under “Disclosures” at the end of this communication.

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Geographic Diversification Pro Forma Portfolio Diversification Consistent with WPC’s Current Portfolio Top 10 Tenants By Property Type Industrial 24% Warehouse 19% Office 26% Retail 19% Self-Storage 3% Other (1) 8% Note: Based on ABR as of 3/31/18. Please see revised ABR definition under “Disclosures” at the end of this communication. Portfolio metrics for net lease properties only. Excludes operating properties. Includes education facilities, hotels, movie theaters, fitness facilities and student housing, which are all net lease properties. Also includes ground leases. Includes Australia and Japan. Uncapped CPI 43% CPI-based 23% Fixed 31% Other 3% None 1% Internal Growth from Contractual Rent Increases U.S. 62% Mexico 0% Canada 1% Europe 35% Other (2) 1% 64% North America 43% Industrial / Warehouse 66% CPI-linked Rank Tenant Location % of Total 1. Europe 4.7% 2. North America 3.4% 3. Europe 2.8% 4. Europe 2.8% 5. North America 2.5% 6. Europe 2.2% 7. North America 1.9% 8. Europe 1.7% 9. North America 1.7% 10. North America 1.6% Top 10 Total 25.3% 43% 23% 31% 3% 1% 62% 0% 1% 35% 1% 24% 19% 26% 19% 3% 8%

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Extends Weighted-Average Lease Term and Lease Maturities Pro forma lease term of 10.4 years is among the highest for the net lease sector Lease Expiration Schedule (1) Weighted Average Lease Term (years) (1) Based on ABR as of 3/31/18. Please see revised ABR definition under “Disclosures” at the end of this communication. 14.0 11.4 10.4 9.7 9.6 9.4 9.3 9.2 8.9 8.6 4.7 STOR NNN WPC (PF) WPC (Current) SRC O VER SIR LXP GNL STAG 1% 4% 5% 6% 10% 6% 14% 5% 3% 6% 41% 1% 3% 3% 4% 7% 4% 12% 5% 4% 7% 49% 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thereafter W. P. Carey Current W. P. Carey Pro Forma

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Transaction Enhances Credit Profile Equity 62% Mortgage Debt (pro rata) 18% Senior Unsecured Notes 18% Unsecured Credit Facility 2% Market Capitalization (2) $10,919 Mortgage Debt, pro rata 3,167 Senior Unsecured Notes 3,148 Unsecured Credit Facility (3) 360 Total Pro Rata Debt $6,675 Less: Cash and Equivalents (4) (274) Total Pro Rata Net Debt $6,401 Total Enterprise Value $17,320 Total Capitalization $17,594 Total Debt and Gross Assets based on 3/31/18 consolidated figures for WPC and CPA:17 adjusted for select transaction adjustments. Pro forma enterprise value based on 3/31/18 public filings. Share count assumes the issuance of approximately 54 million shares at a 0.16x exchange ratio. WPC share count as of 4/27/18. WPC stock price of $67.03 as of 6/15/18. Includes WPC credit facility and CPA:17 term loan / credit facility; excludes any additional impact of transaction adjustments from merger. Cash and equivalents presented on a consolidated basis. Pro Forma Capitalization ($MM) March 31, 2018 Decreases debt to gross assets from 49% to below 44% (1) Clear path to reducing secured debt through prepayment of debt with minimal frictional costs Temporary increase in net debt / EBITDA above current levels with projected path to reduce post-transaction Substantial credit facility capacity to fund ongoing needs Expected to enhance liquidity and access to capital Increases size – the largest diversified net lease REIT Replaces finite Investment Management fees with long-term, recurring Real Estate revenues providing higher quality cash flow coverage for interest expense and dividend 62% 18% 18% 2%

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Current Debt Maturity Schedule as of 3/31/18 (1) (2) (3) (3) Represents pro rata balloon payments at maturity and excludes fully amortizing loans. WPC’s unsecured revolver has initial maturity in 2021 with two six-month extension options. Reflects amount due at maturity, excluding unamortized discount and unamortized deferred financing costs. Includes $50MM of term loan and $42MM credit facility balance outstanding on CPA:17’s credit facility. Excludes any additional impact from the merger. Pro forma Debt Maturity Schedule (1) (2), (4) (3) (3) Maintains Well-Laddered Debt Maturity Profile 32 47 225 108 203 91 3 55 19 267 616 616 616 500 450 350 0 200 400 600 800 1,000 1,200 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 $ MM Year of Maturity Mortgage Debt, pro rata Unsecured Revolving Credit Facility Unsecured Bonds (EUR) Unsecured Bonds (USD) 67 85 647 615 546 391 194 142 32 21 360 616 616 616 500 450 350 0 200 400 600 800 1,000 1,200 1,400 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 $ MM Year of Maturity Mortgage Debt, pro rata Unsecured Revolving Credit Facility Unsecured Bonds (EUR) Unsecured Bonds (USD)

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Continues WPC’s History of Long-term Shareholder Value Creation Total Shareholder Return Since CPA:15 Merger and REIT Conversion in 2012 Source: SNL; Market data as of 6/15/18. Represents transaction value at close. Net lease peers weighted by equity market capitalization. Includes LXP, STAG, SIR, GNL, NNN, O, SRC, STOR and VER. WPC: +113% total return RMS: +68% total return Net lease peers (2): +65% total return (2) June 2017: Announced strategy to exit retail fundraising business and focus exclusively on net lease investing on balance sheet July 2013: $3.8B (1) merger with CPA:16 announced September 2014: $294MM inaugural follow-on equity offering March 2014: $500MM inaugural senior unsecured notes offering January 2014: Received investment grade ratings of BBB / Baa2 with stable outlook from S&P and Moody’s October 2012: Commenced trading on NYSE as a REIT February 2012: $3.2B (1) merger with CPA:15 announced Annualized TSR % per annum WPC 12.7% Net lease peers (2) 8.2% RMS 8.7% (10%) 10% 30% 50% 70% 90% 110% 130% Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 WPC Peers RMS Events

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Further simplifies WPC’s business and accelerates its strategy to focus exclusively on net lease investing for its balance sheet Higher multiple Real Estate segment is expected to generate approximately 96% of total pro forma AFFO, up from 83% currently (1) Real Estate segment is expected to contribute approximately 95% of pro forma revenue, up from 85% currently Real Estate Invest. Mgmt. Revenue (%) Real Estate Revenue $86MM $2.3B Sep / Oct 2012: $3.2B CPA:15 merger closed $302MM $6.2B Feb 2014: $3.8B CPA:16 merger closed $713MM $10.4B Pro Forma (2) (4) 2011 (2) 2013 (2) 2015 (2) Current (2) (3) Jun 2017: Strategy to focus exclusively on net lease investing announced Jun 2018: Proposed acquisition of CPA:17 announced $1.1B $17.3B (5) $685MM (3) $11.5B Source: WPC and CPA: 17 public company filings. WPC share price of $67.03 based on 6/15/18 market close. Current Real Estate AFFO based on 3/31/18 actuals. Illustrative pro forma Real Estate AFFO based on AFFO for WPC and MFFO, adjusted for CPA:17 for the three months ended 3/13/18 and adjusted for select transaction adjustments. Invest. Mgmt. revenue consists of asset mgmt. fees, structuring revenue and special GP distributions. Real Estate revenue consists of lease revenue, operating Real Estate revenue and other Real Estate income all on a consolidated basis. Real Estate and Investment Management revenues based on last quarter annualized (LQA) as of Q1 2018. Real Estate and Investment Management revenues based on LQA as of Q1 2018 pro forma for transaction adjustments. Pro forma enterprise value based on 3/31/18 public filings. Share count assumes the issuance of approximately 54 million shares at a 0.16x exchange ratio. WPC share count as of 4/27/18. Enterprise Value Increased Contribution from Real Estate 95% 5% 40% 60% 71% 29% 80% 20% 85% 15%

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A Compelling Transaction for W. P. Carey Accelerates execution of strategy to focus exclusively on net lease investing for its balance sheet Significantly increases earnings derived from “higher-multiple” recurring Real Estate revenues Enhances portfolio by increasing diversification and extending weighted-average lease term Second largest net lease REIT and largest diversified net lease REIT by market capitalization Positions WPC for earnings growth through improved cost of capital Enhances credit profile and maintains flexible, conservative, investment grade balance sheet Minimal integration cost / risk and greater efficiency from managing a larger portfolio

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Cautionary Statement Concerning Forward-Looking Statements Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey Inc. (“WPC”) and can be identified by the use of words such as “may,” “will,” “should,” “would,” “will be,” “will continue,” “will likely result,” “believe,” “project,” “expect,” “anticipate,” “intend,” “estimate” and other comparable terms. These forward-looking statements include, but are not limited to, statements regarding: our ability to close the proposed transaction; the impact of the proposed transaction on our earnings and on our credit profile; the strategic rational and transaction benefits; our ability to refinance mortgage debt with unsecured bonds; capital markets; our ability to sell shares under our “at-the-market” program and the use of proceeds from that program; tenant credit quality; the general economic outlook; our expected range of Adjusted funds from operations, or AFFO, including the impact on AFFO as a result of the proposed transaction; our corporate strategy; our capital structure; our portfolio lease terms; our international exposure and acquisition volume; our expectations about tenant bankruptcies and interest coverage; statements regarding estimated or future economic performance and results, including our underlying assumptions, occupancy rate, credit ratings, and possible new acquisitions and dispositions; the outlook for the investment programs that we manage, including their earnings, as well as possible liquidity events for those programs; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust, or REIT; the impact of recently issued accounting pronouncements, the Tax Cuts and Jobs Act in the United States adopted in 2017, and other regulatory activity, such as the General Data Protection Regulation in the European Union or other data privacy initiatives; the amount and timing of any future quarterly dividends; our existing or future leverage and debt service obligations; our estimated future growth; our projected assets under management; our future capital expenditure levels; our future financing transactions; and our plans to fund our future liquidity needs. These statements are based on the current expectations of our management. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on our business, financial condition, liquidity, results of operations, AFFO, and prospects. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in our filings with the Securities and Exchange Commission, or the SEC from time to time, including, but not limited to those described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on February 23, 2018. Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, potential investors are cautioned not to place undue reliance on these forward-looking statements as a prediction of future results, which speak only as of the date of this presentation, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements. All data presented herein is as of March 31, 2018 unless otherwise noted. Amounts may not sum to totals due to rounding. Past performance does not guarantee future results.

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Additional Information and Where to Find it This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the federal securities laws. W. P. Carey intends to file a Registration Statement on Form S-4 and mail the Joint Proxy Statement/Prospectus and other relevant documents to its security holders in connection with the proposed Merger. WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED BY W. P. CAREY AND CPA®:17 – GLOBAL IN CONNECTION WITH THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT W. P. CAREY, CPA®:17 – GLOBAL AND THE PROPOSED MERGER. INVESTORS ARE URGED TO READ THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY. Investors will be able to obtain these materials and other documents filed with the SEC free of charge at the SEC’s website (http://www.sec.gov). In addition, these materials will also be available free of charge by accessing W. P. Carey’s website (http://www.wpcarey.com) or by accessing CPA®:17 – Global’s website (http://www.cpa17global.com). Investors may also read and copy any reports, statements and other information filed by W. P. Carey or CPA®:17 – Global with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room. Participants in the Proxy Solicitation: Information regarding W. P. Carey’s directors and executive officers is available in its proxy statement filed with the SEC by W. P. Carey on April 03, 2018 in connection with its 2018 annual meeting of stockholders, and information regarding CPA®:17 – Global’s directors and executive officers is available in its proxy statement filed with the SEC by CPA®:17 – Global on April 20, 2018 in connection with its 2018 annual meeting of stockholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials filed with the SEC when they become available.

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Disclosures The following non-GAAP financial measures are used in this presentation FFO and AFFO Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc., or NAREIT, an industry trade group, has promulgated a non-GAAP measure known as FFO, which we believe to be an appropriate supplemental measure, when used in addition to and in conjunction with results presented in accordance with GAAP, to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental non-GAAP measure. FFO is not equivalent to nor a substitute for net income or loss as determined under GAAP. We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property, impairment charges on real estate and depreciation and amortization from real estate assets; and after adjustments for unconsolidated partnerships and jointly owned investments. Adjustments for unconsolidated partnerships and jointly owned investments are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s policy described above. We modify the NAREIT computation of FFO to include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of real estate-related intangibles, deferred income tax benefits and expenses, straight-line rents, stock-based compensation, non-cash environmental accretion expense and amortization of deferred financing costs. Our assessment of our operations is focused on long-term sustainability and not on such non-cash items, which may cause short-term fluctuations in net income but have no impact on cash flows. Additionally, we exclude non-core income and expenses such as certain lease termination income, gains or losses from extinguishment of debt, restructuring and related compensation expenses and merger and acquisition expenses. We also exclude realized and unrealized gains/losses on foreign exchange transactions (other than those realized on the settlement of foreign currency derivatives), which are not considered fundamental attributes of our business plan and do not affect our overall long-term operating performance. We refer to our modified definition of FFO as AFFO. We exclude these items from GAAP net income to arrive at AFFO as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our portfolio performance over time and makes it more comparable to other REITs which are currently not engaged in acquisitions, mergers and restructuring which are not part of our normal business operations. AFFO also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use AFFO as one measure of our operating performance when we formulate corporate goals, evaluate the effectiveness of our strategies and determine executive compensation. We believe that AFFO is a useful supplemental measure for investors to consider as we believe it will help them to better assess the sustainability of our operating performance without the potentially distorting impact of these short-term fluctuations. However, there are limits on the usefulness of AFFO to investors. For example, impairment charges and unrealized foreign currency losses that we exclude may become actual realized losses upon the ultimate disposition of the properties in the form of lower cash proceeds or other considerations. We use our FFO and AFFO measures as supplemental financial measures of operating performance. We do not use our FFO and AFFO measures as, nor should they be considered to be, alternatives to net earnings computed under GAAP or as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.

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Disclosures (cont’d) The following non-GAAP financial measures are used in this presentation (cont’d) MFFO and MFFO, adjusted We define MFFO consistent with the IPA’s (formerly known as the Investment Program Association) Practice Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, included in the determination of GAAP net income, as applicable: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above- and below-market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; nonrecurring impairments of real estate-related investments (i.e., infrequent or unusual, not reasonably likely to recur in the ordinary course of business); mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives, or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and jointly owned investments, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses that are unrealized and may not ultimately be realized. In addition, our management uses Adjusted MFFO as another measure of sustainable operating performance. Adjusted MFFO adjusts MFFO for deferred income tax expenses and benefits, which are non-cash items that may cause short-term fluctuations in net income but have no impact on current period cash flows. Additionally, we adjust MFFO to reflect the realized gains/losses on the settlement of foreign currency derivatives to arrive at Adjusted MFFO. Foreign currency derivatives are a fundamental part of our operations in that they help us manage the foreign currency exposure we have associated with cash flows from our international investments.

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Disclosures (cont’d) The following non-GAAP financial measures are used in this presentation (cont’d) EBITDA and Adjusted EBITDA We believe that EBITDA is a useful supplemental measure to investors and analysts for assessing the performance of our business segments because (i) it removes the impact of our capital structure from our operating results and (ii) because it is helpful when comparing our operating performance to that of companies in our industry without regard to such items, which can vary substantially from company to company. Adjusted EBITDA as disclosed represents EBITDA, modified to include other adjustments to GAAP net income for certain non-cash charges, such as impairments, non-cash rent adjustments and unrealized gains and losses from our hedging activity. Additionally, we exclude gains and losses on sale of real estate, which are not considered fundamental attributes of our business plans and do not affect our overall long-term operating performance. We exclude these items from adjusted EBITDA as they are not the primary drivers in our decision-making process. Adjusted EBITDA reflects adjustments for unconsolidated partnerships and jointly owned investments. Our assessment of our operations is focused on long-term sustainability and not on such non-cash and non-core items, which may cause short-term fluctuations in net income but have no impact on cash flows. We believe that adjusted EBITDA is a useful supplemental measure to investors and analysts, although it does not represent net income that is computed in accordance with GAAP. Accordingly, adjusted EBITDA should not be considered as an alternative to net income or as an indicator of our financial performance. EBITDA and adjusted EBITDA as calculated by us may not be comparable to similarly titled measures of other companies. Pro Rata Metrics This presentation contains certain metrics prepared under the pro rata consolidation method. We refer to these metrics as pro rata metrics. We have a number of investments, usually with our affiliates, in which our economic ownership is less than 100%. Under the full consolidation method, we report 100% of the assets, liabilities, revenues and expenses of those investments that are deemed to be under our control or for which we are deemed to be the primary beneficiary, even if our ownership is less than 100%. Also, for all other jointly owned investments, which we do not control, we report our net investment and our net income or loss from that investment. Under the pro rata consolidation method, we present our proportionate share, based on our economic ownership of these jointly owned investments, of the assets, liabilities, revenues and expenses of those investments. Multiplying each of our jointly owned investments’ financial statement line items by our percentage ownership and adding or subtracting those amounts from our totals, as applicable, may not accurately depict the legal and economic implications of holding an ownership interest of less than 100% in our jointly owned investments. ABR ABR represents contractual minimum annualized base rent for our net-leased properties, net of receivable reserves as determined by GAAP, and reflects exchange rates as of March 31, 2018. If there is a rent abatement, we annualize the first monthly contractual base rent following the free rent period. ABR is not applicable to operating properties and is presented on a pro rata basis.

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Section 4: EX-99.2 (EX-99.2)

Exhibit 99.2

 

Filed pursuant to Rule 425 under the Securities Act of 1933, as amended, 

and deemed filed pursuant to 14-6 under the

Securities Exchange Act of 1934, as amended

Filing Person: W. P. Carey Inc.

Subject Company: Corporate Property Associates 17 - Global Incorporated

Commission File No.: 000-52891

 

 

Institutional Investors:
Peter Sands
W. P. Carey Inc.
212-492-1110
institutionalir@wpcarey.com

 

Individual Investors:
W. P. Carey Inc.
212-492-8920

ir@wpcarey.com

 

Press Contact:
Guy Lawrence
Ross & Lawrence
212-308-3333
gblawrence@rosslawpr.com

 

W. P. Carey Inc. Announces Proposed Merger with CPA®:17 in a $6 Billion Transformational Transaction

 

Improves Earnings Quality and Further Simplifies Business

 

NEW YORK, June 18, 2018 — W. P. Carey Inc. (NYSE: WPC), a net lease real estate investment trust, announced today that its Board of Directors has unanimously approved a definitive merger agreement pursuant to which Corporate Property Associates 17 — Global Incorporated (“CPA:17”), a publicly-held non-traded REIT advised by W. P. Carey, will merge with and into a subsidiary of W. P. Carey in a stock-for-stock transaction valued at approximately $6 billion. The transaction has also been approved by CPA:17’s Board of Directors upon the unanimous recommendation of a Special Committee of CPA:17’s independent directors. The merger is currently expected to close at or around December 31, 2018, subject to the satisfaction of the conditions set forth in the merger agreement, including the approval of stockholders of each of W. P. Carey and CPA:17.

 

Subject to the terms and conditions of the merger agreement, CPA:17 stockholders will receive a fixed exchange ratio of 0.160 shares of W. P. Carey common stock for each share of CPA:17, equivalent to $10.72 per share based on W. P. Carey’s closing share price of $67.03 as of June 15, 2018.

 



 

After the close of the transaction, W. P. Carey is expected to have a pro forma equity market capitalization of approximately $11 billion and an enterprise value of approximately $17 billion, based upon W. P. Carey’s closing share price on June 15, 2018.

 

Consistent with its long-term strategy, W. P. Carey currently anticipates the primary benefits of the transaction to include the following:

 

·                  Improves earnings quality, with approximately 96% of total pro forma AFFO derived from recurring long-term Real Estate revenues and approximately 4% derived from finite-life Investment Management revenues;

 

·                  Accelerates its strategy to further simplify its business;

 

·                  Adds a high-quality diversified portfolio of net lease assets that is well-aligned with W. P. Carey’s existing portfolio;

 

·                  Enhances W. P. Carey’s overall portfolio metrics, including extending weighted-average lease term to 10.4 years and increasing tenant and industry diversification;

 

·                  Significantly increases size, scale and market prominence; and

 

·                  Enhances W. P. Carey’s overall credit profile and expected to maintain its BBB and Baa2 ratings.

 

“This transaction simplifies our business and effectively transforms W. P. Carey into a pure-play net lease REIT with earnings derived almost entirely from higher-multiple lease revenues,” said Jason Fox, W. P. Carey’s Chief Executive Officer. “In addition to creating value by reweighting our earnings mix and enhancing our credit profile, it provides a unique and compelling opportunity to acquire a large portfolio of high-quality assets well-aligned with our existing portfolio at a favorable cap rate.”

 

J.P. Morgan Securities LLC is acting as lead financial advisor, Barclays is acting as co-financial advisor and DLA Piper LLP (US) is acting as legal advisor to W. P. Carey.  Morgan Stanley & Co. LLC is acting as financial advisor to the CPA:17 Special Committee. Clifford Chance US LLP is acting as legal advisor to CPA:17 and Pepper Hamilton LLP is acting as legal advisor to the CPA:17 Special Committee.

 

A joint proxy statement/prospectus will be filed on Form S-4 with the Securities and Exchange Commission (“SEC”), which will describe the proposed merger. Completion of the transaction is subject to, among other things, effectiveness of the Form S-4, receipt of all third-party consents as well as the approval of the stockholders of both companies and satisfaction of customary closing conditions.  The transaction is currently expected to close at or around December 31, 2018, although there can be no assurance that the transaction will close at such time, if at all.

 

Conference Call and Audio Webcast Scheduled for 8:30 a.m. Eastern Time

 

The Company will host a conference call and live audio webcast to discuss this announcement at 8:30 a.m. Eastern Time today, details of which are provided below.

 

Date/Time: Monday, June 18, 2018 at 8:30 a.m. Eastern Time
Call-in Number: 1-877-465-1289 (US) or +1-201-689-8762 (international)

Please dial in at least 10 minutes prior to the start time.
Live Audio Webcast and Replay: www.wpcarey.com/announcement

 



 

W. P. Carey Inc.

 

Celebrating its 45th anniversary, W. P. Carey ranks among the largest diversified net lease REITs with an enterprise value of over $10 billion and a portfolio of operationally-critical commercial real estate totaling 886 properties covering approximately 85 million square feet. For over four decades, the Company has invested in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term leases with built-in rent escalators. Its portfolio is located primarily in North America and Northern and Western Europe and is well-diversified by tenant, property type, geographic location and tenant industry.

www.wpcarey.com

 

Cautionary Statement Concerning Forward-Looking Statements

 

Certain of the matters discussed in this press release constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey Inc. (“WPC”) and can be identified by the use of words such as “may,” “will,” “should,” “would,” “will be,” “will continue,” “will likely result,” “believe,” “project,” “expect,” “anticipate,” “intend,” “estimate” and other comparable terms. These forward-looking statements include, but are not limited to, statements regarding: the anticipated benefits of the merger, including the statements made by Mr. Jason Fox; our ability to close the proposed merger; the impact of the proposed merger on our earnings and on our credit profile; the strategic rational and transaction benefits; our ability to refinance mortgage debt with unsecured bonds; capital markets; our ability to sell shares under our “at-the-market” program and the use of proceeds from that program; tenant credit quality; the general economic outlook; our expected range of Adjusted funds from operations, or AFFO, including the impact on AFFO as a result of the proposed merger; our corporate strategy; our capital structure; our portfolio lease terms; our international exposure and acquisition volume; our expectations about tenant bankruptcies and interest coverage; statements regarding estimated or future economic performance and results, including our underlying assumptions, occupancy rate, credit ratings, and possible new acquisitions and dispositions; the outlook for the investment programs that we manage, including their earnings, as well as possible liquidity events for those programs; statements that we make regarding our ability to remain qualified for taxation as a real estate investment trust, or REIT; the impact of recently issued accounting pronouncements, the Tax Cuts and Jobs Act in the United States adopted in 2017, and other regulatory activity, such as the General Data Protection Regulation in the European Union or other data privacy initiatives; the amount and timing of any future quarterly dividends; our existing or future leverage and debt service obligations; our estimated future growth; our projected assets under management; our future capital expenditure levels; our future financing transactions; and our plans to fund our future liquidity needs.

 

These statements are based on the current expectations of our management. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on our business, financial condition, liquidity, results of operations, AFFO, and prospects. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties, and other factors that may materially affect our future results, performance, achievements, or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in our filings with the Securities and Exchange Commission, or the SEC from time to time, including, but not limited to those described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on February 23, 2018. Moreover, because we operate in a very competitive and rapidly changing environment, new risks are likely to emerge from time to time. Given these risks and uncertainties, potential investors are cautioned not to place undue reliance on these

 



 

forward-looking statements as a prediction of future results, which speak only as of the date of this presentation, unless noted otherwise. Except as required by federal securities laws and the rules and regulations of the SEC, we do not undertake to revise or update any forward-looking statements.

 

Additional Information and Where to Find It

 

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the federal securities laws. W. P. Carey intends to file a Registration Statement on Form S-4 and mail the Joint Proxy Statement/Prospectus and other relevant documents to its security holders in connection with the proposed Merger.

 

WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED BY W. P. CAREY AND CPA:17 IN CONNECTION WITH THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT W. P. CAREY, CPA:17 AND THE PROPOSED MERGER. INVESTORS ARE URGED TO READ THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY.

 

Investors will be able to obtain these materials and other documents filed with the SEC free of charge at the SEC’s website (http://www.sec.gov). In addition, these materials will also be available free of charge by accessing W. P. Carey’s website (http://www.wpcarey.com) or by accessing CPA:17’s website (http://www.cpa17global.com). Investors may also read and copy any reports, statements and other information filed by W. P. Carey or CPA:17 with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.

 

Participants in the Proxy Solicitation

 

Information regarding W. P. Carey’s directors and executive officers is available in its proxy statement filed with the SEC by W. P. Carey on April 03, 2018 in connection with its 2018 annual meeting of stockholders, and information regarding CPA:17’s directors and executive officers is available in its proxy statement filed with the SEC by CPA:17 on April 20, 2018 in connection with its 2018 annual meeting of stockholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials filed with the SEC when they become available.

 


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