EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
PAN PACIFIC RETAIL PROPERTIES, INC.,
A MARYLAND CORPORATION
MB ACQUISITION, INC.,
A MARYLAND CORPORATION
AND
CENTER TRUST, INC.
A MARYLAND CORPORATION
DATED AS OF NOVEMBER 5, 2002
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS 2
ARTICLE II. THE MERGER.................................................................. 12
Section 2.1 The Merger.......................................................... 12
Section 2.2 Closing and Closing Date............................................ 12
Section 2.3 Effective Time...................................................... 12
Section 2.4 Effects of the Merger............................................... 12
Section 2.5 Charter; Bylaws..................................................... 12
Section 2.6 Directors and Officers of the Surviving Company..................... 13
Section 2.7 Conversion of Securities............................................ 13
Section 2.8 Treatment of Company Options and Restricted Stock................... 14
Section 2.9 Fractional Interests................................................ 15
Section 2.10 Surrender of Company Common Stock; Stock Transfer Books............. 15
Section 2.11 Lost, Stolen or Destroyed Certificates.............................. 17
Section 2.12 Withholding Rights.................................................. 17
Section 2.13 Company Payments.................................................... 18
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................. 18
Section 3.1 Organization and Qualification...................................... 18
Section 3.2 Authorization; Validity and Effect of Agreement..................... 19
Section 3.3 Capitalization...................................................... 19
Section 3.4 Subsidiaries........................................................ 20
Section 3.5 Other Interests..................................................... 21
Section 3.6 No Conflict; Required Filings and Consents.......................... 21
Section 3.7 Compliance.......................................................... 22
Section 3.8 SEC Documents....................................................... 22
Section 3.9 Absence of Certain Changes.......................................... 23
Section 3.10 Litigation.......................................................... 23
Section 3.11 Taxes............................................................... 24
Section 3.12 Employee Benefit Plans.............................................. 25
Section 3.13 Properties.......................................................... 27
Section 3.14 Contracts........................................................... 29
Section 3.15 Labor Relations..................................................... 29
Section 3.16 Environmental Matters............................................... 30
Section 3.17 Opinion of Financial Advisor........................................ 30
Section 3.18 Brokers............................................................. 30
Section 3.19 Vote Required....................................................... 31
Section 3.20 Tax Matters......................................................... 31
Section 3.21 Insurance........................................................... 31
Section 3.22 Takeover Provisions Inapplicable.................................... 31
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Section 3.23 No Material Adverse Effect.......................................... 31
Section 3.24 Affiliate Transactions.............................................. 31
Section 3.25 No Existing Discussions............................................. 32
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................... 32
Section 4.1 Organization and Qualification...................................... 32
Section 4.2 Authorization; Validity and Effect of Agreement..................... 32
Section 4.3 Capitalization...................................................... 33
Section 4.4 Subsidiaries........................................................ 34
Section 4.5 Other Interests..................................................... 34
Section 4.6 No Conflict; Required Filings and Consents.......................... 35
Section 4.7 Compliance.......................................................... 35
Section 4.8 SEC Documents....................................................... 36
Section 4.9 Absence of Certain Changes.......................................... 37
Section 4.10 Litigation.......................................................... 37
Section 4.11 Taxes............................................................... 37
Section 4.12 Employee Benefit Plans.............................................. 39
Section 4.13 Properties.......................................................... 40
Section 4.14 Contracts........................................................... 42
Section 4.15 Labor Relations..................................................... 42
Section 4.16 Environmental Matters............................................... 43
Section 4.17 Brokers............................................................. 43
Section 4.18 Vote Required....................................................... 43
Section 4.19 Tax Matters......................................................... 43
Section 4.20 Interim Operations of Merger Sub.................................... 44
Section 4.21 Insurance........................................................... 44
Section 4.22 No Material Adverse Effect.......................................... 44
Section 4.23 Exemption from Limitation on Ownership of Parent Common Stock....... 44
Section 4.24 Prior Stock Ownership............................................... 44
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER....................................... 45
Section 5.1 Conduct of Business of the Company Pending the Merger............... 45
Section 5.2 Conduct of Business of Parent Pending the Merger.................... 49
Section 5.3 Continued Qualification as a Real Estate Investment Trust; Final
Company Dividend.................................................. 50
Section 5.4 Dividend Payment Coordination....................................... 51
ARTICLE VI. ADDITIONAL AGREEMENTS....................................................... 51
Section 6.1 Preparation of Form S-4 and the Proxy Statement; Stockholder
Meeting........................................................... 51
Section 6.2 Cooperation; Notice; Cure........................................... 53
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Section 6.3 No Solicitation..................................................... 53
Section 6.4 Access to Information............................................... 55
Section 6.5 Termination of Company's 401(k) Plan................................ 55
Section 6.6 Governmental Approvals.............................................. 55
Section 6.7 Publicity........................................................... 56
Section 6.8 Affiliate Agreements................................................ 56
Section 6.9 Tax Treatment of Reorganization..................................... 57
Section 6.10 Further Assurances and Actions...................................... 57
Section 6.11 Stock Exchange Listing.............................................. 58
Section 6.12 Letter of the Company's Accountants................................. 58
Section 6.13 Letter of Parent's Accountants...................................... 58
Section 6.14 Company REIT Status................................................. 58
Section 6.15 Parent REIT Status.................................................. 58
Section 6.16 Obtaining Consents.................................................. 59
Section 6.17 Non-Solicitation of Employees....................................... 59
Section 6.18 Indemnification and Insurance....................................... 59
Section 6.19 Termination of Stockholders Agreement............................... 61
Section 6.20 Company OP Units.................................................... 61
ARTICLE VII. CONDITIONS OF MERGER....................................................... 61
Section 7.1 Conditions to Obligation of each Party to Effect the Merger......... 61
Section 7.2 Conditions to Obligations of the Company to Effect the Merger....... 62
Section 7.3 Conditions to Obligations of Parent to Effect the Merger............ 63
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER......................................... 64
Section 8.1 Termination......................................................... 64
Section 8.2 Expenses; Break-Up Fee.............................................. 66
Section 8.3 Effect of Termination............................................... 69
Section 8.4 Amendment........................................................... 69
Section 8.5 Waiver.............................................................. 69
ARTICLE IX. GENERAL PROVISIONS.......................................................... 70
Section 9.1 Non-Survival of Representations, Warranties and Agreements.......... 70
Section 9.2 Notices............................................................. 70
Section 9.3 Severability........................................................ 71
Section 9.4 Entire Agreement; Assignment........................................ 71
Section 9.5 Parties in Interest; Construction................................... 71
Section 9.6 Governing Law....................................................... 71
Section 9.7 No Trial by Jury.................................................... 72
Section 9.8 Action by Subsidiaries.............................................. 72
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Section 9.9 Headings............................................................ 72
Section 9.10 Specific Performance................................................ 72
Section 9.11 Counterparts........................................................ 72
EXHIBITS
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Exhibit A Form of Articles of Incorporation of MB Acquisition, Inc.
Exhibit B Form of Affiliate Agreement
Exhibit C Agreement to Terminate Stockholders Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated as of
November 5, 2002, and entered into by and among Pan Pacific Retail Properties,
Inc., a Maryland corporation ("Parent"), MB Acquisition, Inc., a Maryland
corporation and wholly-owned subsidiary of Parent ("Merger Sub") and Center
Trust, Inc., a Maryland corporation (the "Company"). Parent, Merger Sub and the
Company are sometimes referred to herein, individually, as a "Party," and,
collectively, as the "Parties."
RECITALS
WHEREAS, the Board of Directors of Parent, the Board of Directors of
Merger Sub and the Board of Directors of the Company have each approved this
Agreement, declared that this Agreement is advisable and determined that the
merger of Merger Sub with and into the Company, with the Company being the
surviving corporation in such merger (together with the charter amendments
described herein, the "Merger"), is advisable, fair to and in the best interests
of their respective companies and stockholders and accordingly have agreed to
effect the Merger upon the terms and subject to the conditions set forth herein;
WHEREAS, on or before the date of execution of this Agreement, Lazard
Freres Real Estate Investors L.L.C., LF Strategic Realty Investors L.P.,
Prometheus Western Retail Trust and Prometheus Western Retail, LLC
(collectively, the "Lazard Entities"), which collectively own approximately
56.18% of the outstanding Company Common Stock, have executed and delivered to
Parent a Stockholders Voting Agreement dated as of the date hereof, pursuant to
which the Lazard Entities have agreed to vote certain of their shares
constituting 48.07% of the outstanding Company Common Stock in favor of the
Company Voting Proposal (as defined herein) upon the terms and subject to the
conditions set forth therein;
WHEREAS, on or before the date of execution of this Agreement, Edward D.
Fox, the Chief Executive Officer of the Company, Stuart J.S. Gulland, the Chief
Operating Officer of the Company and Edward A. Stokx, the Chief Financial
Officer of the Company, who collectively own 3.93% of the outstanding Company
Common Stock, have executed and delivered to Parent a Stockholder Voting
Agreement dated as of the date hereof, pursuant to which each of Messrs. Fox,
Gulland and Stokx has agreed to vote in favor of the Company Voting Proposal
upon the terms and subject to the conditions set forth therein;
WHEREAS, for United States federal income tax purposes, the Parties hereto
intend that the Merger will qualify as a reorganization and that this Agreement
will constitute a plan of reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger as
specifically set forth herein, and no others.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and subject to the terms and conditions hereof,
and intending to be legally bound hereby, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the term:
"Action" shall mean any action, order, writ, injunction,
judgment or decree outstanding or claim, suit, litigation, proceeding,
arbitration, audit or investigation by or before any Governmental Entity or any
other Person.
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Assets" shall mean, with respect to any Person, all land,
buildings, improvements, leasehold improvements, Fixtures and Equipment and
other assets, real or personal, tangible or intangible, owned or leased by such
Person or any of its Subsidiaries.
"Benefit Arrangement" shall mean, with respect to any Person,
any employment, consulting, severance, change in control or other similar
contract, arrangement or policy and each plan, arrangement (written or oral),
program, agreement or commitment providing for insurance coverage (including
without limitation any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, retirement benefits,
life, health, disability or accident benefits (including without limitation any
"voluntary employees' beneficiary association," as defined in Section 501(c)(9)
of the Code providing for the same or other benefits) or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive or equity compensation or
post-retirement insurance, compensation or benefits (other than a Welfare Plan,
Pension Plan or Multiemployer Plan), in each case which such Person or any ERISA
Affiliate thereof maintains, administers, contributes to or has contributed to,
is, or was under an obligation to contribute to, and has or may have any
obligation or liability (accrued, contingent or otherwise).
"Business Day" shall mean each day other than Saturdays,
Sundays and days when commercial banks are authorized to be closed for business
in Los Angeles, California.
"Certificates" shall mean outstanding certificates which
immediately prior to the Effective Time represented Company Common Stock.
"Company Affiliate" shall mean an "affiliate" of the Company
within the meaning of Rule 145 promulgated under the Securities Act.
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"Company Board" shall mean the Board of Directors of the
Company.
"Company Capital Stock" shall mean Company Common Stock,
Excess Stock and Company Preferred Stock.
"Company Common Stock" shall mean the common stock of the
Company, par value $.01 per share.
"Company Contract" shall mean any note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their Assets are
bound, and which either (i) has a remaining term of more than one year from the
date hereof and (A) cannot be unilaterally terminated by the Company at any
time, without penalty, within one year of providing notice of termination, and
(B) involves the payment or receipt of money in excess of $100,000 during its
remaining term, (ii) involves the payment or receipt of money in excess of
$1,000,000 during the remaining term of such instrument or (iii) contains
covenants limiting the freedom of the Company or any of its Subsidiaries to
engage in any line of business or compete with any Person or operate at any
location; provided, however, that a Company Lease shall not be considered a
Company Contract.
"Company Lease" shall mean any agreement under which the
Company or its Subsidiaries is the lessor that provides for the use, occupancy
or possession of any parcel of Company Real Property.
"Company Material Adverse Effect" shall mean any change
affecting, or condition having an effect on, the Company or any of its
Subsidiaries (i) that is, or would reasonably be expected to be, materially
adverse to the business, Assets, liabilities, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
(ii) that will, or would reasonably be expected to, prevent or materially impair
the ability of the Parties to consummate the Merger before the Termination Date,
(iii) that would, or would reasonably be expected to, prevent or materially
impair the ability of the Company to operate its or any of its Subsidiaries'
businesses following the Effective Time, (iv) that, to the Knowledge of the
Company, would or would reasonably be expected to, prevent or materially impair
the ability of Parent to operate its or any of its Subsidiaries' businesses
following the Effective Time, or (v) that could reasonably be expected to
prevent or materially impair the Company or Parent from qualifying for federal
or state taxation as a REIT prior to the Effective Time, or the Parent from
qualifying for federal or state taxation as a REIT after the Effective Time;
provided, however, that any such change or effect having the results described
in the foregoing (i) through (v) that results from (A) a change in law, rule or
regulation, or GAAP or interpretations thereof that applies to both Parent and
the Company or (B) economic or market conditions in the retail shopping center
industry generally shall not be considered when determining whether a Company
Material Adverse Effect has occurred, except to the extent that such change or
effect disproportionately affects the Company or its Subsidiaries in any
material respect; provided, further, that a decline in the share price of the
Company resulting from the public announcement
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of this Agreement and the proposed Merger shall not be deemed a Company Material
Adverse Effect.
"Company OP Units" shall mean the units of limited partnership
interest in the Operating Partnership.
"Company Options" shall mean all options and purchase rights
to acquire Company Capital Stock granted, awarded, earned or purchased under the
Company Stock Plan.
"Company Stockholder" shall mean a holder of record of one or
more shares of Company Common Stock immediately prior to the Effective Time.
"Company Stock Plan" shall mean the Company's Third Amended
and Restated 1993 Stock Option and Incentive Plan for Officers, Directors and
Key Employees of the Company and Operating Partnership.
"Company Stock Rights" shall mean all options, restricted
share awards, performance awards, dividend equivalents, deferred stock, equity
payments, equity appreciation rights and shares of capital stock or beneficial
interests granted, awarded, earned or purchased pursuant to the Company Stock
Plan.
"Company Transactions" shall mean the Merger and the other
transactions contemplated by this Agreement.
"Effective Time" shall have the meaning assigned thereto in
Section 2.3.
"Encumbrances" shall mean any claim, lien, pledge, option,
right of first refusal, charge, security interest, deed of trust, mortgage,
restriction or encumbrance pertaining to the Assets held by or in favor of Third
Parties.
"Environmental Laws" shall mean any federal, state or local
law, statute, ordinance, order, decree, rule, regulation or policies relating
(i) to releases, discharges, emissions or disposals to air, water, land or
groundwater of Hazardous Materials; (ii) to the use, handling or disposal of
polychlorinated biphenyls, asbestos or urea formaldehyde or any other Hazardous
Material; (iii) to the treatment, storage, disposal or management of Hazardous
Materials; (iv) to exposure to toxic, hazardous or other controlled, prohibited
or regulated substances; or (v) to the transportation, release or any other use
of Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, 42 U.S.C. 6901, et seq. ("RCRA"), the Toxic
Substances Control Act, 15 U.S.C. 2601, et seq. ("TSCA"), those portions of the
Occupational, Safety and Health Act, 29 U.S.C. 651, et seq. relating to
Hazardous Materials exposure and compliance, the Clean Air Act, 42 U.S.C. 7401,
et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251, et seq., the
Safe Drinking Water Act, 42 U.S.C. 300f, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. 1802 et seq. ("HMTA") and the Emergency Planning
and Community Right to Know Act, 42 U.S.C. 11001, et seq. ("EPCRA"),
4
and other comparable state and local laws and all rules and regulations
promulgated pursuant thereto or published thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean, with respect to any Person, any
entity which is (or at any relevant time was) considered a single employer with
such Person under Section 4001 of ERISA or Section 414 of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Fixtures and Equipment" shall mean, with respect to any
Person, all of the furniture, fixtures, furnishings, machinery and equipment
owned or leased by such Person and located in, at or upon the Assets of such
Person.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, as in effect from time to time, consistently
applied.
"Governmental Entities" shall mean all domestic courts,
regulatory or administrative agencies, commissions or other governmental
authorities, bodies or instrumentalities with jurisdiction.
"Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified as hazardous or toxic under
applicable Environmental Laws or the release of which is regulated under
Environmental Laws. Without limiting the generality of the foregoing, the term
includes: "hazardous substances" as defined in CERCLA; "extremely hazardous
substances" as defined in EPCRA; "hazardous waste" as defined in RCRA;
"hazardous materials" as defined in HMTA; a "chemical substance or mixture" as
defined in TSCA; crude oil, petroleum products or any fraction thereof;
radioactive materials, including source, byproduct or special nuclear materials;
asbestos or asbestos-containing materials; chlorinated fluorocarbons ("CFCs");
and radon.
"IRS" shall mean the United States Internal Revenue Service or
any successor agency.
"Knowledge" shall mean with respect to (i) the Company, the
actual knowledge of those individuals listed in Section 1(a) of the Company
Disclosure Schedule, and (ii) Parent and Merger Sub, the actual knowledge of
those individuals listed in Section 1 of the Parent Disclosure Schedule.
"Lazard Rights Agreement" shall mean the Stockholders' Rights
Agreement among the Lazard Entities and Parent dated as of even date herewith.
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"Material Consents" shall mean the consent to assumption of
each of the agreements listed on Section 1(b) of the Company Disclosure Schedule
excluding any such agreements that have expired or have been terminated
(including as a result of repayment of indebtedness pursuant thereto) after the
date hereof.
"MGCL" shall mean the Maryland General Corporation Law, as
amended.
"Multiemployer Plan" shall mean, with respect to any Person,
any "multiemployer" plan thereof, within the meaning of Section 3(37) or
4001(a)(3) of ERISA, which such Person or any ERISA Affiliate thereof maintains,
administers, contributes to or has contributed to or is or was required to
contribute to, and under which such Person or any ERISA Affiliate has or may
have any obligation or liability (accrued, contingent or otherwise).
"NYSE" shall mean The New York Stock Exchange, Inc.
"Operating Partnership" shall mean CT Operating Partnership,
L.P., a California limited partnership.
"Operating Partnership Agreement" shall mean the Amended and
Restated Agreement of Limited Partnership of the Operating Partnership, dated as
of March 23, 2000, as amended by the First Amendment to the Amended and Restated
Agreement of Limited Partnership, dated October 1, 2002.
"Operating Partnership Amendment" shall mean the Second
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership.
"Organizational Documents" means, with respect to any entity,
the charter, certificate of incorporation, articles of incorporation, bylaws,
partnership agreement, operating agreement, declaration of trust or other
governing documents of such entity, including any documents designating or
certifying the terms of any securities of such entity.
"Parent Capital Stock" shall mean Parent Common Stock and
Parent Preferred Stock.
"Parent Common Stock" shall mean the common stock, par value
$.01 per share, of Parent.
"Parent Contract" shall mean any note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which Parent or any of its
Subsidiaries is a party or by which any of them or any of their Assets may be
bound, and which either (i) (A) cannot be unilaterally terminated by the Parent
at any time, without penalty, within one year of providing notice of
termination, and (B) involves the payment or receipt of money in excess of
$500,000 during the remaining term of such instrument, (ii) involves the payment
or receipt of money in excess of $5,000,000 during the remaining term of such
instrument or (iii) contains covenants limiting the freedom of Parent
6
or any of its Subsidiaries to engage in any line of business or compete with any
Person or operate at any location; provided, however, that a Parent Lease shall
not be considered a Parent Contract.
"Parent DownREITs" means, collectively, Portland DownREIT,
Pinecreek DownREIT, and Rancho DownREIT.
"Parent DownREIT Operating Agreements" shall mean the
operating agreements or partnership agreements, as applicable, of the Parent
DownREITs, as in effect as of the date hereof.
"Parent DownREIT Units" means the units of ownership interest
in the Parent DownREITs.
"Parent Lease" shall mean any agreement under which the Parent
or its Subsidiaries is the lessor, that provides for the use, occupancy or
possession of any parcel of Parent Real Property.
"Parent Material Adverse Effect" shall mean any change
affecting, or condition having an effect on, Parent or any of its Subsidiaries
(i) that is, or would reasonably be expected to be, materially adverse to the
business, Assets, liabilities, results of operations or condition (financial or
otherwise) of Parent and its Subsidiaries, taken as a whole, (ii) that will, or
would reasonably be expected to, prevent or materially impair the ability of the
Parties to consummate the Merger before the Termination Date (iii) that would,
or would reasonably be expected to, prevent or materially impair the ability of
Parent to operate its or any of its Subsidiaries' businesses following the
Effective Time or (iv) that could reasonably be expected to impair the ability
of Parent to qualify for state or federal taxation as a REIT; provided, however,
that any such change or effect having the results described in the foregoing (i)
through (iv) that results from (A) a change in law, rule or regulation, or GAAP
or interpretations thereof that applies to both Parent and the Company or (B)
economic or market conditions in the retail shopping center industry generally
shall not be considered when determining whether a Parent Material Adverse
Effect has occurred, except to the extent that such change or effect
disproportionately affects Parent or its Subsidiaries in any material respect;
provided, further, that a decline in the stock price of Parent resulting from
the public announcement of this Agreement and the proposed Merger shall not be
deemed a Parent Material Adverse Effect.
"Parent Stock Plans" shall mean the 1997 Stock Option and
Incentive Plan of Parent and the 2000 Equity Incentive Plan of Parent.
"Parent Stock Rights" shall mean all stock options, restricted
stock awards, performance awards, dividend equivalents, deferred stock, stock
payments, stock appreciation rights and shares of stock granted, awarded, earned
or purchased pursuant to any Parent Stock Plan.
"Parent Transactions" means the Merger and the other
transactions contemplated by this Agreement.
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"Partnership Unit" means a fractional, undivided share of an
ownership interest of either the general partner or a limited partner in the
Operating Partnership.
"Pension Plan" shall mean, with respect to any Person, any
"employee pension benefit plan," as defined in Section 3(2) of ERISA (other than
a Multiemployer Plan) which such Person or any ERISA Affiliate thereof
maintains, administers, contributes to or has contributed to or is or was
required to contribute to, and under which such Person or any ERISA Affiliate
thereof has or may have any obligation or liability (accrued, contingent or
otherwise).
"Permitted Encumbrances" shall mean (i) any and all
Encumbrances which result from all statutory or other liens for Taxes or
assessments which are not yet due or delinquent or the validity of which is
being contested in good faith by appropriate proceedings by a Party hereto for
which adequate reserves are being maintained in accordance with GAAP by a Party
hereto; (ii) all cashiers', landlords', workers', mechanics', carriers' and
repairers' liens, and other similar liens imposed by law, incurred in the
ordinary course of business and which do not exceed $100,000 individually, or
$250,000 in the aggregate; (iii) all Company Contracts (only to the extent that
the same affects title to the real property), Parent Contracts (only to the
extent that the same affects title to the real property), Company Leases or
Parent Leases; (iv) Encumbrances identified on title policies or preliminary
title reports, surveys in the possession of the Company or its Subsidiaries (in
the case of Company Assets) or in the possession of Parent or its Subsidiaries
(in the case of Parent Assets); (v) Encumbrances relating to the debt
obligations set forth on Section 3.13(c) of the Company Disclosure Schedule or
disclosed in the Company SEC Reports; and (vi) other Encumbrances which
individually or in the aggregate do not materially detract from or materially
interfere with the present use of the property subject thereto or affected
thereby and would not otherwise cause a Company Material Adverse Effect with
respect to Encumbrances affecting Company Real Property or a Parent Material
Adverse Effect with respect to Encumbrances affecting Parent Real Property.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, real estate investment trust, other
organization (whether incorporated or unincorporated), governmental agency or
instrumentality, or any other legal entity.
"Pinecreek DownREIT" shall mean Pan Pacific (Pinecreek), L.P.,
a Delaware limited partnership.
"Portland DownREIT" shall mean Pan Pacific (Portland), LLC, a
Delaware limited liability company.
"Rancho DownREIT" shall mean Pan Pacific (Rancho Las Palmas),
LLC, a Nevada limited liability company.
"REIT" shall mean a real estate investment trust within the
meaning of Sections 856 through 860 of the Code.
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"Representative" shall mean, with respect to any Person, that Person's
officers, directors, employees, financial advisors, agents or other
representatives.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Stockholders Agreement" shall mean that certain Stockholders Agreement
entered into by and among Lazard Freres Real Estate Investors L.L.C., LF
Strategic Realty Investors L.P., Prometheus Western Retail, LLC and Alexander
Haagen Properties, Inc., dated as of June 1, 1997.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, limited liability company, joint venture, real estate investment
trust, or other organization, whether incorporated or unincorporated, or other
legal entity of which (i) such Person directly or indirectly owns or controls at
least a majority of the capital stock or other equity interests having by their
terms ordinary voting power to elect a majority of the board of directors or
others performing similar functions; (ii) such Person is a general partner,
manager or managing member; or (iii) such Person holds a majority of the equity
economic interest.
"Tax" or "Taxes" shall mean all federal, state, local, foreign and
other taxes, levies, imposts, assessments, impositions or other similar
government charges, including, without limitation, income, estimated income,
business, occupation, franchise, real property, payroll, personal property,
sales, transfer, stamp, use, employment, commercial rent or withholding,
occupancy, premium, gross receipts, profits, windfall profits, deemed profits,
license, lease, severance, capital, production, corporation, ad valorem, excise,
duty or other taxes, including interest, penalties and additions (to the extent
applicable) thereto, whether disputed or not.
"Tax Return" shall mean any report, return, document, declaration or
other information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, any schedule or attachment thereto and any amendment thereof, any
information returns, any documents with respect to or accompanying payments of
estimated Taxes, or with respect to or accompanying requests for the extension
of time in which to file any such report, return, document, declaration or other
information.
"Third Party" shall mean any person other than the Company, Merger Sub,
Parent and their respective Affiliates.
"Welfare Plan" shall mean, with respect to any Person, any "employee
welfare benefit plan," as defined in Section 3(1) of ERISA, which such Person or
any ERISA Affiliate thereof maintains, administers, contributes to or has
contributed to or is or was required to
9
contribute to, and under which such Person or any ERISA Affiliate thereof has or
may have any obligation or liability (accrued, contingent or otherwise).
TABLE OF OTHER DEFINED TERMS
<Table>
<Caption>
Cross Reference
Terms in Agreement
- ----- ----------------
Acquisition Proposal..................................... Section 6.3(a)
Affiliate Agreement ..................................... Exhibit B
Agreement ............................................... Preamble
Alternative Transaction.................................. Section 8.2(d)
Articles of Merger....................................... Section 2.3
Assumed Options.......................................... Section 2.8(b)
Base Amount ............................................. Section 8.2(e)
Blue Sky Laws............................................ Section 3.6(b)
Break-Up Fee............................................. Section 8.2(e)
Closing ................................................. Section 2.2
Closing Date ............................................ Section 2.2
Code .................................................... Recitals
Company ................................................. Preamble
Company 401(k) Plan...................................... Section 6.5
Company Disclosure Schedule ............................. Article III
Company Employee Plans................................... Section 3.12(a)
Company Financial Advisor ............................... Section 3.17
Company Leased Property ................................. Section 3.13(a)
Company Owned Property .................................. Section 3.13(a)
Company Payment.......................................... Section 2.13
Company Preferred Stock.................................. Section 3.3(a)
Company Real Property ................................... Section 3.13(a)
Company SEC Reports ..................................... Section 3.8(a)
Company Stockholders Meeting ............................ Section 3.17
Company Voting Proposal.................................. Section 3.2
Confidentiality Agreement ............................... Section 6.4
Designated Record Date................................... Section 5.4
Excess Stock............................................. Section 3.3(a)
Exchange Agent .......................................... Section 2.10(a)
Exchange Ratio .......................................... Section 2.7(a)
Expenses................................................. Section 8.2(a)
Final Company Dividend................................... Section 5.3
Governmental Approvals .................................. Section 6.6
Indemnified Parties...................................... Section 6.18(a)
Indemnifying Parties..................................... Section 6.18(b)
</Table>
10
<Table>
<Caption>
Lazard Entities.......................................... Preamble
Maryland Department...................................... Section 2.3
Maximum Expense Amount................................... Section 8.2(b)
Merger .................................................. Recitals
Merger Consideration..................................... Section 2.7(a)
Merger Sub............................................... Preamble
Minimum Distribution Dividend ........................... Section 5.3
Notifying Party ......................................... Section 6.6(a)
Operating Partnership.................................... Preamble
Option Consideration..................................... Section 2.8(a)
Parent .................................................. Preamble
Parent Board ............................................ Section 4.2
Parent Disclosure Schedule .............................. Article IV
Parent Employee Plans.................................... Section 4.12(a)
Parent Leased Property .................................. Section 4.13(a)
Parent Owned Property ................................... Section 4.13(a)
Parent Preferred Stock................................... Section 4.3(a)
Parent Real Property .................................... Section 4.13(a)
Parent SEC Reports ...................................... Section 4.8(a)
Party or Parties ........................................ Preamble
Proxy Statement/Prospectus .............................. Section 3.17
Qualifying Income ....................................... Section 8.2(b)
Registration Statement .................................. Section 3.17
REIT Requirements ....................................... Section 8.2(b)
Superior Proposal ....................................... Section 6.3(b)
Surviving Company ....................................... Section 2.1
Tax Guidance ............................................ Section 8.2(b)
Terminating Company Breach............................... Section 8.1(f)
Terminating Parent Breach................................ Section 8.1(g)
Termination Date......................................... Section 8.1(b)
Voting Debt.............................................. Section 3.3(e)
</Table>
11
ARTICLE II.
THE MERGER
SECTION 2.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement and in accordance with Subtitle 1 of Title 3 of the MGCL, at the
Effective Time, Merger Sub shall be merged with and into the Company. Following
the Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving entity (the "Surviving Company") in
accordance with the MGCL.
SECTION 2.2 CLOSING AND CLOSING DATE. Unless this Agreement shall have
been terminated by either Parent or the Company and the transactions herein
contemplated shall have been abandoned pursuant to the provisions of Section
8.1, the closing of the Merger (the "Closing") shall take place (a) at 10:00
a.m., Los Angeles time, as soon as practicable, but in no event later than the
fifth Business Day, after the last of all of the conditions to the respective
obligations of the Parties set forth in Article VII hereof shall have been
satisfied or waived (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) or (b) at such other time and date as Parent and the Company shall
mutually agree; provided, however, that the Closing shall not occur prior to the
Designated Record Date (such date and time on and at which the Closing occurs
being referred to herein as the "Closing Date"). The Closing shall take place at
the offices of Latham & Watkins, 650 Town Center Drive, 20th Floor, Costa Mesa,
California 92626. At the Closing, the documents, certificates, opinions and
instruments referred to in Article VII shall be executed and delivered to the
applicable party.
SECTION 2.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as reasonably practicable on or after the Closing Date, the
Parties shall file with the State Department of Assessments and Taxation of
Maryland (the "Maryland Department") the articles of merger or other appropriate
documents (the "Articles of Merger") in such form as is required by, and
executed in accordance with, the relevant provisions of the MGCL and make all
other filings, recordings or publications required under the MGCL in connection
with the Merger. The Merger shall become effective at 2:00 p.m., Los Angeles
time, on the date of the filing of the Articles of Merger with, and acceptance
for record of such Articles of Merger by, the Maryland Department in accordance
with the MGCL, or at such other time as the Parties shall agree as specified in
such filings in accordance with applicable law (the "Effective Time").
SECTION 2.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 3-114 of the MGCL and this Agreement. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time of the
Merger, all of the property, rights, privileges and powers of the Company and
Merger Sub will vest in the Surviving Company, and all of the debts, liabilities
and duties of the Company and Merger Sub will become the debts, liabilities and
duties of the Surviving Company.
SECTION 2.5 CHARTER; BYLAWS. At the Effective Time, (i) the charter of
the Surviving Company shall be amended in its entirety to read as the charter of
Merger Sub, as in
12
effect on the date hereof, a copy of which has been provided to the Company,
except that at the Effective Time, Article I thereof shall be amended to read as
follows: "The name of the Corporation is Pan Pacific (CTA), Inc." and (ii) the
bylaws of the Surviving Company shall be amended in their entirety to read as
the bylaws of Merger Sub, as in effect on the date hereof, a copy of which has
been provided to the Company. Such charter and bylaws shall not be inconsistent
with Section 6.18.
SECTION 2.6 DIRECTORS AND OFFICERS OF THE SURVIVING COMPANY. The
directors of Merger Sub immediately prior to the Effective Time shall be elected
as the initial directors of the Surviving Company, each to hold office in
accordance with the charter and bylaws of the Surviving Company. The officers of
Merger Sub immediately prior to the Effective Time shall be elected as the
initial officers of the Surviving Company, each to hold office in accordance
with the charter and bylaws of the Surviving Company.
SECTION 2.7 CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company or
the holder of any of the following securities:
(a) Subject to Section 2.9, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (including,
without limitation, outstanding restricted Company Common Stock granted under
the Company Stock Plan, but excluding any shares to be canceled in accordance
with Section 2.7(b) hereof), shall be converted into and represent the right to
receive 0.218 fully paid and nonassessable shares (rounded to the nearest
hundredth of a share) (as adjusted as set forth in subsection (d), the "Exchange
Ratio") of Parent Common Stock (the "Merger Consideration"). The Merger
Consideration shall be payable upon the surrender of the Certificate formerly
representing such Company Common Stock, subject to Section 2.11. As of the
Effective Time, all Company Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a Certificate representing any Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive (i) the Merger
Consideration, (ii) any cash in lieu of fractional shares of Parent Common Stock
to be issued or paid in consideration therefor upon surrender of such
Certificate in accordance with Section 2.9, (iii) any dividends or distributions
in accordance with Section 2.10(e) and (iv) any unpaid dividend declared by the
Company in respect of Company Common Stock in accordance with Section 5.3, in
each case without interest.
(b) Each share of Company Common Stock that is (i) owned by any
Subsidiary of the Company or (ii) owned by Parent or any Subsidiary of Parent,
in each case immediately prior to the Effective Time, shall, by virtue of the
Merger and without any action on the part of the holder thereof, be canceled and
retired without any conversion thereof and no payment or distribution of any
consideration shall be made with respect thereto.
(c) Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
be exchanged for one newly
13
and validly issued, fully paid and nonassessable share of common stock of the
Surviving Company.
(d) The Exchange Ratio shall be adjusted to reflect fully
the effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Parent Common Stock or
Company Common Stock, as applicable), reorganization, recapitalization,
consolidation, exchange or other like change with respect to Parent Common Stock
or Company Common Stock occurring after the date hereof and prior to the
Effective Time.
SECTION 2.8 TREATMENT OF COMPANY OPTIONS AND RESTRICTED STOCK.
(a) Except for the Company Options listed on Section 2.8
of the Company Disclosure Schedule, immediately prior to the Effective Time and
subject to the consummation of the Merger, subject to the receipt of any
necessary consents, the Company and the Company Board (or, if appropriate, any
committee thereof) shall cause the vesting of each then outstanding Company
Option to be fully accelerated and shall cause each then outstanding Company
Option to not be exercisable following the Effective Time and to be canceled and
terminated, and the holder to become entitled to receive an amount of cash, if
any, from the Company equal to the product of (x) the amount, if any, by which
(1) the product of (a) the average closing price per share of Parent Common
Stock on the NYSE for the period of ten trading days immediately preceding the
Effective Time, and (b) the Exchange Ratio, exceeds (2) the exercise price per
share of Company Common Stock subject to such Company Option, and (y) the number
of shares of Company Common Stock issuable pursuant to the unexercised portion
of such Company Option (such amount being hereinafter referred to as the "Option
Consideration"). The Option Consideration shall be paid by the Company
immediately prior to the Effective Time. The Company shall withhold from the
Option Consideration any taxes required to be withheld.
(b) With respect to Company Options listed on Section 2.8 of the
Company Disclosure Schedule, at the Effective Time and subject to the
consummation of the Merger, such Company Options shall be assumed by Parent and
converted into options to acquire Parent Company Stock (the "Assumed Options")
on the same terms and conditions as were applicable under such Company Options
immediately prior to the Effective Time except that (i) the per share exercise
price of each Assumed Option shall be equal to the per share exercise price of
the Company Option immediately prior to the Effective Time divided by the
Exchange Ratio (rounded up the nearest two-place decimal), and (ii) the number
of shares of Parent Common Stock issuable upon exercise of such Assumed Option
shall be equal to the number of shares of Company Common Stock issuable pursuant
to the unexercised portion of the Company Option multiplied by the Exchange
Ratio (rounded down to the nearest whole share).
(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
under Company Stock Plans assumed in accordance with this Section 2.8. As soon
as practicable after the Effective Time,
14
Parent shall file a registration statement on Form S-8 (or any successor or
other appropriate forms), with respect to the shares of Parent Common Stock
subject to the Assumed Options and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as the Assumed Options remain outstanding.
(d) Immediately prior to the Effective Time, and subject to the
consummation of the merger, the Company and Company Board (or, if appropriate,
any committee thereof) shall cause the vesting of each share of outstanding
restricted Company Common Stock granted under the Company Stock Plan to be fully
accelerated and the contractual restrictions thereon to terminate.
(e) Each of the Parties shall take such steps as may be required
to provide that, with respect to each Section 16 Affiliate (as defined below),
(i) the transactions contemplated by this section, and (ii) any other
dispositions of Company equity securities (including derivative securities) or
other acquisitions of Parent equity securities (including derivative securities)
in connection with this Agreement, shall be exempt under Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended, in accordance with the
terms and conditions set forth in that certain No-Action Letter, dated January
12, 1999 (CCH Fed. Sec. L. Rep. Paragraph 77.515). For purposes of this
Agreement, "Section 16 Affiliate" shall mean each individual who (x) immediately
prior to the Effective Time is a director or officer of the Company or (y) at
the Effective Time will become a director or officer of Parent, Merger Sub or
the Company.
SECTION 2.9 FRACTIONAL INTERESTS. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued in connection with the
Merger, and such fractional interests will not entitle the owner thereof to any
rights of a stockholder of Parent. In lieu of any such fractional interests,
each Company Stockholder exchanging Certificates pursuant to Section 2.7(a) who
would otherwise have been entitled to receive a fraction of a share of Parent
Common Stock (after taking into account all shares of Company Common Stock then
held of record by such stockholder) shall receive cash (without interest) in an
amount equal to such fractional amount multiplied by the average of the last
reported sales prices of Parent Common Stock, as reported on the NYSE, on each
of the ten trading days immediately preceding the date of the Effective Time.
SECTION 2.10 SURRENDER OF COMPANY COMMON STOCK; STOCK TRANSFER BOOKS.
(a) Prior to the Closing Date, Parent shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for Company
Stockholders in connection with the Merger (the "Exchange Agent"). The Exchange
Agent shall receive the Merger Consideration to which Company Stockholders shall
become entitled pursuant to Section 2.7(a). Prior to the Effective Time, Parent
will make available to the Exchange Agent sufficient shares of Parent Common
Stock and an estimated amount of cash in lieu of fractional shares to make all
exchanges pursuant to Section 2.10(b). The Exchange Agent shall cause the shares
of Parent
15
Common Stock, dividends or distributions with respect thereto and cash in lieu
of fractional shares deposited by Parent to be (i) held for the benefit of
Company Stockholders and (ii) promptly applied to making the exchanges and
payments provided for in Section 2.10(b). Such shares of Parent Common Stock,
dividends or distributions with respect thereto and cash in lieu of fractional
shares shall not be used for any purpose that is not provided for herein.
(b) Promptly after the Effective Time, Parent shall, or shall
cause the Exchange Agent to, mail to each Company Stockholder whose shares were
converted pursuant to Section 2.7(a) into the right to receive Parent Common
Stock (i) a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration and the cash in lieu of fractional shares pursuant
to Section 2.9. Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor, (i) a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the provisions of Section 2.7(a),
with respect to each Certificate formerly representing shares of Company Common
Stock, (ii) cash in lieu of any fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 2.9, after giving effect to
any required Tax withholdings, and (iii) any dividends or distributions to which
such holder is entitled pursuant to Section 2.10(e), and the Certificate so
surrendered shall forthwith be canceled. Until so surrendered and exchanged,
each Certificate shall represent solely the right to receive the Merger
Consideration into which the shares of Company Common Stock it theretofore
represented shall have been converted pursuant to Section 2.7(a), cash in lieu
of any fractional shares pursuant to Section 2.9 and any dividends or
distributions pursuant to Section 2.10(e). If the exchange of certificates
representing shares of Parent Common Stock is to be made to a Person other than
the Person in whose name the surrendered Certificate is registered, it shall be
a condition of exchange that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the Person
requesting such exchange shall have paid any transfer and other taxes required
by reason of the exchange of certificates representing shares of Parent Common
Stock to a Person other than the registered holder of the Certificate
surrendered or shall have established to the reasonable satisfaction of Parent
that such Tax either has been paid or is not applicable.
(c) At any time after the one-year anniversary of the Effective
Time, Parent shall be entitled to require the Exchange Agent to deliver to
Parent cash and any other instruments (including certificates for shares of
Parent Common Stock) in its possession relating to the transactions contemplated
by this Agreement which had been made available to the Exchange Agent and which
have not been distributed to holders of Certificates. Thereafter, each holder of
a Certificate, representing shares converted pursuant to
16
Section 2.7(a), may surrender such Certificate to Parent and (subject to
applicable abandoned property, escheat or other similar laws) receive in
exchange therefor the consideration payable in respect thereto pursuant to
Section 2.7(a), Section 2.9 and Section 2.10(e), without interest, but shall
have no greater rights against Parent than may be accorded to general creditors
of Parent under applicable law. Notwithstanding the foregoing, none of Parent,
the Surviving Company or the Exchange Agent shall be liable to any stockholder
of the Company (or Company Stockholder) for shares of Parent Common Stock (and
any cash payable in lieu of any fractional shares of Parent Common Stock) whose
Certificates have been delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock, except as otherwise provided for herein or by applicable law.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to shares of Parent Common Stock shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock the holder is entitled to receive and no Merger Consideration, or
any cash in lieu of fractional shares pursuant to Section 2.9, shall be paid to
such holder until the holder of such Certificate surrenders such Certificate in
accordance with the provisions of this Agreement. Upon such surrender, Parent
shall cause to be paid to the Person in whose name the certificates representing
the Parent Common Stock shall be issued in respect of such surrendered
Certificate, any dividends or distributions with respect to such shares of
Parent Common Stock which have a record date after the Effective Time and shall
have become payable between the Effective Time and the time of such surrender.
In no event shall the Person entitled to receive such dividends or distributions
be entitled to receive interest thereon.
SECTION 2.11 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of Parent
Common Stock (and cash in lieu of any fractional shares of Parent Common Stock),
and dividends or distributions, if any, as may be required to be issued or paid
pursuant to Section 2.7(a), Section 2.9 and Section 2.10(e); provided, however,
that Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 2.12 WITHHOLDING RIGHTS. Parent or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration, or cash in lieu
of fractional shares, if any, or dividends or distributions, if any, otherwise
payable pursuant to this Agreement to any stockholder of the Company such
amounts as Parent or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code or any
17
provision of state, local, or foreign Tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the Company
Stockholder, in respect of which such deduction and withholding was made by
Parent or the Exchange Agent.
SECTION 2.13 COMPANY PAYMENTS. Notwithstanding any other provision of
this Agreement, in the event that counsel for Parent or the Company shall in
good faith determine that the payment of all or any portion of any amount
required to be paid in cash by the Company as a result of any of the
transactions contemplated under this Agreement (each a "Company Payment" and
collectively, the "Company Payments"), which cash is attributable to a borrowing
incurred by the Company, Parent, or any subsidiary or affiliate of Parent or
Company, would prevent counsel from rendering an opinion described in Sections
7.2(d) or 7.3(f) hereof, then, to the extent necessary to enable such counsel to
render such opinion and subject to the receipt of any necessary consents, each
party identified by the Company in its sole and absolute discretion that is
entitled to receive the Company Payments shall instead receive a number of
shares of Parent Common Stock (if necessary, rounded up to the next whole number
of shares) equal to: (x) the sum of (1) the dollar amount of the Company Payment
and (2) 3% of the amount in (1), which represents the estimated brokerage fees
and other selling costs and expenses that reasonably could be expected to be
incurred by such party if such party decided to sell such shares of Parent
Common Stock received pursuant to this Section 2.13, divided by (y) the average
closing price per share of Parent Common Stock on the NYSE for the period of ten
trading days immediately preceding the Effective Time. Parent shall withhold
from any payment of Parent Common Stock pursuant to this Section 2.13 any taxes
required to be withheld. At Parent's request, the Company shall use its
reasonable best efforts to obtain any such necessary consents prior to the
Effective Time. Notwithstanding the fact that a Company Payment would otherwise
or ordinarily have been paid by the Company prior to the Effective Time, if paid
in shares of Parent Common Stock pursuant to this Section 2.13, such Company
Payment shall be made by Parent as soon as practicable after the Effective Time.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that the statements
contained in this Article III are true and correct except as set forth herein or
in the disclosure schedule delivered by the Company to Parent on or before the
date of this Agreement (the "Company Disclosure Schedule") or as otherwise
limited herein.
SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Company and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, with the corporate, partnership or
limited liability company power and authority to own and operate its business as
presently conducted. The Company and each of its Subsidiaries is duly qualified
as a foreign corporation or other entity to do business and is in good standing
in each jurisdiction where the ownership or operation of its properties or the
nature of its activities makes such qualification necessary, except for such
failures of the
18
Company and any of its Subsidiaries to be so qualified as would not, when taken
with all other such failures, cause a Company Material Adverse Effect. The
Company and each of its Subsidiaries have previously made available to Parent
true and correct copies of their Organizational Documents as in effect on the
date hereof.
SECTION 3.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT. The
Company has the requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby subject to the adoption and approval of the Agreement and
the approval of the Merger by the requisite vote of the holders of Company
Common Stock (such adoption and approval being the "Company Voting Proposal").
The execution and delivery of this Agreement by the Company and the performance
by the Company of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by the Company Board
and all other necessary corporate action on the part of the Company, other than
the adoption and approval of this Agreement and the approval of the Merger by
the requisite vote of the holders of the Company Common Stock, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or the Company Transactions. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and general
equitable principles (whether considered in a proceeding in equity or at law).
No consents are necessary under the Stockholders Agreement with respect to the
execution and performance by the Company of this Agreement and the consummation
of the Merger. All necessary approvals of the general partner of the Operating
Partnership have been obtained with respect to the Merger and the other
transactions contemplated by this Agreement.
SECTION 3.3 CAPITALIZATION.
(a) As of the date hereof and as of the date of the Effective Time
the authorized shares of capital stock of the Company consists of 100,000,000
shares of Company Common Stock, 50,000,000 shares of excess stock, par value
$.01 per share ("Excess Stock"), and 10,000,000 shares of preferred stock, par
value $.01 per share ("Company Preferred Stock"). As of the close of business on
September 30, 2002, (i) 27,887,840 shares of Company Common Stock were issued
and outstanding, and (ii) no shares of Excess Stock or Company Preferred Stock
were issued and outstanding. From October 1, 2002 to the date hereof, no shares
of Company Capital Stock have been issued or reserved for issuance, except for
shares of Company Common Stock issued in respect of the exercise, conversion or
exchange of Company Stock Rights or Company OP Units outstanding on September
30, 2002 or as set forth in Section 3.3(a) of the Company Disclosure Schedule.
As of the date hereof there are a total of 29,210,719 Partnership Units
outstanding, of which 1,323,504 Partnership Units are owned by limited partners
of the Operating Partnership and 27,887,840 Partnership Units are owned by the
Company.
19
(b) Section 3.3(b) of the Company Disclosure Schedule sets forth
as of the date hereof, for the Company Stock Plan, the dates on which Company
Stock Rights under such plan were granted, the number of outstanding Company
Stock Rights granted on each such date, the number and class of shares of
Company Capital Stock for or into which each such Company Stock Right is
exercisable, convertible or exchangeable and the exercise price thereof. Except
(i) as set forth in this Section 3.3(b), (ii) as described in Section 3.3(b) of
the Company Disclosure Schedule, and (iii) for the rights to convert Company OP
Units into Company Common Stock pursuant to the Operating Partnership Agreement,
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or any
of its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of Company Capital Stock or any
other equity interests of the Company, or its Subsidiaries or other voting
securities of the Company or its Subsidiaries or obligating the Company or its
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking and
neither the Company nor its Subsidiaries has granted any share appreciation
rights or any other contractual rights the value of which is derived from the
financial performance of the Company or the Operating Partnership or the value
of Company Common Stock or any other equity interests of the Company or the
Operating Partnership.
(c) There are no outstanding or contingent obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of Company Capital Stock or any other equity interests in the Company
or the capital stock or ownership interests of any Subsidiary of the Company,
other than the Company's obligation to exchange Company Common Stock for Company
OP Units pursuant to the Operating Partnership Agreement.
(d) All shares of Company Common Stock subject to issuance as
specified in Section 3.3(b) hereof or in Section 3.3(b) of the Company
Disclosure Schedule, are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
including payment of any exercise price in respect thereof, will be validly
issued, fully paid and nonassessable.
(e) There are no bonds, debentures, notes or other indebtedness
having voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. There are no voting trusts, proxies or other voting agreements with
respect to the equity interests in the Company to which the Company or any of
its Subsidiaries is a party.
SECTION 3.4 SUBSIDIARIES. The only Subsidiaries of the Company are
those set forth in Section 3.4 of the Company Disclosure Schedule. All of the
outstanding shares of capital stock of each of the Company's Subsidiaries that
is a corporation are duly authorized, validly issued, fully paid and
nonassessable. All equity interests in each of the Company's Subsidiaries that
is a partnership or limited liability company are duly authorized and validly
issued. All shares of capital stock of (or other ownership interests in) each of
the Company's
20
Subsidiaries which may be issued upon exercise of outstanding options or
exchange rights are duly authorized and, upon issuance will be validly issued,
fully paid and nonassessable. Except as set forth in Section 3.4 of the Company
Disclosure Schedule, the Company owns, directly or indirectly, all of the issued
and outstanding capital stock and other ownership interests of each of its
Subsidiaries, free and clear of all Encumbrances other than statutory or other
liens for Taxes or assessments which are not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings,
and there are no existing options, warrants, calls, subscriptions, convertible
securities or other securities, agreements, commitments or obligations of any
character relating to the outstanding capital stock or other securities of any
Subsidiary of the Company or which would require any Subsidiary of the Company
to issue or sell any shares of its capital stock, ownership interests or
securities convertible into or exchangeable for shares of its capital stock or
ownership interests.
SECTION 3.5 OTHER INTERESTS. Except as set forth in Section 3.5 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
owns or has the right or option to acquire, directly or indirectly, any interest
or investment in (whether equity or debt) any corporation, partnership, limited
liability company, joint venture, business, trust or other Person, other than
the rights held by the Company or its Subsidiaries identified in Section 3.4 of
the Company Disclosure Schedule.
SECTION 3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Section 3.6 of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder, nor the consummation of
the transactions contemplated hereby, will: (i) assuming the Company Voting
Proposal is approved, conflict with the Company's Organizational Documents or
the Organizational Documents of any of its Subsidiaries; (ii) assuming
satisfaction of the requirements set forth in Section 3.6(b) below, violate any
statute, law, ordinance, rule or regulation, applicable to the Company or any of
its Subsidiaries or any of their Assets; or (iii) violate, breach, require
consent under, be in conflict with or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
permit the termination of any provision of, or result in the termination of, the
acceleration of the maturity of, or the acceleration of the performance of any
obligation of the Company or any of its Subsidiaries under, or result in the
creation or imposition of any lien upon any Assets or business of the Company or
any of its Subsidiaries under, or give rise to any Third Party's right of first
refusal or other similar right under, any note, bond, indenture, mortgage, deed
of trust, lease, or permit, authorization, license, contract, instrument or
other agreement or commitment or any order, judgment or decree to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective Assets are bound or encumbered, or
give any Person the right to require the Company or any of its Subsidiaries to
purchase or repurchase any notes, bonds or instruments of any kind, except, in
the case of clauses (ii) and (iii), for such violations, breaches, conflicts,
defaults or other occurrences which, individually or in the aggregate, would not
cause a Company Material Adverse Effect.
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(b) Except as set forth in Section 3.6 of the Company Disclosure
Schedule, no consent, approval or authorization of, permit from, or declaration,
filing or registration with, any Governmental Entity is required to be made or
obtained by the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the Operating Partnership Amendment
by the Company or any of its Subsidiaries or the consummation by the Company or
its Subsidiaries of the Company Transactions, other than (A) the filing with the
SEC of the Proxy Statement/Prospectus and such reports under Section 13(a) of
the Exchange Act, and such other compliance with the Exchange Act, as may be
required in connection with this Agreement; (B) the filing of Articles of Merger
pursuant to the MGCL; (C) filings with the NYSE; (D) such filings and approvals
as may be required by any applicable state securities or "blue sky" laws ("Blue
Sky Laws") or Environmental Laws; (E) business, operating and occupancy licenses
and permits; and (F) such consents, approvals, authorizations, permits,
registrations, declarations and filings the failure to make or obtain which
would not, in the aggregate, cause a Company Material Adverse Effect.
SECTION 3.7 COMPLIANCE. Except as set forth in Section 3.7 of the
Company Disclosure Schedule, the Company and each of its Subsidiaries are in
compliance with all foreign, federal, state and local laws and regulations
applicable to their operations or with respect to which compliance is a
condition of engaging in the business thereof, except to the extent that failure
to comply would not, individually or in the aggregate, cause a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
written notice since January 1, 1999, or has Knowledge of any written notice
received by it at any time, asserting a failure, or possible failure, to comply
with any such law or regulation, the subject of which written notice has not
been resolved as required thereby or otherwise to the reasonable satisfaction of
the party sending the notice, except for (A) matters being contested in good
faith and set forth in Section 3.7 of the Company Disclosure Schedule and (B)
such failures as would not, individually or in the aggregate, cause a Company
Material Adverse Effect.
SECTION 3.8 SEC DOCUMENTS.
(a) The Company has filed with the SEC all reports, schedules,
statements and other documents required to be filed by the Company or any of its
Subsidiaries with the SEC since December 31, 1999 (collectively, the "Company
SEC Reports"). As of their respective dates, with respect to Company SEC Reports
filed pursuant to the Exchange Act, and as of their respective effective dates,
as to Company SEC Reports filed pursuant to the Securities Act, the Company SEC
Reports and any registration statements, reports, forms, proxy or information
statements and other documents filed by the Company with the SEC after the date
of this Agreement (i) complied, or, with respect to those not yet filed, will
comply, in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, and (ii) did not, or, with respect to those
not yet filed, will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
22
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Company SEC Reports (including the related
notes and schedules) presents fairly, in all material respects, the consolidated
financial position of the Company and its consolidated Subsidiaries as of its
date, and each of the consolidated statements of income, stockholders' equity
and cash flows of the Company included in or incorporated by reference into the
Company SEC Reports (including any related notes and schedules) presents fairly,
in all material respects, the results of operations, stockholders' equity and
cash flows, as the case may be, of the Company and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments), in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein.
(c) Except as set forth in the Company SEC Reports, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of the
Company or in the notes thereto prepared in accordance with GAAP consistently
applied, except for (i) liabilities or obligations that were so reserved on, or
reflected in (including the notes to), the consolidated balance sheet of the
Company as of September 30, 2002, (ii) liabilities or obligations arising in the
ordinary course of business (including trade indebtedness) from September 30,
2002 to the date hereof (iii) liabilities incurred after the date hereof that
are permitted by Section 5.1 hereof and (iv) other liabilities or obligations
which would not, individually or in the aggregate, cause a Company Material
Adverse Effect.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in the
Company SEC Reports and except for the transactions expressly contemplated
hereby, from September 30, 2002 to the date hereof, the Company and its
Subsidiaries have conducted their respective businesses substantially in the
ordinary and usual course consistent with past practices (including the
incurrence of trade indebtedness and secured debt assumed in connection with the
acquisition of properties by the Company and its Subsidiaries or the disposition
of assets listed in Section 3.9 of the Company Disclosure Schedule and
construction activities at the Company Real Property listed in Section 3.9 of
the Company Disclosure Schedule), and there has not been any change in the
Company's business, operations, condition (financial or otherwise), results of
operations, Assets or liabilities, except for changes contemplated hereby or
changes which, individually or in the aggregate, have not caused a Company
Material Adverse Effect.
SECTION 3.10 LITIGATION. Except as set forth in the Company SEC Reports
or as set forth in Section 3.10 of the Company Disclosure Schedule, there is no
Action (i) instituted, (ii) pending and served upon the Company or any of its
Subsidiaries, or (iii) to the Knowledge of the Company, pending and not served
upon the Company or its Subsidiaries, or threatened, in each case against the
Company or any of its Subsidiaries or any of their respective Assets which,
individually or in the aggregate, directly or indirectly, has caused a Company
Material Adverse Effect, nor is there any outstanding judgment, decree or
injunction, in each case against the Company any of its Subsidiaries or any of
their respective Assets or any statute, rule or order of any Governmental Entity
applicable to the Company or any of its Subsidiaries which, individually or in
the aggregate, has caused a Company Material Adverse Effect.
23
SECTION 3.11 TAXES.
(a) The Company and its Subsidiaries have (i) duly filed (or there have
been filed on their behalf) with the appropriate Governmental Entities all Tax
Returns required to be filed by them (after giving effect to any filing
extension properly granted by a Governmental Entity having authority to do so),
and such Tax Returns are true, correct and complete in all material respects,
(ii) duly paid in full, or made provision in accordance with GAAP (or there has
been paid or provision has been made on their behalf) for, all Taxes required to
have been paid by them, whether or not shown to be due on such Tax Returns and
(iii) withheld and paid all material Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other party;
(b) Neither the Company nor any of its Subsidiaries has received a written
claim by any authority in a jurisdiction where any of the Company and its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction;
(c) Except as set forth in Section 3.11(c) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received a written
notice of any threatened audits with respect to taxable years ended on or after
December 31, 1993, with respect to Taxes or Tax Returns of the Company or any of
its Subsidiaries. With respect to taxable years ended on or after December 31,
1993, neither the IRS nor any other taxing authority (whether domestic or
foreign) has asserted against the Company or any of its Subsidiaries any
deficiency or claim for Taxes;
(d) Section 3.11(d) of the Company Disclosure Schedule sets forth each
year for which an extension to file Tax Returns has been requested and for which
such Tax Returns have not yet been filed;
(e) There are no Encumbrances for Taxes upon any Assets of the Company or
any Subsidiary thereof, except for Permitted Encumbrances, and no written power
of attorney that has been granted by the Company or any of its Subsidiaries
(other than to the Company or a Subsidiary or Deloitte & Touche LLP) currently
is in force with respect to any matter relating to Taxes;
(f) Except as set forth in Section 3.11(f) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code or which would result
in a disallowed deduction under Section 162(m) of the Code;
(g) There are no, and at the Closing Date there will be no, Tax allocation
or sharing agreements or similar arrangements with respect to or involving the
Company or any of its Subsidiaries, and, after the Closing Date, neither the
Company nor any of its Subsidiaries
24
shall be bound by any such Tax allocation or sharing agreements or similar
arrangements or have any liability thereunder for amounts due in respect of
periods prior to the Closing Date;
(h) None of the Company and its Subsidiaries (i) has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which was the Company) or (ii) has any liability for
the Taxes of any Person (other than any of the Company and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or otherwise;
(i) Since the Company's taxable year ended December 31, 1993, the Company
has not incurred and does not expect to incur through the Closing Date any
liability for Taxes under Section 857(b), 860(c) or 4981 of the Code, and
neither the Company nor any of its Subsidiaries has incurred any material
liability for Taxes other than in the ordinary course of business. To the
Knowledge of the Company, no event has occurred, and no condition or
circumstance exists, which presents a material risk that any material Tax
described in the preceding sentence will be imposed upon the Company or its
Subsidiaries; and
(j) The Company (i) for all taxable years commencing with its taxable year
ending December 31, 1993 through the December 31 immediately prior to the
Effective Time, has elected and has been subject to federal and state taxation
as a REIT and has satisfied all requirements to qualify as a REIT for federal
and state Tax purposes for such years, (ii) at all times since such date, has
operated in such a manner so as to qualify as a REIT for federal and state Tax
purposes and will continue to operate through the Effective Time in such a
manner so as to so qualify for the taxable year ending on the date of the
Effective Time, (iii) has not taken or omitted to take any action that could
reasonably be expected to result in a challenge by the IRS or any other taxing
authority to its status as a REIT, and no such challenge is pending or, to the
Company's Knowledge, threatened. Each Subsidiary of the Company that is a state
law partnership or limited liability company has been since its formation and
continues to be treated for federal and state income Tax purposes as a
partnership (or a disregarded entity) and not as a corporation or an association
or publicly traded partnership taxable as a corporation. Each other Subsidiary
of the Company has been and continues to be treated for federal and state income
Tax purposes as a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code, or a "taxable REIT subsidiary" within the meaning of Section
856(l) of the Code. Neither the Company nor any Subsidiary of the Company holds
any Asset the disposition of which would be subject to rules similar to Section
1374 of the Code as a result of an election under Notice 88-19 or the Treasury
Regulations promulgated under Code Section 337.
SECTION 3.12 EMPLOYEE BENEFIT PLANS.
(a) The Company has listed in Section 3.12 of the Company Disclosure
Schedule all Benefit Arrangements, Multiemployer Plans, Pension Plans and
Welfare Plans of the Company and its Subsidiaries and all bonus, stock option,
stock purchase, incentive, deferred compensation, supplemental retirement,
change in control, severance and other similar employee
25
benefit plans, and all unexpired severance agreements, written or otherwise, for
the benefit of, or relating to, any current or former employee of the Company or
any ERISA Affiliate of the Company or any Subsidiary of the Company (together,
the "Company Employee Plans").
(b) With respect to each Company Employee Plan, the Company has made
available to Parent, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Company Employee Plan, (iii)
each trust agreement and group annuity contract, if any, relating to such
Company Employee Plan and (iv) the most recent actuarial report or valuation
relating to a Company Employee Plan subject to Title IV of ERISA.
(c) With respect to the Company Employee Plans, individually and in the
aggregate, no event has occurred, and to the Knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
could be subject to any liability that will have a Company Material Adverse
Effect under ERISA, the Code or any other applicable law. There is no Company
Employee Plan that is subject to Title IV of ERISA or is a Multiemployer Plan.
(d) With respect to the Company Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accrued or otherwise properly disclosed in the footnotes in
accordance with GAAP, in the financial statements of the Company, which
obligations will cause a Company Material Adverse Effect.
(e) Except as disclosed in Company SEC Reports filed prior to the date of
this Agreement, and except as set forth in Section 3.12(e) of the Company
Disclosure Schedule, or as provided for in this Agreement, neither the Company
nor any of its Subsidiaries is a party to any oral or written (i) agreement with
any officer or other key employee of the Company or any of its Subsidiaries, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company of the nature
contemplated by this Agreement, (ii) agreement with any officer of the Company
providing any term of employment or compensation guarantee extending for a
period longer than one year from the date hereof and for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
26
SECTION 3.13 PROPERTIES.
(a) Section 3.13(a) of the Company Disclosure Schedule identifies:
(i) all real properties (by name and location) owned by the Company
or its Subsidiaries (the "Company Owned Property") as of the date hereof, which
are all of the real properties owned by them as of the date hereof; and
(ii) all real properties leased or operated by the Company or its
Subsidiaries as lessee (the "Company Leased Property") as of the date hereof,
which are all of the real properties so leased or operated by them. The Company
Owned Property and the Company Leased Property is referred to herein
collectively as the "Company Real Property."
(b) The Company and its Subsidiaries have obtained title insurance
policies for the Company Real Property listed in Section 3.13(b) of the Company
Disclosure Schedule, and no material claims have been made against any such
policies by an insured party thereunder. With respect to the Company Real
Property not listed in Section 3.13(b) of the Company Disclosure Schedule, the
Company or its Subsidiaries has valid title to the Company Owned Property, and a
valid leasehold interest in the Company Leased Property, sufficient to allow
each of the Company and its Subsidiaries to conduct their business as and where
currently conducted. Each Company Real Property is not subject to any
Encumbrances, except for any Permitted Encumbrances.
(c) Except as set forth on Section 3.13(c) of the Company Disclosure
Schedule or as disclosed in the Company SEC Reports, the Company Real Property
is not encumbered by any debt.
(d) To the Company's Knowledge, all (i) certificates, permits or licenses
from any Governmental Entity having jurisdiction over any Company Real Property
and (ii) agreements, easements or other rights, necessary to permit the lawful
use and operation of the buildings and improvements on any of the Company Real
Property or to permit the lawful use and operation of all driveways, roads, and
other means of egress and ingress to and from any Company Real Property have
been obtained and are in full force and effect, except where the failure to
obtain or maintain the same would not cause a Company Material Adverse Effect,
and there is no pending threat of modification or cancellation of the same. No
Company Real Property is located outside of the United States and neither the
Company nor any of its Subsidiaries conducts its business of owning, leasing or
operating properties outside of the United States. All work to be performed,
payments to be made and financial undertakings required to be taken by the
Company or its Subsidiaries prior to the date hereof pursuant to any agreement
entered into with a Governmental Entity in connection with a site approval,
zoning reclassification or other similar action relating to a Company Real
Property has been paid or undertaken, as the case may be, except where the
failure to pay such amount or undertake such action would not cause a Company
Material Adverse Effect.
27
(e) Neither the Company nor any of its Subsidiaries has received since
January 1, 1999 any written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement affecting any portion
of any Company Real Property issued by any Governmental Entity which would cause
a Company Material Adverse Effect. Since January 1, 1999, neither the Company
nor any of its Subsidiaries has received any written notice from any
Governmental Entity with jurisdiction over the Company or any such Subsidiaries
to the effect that (i) any condemnation or rezoning proceedings are pending or
threatened with respect to any Company Real Property or (ii) any zoning,
building or similar law, code, ordinance or regulation is being violated by the
maintenance, operation or use of any buildings or other improvements on any
Company Real Property or by the maintenance, operation or use of the parking
areas, except where any such written notice of such a proceeding or violation
would not, individually or in the aggregate, cause a Company Material Adverse
Effect.
(f) Except as would not cause, individually or in the aggregate, a Company
Material Adverse Effect and except as set forth in Section 3.13(f) of the
Company Disclosure Schedule, to the Company's Knowledge, (i) there are no
structural defects relating to any Company Real Property, (ii) there is no
Company Real Property whose building systems are not in working order in any
material respect (ordinary wear and tear excepted), (iii) there is no uninsured
physical damage to any Company Real Property in an amount in excess of $150,000
with respect to any individual property, except for the payment by the Company
of a deductible under the applicable insurance policy, and (iv) there is no
current renovation or restoration to any Company Real Property the remaining
cost of which exceeds $150,000 with respect to any individual property.
(g) True and correct copies of the Company Leases as amended as of the
date hereof have been delivered to, or made available for review by, Parent.
Section 3.13(g) of the Company Disclosure Schedule lists the following
information with respect to the Company Leases:
(i) the name of the lessee;
(ii) the expiration date of the Company Lease; and
(iii) the amount (or method of determining the amount) of minimum
monthly base rentals due under each Company Lease.
(h) The Company has delivered to Parent a copy of their respective aging
of accounts receivable as of September 30, 2002, which copy is true and correct
in all material respects. Except as set forth in Section 3.13(h) of the Company
Disclosure Schedule, as of the date hereof, neither the Company nor any of its
Subsidiaries has delivered written notice to any tenant under any Company Lease,
alleging that such tenant is in default thereunder, other than with respect to
defaults that have been cured or waived or which would not, individually or in
the aggregate, cause a Company Material Adverse Effect.
28
(i) There are no agreements, written or oral, between the Company or any
of its Subsidiaries and any other Person relating to the use and occupancy of
the Company Real Property by a Person other than the Company or any of its
Subsidiaries other than the Company Leases. Except as set forth in Section
3.13(i) of the Company Disclosure Schedule, as of the date hereof, no defaults
(unless subsequently cured) by the Company or its Subsidiaries have been alleged
in writing by the lessees (and received by the Company or any of its
Subsidiaries) thereunder that have not been cured in all material respects and,
to the Knowledge of the Company, neither the Company nor any of its Subsidiaries
is in default under any Company Lease other than such defaults which would not,
individually or in the aggregate, cause a Company Material Adverse Effect.
SECTION 3.14 CONTRACTS.
(a) Section 3.14(a) of the Company Disclosure Schedule contains a complete
and accurate list of all Company Contracts in effect as of the date hereof,
other than the Company Contracts which are listed as an exhibit to the Company's
most recent annual report on Form 10-K or a subsequent quarterly report on Form
10-Q. Each copy of a Company Contract which has been delivered to, or made
available for review by, Parent is a true and correct copy of such Company
Contract as amended to date.
(b) As of the date of this Agreement, (i) there is no breach or violation
of or default by the Company or any of its Subsidiaries under any of the Company
Contracts, except such breaches, violations and defaults as have been waived,
and (ii) no event has occurred with respect to the Company or any of its
Subsidiaries which, with notice or lapse of time or both, would constitute a
breach, violation or default, or give rise to a right of termination,
modification, cancellation, foreclosure, imposition of a lien, prepayment or
acceleration under any of the Company Contracts, which breach, violation or
default referred to in clauses (i) or (ii), individually or in the aggregate
with other such breaches, violations or defaults referred to in clauses (i) or
(ii), would cause a Company Material Adverse Effect. True copies of the Company
Contracts in effect as of the date hereof have been delivered or made available
to Parent.
SECTION 3.15 LABOR RELATIONS. Except as set forth in Section 3.15 of the
Company Disclosure Schedule or as would not cause a Company Material Adverse
Effect, (i) there are no controversies pending or, to the Knowledge of the
Company, threatened between the Company or any of its Subsidiaries and any of
their respective employees; (ii) neither the Company nor any of its Subsidiaries
is a party, or otherwise subject, to any collective bargaining agreement or
similar contract; (iii) there are no proceedings asserting unfair labor practice
charges pending against the Company or any of its Subsidiaries before the
National Labor Relations Board, or any similar foreign labor relations
governmental bodies, or any current union representation questions involving
employees of the Company or any of its Subsidiaries; and (iv) there is no
strike, slowdown, work stoppage or lockout, or, to the Knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any of its
Subsidiaries.
29
SECTION 3.16 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 3.16(a) of the Company Disclosure
Schedule, the Company, each of its Subsidiaries and, to the Knowledge of the
Company, each tenant or operator of Company Real Property (i) have obtained all
permits, licenses and other authorizations which are required to be obtained
under all applicable Environmental Laws by the Company or its Subsidiaries and
(ii) are in compliance with all terms and conditions of such required permits,
licenses and authorizations, and also are in compliance with all other
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws, except where the failure to obtain such permits, licenses or
other authorizations or to comply with such terms and conditions or limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables would not, individually or in the aggregate, cause a
Company Material Adverse Effect.
(b) Except as set forth in Section 3.16(b) of the Company Disclosure
Schedule, the Company, each of its Subsidiaries and, to the Knowledge of the
Company, each tenant or operator of Company Real Property have not received a
written notice of and have no Knowledge of any present or unremediated past
violations of Environmental Laws, or of any event, incident or Action preventing
continued compliance with such Environmental Laws, or which could give rise to
any common law environmental liability, or form the basis of any Action against
the Company or any of its Subsidiaries based on or resulting from the
manufacture, processing, use, treatment, storage, disposal, transport or
handling, or the emission, discharge or release into the environment, of any
Hazardous Material or otherwise relating to protection of human health or the
environment.
SECTION 3.17 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Company
Financial Advisor"), as of the date of this Agreement, to the effect that the
Exchange Ratio is fair to the holders of Company Common Stock from a financial
point of view. The Company has been authorized by the Company Financial Advisor
to permit, subject to prior review and consent by such Company Financial
Advisor, the inclusion of the entirety of such fairness opinion (or a reference
thereto) in the proxy statement/prospectus to be sent to Company Stockholders in
connection with the meeting of the Company Stockholders (the "Company
Stockholders Meeting") to consider this Agreement and the Merger (the "Proxy
Statement/Prospectus") and the registration statement on Form S-4 pursuant to
which the issuance of shares of Parent Common Stock to be issued in the Merger
will be registered under the Securities Act (the "Registration Statement"), of
which the Proxy Statement/Prospectus will form a part.
SECTION 3.18 BROKERS. No broker, finder or investment banker (other than
the Company Financial Advisor, the fees and expenses of which shall be paid by
the Company) is entitled to any brokerage, finder's or other fee or commission
in connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company or any of its
Subsidiaries. The Company has heretofore furnished to Parent a
30
complete and correct copy of all agreements between the Company and the Company
Financial Advisor pursuant to which such firm would be entitled to any such
payment.
SECTION 3.19 VOTE REQUIRED. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of the Company's
equity interests necessary to approve the Company Voting Proposal. The Company
Board, at a meeting duly called and held, subject to its right to withdraw its
support of the Merger and recommend an Acquisition Proposal pursuant to Section
6.3 hereof, (a) determined that this Agreement and the transactions contemplated
hereby, including the Merger, are fair to, and in the best interests of, the
Company Stockholders, (b) approved this Agreement and the Merger, (c) has
declared that this Agreement and the Merger are advisable, and (d) resolved to
recommend that the holders of Company Common Stock approve this Agreement and
the Merger.
SECTION 3.20 TAX MATTERS. Neither the Company nor any of its controlled
Affiliates has taken or agreed to take any action, nor does the Company have
Knowledge of any circumstances, that (without regard to any action taken or
agreed to be taken by Parent or any of its Affiliates) would prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
SECTION 3.21 INSURANCE. The Company has made available to Parent true and
correct copies of all fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by the Company or any of its Subsidiaries as of the date
hereof.
SECTION 3.22 TAKEOVER PROVISIONS INAPPLICABLE. The Company has taken all
action necessary, if any, to exempt transactions between Parent and the Company
and its Affiliates from the operation of any "fair price," "moratorium,"
"control share acquisition" or any other anti-takeover statute enacted under the
laws of the State of Maryland. The Company does not have a stockholder rights
plan in effect.
SECTION 3.23 NO MATERIAL ADVERSE EFFECT. Since January 1, 1999, except as
disclosed in the Company SEC Reports, to the Knowledge of the Company, no fact,
circumstance or condition has arisen or existed that could reasonably be
expected to cause a Company Material Adverse Effect.
SECTION 3.24 AFFILIATE TRANSACTIONS. Except as set forth in the Company
SEC Reports or as permitted by this Agreement, from December 31, 2001 through
the date of this Agreement there have been no transactions, agreements,
arrangements or understandings between the Company or any of its Subsidiaries,
on the one hand, and any Affiliates (other than wholly-owned Subsidiaries) of
the Company or other Persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act.
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SECTION 3.25 NO EXISTING DISCUSSIONS. As of the date hereof, the Company
is not in breach of its obligations set forth in the eleventh paragraph
(relating to negotiations of an Acquisition Proposal with a third party) of the
Confidentiality Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that the
statements contained in this Article IV are true and correct except as set forth
herein or in the disclosure schedule delivered by Parent to the Company on or
before the date of this Agreement (the "Parent Disclosure Schedule") or as
otherwise limited herein.
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Parent and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, with the corporate, partnership or
limited liability company power and authority to own and operate its business as
presently conducted. Parent and each of its Subsidiaries is duly qualified as a
foreign corporation or other entity to do business and is in good standing in
each jurisdiction where the ownership or operation of its properties or the
nature of its activities makes such qualification necessary, except for such
failures of Parent and any of its Subsidiaries to be so qualified as would not,
when taken with all other such failures, cause a Parent Material Adverse Effect.
Parent has previously made available to the Company true and correct copies of
its and its Subsidiaries' Organizational Documents as in effect on the date
hereof.
SECTION 4.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT. Each of
Parent and Merger Sub has the requisite corporate power and authority to
execute, deliver and perform its respective obligations under this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by each of Parent and Merger Sub and the performance by it of
its respective obligations hereunder and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Parent (the "Parent Board") and the Board of Directors of Merger Sub and all
other necessary corporate action on the part of Parent and Merger Sub, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or the Parent Transactions. This Agreement has been
duly and validly executed and delivered by each of Parent and Merger Sub and
constitutes a legal, valid and binding obligation of Parent and Merger Sub,
enforceable against each of Parent and Merger Sub in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
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SECTION 4.3 CAPITALIZATION.
(a) As of the date hereof and as of the Effective Time, the authorized
capital stock of Parent consists of 100,000,000 shares of Parent Common Stock
and 30,000,000 shares of preferred stock, par value $0.01 per share ("Parent
Preferred Stock"). As of the close of business on September 30, 2002, 33,583,520
shares of Parent Common Stock were issued and outstanding and no shares of
Parent Preferred Stock were issued and outstanding. From October 1, 2002 to the
date hereof, no shares of Parent Capital Stock have been issued or reserved for
issuance, except for shares of Parent Common Stock issued in respect of the
exercise, conversion or exchange of Parent Stock Rights or Parent DownREIT Units
outstanding on September 30, 2002. Each of the Parent DownREITs is a Subsidiary
of Parent. As of the date hereof, (i) the non-managing members of Portland
DownREIT own 432,617 Parent DownREIT Units which represents a 22.77% ownership
interest in Portland DownREIT, with the remaining ownership interests owned by
the Parent or its Subsidiaries; (ii) the limited partners of Pinecreek DownREIT
own 54,869 Parent DownREIT Units which represents a 25.28% ownership interest in
PineCreek DownREIT, with the remaining ownership interests owned by the Parent
or its Subsidiaries; and (iii) the non-managing members of Rancho DownREIT own
314,587 Parent DownREIT Units which represents an 84% ownership interest in
Rancho DownREIT, with the remaining ownership interests owned by the Parent or
its Subsidiaries.
(b) Section 4.3(b) of the Parent Disclosure Schedule sets forth as of the
date hereof, for each Parent Stock Plan, the dates on which Parent Stock Rights
under such plan were granted, the number of outstanding Parent Stock Rights
granted on each such date, the number and class of Parent Capital Stock for or
into which each such Parent Stock Right is exercisable, convertible or
exchangeable and the exercise price thereof. Except (i) as set forth in this
Section 4.3(b), (ii) as described in Section 4.3(b) of the Parent Disclosure
Schedule, and (iii) the rights to convert Parent DownREIT Units into shares of
Parent Common Stock pursuant to the Parent DownREIT Operating Agreements, there
are no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Parent or any of its
Subsidiaries is a party or by which any of them is bound obligating Parent or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of Parent Capital Stock or any other equity
interests of Parent or its Subsidiaries or other voting securities of Parent or
its Subsidiaries or obligating Parent or its Subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking and neither Parent nor its
Subsidiaries have granted any stock appreciation rights or any other contractual
rights the value of which is derived from the financial performance of Parent or
the value of shares of Parent Capital Stock.
(c) There are no outstanding or contingent obligations of Parent or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Parent
Capital Stock or the stock or ownership interests of any Subsidiary of Parent,
other than Parent's obligation to exchange Parent Common Stock for Parent
DownREIT Units pursuant to the Parent DownREIT Operating Agreements.
33
(d) All shares of Parent Common Stock subject to issuance as specified in
Section 4.3(b) hereof, or in Section 4.3(b) of the Parent Disclosure Schedule,
are duly authorized and, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, including payment of any
exercise price in respect thereof, will be validly issued, fully paid and
nonassessable.
(e) There is no Voting Debt of Parent or any of its Subsidiaries issued
and outstanding. There are no voting trusts, proxies or other voting agreements
with respect to the shares of stock of Parent to which Parent or any of its
Subsidiaries is a party.
(f) As of the date hereof, the authorized capital stock of Merger Sub
consists of 100 shares of common stock, par value $.01 per share, all of which
have been validly issued, are fully paid and nonassessable and are owned by
Parent, free and clear of any lien, and as of the Effective Time, all of the
issued and outstanding shares of the common stock of Merger Sub will be owned by
Parent free and clear of any lien.
SECTION 4.4 SUBSIDIARIES. Other than Merger Sub and Subsidiaries of Parent
formed or acquired after the date hereof in connection with the acquisition of
real property in the ordinary course of business, the only Subsidiaries of
Parent are those set forth in Section 4.4 of the Parent Disclosure Schedule. All
of the outstanding shares of capital stock (including shares which may be issued
upon exercise of outstanding options) of each of Parent's Subsidiaries that is a
corporation are duly authorized, validly issued, fully paid and nonassessable.
All equity interests in each of Parent's Subsidiaries that is a partnership or
limited liability company are duly authorized and validly issued. Except as set
forth in Section 4.4 of the Parent Disclosure Schedule, Parent owns, directly or
indirectly, all of the issued and outstanding capital stock and other ownership
interests of each of its Subsidiaries, free and clear of all Encumbrances other
than statutory or other liens for Taxes or assessments which are not yet due or
delinquent or the validity of which is being contested in good faith by
appropriate proceedings, and there are no existing options, warrants, calls,
subscriptions, convertible securities or other securities, agreements,
commitments or obligations of any character relating to the outstanding capital
stock or other securities of any Subsidiary of Parent or which would require any
Subsidiary of Parent to issue or sell any shares of its capital stock, ownership
interests or securities convertible into or exchangeable for shares of its
capital stock or ownership interests.
SECTION 4.5 OTHER INTERESTS. Except as set forth in Section 4.5 of the
Parent Disclosure Schedule, neither Parent nor any of Parent's Subsidiaries owns
or has the right or option to acquire, directly or indirectly, any interest or
investment in (whether equity or debt) any corporation, partnership, limited
liability company, joint venture, business, trust or other Person, other than
Parent's Subsidiaries identified in Section 4.4 of the Parent Disclosure
Schedule.
34
SECTION 4.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Neither the execution and delivery of this Agreement nor the
performance by Parent and Merger Sub of their respective obligations hereunder,
nor the consummation of the transactions contemplated hereby, will: (i) conflict
with Parent's Organizational Documents or the Organizational Documents of any of
its Subsidiaries; (ii) assuming satisfaction of the requirements set forth in
Section 4.6(b) below, violate any statute, law, ordinance, rule or regulation,
applicable to Parent or any of its Subsidiaries or any of their Assets; or (iii)
except as set forth in Section 4.6(a)(iii) of the Parent Disclosure Schedule,
violate, breach, require consent under, be in conflict with or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or permit the termination of any provision of, or
result in the termination of, the acceleration of the maturity of, or the
acceleration of the performance of any obligation of Parent or any of its
Subsidiaries under, or result in the creation or imposition of any lien upon any
Assets or business of Parent or any of its Subsidiaries under or give rise to
any Third Party's right of first refusal, or other similar right, under any
note, bond, indenture, mortgage, deed of trust, lease, or permit, authorization,
license, contract, instrument or other agreement or commitment or any order,
judgment or decree to which Parent or any of its Subsidiaries is a party or by
which Parent or any of its Subsidiaries or any of their respective Assets are
bound or encumbered, or give any Person the right to require Parent or any of
its Subsidiaries to purchase or repurchase any notes, bonds or instruments of
any kind, except, in the case of clauses (ii) and (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or in the
aggregate, would not cause a Parent Material Adverse Effect.
(b) Except as set forth in Section 4.6(a) or 4.6(b) of the Parent
Disclosure Schedule, no consent, approval or authorization of, permit from, or
declaration, filing or registration with, any Governmental Entity is required to
be made or obtained by Parent or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by Parent, Merger Sub or any of their
applicable Subsidiaries or the consummation by Parent and Merger Sub of the
Parent Transactions, other than (A) the filing with the SEC of the Registration
Statement and such reports under Section 13(a) of the Exchange Act, and such
other compliance with the Exchange Act, as may be required in connection with
this Agreement; (B) the filing of Articles of Merger pursuant to the MGCL; (C)
filings with the NYSE; (D) such filings and approvals as may be required by any
applicable state securities or Blue Sky Laws or Environmental Laws; (E)
business, operating and occupancy licenses and permits; and (F) such consents,
approvals, authorizations, permits, registrations, declarations and filings, the
failure to make or obtain which would not, in the aggregate, cause a Parent
Material Adverse Effect.
SECTION 4.7 COMPLIANCE. Except as set forth in Section 4.7 of the Parent
Disclosure Schedule, Parent and each of its Subsidiaries is in compliance with
all foreign, federal, state and local laws and regulations applicable to its
operations or with respect to which compliance is a condition of engaging in the
business thereof, except to the extent that failure to comply would not,
individually or in the aggregate, cause a Parent Material Adverse Effect.
Neither Parent nor any of its Subsidiaries has received written notice since
January 1, 1999, or has Knowledge of any written notice received by it at any
time, asserting a failure, or possible
35
failure, to comply with any such law or regulation, the subject of which written
notice has not been resolved as required thereby or otherwise to the reasonable
satisfaction of the party sending the notice, except for (A) matters being
contested in good faith and set forth in Section 4.7 of the Parent Disclosure
Schedule and (B) such failures as would not, individually or in the aggregate,
cause a Parent Material Adverse Effect.
SECTION 4.8 SEC DOCUMENTS.
(a) Parent has filed with the SEC all reports, schedules, statements and
other documents required to be filed by Parent or any of its Subsidiaries with
the SEC since December 31, 1999 (collectively, the "Parent SEC Reports"). As of
their respective dates, with respect to Parent SEC Reports filed pursuant to the
Exchange Act, and as of their respective effective dates, as to Parent SEC
Reports filed pursuant to the Securities Act, the Parent SEC Reports and any
registration statements, reports, forms, proxy or information statements and
other documents filed by Parent with the SEC after the date of this Agreement
(i) complied, or, with respect to those not yet filed, will comply, in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, and (ii) did not, or, with respect to those not yet filed, will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated balance sheets included in or incorporated by
reference into Parent SEC Reports (including the related notes and schedules)
presents fairly, in all material respects, the consolidated financial position
of Parent and its consolidated Subsidiaries as of its date, and each of the
consolidated statements of income, stockholders' equity and cash flows of Parent
included in or incorporated by reference into Parent SEC Reports (including any
related notes and schedules) presents fairly, in all material respects, the
results of operations and cash flows, as the case may be, of Parent and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments), in each case in
accordance with GAAP consistently applied during the periods involved, except as
may be noted therein.
(c) Except as set forth in the Parent SEC Reports, neither Parent nor any
of its Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of Parent or in the notes
thereto, prepared in accordance with GAAP consistently applied, except for (i)
liabilities or obligations that were so reserved on, or reflected in (including
the notes to), the consolidated balance sheet of Parent as of September 30,
2002, (ii) liabilities or obligations arising in the ordinary course of business
(including trade indebtedness) from September 30, 2002 to the date hereof, (iii)
other liabilities incurred after the date hereof that are permitted by Section
5.2 hereof, and (iv) liabilities or obligations which would not, individually or
in the aggregate, cause a Parent Material Adverse Effect.
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SECTION 4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in the Parent
SEC Reports and except for the transactions expressly contemplated hereby, from
September 30, 2002 to the date hereof, Parent and its Subsidiaries have
conducted their respective businesses substantially in the ordinary and usual
course consistent with past practices (including the incurrence of trade
indebtedness and secured debt assumed in connection with the acquisition of
properties by Parent or its Subsidiaries), and there has not been any change in
Parent's business, operations, condition (financial or otherwise), results of
operations, Assets or liabilities, except for changes contemplated hereby or
changes which, individually or in the aggregate, have not caused or will not
cause a Parent Material Adverse Effect.
SECTION 4.10 LITIGATION. Except as set forth in the Parent SEC Reports or
as set forth in Section 4.10 of the Parent Disclosure Schedule, there is no
Action (i) instituted, (ii) pending and served upon Parent or any of its
Subsidiaries or (iii) to the Knowledge of Parent, pending and not served on
Parent or threatened, in each case against Parent, any of its Subsidiaries or
any of their respective Assets which, individually or in the aggregate, directly
or indirectly, has caused a Parent Material Adverse Effect, nor is there any
outstanding judgment, decree or injunction, in each case against Parent, any of
its Subsidiaries or any of their respective Assets, or any statute, rule or
order of any Governmental Entity applicable to Parent or any of its Subsidiaries
which, individually or in the aggregate, has caused a Parent Material Adverse
Effect.
SECTION 4.11 TAXES.
(a) Parent and its Subsidiaries have (i) duly filed (or there have been
filed on their behalf) with the appropriate Governmental Entities all Tax
Returns required to be filed by them (after giving effect to any filing
extension properly granted by a Governmental Entity having authority to do so),
and such Tax Returns are true, correct and complete in all material respects,
(ii) duly paid in full, or made provision in accordance with GAAP (or there has
been paid or provision has been made on their behalf) for, all Taxes required to
have been paid by them, whether or not shown to be due on such Tax Returns and
(iii) withheld and paid all material Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other party;
(b) Neither Parent nor any of its Subsidiaries has received a written
claim by any authority in a jurisdiction where any of Parent and its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction;
(c) Neither Parent nor any of its Subsidiaries has received a written
notice of any threatened audits with respect to taxable years ended on or after
December 31, 1997, with respect to Taxes or Tax Returns of Parent or any of its
Subsidiaries. With respect to taxable years ended on or after December 31, 1997,
neither the IRS nor any other taxing authority (whether domestic or foreign) has
asserted against Parent or any of its Subsidiaries any deficiency or claim for
Taxes;
37
(d) Section 4.11(d) of the Parent Disclosure Schedule sets forth each year
for which an extension to file Tax Returns has been requested and for which such
Tax Returns have not yet been filed;
(e) There are no Encumbrances for Taxes upon any Assets of Parent or any
Subsidiary thereof, except for Permitted Encumbrances, and no written power of
attorney that has been granted by Parent or any of its Subsidiaries (other than
to Parent or a Subsidiary) currently is in force with respect to any matter
relating to Taxes;
(f) Except as set forth in Section 4.11(f) of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code or which could result
in a disallowed deduction under Section 162(m) of the Code;
(g) There are no, and at the Closing Date there will be no, Tax allocation
or sharing agreements or similar arrangements with respect to or involving
Parent or any of its Subsidiaries, and, after the Closing Date, neither Parent
nor any of its Subsidiaries shall be bound by any such Tax allocation or sharing
agreements or similar arrangements or have any liability thereunder for amounts
due in respect of periods prior to the Closing Date;
(h) None of Parent and its Subsidiaries (i) has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which was Parent) or (ii) has any liability for the
Taxes of any Person (other than any of Parent and its Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise;
(i) Since Parent's taxable year ended December 31, 1997, Parent has not
incurred and does not expect to incur through the Closing Date any liability for
Taxes under Section 857(b), 860(c) or 4981 of the Code, and neither Parent nor
any of its Subsidiaries has incurred any material liability for Taxes other than
in the ordinary course of business. To the Knowledge of Parent, no event has
occurred, and no condition or circumstance exists, which presents a material
risk that any material Tax described in the preceding sentence will be imposed
upon Parent or its Subsidiaries; and
(j) Parent (i) for all taxable years commencing with its taxable year
ending December 31, 1997 through the December 31 immediately prior to the
Effective Time, has elected and has been subject to federal and state taxation
as a REIT and has satisfied all requirements to qualify as a REIT for federal
and state Tax purposes for such years, (ii) at all times since such date, has
operated in such a manner so as to qualify as a REIT for federal and state Tax
purposes and will continue to operate through the Effective Time in such a
manner so as to so qualify for the taxable year ending on the date of the
Effective Time, (iii) has not taken or omitted to take any action that could
reasonably be expected to result in a challenge by the IRS or any other taxing
authority to its status as a REIT, and no such challenge is pending or, to
38
Parent's Knowledge, threatened. Each Subsidiary of Parent that is a state law
partnership or limited liability company has been since its formation and
continues to be treated for federal and state income Tax purposes as a
partnership (or a disregarded entity) and not as a corporation or an association
or publicly traded partnership taxable as a corporation. Each other Subsidiary
of Parent has been and continues to be treated for federal and state income Tax
purposes as a "qualified REIT subsidiary" within the meaning of Section 856(i)
of the Code, or a "taxable REIT subsidiary" within the meaning of Section 856(l)
of the Code. Except as set forth in Section 4.11(j) of the Parent Disclosure
Schedule, neither Parent nor any Subsidiary of Parent holds any Asset the
disposition of which would be subject to rules similar to Section 1374 of the
Code as a result of an election under Notice 88-19 or the Treasury Regulations
promulgated under Code Section 337.
SECTION 4.12 EMPLOYEE BENEFIT PLANS.
(a) Parent has listed in Section 4.12 of the Parent Disclosure Schedule
all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans
of Parent and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, change in control, severance and other
similar employee benefit plans, and all unexpired severance agreements, written
or otherwise, for the benefit of, or relating to, any current or former employee
of Parent or any ERISA Affiliate of Parent, or any Subsidiary of Parent
(together, the "Parent Employee Plans").
(b) With respect to each Parent Employee Plan, Parent has made available
to the Company, a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS, (ii) such Parent Employee Plan, (iii) each trust
agreement and group annuity contract, if any, relating to such Parent Employee
Plan and (iv) the most recent actuarial report or valuation relating to a Parent
Employee Plan subject to Title IV of ERISA.
(c) With respect to the Parent Employee Plans, individually and in the
aggregate, no event has occurred, and to the Knowledge of Parent, there exists
no condition or set of circumstances in connection with which Parent could be
subject to any liability that will have a Parent Material Adverse Effect under
ERISA, the Code or any other applicable law. There is no Company Employee Plan
that is subject to Title IV of ERISA or is a Multiemployer Plan.
(d) With respect to the Parent Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accrued or otherwise properly disclosed in the footnotes in
accordance with GAAP, in the financial statements of Parent, which obligations
will cause a Parent Material Adverse Effect.
(e) Except as disclosed in Parent SEC Reports filed prior to the date of
this Agreement, and except as set forth in Section 4.12(e) of the Parent
Disclosure Schedule, or as provided for in this Agreement, neither Parent nor
any of its Subsidiaries is a party to any oral or
39
written (i) agreement with any officer or other key employee of Parent or any of
its Subsidiaries, the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving Parent of
the nature contemplated by this Agreement, (ii) agreement with any officer of
Parent providing any term of employment or compensation guarantee extending for
a period longer than one year from the date hereof and for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
SECTION 4.13 PROPERTIES.
(a) Section 4.13(a) of the Parent Disclosure Schedule identifies:
(i) all real properties (by name and location) owned by Parent or
its Subsidiaries (the "Parent Owned Property") as of the date hereof, which are
all of the real properties owned by them as of the date hereof; and
(ii) all real properties leased or operated by Parent or its
Subsidiaries as lessee (the "Parent Leased Property") as of the date hereof,
which are all of the real properties so leased or operated by them. The Parent
Owned Property and the Parent Leased Property is referred to herein collectively
as the "Parent Real Property."
(b) Parent and its Subsidiaries have obtained title insurance policies for
the Parent Real Property listed in Section 4.13(b) of the Parent Disclosure
Schedule, and no material claims have been made against any such policies by an
insured party thereunder. With respect to the Parent Real Property not listed in
Section 4.13(b) of the Parent Disclosure Schedule, Parent has valid title to the
Parent Owned Property, and a valid leasehold interest in the Parent Leased
Property, sufficient to allow each of Parent and its Subsidiaries to conduct its
business as and where currently conducted. Each Parent Real Property is not
subject to any Encumbrances, except for any Permitted Encumbrances.
(c) Except as set forth on Section 4.13(c) of the Parent Disclosure
Schedule or as disclosed in the Parent SEC Reports, the Parent Real Property is
not encumbered by any debt.
(d) To Parent's Knowledge, all (i) certificates, permits or licenses from
any Governmental Entity having jurisdiction over any Parent Real Property and
(ii) agreements, easements or other rights, necessary to permit the lawful use
and operation of the buildings and improvements on any of the Parent Real
Property or to permit the lawful use and operation of all driveways, roads, and
other means of egress and ingress to and from any Parent Real Property have been
obtained and are in full force and effect except where the failure to obtain or
maintain the same would not cause a Parent Material Adverse Effect and there is
no pending threat of
40
modification or cancellation of the same. All work to be performed, payments to
be made and financial undertakings required to be taken by Parent or its
Subsidiaries prior to September 30, 2002 pursuant to any contract entered into
with a Governmental Entity in connection with a site approval, zoning
reclassification or other similar action relating to a Parent Real Property has
been paid or undertaken, as the case may be, except where the failure to pay
such amount or undertake such action would not cause a Parent Material Adverse
Effect.
(e) Parent has not received since January 1, 1999 any written notice of
any violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any Parent Real Property
issued by any Governmental Entity which would cause a Parent Material Adverse
Effect. Since January 1, 1999, neither Parent nor any of its Subsidiaries has
received any written notice from any Governmental Entity with jurisdiction over
Parent or any such Subsidiaries to the effect that (i) any condemnation or
rezoning proceedings are pending or threatened with respect to any Parent Real
Property or (ii) any zoning, building or similar law, code, ordinance or
regulation is being violated by the maintenance, operation or use of any
buildings or other improvements on any Parent Real Property or by the
maintenance, operation or use of the parking areas, except where any such
written notice of such a proceeding or violation would not, individually or in
the aggregate, cause a Parent Material Adverse Effect.
(f) Except as would not cause, individually or in the aggregate, a Parent
Material Adverse Effect, to Parent's Knowledge, (i) there are no structural
defects relating to any Parent Real Property, (ii) there is no Parent Real
Property whose building systems are not in working order in any material respect
(ordinary wear and tear excepted), (iii) there is no uninsured physical damage
to any Parent Real Property in an amount in excess of $150,000 with respect to
any individual property, except for the payment by the Parent of a deductible
under the applicable insurance policy, and (iv) there is no current renovation
or restoration to any Parent Real Property the remaining cost of which exceeds
$150,000 with respect to any individual property.
(g) True and correct copies of the Parent Leases as amended as of the date
hereof have been delivered to, or made available for review by, the Company.
Section 4.13(g) of the Parent Disclosure Schedule lists the following
information with respect to the Parent Leases:
(i) the name of the lessee;
(ii) the expiration date of the Parent Lease; and
(iii) the amount (or method of determining the amount) of minimum
monthly base rentals due under each Parent Lease.
(h) Parent has delivered to the Company a copy of its aging of accounts
receivable as of September 30, 2002, which copy is true and correct in all
material respects. Except as set forth in Section 4.13(h) of the Parent
Disclosure Schedule, as of the date hereof,
41
neither Parent nor any of its Subsidiaries has delivered written notice to any
tenant under any Parent Lease alleging that such tenant is in default
thereunder, other than with respect to defaults that have been cured or waived
or which would not, individually or in the aggregate, cause a Parent Material
Adverse Effect.
(i) There are no agreements, written or oral, between Parent or any of its
Subsidiaries and any other Person relating to the use and occupancy of the
Parent Real Property by a Person other than Parent or any of its Subsidiaries
other than the Parent Leases. Except as set forth in Section 4.13(i) of the
Parent Disclosure Schedule, as of the date hereof, no defaults (unless
subsequently cured) by Parent or its Subsidiaries have been alleged in writing
by the lessees thereunder (and received by Parent or any of its Subsidiaries)
that have not been cured in all material respects and, to the Knowledge of
Parent, none of Parent nor any of its Subsidiaries is in default under any
Parent Lease other than such defaults which would not, individually or in the
aggregate, cause a Parent Material Adverse Effect.
SECTION 4.14 CONTRACTS.
(a) Section 4.14(a) of the Parent Disclosure Schedule contains a complete
and accurate list of all Parent Contracts in effect as of the date hereof, other
than the Parent Contracts which are listed as an exhibit to Parent's most recent
annual report on Form 10-K or a subsequent quarterly report on Form 10-Q. Each
copy of a Parent Contract which has been delivered to, or made available for
review by, the Company is a true and correct copy of such Parent Contract as
amended to date.
(b) As of the date of this Agreement, (i) there is no breach or violation
of or default by Parent or any of its Subsidiaries under any of the Parent
Contracts, except such breaches, violations and defaults as have been waived,
and (ii) no event has occurred with respect to Parent or any of its Subsidiaries
which, with notice or lapse of time or both, would constitute a breach,
violation or default, or give rise to a right of termination, modification,
cancellation, foreclosure, imposition of a lien, prepayment or acceleration
under any of the Parent Contracts, which breach, violation or default referred
to in clauses (i) or (ii), individually or in the aggregate with other such
breaches, violations or defaults referred to in clauses (i) or (ii), would cause
a Parent Material Adverse Effect. True copies of the Parent Contracts in effect
as of the date hereof have been delivered or made available to the Company.
SECTION 4.15 LABOR RELATIONS. Except as set forth in Section 4.15 of the
Parent Disclosure Schedule, or as would not cause a Parent Material Adverse
Effect, (i) there are no controversies pending or, to the Knowledge of Parent,
threatened between Parent or any of its Subsidiaries and any of their respective
employees; (ii) neither Parent nor any of its Subsidiaries is a party, or
otherwise subject, to any collective bargaining agreement or similar contract;
(iii) there are no proceedings asserting unfair labor practice charges pending
against Parent or any of its Subsidiaries before the National Labor Relations
Board, or any similar foreign labor relations governmental bodies, or any
current union representation questions involving employees of Parent or any of
its Subsidiaries; and (iv) there is no strike, slowdown, work
42
stoppage or lockout, or, to the Knowledge of Parent, threat thereof, by or with
respect to any employees of Parent or any of its Subsidiaries.
SECTION 4.16 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 4.16(a) of the Parent Disclosure
Schedule, Parent, each of its Subsidiaries and, to Parent's Knowledge, each
tenant or operator of Parent Real Property (i) have obtained all permits,
licenses and other authorizations which are required to be obtained under all
applicable Environmental Laws by Parent or its Subsidiaries; (ii) are in
compliance with all terms and conditions of such required permits, licenses and
authorizations, and also are in compliance with all other applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in applicable Environmental Laws
except where the failure to obtain such permits, licenses or other
authorizations or to comply with such terms and conditions or limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables would not, individually or in the aggregate, cause a
Parent Material Adverse Effect.
(b) Except as set forth in Section 4.16(b) of the Parent Disclosure
Schedule, Parent, each of its Subsidiaries and, to Parent's Knowledge, each
tenant or operator of Parent Real Property have not received a written notice of
and have no Knowledge of any present or unremediated past violations of
Environmental Laws, or of any event, incident or Action preventing continued
compliance with such Environmental Laws, or which could give rise to any common
law environmental liability, or form the basis of any Action against Parent or
any of its Subsidiaries based on or resulting from the manufacture, processing,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge or release into the environment, of any Hazardous Material or
otherwise relating to protection of human health or the environment.
SECTION 4.17 BROKERS. No broker, finder or investment banker (other than
Credit Suisse First Boston, the fees and expenses of which shall be paid by
Parent) is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or any of its
Subsidiaries. Parent has heretofore furnished to the Company a complete and
correct copy of all agreements between Parent and Credit Suisse First Boston
pursuant to which such firm would be entitled to any such payment.
SECTION 4.18 VOTE REQUIRED. This Agreement has been approved by Parent, as
the sole stockholder of Merger Sub. No other vote of holders of any class or
series of securities of Parent or Merger Sub is necessary to approve this
Agreement and the Parent Transactions.
SECTION 4.19 TAX MATTERS. Neither Parent nor any of its Affiliates has
taken or omitted or agreed to take or omit any action, nor does Parent have
Knowledge of any circumstances, that (without regard to any action taken or
omitted or agreed to be taken or omitted by the Company or any of its
Affiliates) would prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code. Parent has no Knowledge of
43
any agreement, plan or other circumstance that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
SECTION 4.20 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed on
November 1, 2002 solely for the purpose of engaging in the transactions
contemplated by this Agreement, has engaged in no other business activities, has
no liabilities or obligations and has conducted its operations only as
contemplated hereby.
SECTION 4.21 INSURANCE. Parent has made available to the Company true and
correct copies of all fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by Parent or any of its Subsidiaries as of the date hereof.
SECTION 4.22 NO MATERIAL ADVERSE EFFECT. Since January 1, 1999, except as
disclosed in the Parent SEC Reports, to the Knowledge of Parent no fact,
circumstance or condition has arisen or existed that could reasonably be
expected to cause a Parent Material Adverse Effect.
SECTION 4.23 EXEMPTION FROM LIMITATION ON OWNERSHIP OF PARENT COMMON
STOCK. Prior to the Effective Time, Parent Board will, subject to customary
limitations and exceptions, exempt the Lazard Entities from the limitation on a
person owning shares of Parent Common Stock contained in the Parent
Organizational Documents to allow the Lazard Entities to initially own in the
aggregate such number of shares of Parent Common Stock as will be received by
the Lazard Entities in the Merger (such number of shares to be subject to
downward adjustment to reflect the sale by the Lazard Entities of shares of
Parent Common Stock received by the Lazard Entities in the Merger), provided
that prior to the Effective Time Parent receives from the Lazard Entities (A)
representations in a form reasonably acceptable to the Parent Board to the
effect that (i) Prometheus Western Retail, LLC is wholly-owned by Prometheus
Western Retail Trust; (ii) Prometheus Western Retail Trust is wholly-owned by LF
Strategic Realty Investors L.P., and (iii) to the best of the knowledge of LF
Strategic Realty Investors L.P., on the date hereof, no Person now owns,
actually or constructively (within the meaning of Code Section 856(h)), an
interest in excess of 50% in LF Strategic Realty Investors L.P., and (B) a
covenant in a form reasonably acceptable to the Parent Board to the effect that,
if LF Strategic Realty Investors L.P. acquires actual knowledge in the future
that any Person owns, actually or constructively (within the meaning of Code
Section 856(h)), an interest in excess of 50% in LF Strategic Realty Investors
L.P., LF Strategic Realty Investors L.P. will promptly notify Parent of that
fact.
SECTION 4.24 PRIOR STOCK OWNERSHIP. Neither Parent nor any Subsidiary of
Parent owns, directly or indirectly, nor have they owned during the past five
years, directly or indirectly, any stock, securities or other instruments giving
the holder thereof the right to acquire any such stock or securities of the
Company. Neither Parent nor Merger Sub nor any affiliate thereof is an
"interested stockholder" or an "affiliate" of an interested stockholder (both as
44
defined in Section 3-601 of the MGCL) of the Company for purposes of Section
3-602 of the MGCL.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE MERGER. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, the Company agrees as
to itself and each of its Subsidiaries, except to the extent that Parent shall
otherwise consent in writing, or as expressly contemplated or permitted by this
Agreement, or as otherwise indicated in Section 5.1 of the Company Disclosure
Schedule, or as required by a Governmental Entity of competent jurisdiction, to
carry on its business in the ordinary course in substantially the same manner as
previously conducted, to pay its debts and Taxes when due, subject to good faith
disputes over such debts or Taxes, in the ordinary course in substantially the
same manner as previously paid, to pay or perform its other material obligations
when due in the ordinary course in substantially the same manner as previously
paid or performed, to maintain insurance coverages and its books, accounts and
records in the usual manner generally consistent with past practices, to comply
in all material respects with all applicable laws, ordinances and regulations of
Governmental Entities, to maintain and keep its properties and equipment in good
repair, working order and condition (except ordinary wear and tear), and, to the
extent consistent with such business, use all reasonable efforts, generally
consistent with past practices and policies, to preserve intact its present
business organization and its relationships with officers, employees and others
having business dealings with it; provided, however, that no action by the
Company or any of its Subsidiaries with respect to matters specifically
addressed by any other provision of this Section 5.1 shall be deemed to be a
breach of this paragraph of Section 5.1 unless such action would constitute a
breach of one or more of such other provisions. Without limiting the generality
of the foregoing and except as expressly contemplated by this Agreement, during
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, without the written
consent of Parent, the Company shall not and shall not permit any of its
Subsidiaries to:
(a) adopt or propose any amendment to its Organizational Documents, except
as contemplated by this Agreement;
(b) (i) except as set forth on Section 5.1(b) of the Company Disclosure
Schedule, issue, pledge or sell (other than upon exercise of Company Stock
Rights outstanding on the date of this Agreement upon payment of the exercise
price thereof and withholding of any taxes required to be withheld or upon the
exercise of rights of the limited partners in the Operating Partnership to
convert or exchange their Company OP Units outstanding on the date of this
Agreement into Company Common Stock), or propose or authorize the issuance,
pledge or sale, or grant any options or make any other agreements with respect
to, any of its shares of capital stock or any other of its securities, (ii)
amend, waive or otherwise modify any of the terms of any option, warrant or
stock option plan of the Company or any of its Subsidiaries,
45
including without limitation, the Company Stock Rights and the Company Stock
Plan, or authorize cash payments in exchange for any options granted under any
of such plans, or (iii) adopt or implement any stockholder rights plan;
(c) except as set forth in or permitted by Sections 5.3, 5.4 and 6.14,
declare, set aside or pay any dividend or make any other distribution or payment
with respect to any shares of its stock or beneficial interests (including any
dividend distribution payable in, or otherwise make a distribution of, shares of
capital stock of any existing or subsequently formed Subsidiary of the Company),
except (i) the regular quarterly cash dividend paid by the Company for the
fourth quarter of 2002 in an amount not to exceed $0.06 per share of Company
Common Stock, (ii) in the event the Closing Date is on or after March 15, 2003,
the regular quarterly cash dividend paid by the Company for the first quarter of
2003 in an amount not to exceed $0.12 per share of Company Common Stock, (iii)
the regular distributions that are required to be made in respect of the Company
OP Units in connection with any dividends paid on the Company Common Stock, (iv)
and dividends or distributions made to the Company or any Subsidiary of the
Company.
(d) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its stock or beneficial interests, or any of its other securities, except
exchanges of Company OP Units for Company Common Stock, in accordance with the
Operating Partnership Agreement;
(e) increase the compensation or fringe benefits payable or to become
payable to its directors, officers or employees (whether from the Company or any
of its Subsidiaries), or pay any benefit, grant or award not required by any
Company Employee Plan (including, without limitation, the granting of stock
options, stock appreciation rights, shares of restricted stock or performance
units) or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or employee of the
Company or any of its Subsidiaries or establish, adopt, enter into, or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, savings, welfare, deferred
compensation, employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or welfare of any
directors, officers or current or former employees, including any Benefit
Arrangement, Pension Plan or Welfare Plan, except, in any case referred to in
this Section 5.1(e) (i) to the extent required by applicable law or regulation,
(ii) pursuant to and as required by any collective bargaining agreements or
Company Employee Plan as in effect on the date of this Agreement, (iii) for
salary and benefit increases in the ordinary course of business consistent with
past practice to employees other than officers of the Company and employees
earning an annual base salary in excess of $100,000, (iv) pursuant to Section
2.8, or (v) as disclosed in Section 5.1(e) of the Company Disclosure Schedule to
the extent not otherwise required by any Company Employee Plan. For the
avoidance of doubt, no payment set forth in Section 5.1(e) of the Company
Disclosure Schedule shall be duplicative of any payment otherwise required by
any Company Employee Plan, as set forth in subsection (ii) above.
46
(f) (i) sell, pledge, dispose of, grant or encumber any of the Assets of
the Company or any of its Subsidiaries consisting of stock or partnership
interests of its Subsidiaries or fee interests in real property, other than
sales of Assets listed on Schedule 5.1(f)(i) of the Company Disclosure Schedule,
(ii) acquire any Assets consisting of fee interests in real property (other than
real property listed in Section 5.1(f)(ii) of the Company Disclosure Schedule),
or (iii) acquire any other Assets or (including, without limitation, by merger,
consolidation, lease or acquisition of stock or Assets) any interest in a
corporation, partnership, other business organization or any division thereof
(or a substantial portion of the Assets thereof) in an aggregate amount
exceeding $1,000,000; provided that nothing herein shall prevent the Company or
its Subsidiaries from entering into leases, as landlord, of their real property
Assets and provided further that the Company shall notify Parent of the
acquisition by the Company or any of its Subsidiaries of any interest in a
corporation, partnership, other business organization or any division thereof
(or a substantial portion of the Assets thereof) prior to any such acquisition;
(g) except as required under any Company Contracts in effect as of the
date hereof or as set forth in Section 5.1(g) of the Company Disclosure
Schedule, (i) incur, assume or pre-pay any debt for borrowed money, other than
pursuant to credit or other agreements in effect as of the date hereof, (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person,
(iii) make or acquire any loans, advances or capital contributions to, or
investments in, any other Person (including advances to employees), except for
loans, advances, capital contributions or investments between any wholly-owned
Subsidiary of the Company and the Company or another wholly-owned Subsidiary of
the Company, or (iv) enter into any "keep well" or other agreement to maintain
the financial condition of another entity (other than the Company or any of its
wholly-owned Subsidiaries);
(h) make, alter or rescind any material express or deemed election
relating to Taxes, settle or compromise any material Action relating to Taxes,
amend in any material respect any material Tax return except in each case in the
ordinary course of business consistent with past practice or as required by law,
or except as may be required by applicable law, make any change to any of its
material methods of reporting income or deductions (including, without
limitation, any change to its methods or basis of write-offs of accounts
receivable) for federal income Tax purposes from those employed in the
preparation of its federal income Tax return for the taxable year ending
December 31, 2001;
(i) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted, unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities;
(j) other than in the ordinary course of business and consistent with past
practice, waive any rights of substantial value or make any payment, direct or
indirect, of any material liability of the Company or of any of its Subsidiaries
before the same comes due in accordance with its terms;
47
(k) fail to maintain its existing insurance coverage of all types in
effect or, in the event any such coverage shall be terminated or lapse, to the
extent available at reasonable cost, procure substantially similar substitute
insurance policies which in all material respects are in at least such amounts
and against such risks as are currently covered by such policies or, as
reasonably determined by the Company, property policies with increased coverage
limits to adequately insure all Company Real Property;
(l) change in any material manner its methods of accounting as in effect
on September 30, 2002 except as required by GAAP, or take any action, other than
reasonable and usual actions in the ordinary course of business and consistent
with past practice, with respect to accounting policies, unless required by GAAP
or the SEC;
(m) make any material modification or amendment or terminate any of the
Company Contracts, except as necessary to effectuate the construction of Company
Real Property identified on Section 3.9 of the Company Disclosure Schedule, or
waive, release or assign any material rights or claims other than in the
ordinary course of business and consistent with past practice (provided that the
Company is expressly permitted to waive its right to terminate Company Leases in
the event of non-material or non-recurring breaches by tenants);
(n) take, or agree to commit to take, any action that would cause the
representations and warranties of the Company contained herein, individually or
in the aggregate, not to be true and correct in all material respects;
(o) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any Company
Affiliates which involves the transfer of consideration or has a financial
impact on the Company, other than pursuant to such agreements, arrangements, or
understandings existing on the date of this Agreement or disclosed on the
Company Disclosure Schedule;
(p) take or agree to take or cause to be taken any action that could
reasonably be expected to prevent the Merger from qualifying as a reorganization
as described in Section 368(a) of the Code;
(q) except as stated in the budgets set forth in Section 5.1(q) of the
Company Disclosure Schedule, make or commit to make any capital expenditures
(other than capital expenditures for the repair or maintenance of capital
Assets) that exceed $2,500,000 in the aggregate, excluding capital expenditures
made with funds (A) held in like kind escrows established prior to the date
hereof in accordance with Section 1031 of the Code or (B) obtained as proceeds
from insurance policies due to the destruction, loss or impairment of capital
Assets;
(r) compromise, or settle any litigation or arbitration proceedings
involving payments by the Company or its Subsidiaries in excess of $100,000 per
litigation or arbitration, or $500,000 in the aggregate; or
48
(s) enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to authorize, publicly recommend, publicly propose or
publicly announce an intention to do any of the foregoing, except as permitted
above.
SECTION 5.2 CONDUCT OF BUSINESS OF PARENT PENDING THE MERGER. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent agrees as to itself
and each of its Subsidiaries (including Merger Sub), except to the extent that
the Company shall otherwise consent in writing, or as expressly contemplated or
permitted by this Agreement, or as otherwise indicated in Section 5.2 of the
Parent Disclosure Schedule, or as required by a Governmental Entity of competent
jurisdiction, to carry on its business in the ordinary course in substantially
the same manner as previously conducted, to pay its debts and Taxes when due,
subject to good faith disputes over such debts or Taxes, in the ordinary course
in substantially the same manner as previously paid, to pay or perform its other
material obligations when due in the ordinary course in substantially the same
manner as previously paid or performed, to maintain insurance coverages and its
books, accounts and records in the usual manner generally consistent with past
practices, to comply in all material respects with all applicable laws,
ordinances and regulations of Governmental Entities, to maintain and keep its
properties and equipment in good repair, working order and condition (except
ordinary wear and tear), and, to the extent consistent with such business, use
all reasonable efforts consistent with past practices and policies to preserve
intact its present business organization and its relationships with officers,
employees and customers, suppliers, distributors, and others having business
dealings with it; provided, however, that no action by Parent or any of its
Subsidiaries with respect to matters specifically addressed by any other
provision of this Section 5.2 shall be deemed to be a breach of this paragraph
of Section 5.2 unless such breach would constitute a breach of one or more of
such other provisions. Without limiting the generality of the foregoing and
except as expressly contemplated by this Agreement, during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, without the written consent of the
Company, Parent shall not and shall not permit any of its Subsidiaries to:
(a) adopt or propose any amendment to its Organizational Documents that
could reasonably be expected to adversely affect the Company Stockholders;
(b) except as set forth in or permitted by Sections 5.3 and 6.15, declare,
set aside or pay any dividend or make any other distribution or payment with
respect to any shares of its stock or beneficial interests (including any
dividend distribution payable in, or otherwise make a distribution of, shares of
capital stock of any existing or subsequently formed Subsidiary of Parent),
except the regular quarterly dividend paid by Parent in an amount not to exceed
$0.50 per share of Parent Common Stock, distributions that are required to be
made in respect of the Parent DownREIT Units in connection with any dividends
paid on the shares of Parent Common Stock, and dividends or distributions made
to Parent or any subsidiary of Parent;
49
(c) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its common stock, or any of its other securities, except for (i) redemptions and
transfers of Parent Common Stock required under Parent's charter in order to
preserve the status of Parent as a REIT under the Code, and (ii) conversions or
redemptions of Parent DownREIT Units for cash, Parent Common Stock or otherwise
in accordance with the Organizational Documents of the Parent DownREITs;
(d) (i) sell, pledge, dispose of, grant or encumber any of the Assets of
Parent or any of its Subsidiaries consisting of stock or partnership interests
of its Subsidiaries or fee interests in real property, other than sales or
dispositions of Assets in an aggregate amount not to exceed $75,000,000, (ii)
acquire any Assets consisting of fee interests in real property, other than
Assets in an aggregate amount not to exceed $75,000,000; (iii) acquire all or
substantially all of the assets of any company, division or line of business of
any Person, if the aggregate value of such assets exceeds $75,000,000; or (iv)
agree to enter into any merger, reorganization, share exchange, business
combination or similar transaction pursuant to which Parent Stockholder will
receive any consideration (whether payable in cash, securities, property or
other consideration) in exchange for their shares of Parent Common Stock;
provided that nothing herein shall prevent Parent or its Subsidiaries from
entering into leases of their real property Assets;
(e) enter into any line of business that is not a part of, related to or
in support of the retail shopping center business conducted by Parent as of the
date hereof;
(f) take or agree to take or cause to be taken any action that could
reasonably be expected to prevent the Merger from qualifying as a reorganization
as described in Section 368(a) of the Code;
(g) issue, pledge or sell, or propose or authorize the issuance, pledge or
sale, or grant any options or make any other agreements with respect to, any of
its shares of capital stock; provided, however, the foregoing restrictions shall
not apply to (A) securities issued upon exercise of Parent Stock Rights upon
payment of the exercise price thereof, (B) securities issued upon exercise of
rights of the equity holders in the Parent DownREITs to convert their Parent
DownREIT Units into shares of Parent Common Stock, (C) stock options or
restricted stock awarded to directors, officers or employees of the Company
pursuant to the Parent Stock Plans, (D) securities issued pursuant the Parent's
dividend reinvestment plan or (E) securities issued pursuant to Article II of
this Agreement; or
(h) enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to authorize, recommend, propose or announce an intention
to do any of the foregoing.
SECTION 5.3 CONTINUED QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST;
FINAL COMPANY DIVIDEND. From and after the date hereof through the Effective
Time, each of Company and Parent will maintain its respective qualification as a
"real estate investment trust" under the Code and the rules and regulations
thereunder. Without limiting the generality of the
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foregoing and notwithstanding anything to the contrary set forth in this
Agreement, if necessary to enable the Company to make aggregate dividend
distributions during its final taxable period equal to the Minimum Distribution
Dividend, the Company shall declare and pay a dividend (the "Final Company
Dividend") to holders of Company Common Stock in an amount equal to the minimum
dividend sufficient to permit the Company to make aggregate dividend
distributions during its final taxable period equal to the Minimum Distribution
Dividend. If the Company determines it is necessary to declare the Final Company
Dividend, it shall notify Parent at least ten days prior to the date for the
Company Stockholders Meeting so that Parent may declare and pay a dividend per
share to holders of Parent Common Stock in an amount per share equal to the
quotient obtained by dividing (x) the Final Company Dividend per Company Common
Share by (y) the Exchange Ratio. For purposes of this paragraph, the term
"Minimum Distribution Dividend" shall mean a distribution with respect to the
Company's taxable year ending at the Effective Time which is sufficient to allow
the Company to (i) satisfy the distribution requirements set forth in Section
857(a) of the Code, and (ii) avoid, to the extent possible, the imposition of
income tax under Section 857(b) of the Code and the imposition of excise tax
under Section 4981 of the Code.
SECTION 5.4 DIVIDEND PAYMENT COORDINATION. Each of Parent and the Company
shall coordinate with the other the declaration of its regular dividend payable
with respect to the fourth quarter of 2002, and shall designate the same date as
its record date (the "Designated Record Date") for such dividend, provided that
such record date shall be no earlier than December 15, 2002 and no later than
January 15, 2003, unless otherwise agreed to by Parent and the Company. In the
event that the Closing shall not have occurred prior to March 15, 2003, each of
Parent and the Company shall coordinate with the other the declaration of its
regular dividend payable with respect to the first quarter of 2003, and shall
designate March 15, 2003 as its record date for such dividend.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1 PREPARATION OF FORM S-4 AND THE PROXY STATEMENT; STOCKHOLDER
MEETING.
(a) As promptly as practicable after the execution of this Agreement, the
Company and Parent shall cooperate with each other regarding, and, prepare and
file with the SEC, the Proxy Statement/Prospectus and Parent shall prepare and
file the Registration Statement (in which the Proxy Statement/Prospectus will be
included). The Company and Parent will cause the Proxy Statement/Prospectus and
the Registration Statement to comply as to form in all material respects with
the applicable provisions of the Securities Act, the Exchange Act and the rules
and regulations thereunder. Each of Parent and the Company shall use all
reasonable efforts to have or cause the Proxy Statement/Prospectus to be cleared
by the SEC and to cause the Registration Statement to become effective as
promptly as practicable. Without limiting the generality of the foregoing, each
of the Company and Parent shall cause its respective Representatives to fully
cooperate with the other Party and its respective
51
Representatives in the preparation of the Proxy Statement/Prospectus and the
Registration Statement, and shall, upon request, furnish the other Party with
all information concerning it and its Affiliates as the other may deem
reasonably necessary or advisable in connection with the preparation of the
Proxy Statement/Prospectus and the Registration Statement. The Company hereby
agrees that the recommendations of the Company Board described in Section 3.19
(subject to the right of the Company Board to withdraw, amend or modify such
recommendation in accordance with Section 6.3) shall be included in the
Registration Statement and the Proxy Statement/Prospectus. Parent shall use
commercially reasonable best efforts to take all actions required under any
applicable federal or state securities or Blue Sky Laws in connection with the
issuance of shares of Parent Common Stock pursuant to the Merger and will pay
all filing fees incident thereto. As promptly as practicable after the
Registration Statement becomes effective, the Company shall cause the Proxy
Statement/Prospectus to be mailed to its stockholders. Parent shall comply with
its obligations under Section 3(a)(i) of the Lazard Rights Agreement.
(b) The Company and Parent each agrees that none of the information
supplied by it or its Subsidiaries to be included or incorporated by reference
in the Proxy Statement/Prospectus or any amendment thereof or supplement
thereto, will, on the date of the mailing of the Proxy Statement/Prospectus or
any amendment or supplement thereto, and at the time of the Company Stockholders
Meeting, 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. The Company and Parent each agrees that none of the information
supplied by it or its Subsidiaries to be included or incorporated by reference
in the Registration Statement will, at the time the Registration Statement
becomes effective under the Securities Act, 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.
(c) Without limiting the generality of the foregoing, prior to the
Effective Time (i) the Company and Parent shall notify each other as promptly as
practicable upon becoming aware of any event or circumstance which should be
described in an amendment of, or supplement to, the Proxy Statement/Prospectus
or the Registration Statement, and (ii) the Company and Parent shall each notify
the other as promptly as practicable after the receipt by it of any written or
oral comments of the SEC on, or of any written or oral request by the SEC for
amendments or supplements to, the Proxy Statement/Prospectus or the Registration
Statement, and shall promptly supply the other with copies of all correspondence
between it or any of its Representatives and the SEC with respect to any of the
foregoing filings.
(d) The Company shall take all action necessary to duly call the Company
Stockholders Meeting, to be held as promptly as practicable for the purpose of
voting upon the approval of the Company Voting Proposal. Subject to the right of
the Company Board to withdraw, amend or modify such recommendation in accordance
with Section 6.3, the Company shall, through its board of directors, recommend
to its stockholders adoption of this Agreement and approval of the Merger and
related matters, and the Company shall use its best efforts to
52
solicit from its stockholders proxies in favor of the Company Voting Proposal.
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to this Section 6.1(d) to call and conduct the Company
Stockholders Meeting shall not be affected by the commencement, public proposal
or communication to the Company of any Acquisition Proposal.
SECTION 6.2 COOPERATION; NOTICE; CURE. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Parent
and the Company shall confer on a regular and frequent basis with one or more
Representatives of the other Party to report on the general status of ongoing
operations. Each of Parent and the Company shall promptly notify the other in
writing of, and will use all commercially reasonable efforts to cure before the
Closing Date, any event, transaction or circumstance, as soon as reasonably
practicable after it becomes known to such Party, that causes or will cause any
covenant or agreement of Parent or the Company, as the case may be, under this
Agreement to be breached in any material respect or that renders or will render
untrue in any material respect any representation or warranty of Parent or the
Company contained in this Agreement. No notice given pursuant to this paragraph
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
SECTION 6.3 NO SOLICITATION.
(a) Subject to Section 6.3(b), unless and until this Agreement shall have
been terminated by either party pursuant to Article VIII hereof, the Company
shall not take or cause, directly or indirectly (through representatives, agents
or otherwise), any of the following actions with any party other than Parent or
its designees: (i) solicit, encourage, initiate or participate in any
negotiations, inquiries or discussions with respect to any offer or proposal to
acquire all or any part of its business, assets or capital stock whether by
merger, consolidation, other business combination, purchase of assets, tender or
exchange offer or otherwise, other than an offer or proposal with respect to a
sale transaction permitted under Section 5.1 hereof (each of the foregoing, an
"Acquisition Proposal"); (ii) disclose, in connection with an Acquisition
Proposal, any information or provide access to its properties, books or records,
except as required by law or pursuant to a governmental request for information;
(iii) enter into or execute any agreement relating to an Acquisition Proposal;
or (iv) make or authorize any public statement, recommendation or solicitation
in support of any Acquisition Proposal other than with respect to the Merger, or
as otherwise required by applicable law. This Section 6.3(a) shall not limit the
ability of the Company and its Subsidiaries to sell Assets in accordance with
Section 5.1(f) hereof.
(b) Notwithstanding the foregoing, in response to a bona fide,
unsolicited, written Acquisition Proposal from a Third Party (that does not
result from a breach of this Section 6.3), the Company Board may, and may
authorize and permit the Company's officers, directors, employees, financial
advisors, representatives, or agents to, (i) provide such Third Party with
nonpublic information, (ii) otherwise facilitate any effort or attempt by such
Third Party to make such Acquisition Proposal, (iii) agree to or recommend or
endorse any such
53
Acquisition Proposal with or by any Third Party, (iv) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, its
approval and recommendation of the Merger and this Agreement, and (v)
participate in discussions and negotiations with such Third Party relating to
such Acquisition Proposal, if and only to the extent that (x) the Company Board
believes in good faith (after consultation with its financial advisor and legal
counsel) that such Acquisition Proposal is more favorable or is likely to result
in an Acquisition Proposal that is more favorable to Company Stockholders than
the Merger and is made by a Person believed by the Company Board to be
reasonably capable of completing such Acquisition Proposal (a "Superior
Proposal"), (y) in the case of clauses (iii) and (iv) only, the Company Board,
after having consulted with and considered the advice of outside counsel, has
reasonably determined in good faith that the failure of the Company Board to
take the actions specified in clauses (iii) or (iv) would result in a breach of
its legal duties to the Company or the Company Stockholders under applicable law
and (z) the Third Party has entered into a confidentiality agreement pertaining
to nonpublic information regarding the Company containing terms in the aggregate
no more favorable to the Third Party than those in the Confidentiality
Agreement. In the event the Company Board withdraws or modifies its approval of
the Merger and this Agreement as herein provided, the Merger and this Agreement
shall nevertheless be submitted to the Company Stockholders for their
consideration and approval in accordance with Section 3-105(d) of the MGCL. For
a period of not less than five Business Days after Parent's receipt of notice of
a Superior Proposal, the Company shall, if requested by Parent, negotiate in
good faith with Parent to revise this Agreement so that the Acquisition Proposal
that constituted a Superior Proposal no longer constitutes a Superior Proposal.
The Company shall not enter into any agreement implementing an Acquisition
Proposal prior to the termination of this Agreement in accordance with Section
8.1.
(c) The Company shall notify Parent reasonably promptly after receipt by
the Company (or any of its advisors) of any Acquisition Proposal or any request
for nonpublic information in connection with an Acquisition Proposal or for
access to the Company's properties, books or records by any person or entity
that informs the Company that it is considering making, or has made, an
Acquisition Proposal. Such notice shall be made orally and in writing and shall
indicate in reasonable detail the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact. If the Acquisition Proposal is
believed by the Company Board to be a Superior Proposal, the Company shall
promptly (but in any event within one calendar day) furnish to Parent all of the
terms of such proposal and copies of any proposed agreement relating thereto.
The Company shall promptly (but in any event within one calendar day) advise
Parent in writing of any material changes to the terms and conditions of any
Acquisition Proposal.
(d) Nothing contained in this Section 6.3 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14e-2
promulgated under the Exchange Act or from making any disclosure to its
stockholders if the Company Board determines in good faith after consultation
with its outside counsel that failure to do so would reasonably be expected to
result in a breach of its statutory duties to the Company or its stockholders
under any applicable law, provided, however, that neither the Company nor the
54
Company Board nor any committee thereof may, except as expressly permitted by
this Section 6.3 or required by Rule 14e-2 promulgated under the Exchange Act,
withdraw or modify, or propose publicly to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, an Acquisition Proposal.
SECTION 6.4 ACCESS TO INFORMATION. Upon reasonable notice, each of Parent
and the Company (and each of their respective Subsidiaries) shall afford to the
other Party and its Representatives reasonable access, during normal business
hours during the period prior to the Effective Time, to all its personnel,
properties, books, contracts, commitments and records and, during such period,
each of Parent and the Company shall, and shall cause each of its respective
Subsidiaries to, furnish promptly to the other (a) copies of monthly financial
reports and development reports, (b) a copy of each report, schedule,
registration statement and other documents filed or received by it during such
period pursuant to the requirements of federal or state securities laws and (c)
all other information concerning its business, Assets, personnel and tax status
as the other Party may reasonably request; provided, however, the foregoing
shall not require the Company or Parent to permit any inspection or disclose any
information that would result in the disclosure of confidential information of
Third Parties or violate a confidentiality obligation of such party or any
material bearing on an Acquisition Proposal made prior to the date of this
Agreement by any Third Party, or any advice or analysis by the Company or any of
its representatives or any such Third Party or any such Acquisition Proposal or
of any report from its financial advisors, counsel or management regarding
Parent. Each Party making such requests will hold any such information furnished
to it by the other Party or Parties which is nonpublic in confidence in
accordance with the letter agreement dated as of October 10, 2002, between
Parent and the Company (the "Confidentiality Agreement"). All requests for
information made pursuant to this Section shall be directed to an executive
officer of the Company or Parent, as the case may be, or such Person designated
by such officers. No information or knowledge obtained in any investigation
pursuant to this Section 6.4 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the Parties to consummate the Merger.
SECTION 6.5 TERMINATION OF COMPANY'S 401(K) PLAN. Unless Parent otherwise
requests in writing, prior to the Closing, the Company Board shall (i) adopt
resolutions terminating, effective prior to the Effective Time, the Company's
401(k) Plan ("Company 401(k) Plan") and (ii) amend the Company 401(k) Plan in
the manner necessary to cause the tax-qualified status of such Company 401(k)
Plan to be maintained at the time of termination.
SECTION 6.6 GOVERNMENTAL APPROVALS.
(a) The Parties shall cooperate with each other and use commercially
reasonable efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, to obtain as promptly
as practicable all permits, registrations, licenses, consents, variances,
exemptions, orders, approvals and authorizations of all Third Parties and
Governmental Entities which are necessary to consummate the transactions
55
contemplated by this Agreement ("Governmental Approvals"), and to comply with
the terms and conditions of all such Governmental Approvals. Each of the Parties
shall use commercially reasonable efforts to, and shall use commercially
reasonable efforts to cause their respective Representatives and other
Affiliates to, file within 30 days after the date hereof, and in all events
shall file within 60 days after the date hereof, all required initial
applications and documents in connection with obtaining the Governmental
Approvals and shall act reasonably and promptly thereafter in responding to
additional requests in connection therewith. Parent and the Company shall have
the right to review in advance, and to the extent practicable, each will consult
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information relating to Parent and the Company, as the
case may be, and any of their respective Subsidiaries, directors, officers and
stockholders which appear in any filing made with, or written materials
submitted to, any Third Party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. Without limiting the foregoing,
each of Parent and the Company (the "Notifying Party") will notify the other
promptly of the receipt of comments or requests from Governmental Entities
relating to Governmental Approvals, and will supply the other Party with copies
of all correspondence between the Notifying Party or any of its Representatives
and Governmental Entities with respect to Governmental Approvals.
(b) Parent and the Company shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such Party to believe that there is a reasonable likelihood that
any approval needed from a Governmental Entity will not be obtained or that the
receipt of any such approval will be materially delayed. Parent and the Company
shall take any and all actions reasonably necessary to vigorously defend, lift,
mitigate and rescind the effect of any litigation or administrative proceeding
adversely affecting this Agreement or the transactions contemplated hereby or
thereby, including, without limitation, promptly appealing any adverse court or
administrative order or injunction to the extent reasonably necessary for the
foregoing purposes.
(c) Notwithstanding the foregoing or any other provision of this
Agreement, Parent shall have no obligation or affirmative duty under this
Section 6.6 to cease or refrain from the ownership of any Assets, or the
association with any Person which association is material to the operations of
Parent, whether on the date hereof or at any time in the future.
SECTION 6.7 PUBLICITY. Parent and the Company shall agree on the form and
content of the initial press release regarding the transactions contemplated
hereby and thereafter shall consult with each other before issuing any press
release or other public statement with respect to any of the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
obligations pursuant to any listing agreement with, or rules of any national
securities exchange.
SECTION 6.8 AFFILIATE AGREEMENTS. No later than 45 days prior to the
Closing the Company shall deliver to Parent a list identifying, in the view of
the Company, each person
56
who will be, at the time of the Company Stockholders Meeting, a Company
Affiliate. The Company shall provide to Parent such information and documents as
Parent shall reasonably request for purposes of reviewing such list and shall
notify Parent in writing regarding any change in the identity of the Company
Affiliates prior to the Closing Date; provided, however, that no such Person
identified to Parent shall be added to the list of Company Affiliates if Parent
shall receive from the Company, on or before the date of the Company
Stockholders Meeting, an opinion of counsel reasonably satisfactory to Parent to
the effect that such Person is not a Company Affiliate. The Company shall use
its reasonable best efforts to deliver or cause to be delivered to Parent as
promptly as practicable but in no event later than 15 days prior to the Closing
an Affiliate Agreement, in the form attached hereto as Exhibit B, from each of
its Affiliates.
SECTION 6.9 TAX TREATMENT OF REORGANIZATION.
(a) The Parties intend the Merger to qualify as a reorganization under
Section 368(a) of the Code and shall use their best efforts (and shall cause
their respective Subsidiaries to use their best efforts) to cause the Merger to
so qualify. Neither the Company, Parent, nor any of their respective
Subsidiaries or other controlled Affiliates shall take any action that is not
specifically provided for by this Agreement that could be reasonably likely to
adversely affect the treatment of the Merger as a reorganization under Section
368(a) of the Code. Parent and the Company shall, and shall cause their
respective Subsidiaries to, take the position for all purposes that the Merger
qualifies as a reorganization under that Section of the Code. None of the
Company, Parent, or any Subsidiary of either makes any representation or
warranty to the other(s) or to any stockholder regarding the tax treatment of
the Merger or whether the Merger will qualify as a reorganization under the
Code. Each of the Company, Parent, and the Subsidiaries of both acknowledge that
they are relying on their own advisors in connection with the tax treatment of
the Merger and the other transactions contemplated by this Agreement.
(b) Parent and the Company shall, and shall cause their respective
Subsidiaries to, cooperate and use their best efforts in obtaining the opinions
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Company, and Latham
& Watkins, counsel to Parent, dated as of the Closing Date, to the effect that
the Merger will qualify for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. Parent and Company shall, and
shall cause their respective Subsidiaries to, use their best efforts to provide
Skadden, Arps, Slate, Meagher & Flom LLP and Latham & Watkins with such
representations or certificates as may reasonably be required to enable such
counsel to render the opinions referred to in the preceding sentence.
SECTION 6.10 FURTHER ASSURANCES AND ACTIONS. Subject to the terms and
conditions herein, each of the Parties agrees to use its reasonable efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable on its part under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) using their
respective reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations,
57
qualifications and orders of Governmental Entities and parties to contracts with
each Party as are necessary for consummation of the transactions contemplated by
this Agreement, and (ii) to fulfill all conditions precedent applicable to such
Party pursuant to this Agreement, subject, in the case of the Company, to the
rights of the Company and the Company Board under Sections 6.3(b), 6.3(d) and
8.1(f).
SECTION 6.11 STOCK EXCHANGE LISTING. Parent shall use its best efforts to
list on the NYSE prior to the Effective Time, subject to official notice of
issuance, the shares of Parent Common Stock to be issued in the Merger.
SECTION 6.12 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use
all reasonable efforts to cause to be delivered to Parent a letter of Deloitte &
Touche LLP, the Company's independent auditors, dated (i) a date within two
Business Days before the date on which the Registration Statement shall become
effective and (ii) the Closing Date, in each case addressed to Parent and its
directors, in form reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
SECTION 6.13 LETTER OF PARENT'S ACCOUNTANTS. Parent shall use all
reasonable efforts to cause to be delivered to the Company and Parent a letter
of KPMG LLP, Parent's independent auditors, dated (i) a date within two Business
Days before the date on which the Registration Statement shall become effective
and (ii) the Closing Date, in each case addressed to the Company and its
directors, in form reasonably satisfactory to the Company and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
SECTION 6.14 COMPANY REIT STATUS. Notwithstanding anything to the contrary
set forth in this Agreement, nothing in this Agreement shall prohibit the
Company from taking, and the Company hereby agrees to take, any action at any
time or from time to time that in the reasonable judgment of the Company Board,
upon advice of counsel, is legally necessary for the Company to maintain its
qualification as a REIT within the meaning of Sections 856-860 of the Code for
any period or portion thereof ending on or prior to the Effective Time,
including without limitation, making dividend or distribution payments to
Company Stockholders in accordance with Section 5.3 or otherwise.
SECTION 6.15 PARENT REIT STATUS. Notwithstanding anything to the contrary
set forth in this Agreement, nothing in this Agreement shall prohibit Parent
from taking, and Parent hereby agrees to take any action at any time or from
time to time that in the reasonable judgment of Parent Board, upon advice of
counsel, is legally necessary for Parent to maintain its qualification as a REIT
within the meaning of Sections 856-860 of the Code for any period or portion
thereof ending on, prior to or including the Effective Time, including without
limitation, making dividend or distribution payments to stockholders of Parent,
in accordance with Section 5.3 or otherwise.
58
SECTION 6.16 OBTAINING CONSENTS.
(a) Parent shall give (or shall cause its Subsidiaries to give) any
notices to Third Parties, and use, and cause its Subsidiaries to use, their
reasonable best efforts to obtain any Third Party consents related to or
required in connection with the Merger that are (i) disclosed or required to be
disclosed in the Parent Disclosure Schedule or (ii) required to prevent a Parent
Material Adverse Effect from occurring prior to or after the Effective Time.
(b) The Company shall give (or shall cause its Subsidiaries to give)
any notices to Third Parties, and use, and cause its Subsidiaries to use, their
reasonable best efforts to obtain any Third Party consents related to or
required in connection with the Merger that are (i) disclosed or required to be
disclosed in the Company Disclosure Schedule, or (ii) required to prevent a
Company Material Adverse Effect from occurring prior to or after the Effective
Time.
SECTION 6.17 NON-SOLICITATION OF EMPLOYEES. During the period from
the date hereof to the earlier of the Effective Time and the one year
anniversary date of the termination of this Agreement, neither Party hereto
will, or will permit their respective Subsidiaries to, employ or solicit for
employment any of the officers or management level employees of the other Party
hereto.
SECTION 6.18 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, the Surviving Company shall
provide exculpation and indemnification for each Person who is now or has been
at any time prior to the date hereof or who becomes prior to the Effective Time,
an officer, or director of the Company or any of its Subsidiaries, (the
"Indemnified Parties") which is at least as favorable to such persons as the
exculpation and indemnification provided to the Indemnified Parties by the
Company and its Subsidiaries immediately prior to the Effective Time in their
respective Organizational Documents, as in effect on the date hereof; provided,
that such exculpation and indemnification covers actions on or prior to the
Effective Time, including, without limitation, all transactions contemplated by
this Agreement.
(b) In addition to the rights provided in Section 6.18(a) above, in
the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including without
limitation, any action by or on behalf of any or all security holders of the
Company or Parent, or any Subsidiary of the Company or Parent, or by or in the
right of the Company or Parent, or any Subsidiary of the Company or Parent, or
any claim, action, suit, proceeding or investigation (collectively, for this
Section 6.18 "Claims") in which any Indemnified Party is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was an officer, employee or
director of the Company or any of its Subsidiaries or any action or omission or
alleged action or omission by such Person in his capacity as an officer,
employee or director, or (ii) this Agreement or the transactions contemplated
thereby, whether in any case asserted or arising before or after the Effective
Time, Parent and the Surviving Company (the "Indemnifying
59
Parties") shall from and after the Effective Time jointly and severally
indemnify and hold harmless the Indemnified Parties from and against any losses,
claims, liabilities, expenses (including reasonable attorneys' fees and
expenses), judgments, fines or amounts paid in settlement arising out of or
relating to any such Claims. Parent, the Surviving Company and the Indemnified
Parties hereby agree to use their reasonable best efforts to cooperate in the
defense of such Claims. In connection with any such Claim, the Indemnified
Parties shall have the right to select and retain one counsel, at the cost of
the Indemnifying Parties, subject to the consent of the Indemnifying Parties
(which consent shall not be unreasonably withheld or delayed) and more than one
counsel if the interests of such Indemnified Persons with respect to such Claim
diverge or could be reasonably expected to diverge. In addition, after the
Effective Time, in the event of any such threatened or actual Claim, the
Indemnifying Parties shall promptly pay and advance reasonable expenses and
costs incurred by each Indemnified Person as they become due and payable in
advance of the final disposition of the Claim to the fullest extent and in the
manner permitted by law. Notwithstanding the foregoing, the Indemnifying Parties
shall not be obligated to advance any expenses or costs prior to receipt of an
undertaking by or on behalf of the Indemnified Party, such undertaking to be
accepted without regard to the creditworthiness of the Indemnified Party, to
repay any expenses advanced if it shall ultimately be determined that the
Indemnified Party is not entitled to be indemnified against such expense.
Notwithstanding anything to the contrary set forth in this Agreement, the
Indemnifying Parties (i) shall not be liable for any settlement effected without
their prior written consent (which consent shall not be unreasonably withheld or
delayed), and (ii) shall not have any obligation hereunder to any Indemnified
Party to the extent that a court of competent jurisdiction shall determine in a
final and non-appealable order that such indemnification is prohibited by
applicable law. In the event of a final and non-appealable determination by a
court that any payment of expenses is prohibited by applicable law, the
Indemnified Party shall promptly refund to the Indemnifying Parties the amount
of all such expenses theretofore advanced pursuant hereto. Any Indemnified Party
wishing to claim indemnification under this Section 6.18, upon learning of any
such Claim, shall promptly notify the Indemnifying Parties of such Claim and the
relevant facts and circumstances with respect thereto; provided however, that
the failure to provide such notice shall not affect the obligations of the
Indemnifying Parties except to the extent such failure to notify materially
prejudices the Indemnifying Parties' ability to defend such Claim; and provided,
further, however, that no Indemnified Party shall be obligated to provide any
notification pursuant to this Section 6.18(b) prior to the Effective Time.
(c) For six years after the Effective Time, Parent shall maintain in
effect the Company's current directors' and officers' liability insurance
covering acts or omissions occurring prior to the Effective Time with respect to
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy on terms with respect to such coverage and
amount no less favorable in the aggregate to the Company's directors and
officers, as the case may be, currently covered by such insurance than those of
such policy in effect on the date of this Agreement; provided, that in the event
that the aggregate premiums for maintaining such insurance for the benefit of
persons currently covered by the Company's officers' and directors' insurance
policy under this Section 6.18(c) are in excess of $750,000, then Parent shall
60
only be obligated to maintain such insurance coverage as is reasonably available
for such amount.
(d) This Section 6.18 is intended for the irrevocable benefit of,
and to grant third-party rights to, the Indemnified Parties and their
successors, assigns and heirs and shall be binding on all successors and assigns
of Parent, including without limitation the Surviving Company. Each of the
Indemnified Parties shall be entitled to enforce the covenants contained in this
Section 6.18 and Parent acknowledges and agrees that each Indemnified Party
would suffer irreparable harm and that no adequate remedy at law exists for a
breach of such covenants and such Indemnified Party shall be entitled to
injunctive relief and specific performance in the event of any breach of any
provision in this Section 6.18.
(e) In the event that the Surviving Company or any of its respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, the
successors and assigns of such entity shall assume the obligations set forth in
this Section 6.18, which obligations are expressly intended to be for the
irrevocable benefit of, and shall be enforceable by, each director and officer
covered hereby.
SECTION 6.19 TERMINATION OF STOCKHOLDERS AGREEMENT.
At or prior to Closing, the Company shall enter into the Agreement
to Terminate Stockholders Agreement, attached hereto as Exhibit C.
SECTION 6.20 COMPANY OP UNITS. From and after the Effective Time,
Parent shall, and shall cause the Surviving Company to, comply with Section
11.2.B(ii) of the Operating Partnership Agreement in connection with the Merger.
ARTICLE VII.
CONDITIONS OF MERGER
SECTION 7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each Party to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) the Company Voting Proposal shall have been approved by the
Company Stockholders in the manner required under the MGCL, the rules of the
NYSE and the Organizational Documents of the Company;
(b) no statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent) shall
have been enacted, entered, promulgated or enforced by any Governmental Entity
of competent jurisdiction and no other legal restraint or prohibition shall be
in effect which prohibits, restrains or enjoins the
61
consummation of the Merger; provided, however, that the Parties shall use their
reasonable best efforts to cause any such decree, ruling, injunction or other
order to be vacated or lifted;
(c) there shall not be instituted or pending any Action by a
Governmental Entity as a result of this Agreement or any of the transactions
contemplated herein which would reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect (assuming for
purposes of this Section 7.1(c) that the Merger shall have occurred);
(d) the Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order suspending the
effectiveness of the Registration Statement nor shall proceedings for that
purpose have been threatened, and any material Blue Sky Law permits and
approvals applicable to the registration of the Parent Common Stock to be
exchanged for Company Common Stock shall have been obtained;
(e) all filings required to be made prior to the Closing by any
Party or any of its respective Subsidiaries with, and all consents, approvals
and authorizations required to be obtained prior to the Closing by any Party or
any of its respective Subsidiaries from, any Governmental Entity in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been made or obtained, except where
the failure to obtain such consents would not cause a Company Material Adverse
Effect or a Parent Material Adverse Effect and could not reasonably be expected
to subject the Parties or their Affiliates or any directors, officers, agents or
advisors of any of the foregoing to the risk of criminal liability; and
(f) the shares of Parent Common Stock issuable to the holders of
Company Shares pursuant to this Agreement shall have been approved for listing
on the NYSE upon official notice of issuance.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Each representation and warranty of Parent and Merger Sub
contained in this Agreement, without giving effect to any materiality
qualifications or references to materiality therein, shall be true and correct
at and as of the Closing Date as if made at and as of the Closing Date, except
(i) as contemplated or permitted by this Agreement, (ii) to the extent that any
such representation or warranty shall have been expressly made as of an earlier
date, in which case such representation and warranty, without giving effect to
any materiality qualifications or references to materiality therein, shall have
been true and correct as of such earlier date, and (iii) to the extent that any
and all failures of such representations and warranties to be true and correct,
shall not result in a Parent Material Adverse Effect;
62
(b) Parent shall have performed or complied in all material respects
with all obligations required by this Agreement to be performed or complied with
by it at or prior to the Closing Date;
(c) The Company shall have received a certificate executed on behalf
of Parent by the Chief Executive Officer or Chief Financial Officer of Parent to
the effect set forth in clauses (a) and (b) of this Section 7.2;
(d) The Company shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Company, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion that
are consistent with the state of facts existing as of such time, for federal
income tax purposes the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code. In rendering such opinion, Skadden, Arps,
Slate, Meagher & Flom LLP may receive and rely upon representations including
those contained in this Agreement or in certificates of officers of the Company,
the Operating Partnership and Parent or others;
(e) The Company shall have received the opinion of Latham & Watkins
in form and substance reasonably satisfactory to the Company (based upon
customary representations including those contained in this Agreement or in
certificates of officers of the Parties and others), dated as of the Closing
Date, to the effect that, (i) commencing with its taxable year ended December
31, 1997, Parent was organized in conformity with the requirements for
qualification and taxation as a REIT under the Code, and (ii) its method of
operation has enabled it and its proposed method of operation will enable it to
continue to meet the requirements for qualification and taxation as a REIT under
the Code; and
(f) the average closing price of Parent Common Stock on the NYSE for
the period of ten trading days prior to the Closing Date shall not be less than
$25.00 per share.
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF PARENT TO EFFECT THE
MERGER. The obligations of Parent to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Each representation and warranty of the Company contained in
this Agreement, without giving effect to any materiality qualifications or
references to materiality therein, shall be true and correct at and as of the
Closing Date as if made at and as of the Closing Date, except (i) as
contemplated or permitted by this Agreement, (ii) to the extent that any such
representation or warranty shall have been expressly made as of an earlier date,
in which case such representation and warranty, without giving effect to any
materiality qualifications or references to materiality therein, shall have been
true and correct as of such earlier date, and (iii) to the extent that any and
all failures of such representations and warranties to be true and correct,
shall not result in a Company Material Adverse Effect;
63
(b) The Company shall have performed or complied in all material
respects with all obligations required by this Agreement to be performed or
complied with by them at or prior to the Closing Date;
(c) Parent shall have received a certificate executed on behalf of
the Company by the Chief Executive Officer or Chief Financial Officer of the
Company to the effect set forth in clauses (a) and (b) of this Section 7.3;
(d) (i) all consents or approvals (other than Material Consents) of
all Persons (other than Governmental Entities) required for or in connection
with or as a result of the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby shall have been
obtained and shall be in full force and effect, except for those the failure to
obtain which would not cause a Company Material Adverse Effect or a Parent
Material Adverse Effect; and (ii) all Material Consents shall have been obtained
and shall be in full force and effect;
(e) The Stockholders Agreement shall have been terminated and shall
have no further force and effect;
(f) Parent shall have received an opinion of Latham & Watkins, dated
as of the date of the Closing Date, in form and substance reasonably
satisfactory to Parent, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion that are consistent
with the state of facts existing as of such time, for federal income tax
purposes the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code. In rendering such opinion, Latham & Watkins may
receive and rely upon representations including those contained in this
Agreement or in certificates of officers of the Company, the Operating
Partnership and Parent or others;
(g) Parent shall have received the opinion of Latham & Watkins in
form and substance reasonably satisfactory to Parent (based upon customary
representations including those contained in this Agreement or in certificates
of officers of the Parties and others), dated as of the Closing Date, to the
effect that, commencing with its taxable year ended December 31, 1993, the
Company was organized in conformity with the requirements for qualification and
taxation as a REIT under the Code, and its method of operation has enabled it to
meet, through the Closing Date, the requirements for qualification and taxation
as a REIT under the Code; and
(h) Deloitte & Touche LLP shall have delivered to Parent the letter
described in Section 6.12, and KPMG LLP shall have delivered to Parent the
letter described in Section 6.13, at the times provided for in such Sections.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated at any
time before the Effective Time (except as otherwise provided), whether before or
after the approval of
64
the Company Stockholders referred to in Sections 7.1(a), by written notice from
Parent to the Company or the Company to Parent, as the case may be, as follows:
(a) by mutual written consent of each of Parent and the Company;
(b) by either the Company or Parent, if the Effective Time shall not
have occurred on or before April 30, 2003 (the "Termination Date"); provided
however, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) by either the Company or Parent, if a Governmental Entity shall
have issued an order, decree or injunction having the effect of making the
Merger illegal or permanently prohibiting the consummation of the Merger, and
such order, decree or injunction shall have become final and nonappealable;
(d) by either Parent or the Company if the requisite vote in favor
of the Company Voting Proposal shall not have been obtained at a duly held
meeting of Company Stockholders or at any adjournment thereof; provided that the
right to terminate this Agreement under this Section 8.1(d) shall not be
available to the Company if it fails to fulfill its obligations to call and
conduct the Company Stockholders Meeting under Section 6.1(d);
(e) by Parent, if (i) after the receipt by the Company of an
Acquisition Proposal, the Company Board shall have withdrawn or modified, or
proposed publicly to withdraw or modify, its recommendation of the Company
Voting Proposal, (ii) after the receipt by the Company of an Acquisition
Proposal (which Acquisition Proposal is public), Parent requests in writing that
the Company Board publicly reconfirm its recommendation of the Company Voting
Proposal to Company Stockholders and the Company Board fails to do so within ten
Business Days after its receipt of Parent's request; (iii) the Company Board
shall have recommended to the Company Stockholders an Alternative Transaction;
(iv) a tender offer or exchange offer for 19.9% or more of the outstanding
Company Common Stock is commenced (other than by the Company or an Affiliate of
the Company) and the Company Board recommends that the Company Stockholders
tender their shares in such tender or exchange offer; or (v) after the receipt
by the Company of an Acquisition Proposal, the Company fails to call and hold
the Company Stockholders Meeting by the Termination Date.
(f) by Parent, upon a material breach of any covenant or agreement
on the part of the Company set forth in this Agreement, or if (i) any
representation or warranty of the Company that is qualified as to materiality
shall have become untrue or (ii) any representation or warranty of the Company
that is not so qualified shall have become untrue in any material respect, in
each case such that the conditions set forth in Section 7.3(a) or Section 7.3(b)
would not be satisfied (a "Terminating Company Breach"); provided, however,
that, if such Terminating Company Breach is capable of being cured by the
Company prior to the
65
Termination Date, for so long as the Company continues in good faith to attempt
to cure such breach, Parent may not terminate this Agreement under this Section
8.1(f); or
(g) by the Company, upon a material breach of any covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
(i) any representation or warranty of Parent or Merger Sub that is qualified as
to materiality shall have become untrue or (ii) any representation or warranty
of Parent or Merger Sub that is not so qualified shall have become untrue in any
material respect, in each case such that the conditions set forth in Section
7.2(a) or Section 7.2(b) would not be satisfied ("Terminating Parent Breach");
provided, however, that, if such Terminating Parent Breach is capable of being
cured by Parent or Merger Sub prior to the Termination Date, for so long as
Parent or Merger Sub continues in good faith to attempt to cure such breach, the
Company may not terminate this Agreement under this Section 8.1(g).
SECTION 8.2 EXPENSES; BREAK-UP FEE.
(a) Except as otherwise provided in this Section 8.2, all Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such Expenses. As used in this
Agreement, "Expenses" includes all reasonable out-of-pocket expenses (including,
without limitation, all reasonable fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby, including the
preparation, printing, filing and mailing of the Proxy Statement/Prospectus and
Registration Statement and the solicitation of stockholder approvals and all
other matters related to the transactions contemplated hereby.
(b) Notwithstanding the foregoing,
(i) if (A) after the receipt by the Company of an Acquisition
Proposal, this Agreement is terminated pursuant to Section 8.1(d) or (B) this
Agreement is terminated by Parent pursuant to Section 8.1(f), then the Company
shall pay the Expenses incurred by Parent up to the Maximum Expense Amount (as
defined below); provided, however, that the Company shall not be obligated to
pay such Expenses incurred by Parent if it is obligated to pay a Break-Up Fee
pursuant to Section 8.2(c).
(ii) if this Agreement is terminated by the Company pursuant
to Section 8.1(g), then Parent shall pay the Expenses incurred by the Company up
to the Maximum Expense Amount (as defined below).
The "Maximum Expense Amount" shall be an amount equal to the lesser of (i)
$2,500,000 (the "Maximum Amount") and (ii) the maximum amount, if any, that can
be paid to the Company or Parent, as the case may be, without causing it to fail
to meet the requirements of Sections 856(c)(2) and (3) of the Code for such year
determined as if (a) the payment of such
66
amount did not constitute income described in Sections 856(c)(2)(A)-(H) and
856(c)(3)(A)-(I) of the Code ("Qualifying Income"), and (b) the recipient has
$1,000,000 of income from unknown sources during such year which was not
Qualifying Income (in addition to any known or anticipated income which was not
Qualifying Income), in each case as determined by independent accountants to the
Company or Parent, as the case may be. Notwithstanding the foregoing, in the
event the Company or Parent, as the case may be, receives a reasoned opinion
from outside counsel or a ruling from the IRS ( "Tax Guidance") providing that
the Company's or Parent's receipt of the Maximum Amount would either constitute
Qualifying Income or would be excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code (the "REIT Requirements"), the Maximum
Expenses Amount shall be an amount equal to the Maximum Amount and Parent or the
Company, as the case may be, shall, upon receiving notice that the Company or
Parent, as the case may be, has received the Tax Guidance, pay to the Company or
Parent, as the case may be, the unpaid Maximum Amount within five Business Days.
In the event that the Company or Parent, as the case may be, is not able to
receive the full Maximum Amount due to the above limitations, Parent or the
Company, as the case may be, shall place the unpaid amount in escrow by wire
transfer within three days of termination and shall not release any portion
thereof to the Company or Parent, as the case may be, unless and until the
Company or Parent, as the case may be, receives either one or a combination of
the following once or more often: (i) a letter from the Company's or Parent's,
as the case may be, independent accountants indicating the maximum amount that
can be paid at that time to Parent without causing Parent to fail to meet the
REIT Requirements (calculated as described above) or (ii) the Tax Guidance, in
either of which events Parent or the Company, as the case may be, shall pay to
the Company or Parent, as the case may be, the lesser of the unpaid Maximum
Amount or the maximum amount stated in the letter referred to in (i) above
within five Business Days after Parent or the Company, as the case may be, has
been notified thereof. The obligation of Parent or the Company, as the case may
be, to pay any unpaid portion of the Maximum Expense Amount shall terminate on
the December 31 following the date which is three years from the date of this
Agreement. Amounts remaining in escrow after the obligation of Parent or the
Company, as the case may be, to pay the Maximum Expense Amount terminates shall
be released to the party that placed such funds into escrow.
The Company's payment of the Expenses incurred by the Parent pursuant to this
subsection shall be the sole and exclusive remedy of Parent against the Company
and any of its Subsidiaries and their respective directors, officers, employees,
agents, advisors or other representatives with respect to the occurrences giving
rise to such payment, except for liabilities or damages caused by the willful
breach of any representations, warranties, covenants or agreements herein by the
Company. Parent's payment of the Expenses incurred by the Company pursuant to
this subsection shall be the sole and exclusive remedy of the Company against
Parent and any of its Subsidiaries and their respective directors, officers,
employees, agents, advisors or other representatives with respect to the
occurrences giving rise to such payment, except for liabilities or damages
caused by the willful breach of any representations, warranties, covenants or
agreements herein by Parent.
67
(c) The Company shall pay Parent a Break-Up Fee upon the earliest to
occur of the following events:
(i) the termination of this Agreement by either Parent or the
Company pursuant to Section 8.1(d), if a proposal for an Alternative Transaction
involving the Company shall have been publicly announced prior to the Company
Stockholders Meeting and either a definitive agreement for an Alternative
Transaction is entered into, or such Alternative Transaction (or another
Alternative Transaction with the proponent of such transaction or an Affiliate
of such proponent) is consummated, within twelve months of such termination, it
being understood that the Break-Up Fee under this clause 8.2(c)(i) shall be
payable only upon the earlier of the execution of such definitive agreement or
the consummation of such Alternative Transaction; or
(ii) the termination of this Agreement by Parent pursuant to
Section 8.1(e).
The Company's payment of a Break-Up Fee pursuant to this subsection shall be the
sole and exclusive remedy of Parent against the Company and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment; provided that this limitation shall not apply in the event of a
willful breach of this Agreement by the Company.
(d) As used in this Agreement, "Alternative Transaction" means
either (i) a transaction pursuant to which any Third Party acquires more than
19.9% of the outstanding Company Common Stock pursuant to a tender offer or
exchange offer or otherwise, (ii) a merger or other business combination
involving the Company pursuant to which any Third Party (or the stockholders of
a Third Party) acquires more than 19.9% of the outstanding Company Common Stock
or 19.9% of the equity securities of the entity surviving such merger or
business combination, or (iii) any other transaction (other than a transaction
permitted by Section 5.1(f)) pursuant to which any Third Party acquires control
of assets (including for this purpose the outstanding equity securities of
Subsidiaries of the Company and the entity surviving any merger or business
combination including any of them) of the Company or the Operating Partnership
having a fair market value (as determined by the Company Board in good faith)
equal to more than 19.9% of the fair market value of all the assets of the
Company, the Operating Partnership and their Subsidiaries, taken as a whole,
immediately prior to such transaction.
(e) The "Break-Up Fee" shall be an amount equal to the lesser of (i)
the Base Amount (as defined below) and (ii) the maximum amount, if any, that can
be paid to Parent without causing it to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code for such year determined as if (a) the
payment of such amount did not constitute Qualifying Income, and (b) Parent has
$1,000,000 of income from unknown sources during such year which was not
Qualifying Income (in addition to any known or anticipated income of Parent
which was not Qualifying Income), in each case as determined by independent
accountants to Parent. Notwithstanding the foregoing, in the event Parent
receives Tax Guidance providing that Parent's
68
receipt of the Base Amount would either constitute Qualifying Income or would be
excluded from gross income within the meaning of the REIT Requirements, the
Break-Up Fee shall be an amount equal to the Base Amount and the Company shall,
upon receiving notice that Parent has received the Tax Guidance, pay to Parent
the unpaid Base Amount within five Business Days. In the event that Parent is
not able to receive the full Base Amount due to the above limitations, the
Company shall place the unpaid amount in escrow by wire transfer within three
days of termination and shall not release any portion thereof to Parent unless
and until Parent receives either one or a combination of the following once or
more often: (i) a letter from Parent's independent accountants indicating the
maximum amount that can be paid at that time to Parent without causing Parent to
fail to meet the REIT Requirements (calculated as described above) or (ii) the
Tax Guidance, in either of which events the Company shall pay to Parent the
lesser of the unpaid Base Amount or the maximum amount stated in the letter
referred to in (i) above within five Business Days after the Company has been
notified thereof. The payment of the Break-Up Fee shall be compensation and
liquidated damages for the loss suffered by Parent as a result of the failure of
the Merger to be consummated and to avoid the difficulty of determining damages
under the circumstances and neither Party shall have any other liability to the
other after the payment of the Break-Up Fee. The obligation of Company to pay
any unpaid portion of the Break-Up Fee shall terminate on the December 31
following the date which is three years from the date of this Agreement. Amounts
remaining in escrow after the obligation of the Company to pay the Break-Up Fee
terminates shall be released to the Company. As used in this Section 8.2(e), the
"Base Amount" shall mean $7,500,000.
SECTION 8.3 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent or the Company or their respective officers,
members or directors except as (i) set forth in Section 8.2, (ii) with respect
to any actual liabilities or damages incurred or suffered by a party as a result
of the willful breach by the other party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement and (iii)
with respect to provisions that survive the termination hereof pursuant to
Section 9.1.
SECTION 8.4 AMENDMENT. This Agreement may be amended by the Parties
by action taken by or on behalf of their respective Boards at any time before or
after any required approval of matters presented in connection with the Merger
by Company Stockholders; provided, however, that after any such approval, there
shall be made no amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed by the Parties.
SECTION 8.5 WAIVER. At any time prior to the Closing Date, any Party
may (a) extend the time for the performance of any of the obligations or other
acts of the other Parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other Parties contained herein or in any
document delivered pursuant hereto and (c) waive compliance by any other Party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
Party or Parties to be
69
bound thereby. 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 such
rights.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that (a) the agreements set
forth in Article II and Sections 6.18, 6.20 and 9.1 through 9.11 shall survive
the Effective Time and (b) the agreements set forth in the Confidentiality
Agreement and in Sections 6.9, 6.17, 8.2, 8.3 and 9.1 through 9.11 shall survive
termination indefinitely.
SECTION 9.2 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex, by registered or certified mail (postage prepaid,
return receipt requested), or by overnight courier, to the respective Parties at
the following addresses (or at such other address for a Party as shall be
specified by like notice):
If to Parent or Merger Sub:
Pan Pacific Retail Properties, Inc.
1631-B South Melrose Drive
Vista, California 92083
Attention: Chief Executive Officer
Fax No.: (760) 727-1430
with an additional copy to:
Latham & Watkins
650 Town Center Drive
Costa Mesa, California 92626
Attention: William J. Cernius, Esq.
Fax No.: (714) 755-8290
If to the Company:
Center Trust, Inc.
3500 Sepulveda Boulevard
Manhattan Beach, California 90266
Attention: Chief Executive Officer
Fax No.: (310) 545-6354
70
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California
Attention: Brian J. McCarthy, Esq.
Jonathan L. Friedman, Esq.
Fax No.: (213) 687-5600
SECTION 9.3 SEVERABILITY. If any term or other provision of this
agreement is invalid, illegal or incapable of being enforced because of any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 9.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Company Disclosure Schedule and the Parent Disclosure Schedule), together
with the Confidentiality Agreement, constitute the entire agreement among the
Parties with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the Parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by any Party by operation of law or otherwise without the express
written consent of each of the other Parties.
SECTION 9.5 PARTIES IN INTEREST; CONSTRUCTION. This Agreement shall
be binding upon and inure solely to the benefit of each Party hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, except as set forth in Section 6.18.
Notwithstanding the foregoing, the conditions in Sections 7.2(e) and 7.2(f) may
not be waived by the Parties without the consent of the Lazard Entities. The
Lazard Entities shall be considered third-party beneficiaries with full rights
to enforce the obligations of Parent, Merger Sub and the Company set forth in
the preceding sentence.
SECTION 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD,
TO THE FULLEST EXTENT PERMITTED BY LAW, TO THE CONFLICTS OF LAWS PROVISIONS
THEREOF WHICH MIGHT RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION. EACH OF THE PARTIES SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
THE STATE AND FEDERAL COURTS OF THE UNITED STATES LOCATED IN THE COUNTY OF
ORANGE, CALIFORNIA WITH RESPECT TO ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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SECTION 9.7 NO TRIAL BY JURY. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN
CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
CONFIDENTIALITY AGREEMENT, THE MERGER OR ANY OF THE OTHER TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.8 ACTION BY SUBSIDIARIES. Whenever this Agreement requires
any Subsidiary of the Company or any Subsidiary of Parent to take any action,
such requirement shall be deemed to include an undertaking on the part of the
Company or Parent to cause such Subsidiary to take such action, as the case may
be.
SECTION 9.9 HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10 SPECIFIC PERFORMANCE. Each of the Parties hereto
acknowledges and agrees that the other Parties would be irreparably damaged in
the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly,
each of the Parties agrees that they each shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and conditions hereof in any
Action instituted in any court of the United States or any state having
competent jurisdiction, in addition to any other remedy to which such Party may
be entitled, at law or in equity.
SECTION 9.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, and by the different Parties in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PAN PACIFIC RETAIL PROPERTIES, INC.
By: /s/ Stuart A. Tanz
-------------------------------
Stuart A. Tanz
Chairman, President and Chief
Executive Officer
MB ACQUISITION, INC.
By: /s/ Stuart A. Tanz
-------------------------------
Stuart A. Tanz
Chairman, President and Chief
Executive Officer
CENTER TRUST, INC.
By: /s/ Edward D. Fox, Jr.
-------------------------------
Edward D. Fox, Jr.
President and Chief Executive
Officer