Exhibit 2.1
[EXECUTION COPY]
AGREEMENT AND PLAN OF MERGER
BETWEEN
PAN PACIFIC RETAIL PROPERTIES, INC.,
A MARYLAND CORPORATION
AND
WESTERN PROPERTIES TRUST,
A CALIFORNIA REAL ESTATE INVESTMENT TRUST
DATED AS OF AUGUST 21, 2000
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS.........................................................3
ARTICLE II. THE MERGER........................................................13
Section 2.1 The Incorporation.........................................13
Section 2.2 The Merger................................................13
Section 2.3 Closing and Closing Date..................................13
Section 2.4 Effective Time............................................14
Section 2.5 Effects of the Merger.....................................14
Section 2.6 Charter; Bylaws...........................................14
Section 2.7 Directors; Officers.......................................14
Section 2.8 Conversion of Securities..................................14
Section 2.9 Treatment of Company Options and Restricted Stock.........16
Section 2.10 Fractional Interests......................................17
Section 2.11 Surrender of WPT Common Stock and Company Common Shares;
Stock Transfer Books....................................17
Section 2.12 Lost, Stolen or Destroyed Certificates....................19
Section 2.13 Withholding Rights........................................19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................19
Section 3.1 Organization and Qualification............................20
Section 3.2 Authorization; Validity and Effect of Agreement...........20
Section 3.3 Capitalization............................................20
Section 3.4 Subsidiaries..............................................21
Section 3.5 Other Interests...........................................22
Section 3.6 No Conflict; Required Filings and Consents................22
Section 3.7 Compliance................................................23
Section 3.8 SEC Documents.............................................24
Section 3.9 Absence of Certain Changes................................25
Section 3.10 Litigation................................................25
Section 3.11 Taxes.....................................................25
Section 3.12 Employee Benefit Plans....................................27
Section 3.13 Properties................................................28
Section 3.14 Contracts.................................................30
Section 3.15 Labor Relations...........................................31
Section 3.16 [Intentionally Omitted.]..................................31
Section 3.17 Environmental Matters.....................................31
Section 3.18 Opinion of Financial Advisor..............................32
Section 3.19 Brokers...................................................32
Section 3.20 Vote Required.............................................32
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Section 3.21 Tax Matters...............................................33
Section 3.22 Insurance.................................................33
Section 3.23 [Intentionally Omitted]...................................33
Section 3.24 No Material Adverse Effect................................33
Section 3.25 Affiliate Transactions....................................33
Section 3.26 No Existing Discussions...................................33
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PAN PACIFIC.....................33
Section 4.1 Organization and Qualification............................33
Section 4.2 Authorization; Validity and Effect of Agreement...........34
Section 4.3 Capitalization............................................34
Section 4.4 Subsidiaries..............................................35
Section 4.5 Other Interests...........................................36
Section 4.6 No Conflict; Required Filings and Consents................36
Section 4.7 Compliance................................................37
Section 4.8 SEC Documents.............................................37
Section 4.9 Absence of Certain Changes................................38
Section 4.10 Litigation................................................38
Section 4.11 Taxes.....................................................38
Section 4.12 Employee Benefit Plans....................................40
Section 4.13 Properties................................................41
Section 4.14 Contracts.................................................43
Section 4.15 Labor Relations...........................................44
Section 4.16 [Intentionally Omitted.]..................................44
Section 4.17 Environmental Matters.....................................44
Section 4.18 Opinion of Financial Advisor..............................45
Section 4.19 Brokers...................................................45
Section 4.20 Vote Required.............................................45
Section 4.21 Tax Matters...............................................45
Section 4.22 Insurance.................................................46
Section 4.23 No Material Adverse Effect................................46
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER.............................46
Section 5.1 Conduct of Business of the Company Pending the Merger.....46
Section 5.2 Conduct of Business of Pan Pacific Pending the Merger.....50
Section 5.3 Continued Qualification as a Real Estate Investment Trust;
Final Company Dividend..................................52
Section 5.4 Dividend Payment Coordination; Special Dividend...........52
Section 5.5 [Intentionally Omitted]...................................53
Section 5.6 Restructuring of Company Board............................53
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ARTICLE VI. ADDITIONAL AGREEMENTS.............................................53
Section 6.1 Preparation of Form S-4 and the Proxy Statement;
Stockholder and Shareholder Meetings....................53
Section 6.2 Cooperation; Notice; Cure.................................55
Section 6.3 No Solicitation...........................................55
Section 6.4 Access to Information.....................................57
Section 6.5 Termination of Company's 401(k) Plan......................57
Section 6.6 Governmental Approvals....................................57
Section 6.7 Publicity.................................................58
Section 6.8 Affiliate Agreements......................................59
Section 6.9 Tax Treatment of Reorganization...........................59
Section 6.10 Further Assurances and Actions............................59
Section 6.11 Stock Exchange Listing....................................60
Section 6.12 Letter of the Company's Accountants.......................60
Section 6.13 Letter of Pan Pacific's Accountants.......................60
Section 6.14 Company REIT Status.......................................60
Section 6.15 Pan Pacific REIT Status...................................60
Section 6.16 Obtaining Consents........................................61
Section 6.17 Board Representation......................................61
Section 6.18 Employee Benefits.........................................61
Section 6.19 Non-Solicitation of Employees.............................62
Section 6.20 Acquisition of WRESI Stock................................62
Section 6.21 Adjustment to Pan Pacific Dividend Payments...............62
Section 6.22 Indemnification and Insurance.............................62
ARTICLE VII. CONDITIONS OF MERGER.............................................65
Section 7.1 Conditions to Obligation of each Party to Effect the
Merger..................................................65
Section 7.2 Conditions to Obligations of the Company to Effect the
Incorporation and the Merger............................66
Section 7.3 Conditions to Obligations of Pan Pacific to Effect the
Merger..................................................67
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER...............................68
Section 8.1 Termination...............................................68
Section 8.2 Expenses; Break-Up Fee....................................70
Section 8.3 Effect of Termination.....................................72
Section 8.4 Amendment.................................................73
Section 8.5 Waiver....................................................73
ARTICLE IX. GENERAL PROVISIONS................................................73
Section 9.1 Non-Survival of Representations, Warranties and
Agreements..............................................73
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Section 9.2 Notices...................................................73
Section 9.3 Severability..............................................74
Section 9.4 Entire Agreement; Assignment..............................75
Section 9.5 Parties in Interest; Construction.........................75
Section 9.6 Governing Law.............................................75
Section 9.7 No Trial by Jury..........................................75
Section 9.8 Action by Subsidiaries....................................75
Section 9.9 Headings..................................................75
Section 9.10 Specific Performance......................................75
Section 9.11 Counterparts..............................................76
EXHIBITS
Exhibit A Form of Articles of Incorporation of WPT
Exhibit B Form of Affiliate Agreement
Exhibit C Form of REIT Opinion of Xxxxxx & Xxxxxxx
Exhibit D Form of REIT Opinion of O'Melveny & Xxxxx LLP
Exhibit E Development Services/Joint Venture Term Sheet
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), is dated as of
August 21, 2000, and entered into by and between PAN PACIFIC RETAIL PROPERTIES,
INC., a Maryland corporation ("PAN PACIFIC"), and WESTERN PROPERTIES TRUST, a
California real estate investment trust (the "COMPANY"). Pan Pacific and the
Company are sometimes referred to herein, individually, as a "PARTY," and,
collectively, as the "PARTIES."
RECITALS
WHEREAS, the Company desires to incorporate as a California corporation
to be named WPT, Inc. ("WPT") under the California General Corporation Law (the
"INCORPORATION");
WHEREAS, the Board of Directors of Pan Pacific and the Board of Trustees
of the Company have each approved this Agreement, declared that this Agreement
is advisable and determined that the merger of WPT with and into Pan Pacific,
with Pan Pacific being the surviving company in such merger (the "MERGER"), is
advisable, fair to and in the best interests of their respective companies and
shareholders 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, Revenue
Properties (U.S.), Inc., a Delaware corporation that owns approximately 51% of
Pan Pacific Common Stock ("REVENUE PROPERTIES"), has executed and delivered to
the Company and Pan Pacific a Voting Agreement dated as of the date hereof,
pursuant to which Revenue Properties has agreed to vote in favor of the Pan
Pacific Voting Proposals (as defined herein);
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization and that this Agreement
constitute a plan of reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, Pan Pacific and the Company desire to make certain
representations, warranties and agreements in connection with the Merger as
specifically set forth herein, and no others; and
WHEREAS, Pan Pacific and Xxxxxxx Xxxxx, the Chief Executive Officer of
the Company, intend to participate in the development services and joint venture
arrangements described in EXHIBIT E hereof after consummation of the Merger.
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, Pan Pacific and the
Company hereby agree as follows:
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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, 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 (or
beneficial interest) options, stock (or beneficial interest) appreciation
rights, stock (or beneficial interest) purchases or other forms of incentive or
equity compensation (other than a Welfare Plan, Pension Plan or Multiemployer
Plan), in each case with respect to which such Person or any ERISA Affiliate
thereof 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 San Francisco, California.
"CERTIFICATES" shall mean outstanding certificates which
immediately prior to the Effective Time represented WPT Common Stock.
"CGCL" shall mean the California General Corporation Law, as
amended.
"COMPANY AFFILIATE" shall mean an "affiliate" of the Company
within the meaning of Rule 145 promulgated under the Securities Act.
"COMPANY BOARD" shall mean the Board of Trustees of the
Company.
"COMPANY COMMON SHARE" shall mean a common share of beneficial
interest in the Company, no par value.
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"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, (ii)
involves the payment or receipt of money in excess of $2,500,000 during the
remaining term of such Company Contract 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 DOWNREITS" shall mean the Western/Xxxxxx Partnership
and the Western/Pinecreek Partnership.
"COMPANY DOWNREIT PARTNERSHIP AGREEMENTS" shall mean the
partnership agreements of the Company DownREITs, as in effect as of the date
hereof.
"COMPANY DOWNREIT TRANSACTION DOCUMENTS" shall mean the
Western/Xxxxxx Partnership Amendment and the Western/Pinecreek Partnership
Amendment.
"COMPANY DOWNREIT UNITS" shall mean the units of limited
partnership interest in the Company DownREITs.
"COMPANY LEASE" shall mean any agreement providing for the
use, occupancy or possession of the Company Real Property.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or
effect (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 February 28, 2001 or
(iii) that would, or would reasonably be expected to, prevent or materially
impair the ability of Pan Pacific to operate its or any of its Subsidiaries'
business or qualify for taxation as a REIT following the Effective Time;
PROVIDED, HOWEVER, that any such change or effect having the results described
in the foregoing (i), (ii) or (iii) that results from (A) a change in any law,
rule, or regulation, or GAAP or interpretations thereof that applies to both Pan
Pacific 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; provided, further, that
a decline in the share price of the Company resulting from the public
announcement of this Agreement and the proposed Merger shall not be deemed a
Company Material Adverse Effect.
"COMPANY OPTIONS" shall mean all options and purchase rights
to acquire Company Shares granted, awarded, earned or purchased under any
Company Stock Plan.
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"COMPANY SHARES" shall mean Company Common Shares and Company
Preferred Shares.
"COMPANY SHAREHOLDER" shall mean a holder of record of one or
more Company Common Shares immediately prior to the Effective Time.
"COMPANY STOCK PLANS" shall mean the Company's 1988 Stock
Option Plan and the Company's 1998 Equity Incentive Plan.
"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 any Company Stock
Plan.
"COMPANY TRANSACTION DOCUMENTS" shall mean this Agreement and
the Articles of Incorporation.
"COMPANY TRANSACTIONS" shall mean the Incorporation, the
Merger and the other transactions contemplated by the Company Transaction
Documents.
"DECLARATION OF TRUST" shall mean the Amended and Restated
Declaration of Trust of the Company.
"EFFECTIVE TIME" shall have the meaning assigned thereto in
SECTION 2.4.
"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 or regulation 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 Xxxxx
Xxx, 00 X.X.X. 000x, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. 1802 et seq. ("HMTA") and the Emergency Planning and Community Right to
Xxxx Xxx, 00 X.X.X. 00000, et seq. ("EPCRA"),
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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 one 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 after reasonable inquiry of those individuals listed in SECTION
1 of the Company Disclosure Schedule, and (ii) Pan Pacific, the actual knowledge
after reasonable inquiry of those individuals listed in SECTION 1 of the Pan
Pacific Disclosure Schedule.
"MGCL" shall mean the Maryland General Corporation Law, as
amended.
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"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
contributed to or is or was required to contribute to, or 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.
"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.
"PAN PACIFIC COMMON STOCK" shall mean the Common Stock, par
value $.01 per share, of Pan Pacific.
"PAN PACIFIC CONTRACT" shall mean any note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which Pan Pacific 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) has a remaining term of more than one year, (ii)
involves the payment or receipt of money in excess of $5,000,000 during the
remaining term of such Pan Pacific Contract or (iii) contains covenants limiting
the freedom of Pan Pacific 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 Pan Pacific Lease shall not be considered a Pan Pacific
Contract.
"PAN PACIFIC DOWNREITS" means Pan Pacific (Portland), LLC, a
Delaware limited liability company, and Pan Pacific (Rancho Las Palmas), a
Nevada limited liability company.
"PAN PACIFIC DOWNREIT OPERATING AGREEMENTS" shall mean the
operating agreements of the Pan Pacific DownREITs, as in effect as of the date
hereof.
"PAN PACIFIC DOWNREIT UNITS" means the units of membership
interest in the Pan Pacific DownREITs.
"PAN PACIFIC LEASE" shall mean any agreement providing for the
use, occupancy or possession of the Pan Pacific Real Property.
"PAN PACIFIC MATERIAL ADVERSE EFFECT" shall mean any change in
or effect (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 Pan Pacific 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 February 28, 2001 or
(iii) that would, or would reasonably be expected to, prevent or materially
impair the ability of Pan Pacific to
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operate its or any of its Subsidiaries'business or qualify for taxation as a
REIT following the Effective Time; PROVIDED, however, that any such change or
effect having the results described in the foregoing (i), (ii) or (iii) that
results from (A) a change in any law, rule, or regulation, or GAAP or
interpretations thereof that applies to both Pan Pacific and the Company or (B)
economic or market conditions in the retail shopping center industry generally,
shall not be considered when determining whether a Pan Pacific Material Adverse
Effect has occurred; provided, further, that a decline in the stock price of Pan
Pacific resulting from the public announcement of this Agreement and the
proposed Merger shall not be deemed a Pan Pacific Material Adverse Effect.
"PAN PACIFIC STOCK" shall mean Pan Pacific Common Stock and
Pan Pacific Preferred Stock.
"PAN PACIFIC STOCK PLANS" shall mean the 1997 Stock Option and
Incentive Plan of Pan Pacific and the 2000 Equity Incentive Plan of Pan Pacific.
"PAN PACIFIC 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 Pan Pacific Stock Plan.
"PAN PACIFIC TRANSACTIONS" means the Merger and the other
transactions contemplated by this Agreement.
"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
contributed to or is or was required to contribute to, or 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 any Encumbrances which
result from (i) 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;
(iii) all laws, rules, regulations, ordinances and restrictions promulgated by
any Governmental Entity; (iv) all Company Contracts, leases, subleases,
licenses, concessions or service contracts to which any Person or any of its
Subsidiaries is a party; (v) 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 Pan Pacific
or its Subsidiaries (in the case of Pan Pacific Assets), or other documents or
writings or included in the public records incurred or assumed in the ordinary
course of business; and (vi) all other liens and mortgages, covenants,
imperfections in title, charges, easements, restrictions which, in the case of
any such Encumbrances pursuant to
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clause (i) through (vi), 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 Pan Pacific Material Adverse Effect with respect to Encumbrances
affecting Pan Pacific 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.
"PROPERTY RESTRICTIONS" shall mean, with respect to any
Company Real Property or Pan Pacific Real Property, as applicable, all
easements, rights of way, covenants, conditions, written agreements, laws,
ordinances and regulations affecting building use or occupancy, or reservations
of an interest in title.
"REIT" shall mean a real estate investment trust within the
meaning of the Code.
"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.
"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
9
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,
Pan Pacific 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 contributed to or is or was required to
contribute to, or under which such Person or any ERISA Affiliate thereof has or
may have any obligation or liability (accrued, contingent or otherwise).
"WESTERN/XXXXXX PARTNERSHIP" shall mean Western/Xxxxxx, X.X.,
a Delaware limited partnership.
"WESTERN/XXXXXX PARTNERSHIP AMENDMENT" shall mean the First
Amendment to the Agreement of Limited Partnership, dated as of August __, 2000,
which amends the Agreement of Limited Partnership of Western/Xxxxxx, X.X. dated
October 30, 1998.
"WESTERN/PINECREEK PARTNERSHIP" shall mean Western/Pinecreek,
L.P., a Delaware limited partnership.
"WESTERN/PINECREEK PARTNERSHIP AMENDMENT" shall mean the
unexecuted First Amendment to the Agreement of Limited Partnership, which, if
and when it is executed, will amend the Agreement of Limited Partnership of
Western/Pinecreek, L.P. dated November 27, 1999.
"WRESI" shall mean Western Real Estate Services, Inc., a
California corporation.
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TABLE OF OTHER DEFINED TERMS
Cross Reference
TERMS IN AGREEMENT
Acquisition Proposal........................................... Section 6.3(a)
Affiliate Agreement ........................................... Exhibit B
Agreement ..................................................... Preamble
Agreement of Merger............................................ Section 2.4
Alternative Transaction........................................ Section 8.2(d)
Articles of Incorporation...................................... Section 2.1
Articles of Merger............................................. Section 2.4
Base Amount ................................................... Section 8.2(d)
Blue Sky Laws ................................................. Section 3.6(b)
Break-Up Fee................................................... Section 8.2(e)
Certificate of Merger ......................................... Section 2.4
Closing ....................................................... Section 2.3
Closing Date .................................................. Section 2.3
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 3.18
Company Leased Property ....................................... Section 3.13(a)
Company Owned Property ........................................ Section 3.13(a)
Company Preferred Shares....................................... Section 3.3(a)
Company Real Property ......................................... Section 3.13(a)
Company SEC Reports ........................................... Section 3.8(a)
Company Shareholders Meeting .................................. Section 3.18
Company Voting Proposals....................................... Section 3.2
Confidentiality Agreement ..................................... Section 6.4
Effective Time ................................................ Section 2.4
Employee Benefits ............................................. Section 6.18(a)
Exchange Agent ................................................ Section 2.11(a)
Exchange Fund.................................................. Section 2.11(a)
Exchange Ratio ................................................ Section 2.8(a)
Expenses....................................................... Section 8.2(a)
Final Company Dividend......................................... Section 5.3
Governmental Approvals ........................................ Section 6.6
Incorporation.................................................. Recitals
Joint Proxy Statement/Prospectus............................... Section 3.18
Maryland Department............................................ Section 2.4
Matching Transaction........................................... Section 6.3(c)
11
Merger ........................................................ Recitals
Merger Consideration........................................... Section 2.8(a)
Minimum Distribution Dividend ................................. Section 5.3
Notifying Party ............................................... Section 6.5(a)
Option Consideration........................................... Section 2.9(a)
Pan Pacific ................................................... Preamble
Pan Pacific Board ............................................. Section 4.2
Pan Pacific Disclosure Schedule ............................... Article IV
Pan Pacific Employee Plans..................................... Section 4.12(a)
Pan Pacific Financial Advisor.................................. Section 4.18
Pan Pacific Leased Property ................................... Section 4.13(a)
Pan Pacific Options ........................................... Section 4.3(a)
Pan Pacific Owned Property .................................... Section 4.13(a)
Pan Pacific Preferred Stock.................................... Section 4.3(a)
Pan Pacific Real Property ..................................... Section 4.13(a)
Pan Pacific SEC Reports ....................................... Section 4.8(a)
Pan Pacific Stockholders Meeting .............................. Section 3.18
Pan Pacific Voting Proposals................................... Section 4.6(a)
Party or Parties .............................................. Preamble
Qualifying Income ............................................. Section 8.2(e)
Registration Statement ........................................ Section 3.18
REIT Requirements ............................................. Section 8.2(e)
Revenue Properties............................................. Recitals
Superior Proposal ............................................. Section 6.3(b)
Surviving Company ............................................. Section 2.2
Tax Guidance .................................................. Section 8.2(e)
Terminating Company Breach..................................... Section 8.1(h)
Terminating Pan Pacific Breach................................. Section 8.1(i)
Termination Date............................................... Section 8.1(b)
Voting Debt.................................................... Section 3.3(e)
WPT Common Stock............................................... Section 2.1
12
ARTICLE II.
THE MERGER
SECTION 2.1 THE INCORPORATION. Upon the terms and subject to the
conditions of this Agreement and in accordance with Section 200.5 of the CGCL,
immediately prior to the Effective Time, the Company shall consummate the
Incorporation by filing with the Secretary of State of the State of California
articles of incorporation of WPT and a related certificate in the forms attached
hereto as EXHIBIT A (the "ARTICLES OF INCORPORATION"). Upon the filing of the
Articles of Incorporation, WPT shall succeed automatically to all of the rights
and property of the Company and shall be subject to all of the Company's debts
and liabilities in the same manner as if WPT had incurred them. The Company
Board shall constitute the initial Board of Directors of WPT As a result of the
Incorporation, each outstanding Company Common Share shall become, without any
additional action of any shareholder of the Company, one fully paid,
nonassessable share of common stock of WPT ("WPT COMMON STOCK").
SECTION 2.2 THE MERGER. Upon the terms and subject to the conditions
of this Agreement and in accordance with the CGCL and the MGCL, at the Effective
Time, WPT shall be merged with and into Pan Pacific. Following the Merger, the
separate corporate existence of WPT shall cease and Pan Pacific shall continue
as the surviving entity (the "SURVIVING COMPANY") in accordance with the CGCL
and the MGCL.
SECTION 2.3 CLOSING AND CLOSING DATE. Unless this Agreement shall have
been terminated by either Party hereto and the transactions herein contemplated
shall have been abandoned pursuant to the provisions of SECTION 8.1, the closing
(the "CLOSING") of the Incorporation and the Merger shall take place (a) at
10:00 a.m., San Francisco 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 Pan Pacific and the
Company shall mutually agree; PROVIDED, however, if the Closing would otherwise
occur on or before November 15, 2000, the Closing shall be postponed in
accordance with Section 5.4 (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 O'Melveny & Xxxxx LLP, San Francisco, California. At the
Closing, the documents, certificates, opinions and instruments referred to in
ARTICLE VII shall be executed and delivered to the applicable party.
13
SECTION 2.4 EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as reasonably practical on or after the Closing Date, the
Parties shall (i) 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; (ii) file with
the Secretary of State of the State of California an agreement of merger or
other appropriate documents (the "AGREEMENT OF MERGER") in such form as required
by, and executed in accordance with, the relevant provisions of the CGCL; and
(iii) make all other filings, recordings or publications required under the MGCL
and the CGCL in connection with the Merger. The Merger shall become effective at
2:00 p.m., California Time, on the later of the date of (i) 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 and (ii) the filing of
the Agreement of Merger with, and acceptance for record of such Agreement of
Merger by, the California Secretary of State in accordance with the CGCL, or at
such other time as the Parties shall agree as specified in such filings in
accordance with applicable law (the "EFFECTIVE TIME").
SECTION 2.5 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 3-114 of the MGCL, Section 1107 of the CGCL 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 Pan Pacific will vest in the Surviving
Company, and all of the debts, liabilities and duties of the Company and Pan
Pacific will become the debts, liabilities and duties of the Surviving Company.
SECTION 2.6 CHARTER; BYLAWS. At the Effective Time and without any
further action on the part of the Company or Pan Pacific, (i) the charter of Pan
Pacific as in effect at the Effective Time shall be the charter of the Surviving
Company until duly amended as provided for therein or under the MGCL and (ii)
the bylaws of Pan Pacific as in effect at the Effective Time shall be the bylaws
of the Surviving Company until duly amended as provided for therein or under the
MGCL.
SECTION 2.7 DIRECTORS; OFFICERS. The directors of the Surviving
Company following the Effective Time shall be (a) the five directors of Pan
Pacific immediately prior to the Merger plus (b) two additional individuals
chosen by Pan Pacific in accordance with SECTION 6.17. The officers of the
Surviving Company immediately following the Effective Time shall be the officers
of Pan Pacific immediately prior to the Effective Time. Such directors and
officers shall serve until the earlier of their resignation or removal from
office in accordance with the Surviving Company's charter or until their
respective successors are duly elected or appointed (in the case of officers)
and qualified, as the case may be.
SECTION 2.8 CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Pan Pacific, the Company or
the holder of any of the following securities:
14
(a) Subject to SECTION 2.10, each share of WPT Common Stock issued and
outstanding immediately prior to the Effective Time (other than dissenting
shares referred to in SECTION 2.8(E) and shares to be canceled in accordance
with SECTION 2.8(B) hereof), shall be converted into and represent the right to
receive 0.62 fully paid and nonassessable shares (rounded to the nearest
ten-thousandth of a share) (as adjusted as set forth in subsection (d), the
"EXCHANGE RATIO") of Pan Pacific Common Stock (the "MERGER CONSIDERATION"). The
Merger Consideration shall be payable upon the surrender of the Certificate
formerly representing such WPT Common Stock. As of the Effective Time, all WPT
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 WPT 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 Pan Pacific Common Stock to be issued or paid in
consideration therefor upon surrender of such Certificate in accordance with
SECTION 2.10, (iii) any dividends or distributions in accordance with SECTION
2.11(F) and (iv) any unpaid dividend declared by the Company in respect of
Company Common Shares in accordance with SECTION 5.3 or 5.4, in each case
without interest.
(b) Each share of WPT Common Stock that is (i) held in the treasury of
WPT or owned by any wholly-owned Subsidiary of WPT or (ii) owned by Pan Pacific
or any Subsidiary of Pan Pacific, 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, preferred stock or other stock of Pan
Pacific issued and outstanding immediately prior to the Effective Time shall
remain outstanding and shall be unchanged after the Merger.
(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 Pan Pacific Common Stock, WPT Common
Stock or Company Common Shares, as applicable), reorganization, recapitalization
or other like change with respect to Pan Pacific Common Stock, WPT Common Stock
or Company Common Shares occurring after the date hereof and prior to the
Effective Time.
(e) Notwithstanding anything in this Agreement to the contrary, shares
of WPT Common Stock which are dissenting shares (as defined in Section 1300(b)
of the CGCL), if any, shall not be converted into or represent a right to
receive any shares of Pan Pacific Common Stock, but the holders thereof shall be
entitled only to such rights as are granted by the CGCL. Each holder of
dissenting shares who becomes entitled to payment therefor pursuant to the CGCL
shall receive payment from the Surviving Company in accordance with the CGCL;
provided, however, that (i) if any such holder of dissenting shares shall have
failed to establish his entitlement to appraisal rights as provided in the CGCL,
(ii) if any such holder of dissenting
15
shares shall have effectively withdrawn his demand for appraisal thereof or
lost his right to appraisal and payment therefor under the CGCL or
(iii) if neither any holder of dissenting shares nor the Surviving Company shall
have filed a petition demanding a determination of the value of all dissenting
shares within the time provided in the CGCL, such holder or holders (as the case
may be) shall forfeit the right to appraisal of such shares of Pan Pacific
Common Stock and such shares of WPT Common Stock shall thereupon be deemed to
have been converted, as of the Effective Time, into and represent the right to
receive shares of Pan Pacific Common Stock, without interest thereon, as
provided in SECTION 2.8(A).
SECTION 2.9 TREATMENT OF COMPANY OPTIONS AND RESTRICTED STOCK.
(a) At the Effective Time, each outstanding Company Option, whether
vested or unvested, shall constitute an option to acquire, on the same terms and
conditions as were applicable under such Company Option, the same number of
shares of Pan Pacific Common Stock as the holder of such Company Option would
have been entitled to receive pursuant to the Merger had such holder exercised
such option in full immediately prior to the Effective Time (rounded to the
nearest whole number), at a price per share (rounded to the nearest whole cent)
equal to (x) the aggregate exercise price for the Company Common Shares
purchasable pursuant to such Company Option immediately prior to the Effective
Time divided by (y) the number of full shares of Pan Pacific Common Stock deemed
purchasable pursuant to such Company Option in accordance with the foregoing. It
is intended that Company Options converted into options to acquire Pan Pacific
Common Stock in accordance with the foregoing shall qualify following the
Effective Time as incentive stock options as defined in Section 422 of the Code
to the extent such Company Options qualified as incentive stock options
immediately prior to the Effective Time, and the provisions of this SECTION 2.9
shall be applied consistent with such intent.
(b) Pan Pacific shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Pan Pacific Common Stock for
delivery under Company Stock Plans assumed in accordance with this SECTION 2.9.
As soon as practicable after the Effective Time, Pan Pacific shall file a
registration statement on Form S-8 (or any successor or other appropriate
forms), or another appropriate form with respect to the shares of Pan Pacific
Common Stock subject to such 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 such options remain outstanding.
(c) The Company Board shall, prior to or as of the Effective Time,
take all necessary actions, if any, pursuant to and in accordance with the terms
of the Company Stock Plans and the instruments evidencing the Company Options,
to provide for the conversion of the Company Options into options to acquire Pan
Pacific Common Stock in accordance with this SECTION 2.9 without the consent of
the holders of the Company Options.
(d) At the Effective Time, the vesting of each restricted Company
Common Share granted under any Company Stock Plan and set forth on Section
3.3(b) of the Company
16
Disclosure Schedule shall be fully accelerated and the contractual
restrictions thereon shall terminate.
SECTION 2.10 FRACTIONAL INTERESTS. No certificates or scrip
representing fractional shares of Pan Pacific 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 Pan Pacific. In lieu of any such
fractional interests, each shareholder of WPT exchanging Certificates pursuant
to SECTION 2.8(A) who would otherwise have been entitled to receive a fraction
of a share of Pan Pacific Common Stock (after taking into account all shares of
WPT Common Stock then held of record by such shareholder) shall receive cash
(without interest) in an amount equal to such fractional amount multiplied by
the average of the last reported sales prices of Pan Pacific Common Stock, as
reported on the NYSE, on each of the ten trading days immediately preceding the
date of the Effective Time.
SECTION 2.11 SURRENDER OF WPT COMMON STOCK AND COMPANY COMMON SHARES;
STOCK TRANSFER BOOKS.
(a) Prior to the Closing Date, Pan Pacific shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for the
shareholders of WPT in connection with the Merger (the "EXCHANGE AGENT"). The
Exchange Agent shall receive the Merger Consideration to which shareholders of
WPT shall become entitled pursuant to SECTION 2.8(a). Prior to the Effective
Time, Pan Pacific will make available to the Exchange Agent sufficient shares of
Pan Pacific Common Stock and an estimated amount of cash in lieu of fractional
shares (such shares of Pan Pacific Common Stock, together with any dividends or
distributions with respect thereto pursuant to SECTION 2.11(E), if any, and cash
in lieu of fractional shares being hereinafter referred to as the "EXCHANGE
FUND") to make all exchanges pursuant to SECTION 2.11(B). The Exchange Agent
shall cause the shares of Pan Pacific Common Stock, dividends or distributions
with respect thereto and cash in lieu of fractional shares deposited by Pan
Pacific to be (i) held for the benefit of the shareholders of WPT and (ii)
promptly applied to making the exchanges and payments provided for in SECTION
2.11(B). Such shares of Pan Pacific 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, the Surviving Company shall, or
shall cause the Exchange Agent to, mail to each shareholder of WPT whose shares
were converted pursuant to SECTION 2.8(A) into the right to receive certificates
representing Pan Pacific 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 2.10. 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
17
such Certificate shall be entitled to receive in exchange therefor,
(i) a certificate representing that number of whole shares of Pan Pacific Common
Stock which such holder has the right to receive pursuant to the provisions of
SECTION 2.8(a), with respect to Certificates formerly representing shares of WPT
Common Stock, (ii) cash in lieu of any fractional shares of Pan Pacific Common
Stock to which such holder is entitled pursuant to SECTION 2.10, after giving
effect to any required Tax withholdings, and (iii) any dividends or
distributions to which such holder is entitled pursuant to SECTION 2.11(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 WPT Common Stock it theretofore
represented shall have been converted pursuant to SECTION 2.8(A), cash in lieu
of any fractional shares pursuant to SECTION 2.10 and any dividends or
distributions pursuant to SECTION 2.11(E). If the exchange of certificates
representing shares of Pan Pacific 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 Pan
Pacific Common Stock to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Company that such Tax either has been paid or is not applicable.
(c) At any time after the one-year anniversary of the Effective Time,
Pan Pacific shall be entitled to require the Exchange Agent to deliver to Pan
Pacific cash and any other instruments (including shares of Pan Pacific 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 SECTION 2.8(A), may
surrender such Certificate to the Surviving Company and (subject to applicable
abandoned property, escheat or other similar laws) receive in exchange therefor
the consideration payable in respect thereto pursuant to SECTION 2.8(A), SECTION
2.10 and SECTION 2.11(E), without interest, but shall have no greater rights
against the Surviving Company than may be accorded to general creditors of the
Surviving Company under applicable law. Notwithstanding the foregoing, none of
Pan Pacific, the Surviving Company or the Exchange Agent shall be liable to any
shareholder of WPT (or Company Shareholder) for shares of Pan Pacific Common
Stock (and any cash payable in lieu of any fractional shares of Pan Pacific
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 WPT shall be
closed and thereafter there shall be no further registration of transfers of
shares of WPT Common Stock on the records of WPT From and after the Effective
Time, the holders of Certificates evidencing ownership of WPT Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of WPT Common Stock, except as otherwise
provided for herein or by applicable law.
18
(e) No dividends or other distributions declared or made after the
Effective Time with respect to shares of Pan Pacific Common Stock shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of Pan
Pacific Common Stock the holder is entitled to receive and no Merger
Consideration, or any cash in lieu of fractional shares pursuant to SECTION
2.10, 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, Pan Pacific shall cause to be paid to the Person in whose
name the certificates representing the Pan Pacific Common Stock shall be issued
in respect of such surrendered Certificate, any dividends or distributions with
respect to such shares of Pan Pacific 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 2.12 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 Pan
Pacific Common Stock (and cash in lieu of any fractional shares of Pan Pacific
Common Stock), and dividends or distributions, if any, as may be required to be
issued pursuant to SECTION 2.8(A), SECTION 2.10 and SECTION 2.11(E); PROVIDED,
HOWEVER, that Pan Pacific 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 Pan Pacific or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
SECTION 2.13 WITHHOLDING RIGHTS. Pan Pacific or the Exchange Agent
shall be entitled to deduct and withhold from the Merger Consideration or any
Option Consideration, or cash in lieu of fractional shares, if any, or dividends
or distributions, if any, otherwise payable pursuant to this Agreement to any
shareholder of WPT or holder of Company Options such amounts as Pan Pacific or
the Exchange Agent is required to deduct and withhold with respect to the making
of such payment under the Code or any provision of state, local, or foreign Tax
law. To the extent that amounts are so withheld by Pan Pacific or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the shareholder of WPT or holder of any Company Options,
in respect of which such deduction and withholding was made by Pan Pacific or
the Exchange Agent.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Pan Pacific 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 Pan Pacific on or before
the date of this Agreement (the "COMPANY DISCLOSURE SCHEDULE") or as otherwise
limited herein.
19
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 real estate
investment trust, corporate, partnership or other applicable 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 Company and any of its
Subsidiaries to be so qualified as would not, when taken together with all such
other failures, cause a Company Material Adverse Effect. The Company has
previously made available to Pan Pacific true and correct copies of its
Organizational Documents as in effect on the date hereof. The Company is a "real
estate investment trust," as such term is defined in Section 23000 of the CGCL.
SECTION 3.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT. The
Company has the requisite real estate investment trust and 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 Incorporation by the requisite vote of the
holders of Company Common Shares (such votes being the "COMPANY VOTING
PROPOSALS"). 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 real estate investment trust and corporate action
on the part of the Company, other than the adoption and approval of this
Agreement and the Incorporation by the requisite vote of the holders of the
Company Common Shares, and no other trust or 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 it 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).
SECTION 3.3 CAPITALIZATION.
(a) As of the date hereof and as of the date of the Effective Time
(immediately prior to the Incorporation), the authorized shares of beneficial
interest in the Company consists of an unlimited number of Company Common Shares
and 2,000,000 preferred shares of beneficial interest, no par value ("COMPANY
PREFERRED SHARES"). The authorized capital stock of WPT as of the Effective Time
will consist of 25,000,000 shares of WPT Common Stock. As of the close of
business on June 30, 2000, (i) 17,297,250 Company Common Shares were issued and
outstanding, of which zero (0) shares were held in the Company treasury, and
(ii) no Company Preferred Shares were issued and outstanding. Since June 30,
2000, no Company Shares have been issued or reserved for issuance, except for
Company Shares issued in respect of the
20
exercise, conversion or exchange of Company Stock Rights or Company DownREIT
Units outstanding on June 30, 2000.
(b) Section 3.3(b) of the Company Disclosure Schedule sets forth as of
the date hereof, for each 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 Company Shares for or
into which each such Company Stock Right is exercisable, convertible or
exchangeable and the exercise price thereof. Except as set forth in this SECTION
3.3(B), or described in Section 3.3(b) of the Company Disclosure Schedule, or
the rights to convert Company DownREIT Units into Company Common Shares pursuant
to the Company DownREIT Partnership Agreements, 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 Company Shares 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 have
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 value
of Company Shares or any other equity interests of the Company.
(c) There are no outstanding or contingent obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Company Shares 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 convert Company DownREIT Units pursuant to the Company
DownREIT Partnership Agreements.
(d) All Company Common Shares 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. The Company does not have a shareholder rights plan in effect.
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 (including shares which may be issued upon
exercise of outstanding options) or
21
other ownership interests of each of the Company's Subsidiaries are duly
authorized, 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 the Company'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 the rights held by the Company or its Subsidiaries identified
in Section 3.4 of the Company Disclosure Schedule. Without limiting the
generality of the foregoing sentence, neither the Company nor, to the Company's
Knowledge, any "Affiliate" or "Associate" (as such terms are defined in Section
3-601 of the MGCL) of the Company, is, or was at any time since June 30, 1995,
the "Beneficial Owner" (as defined in Section 3-601 of the MGCL), directly or
indirectly, of 5% or more of the voting power of the outstanding voting stock of
Pan Pacific. At all times during the second half of any taxable year beginning
with the taxable year ended December 31, 1992, the Company has met, or was
treated as having met, the "not closely held" requirement set forth in Section
856(a)(6) of the Code. To the Knowledge of the Company, at any particular time
since January 1, 1992, no Person or Persons who actually or constructively (as
such term is used for purposes of the "not closely held" requirement set forth
in Section 856(a)(6) of the Code or as set forth in Section 856(d)(5) of the
Code) owned at any such time in excess of 9.8% in value of the outstanding
shares of beneficial interest in the Company held, in the aggregate, any
interest in any tenant of the Company. To the Knowledge of the Company, as of
the Effective Time, no Person will own, actually or constructively (as such term
is used for purposes of the "not closely held" requirement set forth in Section
856(a)(6) of the Code or as set forth in Section 856(d)(5) of the Code) in
excess of 9.8% of the outstanding shares of beneficial interest in the Company.
SECTION 3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) 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
Proposals are 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,
22
violate any material statute, law, ordinance, rule or regulation, applicable to
the Company or any of its Subsidiaries or any of their Assets; or (iii) except
as set forth in Section 3.6(a)(iii) of the Company 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 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 material 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.
(b) Except as set forth in Sections 3.6(a) or 3.6(b) 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 the Company Transaction Documents or the Company
DownREIT Transaction Documents by the Company or any of its applicable
Subsidiaries or the consummation by the Company or its applicable Subsidiaries
of the Company Transactions, other than (A) the filing with the SEC of the Joint
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 the Company Transaction Documents; (B) the filing of the
Agreement of Merger pursuant to the CGCL and the Articles of Merger pursuant to
the MGCL; (C) filings with the American Stock Exchange, (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 of which to make or obtain
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 is in
material 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 Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
received any written notice since January 1, 1997, 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
23
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, 1997 (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.
(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, shareholders' 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 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 June 30, 2000, (ii) liabilities or obligations arising in the
ordinary course of business (including trade indebtedness) from June 30, 2000 to
the date hereof and (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.
24
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 June 30, 2000 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 or its Subsidiaries, the disposition of assets listed
in Section 3.9 of the Company Disclosure Schedule and the construction of the
development properties 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 or will not cause 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
(iii) to the Knowledge of the Company, pending and not served upon the Company
or threatened, in each case against the Company, any of its Subsidiaries or any
of their respective Assets which, individually or in the aggregate, directly or
indirectly, has 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.
SECTION 3.11 TAXES.
(a) Except as set forth in Section 3.11(a) of the Company Disclosure
Schedule, 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, shareholder or other party;
(b) No written claim is pending by an 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) Neither the Company nor any of its Subsidiaries has received a
written notice of any threatened audits with respect to taxable years beginning
on or after January 1, 1992, with respect to Taxes or Tax Returns of the Company
or any of its Subsidiaries. With
25
respect to taxable years beginning on or after January 1, 1992, 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 liens for Taxes upon any Assets of the Company or any
Subsidiary thereof, except for liens for Taxes not yet due and payable, 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, property tax
consultants or KPMG 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) Except as set forth in Section 3.11(g) of the Company Disclosure
Schedule, 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 shall be bound by any such Tax sharing
agreements or similar arrangements or have any liability thereunder for amounts
due in respect of periods prior to the Closing Date.
(h) Except as set forth in Section 3.11(h) of the Company Disclosure
Schedule, 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 beginning January 1, 1992, 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 January 1,
1992 through December 31, 1999, has been subject to taxation as a REIT and has
satisfied all
26
requirements to qualify as a REIT for such years, (ii) has operated since
December 31, 1999 in such a manner so as to qualify as a REIT and will
continue to operate through the Effective Time in such a manner so as to
qualify as a REIT for the taxable year ending on the date of the Effective
Time, (iii) has not taken or omitted to take any action which would
reasonably be expected to result in a challenge by the IRS 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 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. Except for WRESI and its direct
Subsidiaries, each other Subsidiary of the Company has been since its
formation, and continues to be treated for federal income Tax purposes as a
"qualified REIT subsidiary" as defined in Section 856(i) of the Code. With
respect to WRESI, since its formation, the Company has at no time held, and
does not now hold, directly or indirectly, any voting interest (or any
interest convertible into a voting interest) in WRESI. 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 Treasury Regulation section 1.337(d)-5T.
(k) The Company filed its federal income tax return for its taxable
year ended December 31, 1991 not later than September 15, 1992.
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 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 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 Pan Pacific, 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.
27
(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) 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.
SECTION 3.13 PROPERTIES.
(a) Section 3.13(a) of the Company Disclosure Schedule identifies:
(i) all real properties (by name and address) 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 has good and marketable title to the Company Owned Property, and a good
and marketable leasehold interest in the Company Leased Property, sufficient to
allow each of the Company and its Subsidiaries to conduct its business as and
where currently conducted. Each Company Real Property is not subject to any
Property Restrictions or Encumbrances, except for any Permitted Encumbrances,
any Property Restrictions or in the title insurance policies set forth in
Section 3.13(b) of the Company Disclosure Schedule, or any other
28
Permitted Encumbrances and Property Restrictions and Encumbrances that do not,
individually or in the aggregate, cause a Company Material Adverse Effect.
(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 or 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 June 30, 2000 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 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.
(e) The Company has not received since January 1, 1997 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, 1997, 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, to the Company's Knowledge, (i) there are no
material 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 and (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
29
insurance policy or any 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 Leases as amended to date have been
delivered to, or made available for review by, Pan Pacific. 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 Pan Pacific a copy of its aging of
accounts receivable as of June 30, 2000, 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 to 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.
(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 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 thereunder that have not been cured in
all material respects and, to the Knowledge of the Company, none of the Company
nor any of its Subsidiaries is in default under any Company Lease other than
such defaults which would, 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 have been filed as an exhibit to
the Company SEC Reports. Each copy of a Company Contract which has been
delivered to, or made available for review by, Pan Pacific 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 material breach
or violation of or material default by the Company or any of its Subsidiaries
under any of the Company Contracts, except if such breach, violation of or
material default has 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 material breach, violation or default, or give
30
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 material 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 Pan
Pacific.
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.
SECTION 3.16 [INTENTIONALLY OMITTED.]
SECTION 3.17 ENVIRONMENTAL MATTERS
(a) Except as set forth in Section 3.17(a) of the Company Disclosure
Schedule, the Company, each of its Subsidiaries and, to the actual knowledge of
the individuals listed in Section 1 of the Company Disclosure Schedule (after an
inquiry of the Company's property managers but no other third parties), each
tenant or operator of Company Real Property (i) have obtained all material
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 material compliance with all terms and conditions of such required
permits, licenses and authorizations, and also are in material 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 3.17(b) of the Company Disclosure
Schedule, the Company, each of its Subsidiaries and, to the actual knowledge of
the individuals listed on Section 1 of the Company Disclosure Schedule, each
tenant or operator of Company Real Property have not received a written notice
of and have no Knowledge of any present or
31
unremediated past violations of Environmental Laws, or of any event, incident
or Action preventing continued compliance with such Environmental Laws, or
giving rise to any common law environmental liability, or forming 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.
(c) SECTION 3.17 constitutes the sole representation of the Company
concerning any Environmental Law or Hazardous Material.
SECTION 3.18 OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation (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 Shares 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 joint proxy statement/prospectus to be sent to the stockholders
of Pan Pacific and the Company in connection with the meeting of the
shareholders of the Company (the "COMPANY SHAREHOLDERS MEETING") and the meeting
of Pan Pacific's stockholders (the "PAN PACIFIC STOCKHOLDERS MEETING") to
consider this Agreement, the Merger and the Incorporation (the "JOINT PROXY
STATEMENT/PROSPECTUS") and the registration statement on Form S-4 pursuant to
which shares of Pan Pacific Common Stock to be issued in the Merger will be
registered under the Securities Act (the "REGISTRATION STATEMENT"), of which the
Joint Proxy Statement/Prospectus will form a part.
SECTION 3.19 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 Pan Pacific a
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 3.20 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding Company Common Shares 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 Proposals. 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
shareholders of the Company, (b) approved this Agreement and the Company
Transactions, (c) has declared that this Agreement and the Company Transactions
are advisable, and (d) resolved to recommend that the holders of Company Common
Shares approve this Agreement and the Company Transactions.
32
The Western/Xxxxxx Partnership Amendment has been approved by the requisite
vote of, and all other partnership action by, the partners of the
Western/Xxxxxx Partnership. A true and correct copy of the fully executed
Western/Xxxxxx Partnership Amendment has been delivered to Pan Pacific.
SECTION 3.21 TAX MATTERS. Neither the Company nor any of its
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 Pan Pacific 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 3.22 INSURANCE. The Company has made available to Pan Pacific
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 3.23 [INTENTIONALLY OMITTED].
SECTION 3.24 NO MATERIAL ADVERSE EFFECT. Except as disclosed in the
Company SEC Reports, to the Knowledge of the Company, no fact alone or together
with another fact, would cause a Company Material Adverse Effect prior to the
Termination Date.
SECTION 3.25 AFFILIATE TRANSACTIONS. Except as set forth in the
Company SEC Reports, from December 31, 1999 through the date of this Agreement
there have been no material 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.
SECTION 3.26 NO EXISTING DISCUSSIONS. As of the date hereof, the
Company is not in breach of its obligations set forth in the tenth paragraph
(relating to negotiations of an Acquisition Proposal with a third party) of the
Confidentiality Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PAN PACIFIC
Pan Pacific represents and warrants 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 Pan Pacific to the Company on or before
the date of this Agreement (the "PAN PACIFIC DISCLOSURE SCHEDULE") or as
otherwise limited herein.
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Pan Pacific 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 or
partnership power and authority to own and
33
operate its businesses as presently conducted. Pan Pacific 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 Pan Pacific and any of
its Subsidiaries to be so qualified as would not, when taken with all other
such failures, cause a Pan Pacific Material Adverse Effect. Pan Pacific has
previously made available to the Company true and correct copies of their
Organizational Documents as in effect on the date hereof.
SECTION 4.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT. Pan
Pacific 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 Pan Pacific
Voting Proposals by the requisite vote of the holders of Pan Pacific Common
Stock. The execution and delivery of this Agreement by Pan Pacific and the
performance by it of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Pan Pacific (the "PAN PACIFIC BOARD") and all other necessary
corporate action on the part of Pan Pacific, other than the adoption and
approval of the Parent Voting Proposals by the requisite vote of the holders of
Pan Pacific Common Stock, and no other corporate proceedings on the part of Pan
Pacific are necessary to authorize this Agreement or the Pan Pacific
Transactions. This Agreement has been duly and validly executed and delivered by
Pan Pacific and constitutes a legal, valid and binding obligation of Pan
Pacific, enforceable against it 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).
SECTION 4.3 CAPITALIZATION.
(a) As of the date hereof and as of the Effective Time, the authorized
stock of Pan Pacific consists of 100,000,000 shares of Pan Pacific Common Stock
and 30,000,000 shares of preferred stock, par value $0.01 per share ("PAN
PACIFIC PREFERRED STOCK"). As of the close of business on June 30, 2000,
21,252,512 shares of Pan Pacific Common Stock were issued and outstanding and no
shares of Pan Pacific Preferred Stock were issued and outstanding. Since June
30, 2000, no shares of Pan Pacific Stock have been issued or reserved for
issuance, except for shares of Pan Pacific Common Stock issued in respect of the
exercise, conversion or exchange of Pan Pacific Stock Rights or Parent DownREIT
Units outstanding on June 30, 2000.
(b) Section 4.3(b) of the Pan Pacific Disclosure Schedule sets forth
as of the date hereof, for each Pan Pacific Stock Plan, the dates on which Pan
Pacific Stock Rights under such plan were granted, the number of outstanding Pan
Pacific Stock Rights granted on each such date, the number and class of Pan
Pacific Stock for or into which each such Pan Pacific Stock Right is
exercisable, convertible or exchangeable and the exercise price thereof. Except
as set forth in this SECTION 4.3(b), or described in Section 4.3(b) of the Pan
Pacific Disclosure
34
Schedule, or the rights to convert Pan Pacific DownREIT Units into shares of
Pan Pacific Common Stock pursuant to the Pan Pacific DownREIT Operating
Agreements, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Pan Pacific or any of its Subsidiaries is a party or by which any of them is
bound obligating Pan Pacific or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional Pan Pacific Stock
or any other stock of the Pan Pacific or its Subsidiaries or other voting
securities of Pan Pacific 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 Pan Pacific and its Subsidiaries have granted any
stock appreciation rights or any other contractual rights the value of which
is derived from the financial performance of Pan Pacific or the value of
shares of Pan Pacific Stock.
(c) There are no outstanding or contingent obligations of Pan Pacific
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of Pan Pacific Stock or the stock or ownership interests of any Subsidiary of
Pan Pacific, other than Pan Pacific's obligation to convert Pan Pacific DownREIT
Units pursuant to Pan Pacific DownREIT Operating Agreements.
(d) All shares of Pan Pacific Common Stock subject to issuance as
specified in Section 4.3(b) hereof, or in Section 4.3(b) of the Pan Pacific
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 Pan Pacific 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 Pan Pacific to which Pan
Pacific or any of its Subsidiaries is a party.
SECTION 4.4 SUBSIDIARIES. Other than Subsidiaries of Pan Pacific
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 Pan
Pacific are those set forth in Section 4.4 of the Pan Pacific Disclosure
Schedule. All of the outstanding shares of stock (including shares which may be
issued upon exercise of outstanding options) or other ownership interests of
each of Pan Pacific's Subsidiaries are duly authorized, validly issued, fully
paid and nonassessable. Except as set forth in Section 4.4 of the Pan Pacific
Disclosure Schedule, Pan Pacific 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 Pan Pacific or which would require any Subsidiary of Pan Pacific
to issue or sell any shares of its
35
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
Pan Pacific Disclosure Schedule, neither Pan Pacific nor any of Pan Pacific'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 Pan Pacific's Subsidiaries identified in Section 4.4 of the
Pan Pacific Disclosure Schedule).
SECTION 4.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Neither the execution and delivery of this Agreement nor the
performance by Pan Pacific of its obligations hereunder, nor the consummation of
the transactions contemplated hereby, will: (i) assuming the approval of this
Agreement, the Merger and the issuance of shares of Pan Pacific Common Stock
pursuant to this Agreement (the "PAN PACIFIC VOTING PROPOSALS") by the requisite
holders of Pan Pacific Common Stock, conflict with Pan Pacific'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 material statute, law, ordinance, rule or regulation, applicable to
Pan Pacific or any of its Subsidiaries or any of their Assets; or (iii) except
as set forth in Section 3.6(a)(iii) of the Pan Pacific 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 Pan Pacific or any of its
Subsidiaries under, or result in the creation or imposition of any lien upon any
Assets or business of Pan Pacific 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 material permit,
authorization, license, contract, instrument or other agreement or commitment or
any order, judgment or decree to which Pan Pacific or any of its Subsidiaries is
a party or by which Pan Pacific or any of its Subsidiaries or any of their
respective Assets are bound or encumbered, or give any Person the right to
require Pan Pacific 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 Pan Pacific Material
Adverse Effect.
(b) Except as set forth in Section 4.6(a) or 4.6(b) of the Pan Pacific
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 Pan Pacific or any of its Subsidiaries in connection with
the execution and delivery of this Agreement by Pan Pacific or any of its
applicable Subsidiaries or the consummation by Pan Pacific of the Pan Pacific
Transactions, other than (A) the filing with the SEC of the Joint Proxy
Statement/Prospectus and such reports under Section 13(a) of the Exchange Act,
and such other
36
compliance with the Exchange Act, as may be required in connection with this
Agreement; (B) the filing of the Articles of Merger pursuant to the MGCL and
the Agreement of Merger pursuant to the CGCL; (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
of which to make or obtain would not, in the aggregate, cause a Pan Pacific
Material Adverse Effect.
SECTION 4.7 COMPLIANCE. Except as set forth in Section 4.7 of the Pan
Pacific Disclosure Schedule, Pan Pacific and each of its Subsidiaries is in
material 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 Pan
Pacific Material Adverse Effect. Neither Pan Pacific nor any of its Subsidiaries
has received written notice since April 16, 1997, or has Knowledge of any
written notice, 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 4.7 of the Pan Pacific Disclosure Schedule and (B) such
failures as would not, individually or in the aggregate, cause a Pan Pacific
Material Adverse Effect.
SECTION 4.8 SEC DOCUMENTS.
(a) Pan Pacific has filed with the SEC all reports, schedules,
statements and other documents required to be filed by Pan Pacific or any of its
Subsidiaries with the SEC since December 31, 1997 (collectively, the "PAN
PACIFIC SEC Reports"). As of their respective dates, with respect to Pan Pacific
SEC Reports filed pursuant to the Exchange Act, and as of their respective
effective dates, as to Pan Pacific SEC Reports filed pursuant to the Securities
Act, the Pan Pacific SEC Reports and any registration statements, reports,
forms, proxy or information statements and other documents filed by Pan Pacific
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 Pan Pacific SEC Reports (including the related
notes and schedules) presents fairly, in all material respects, the consolidated
financial position of Pan Pacific and its consolidated Subsidiaries as of its
date, and each of the consolidated statements of income, equity and cash flows
of Pan Pacific included in or incorporated by reference into Pan Pacific SEC
Reports (including any related notes and schedules) presents fairly, in all
material respects,
37
the results of operations and cash flows, as the case may be, of Pan Pacific
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 Pan Pacific SEC Reports, neither Pan
Pacific 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 Pan
Pacific 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 Pan
Pacific as of June 30, 2000, (ii) liabilities or obligations arising in the
ordinary course of business (including trade indebtedness) from June 30, 2000 to
the date hereof and (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 Pan Pacific Material
Adverse Effect.
SECTION 4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in the Pan
Pacific SEC Reports and except for the transactions expressly contemplated
hereby, from June 30, 2000 to the date hereof, Pan Pacific 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 Pan Pacific or its Subsidiaries), and there has not been any
change in Pan Pacific'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 Pan Pacific Material Adverse Effect.
SECTION 4.10 LITIGATION. Except as set forth in the Pan Pacific SEC
Reports or as set forth in Section 4.10 of the Pan Pacific Disclosure Schedule,
there is no Action (i) instituted, (ii) pending and served upon Pan Pacific or
(iii) to the Knowledge of Pan Pacific, pending and not served on Pan Pacific or
threatened, in each case against Pan Pacific, any of its Subsidiaries or any of
their respective Assets which, individually or in the aggregate, directly or
indirectly, has a Pan Pacific Material Adverse Effect, nor is there any
outstanding judgment, decree or injunction, in each case against Pan Pacific,
any of its Subsidiaries or any of their respective Assets, or any statute, rule
or order of any Governmental Entity applicable to Pan Pacific or any of its
Subsidiaries which, individually or in the aggregate, has caused a Pan Pacific
Material Adverse Effect.
SECTION 4.11 TAXES.
(a) Pan Pacific 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
38
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) No written claim is pending by an authority in a jurisdiction
where any of Pan Pacific and its Subsidiaries does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction;
(c) Neither Pan Pacific nor any of its Subsidiaries has received
written notice of any threatened audits with respect to taxable years ending on
or after December 31, 1997, with respect to Taxes or Tax Returns of Pan Pacific
or any of its Subsidiaries. With respect to taxable years ending on or after
December 31, 1997, neither the IRS nor any other taxing authority (whether
domestic or foreign) has asserted against Pan Pacific or any of its Subsidiaries
any deficiency or claim for Taxes;
(d) Section 4.11(d) of the Pan Pacific 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 liens for Taxes upon any Assets of Pan Pacific or any
Subsidiary thereof, except for liens for Taxes not yet due and payable, and no
written power of attorney that has been granted by Pan Pacific or any of its
Subsidiaries (other than to Pan Pacific or a Subsidiary, property tax
consultants or KPMG LLP) currently is in force with respect to any matter
relating to Taxes;
(f) 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 Pan Pacific or any of its Subsidiaries, and, after the Closing Date,
neither Pan Pacific nor any of its Subsidiaries shall be bound by any such Tax
sharing agreements or similar arrangements or have any liability thereunder for
amounts due in respect of periods prior to the Closing Date;
(g) None of Pan Pacific 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 Pan Pacific) or (ii) has any liability
for the Taxes of any Person (other than any of Pan Pacific 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;
(h) Since Pan Pacific's taxable year ending December 31, 1997, Pan
Pacific 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 Pan Pacific nor any of its Subsidiaries has incurred any material
liability for Taxes other than in the ordinary course of
39
business. To the Knowledge of Pan Pacific, 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 Pan
Pacific or its Subsidiaries.
(i) Pan Pacific (i) for all taxable years commencing with 1997 through
December 31, 1999, has been subject to taxation as a REIT and has satisfied all
requirements to qualify as a REIT for such years, (ii) has operated since
December 31, 1999 in such a manner so as to qualify as a REIT, and will continue
to operate through the Effective Time in such a manner so as to qualify as a
REIT for the taxable year ending on the date of the Effective Time, (iii) has
not taken or omitted to take any action which would reasonably be expected to
result in a challenge by the IRS to its status as a REIT, and no such challenge
is pending or, to Pan Pacific's Knowledge, threatened. Each Subsidiary of Pan
Pacific that is a state law partnership or limited liability company has been
since its formation and continues to be treated for federal 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 Pan Pacific has been since its formation, and continues to be
treated for federal income Tax purposes as a "qualified REIT subsidiary" as
defined in Section 856(i) of the Code. Neither Pan Pacific nor any Subsidiary of
Pan Pacific holds any Asset (i) 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 Treasury Regulation Section 1.337(d)-5T.
SECTION 4.12 EMPLOYEE BENEFIT PLANS.
(a) Pan Pacific has listed in Section 4.12 of the Pan Pacific
Disclosure Schedule all Benefit Arrangements, Multiemployer Plans, Pension Plans
and Welfare Plans of Pan Pacific 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 Pan Pacific or any ERISA Affiliate of Pan Pacific,
or any Subsidiary of Pan Pacific (together, the "PAN PACIFIC EMPLOYEE PLANS").
(b) With respect to each Pan Pacific Employee Plan, Pan Pacific 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 Pan Pacific Employee
Plan, (iii) each trust agreement and group annuity contract, if any, relating to
such Pan Pacific Employee Plan and (iv) the most recent actuarial report or
valuation relating to a Pan Pacific Employee Plan subject to Title IV of ERISA.
(c) With respect to the Pan Pacific Employee Plans, individually and
in the aggregate, no event has occurred, and to the Knowledge of Pan Pacific,
there exists no condition or set of circumstances in connection with which Pan
Pacific could be subject to any liability that will have a Pan Pacific Material
Adverse Effect under ERISA, the Code or any other applicable
40
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 Pan Pacific 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 generally accepted accounting principles, in
the financial statements of Pan Pacific, which obligations will cause a Pan
Pacific Material Adverse Effect.
(e) Except as disclosed in Pan Pacific SEC Reports filed prior to the
date of this Agreement, and except as set forth in Section 4.12(e) of the Pan
Pacific Disclosure Schedule, or as provided for in this Agreement, neither Pan
Pacific nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any officer or other key employee of Pan Pacific 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 Pan Pacific
of the nature contemplated by this Agreement, (ii) agreement with any officer of
Pan Pacific 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 Pan Pacific Disclosure Schedule identifies:
(i) all real properties (by name and address) owned by Pan Pacific
or its Subsidiaries (the "PAN PACIFIC 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 Pan Pacific or its
Subsidiaries as lessee (the "PAN PACIFIC LEASED PROPERTY") as of the date
hereof, which are all of the real properties so leased or operated by them. The
Pan Pacific Owned Property and the Pan Pacific Leased Property is referred to
herein collectively as the "PAN PACIFIC REAL PROPERTY."
(b) Pan Pacific and its Subsidiaries have obtained title insurance
policies for the Pan Pacific Real Property listed in Section 4.13(b) of the Pan
Pacific Disclosure Schedule, and no material claims have been made against any
such policies by an insured party thereunder. With respect to the Pan Pacific
Real Property not listed in Section 4.13(b) of the Pan Pacific Disclosure
Schedule, Pan Pacific has good and marketable title to the Pan Pacific Owned
Property, and a valid leasehold interest in the Pan Pacific Leased Property,
sufficient to allow
41
each of Pan Pacific and its Subsidiaries to conduct its business as and where
currently conducted. Each Pan Pacific Real Property is not subject to any
Property Restrictions or Encumbrances, except for any Permitted Encumbrances,
any Property Restrictions or in the title insurance policies set forth in
Section 4.13(b) of the Pan Pacific Disclosure Schedule, or any other
Permitted Encumbrances and Property Restrictions and Encumbrances that do
not, individually or in the aggregate, cause a Pan Pacific Material Adverse
Effect.
(c) Except as set forth on Section 4.13(c) of the Pan Pacific
Disclosure Schedule or as disclosed in the Pan Pacific SEC Reports, the Pan
Pacific Real Property is not encumbered by any debt.
(d) To the Pan Pacific's Knowledge, all (i) certificates, permits or
licenses from any Governmental Entity having jurisdiction over any Pan Pacific
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 Pan Pacific 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 Pan
Pacific 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 Pan Pacific
Material Adverse Effect and there is no pending threat or modification or
cancellation of the same. All work to be performed, payments to be made and
financial undertakings required to be taken by Pan Pacific or its Subsidiaries
prior to June 30, 2000 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 Pan Pacific 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 Pan Pacific Material Adverse Effect.
(e) Pan Pacific has not received since January 1, 1997 any written
notice of any violation of any federal, state or municipal law, ordinance,
order, regulation or requirement affecting any portion of any Pan Pacific Real
Property issued by any Governmental Entity which would cause a Pan Pacific
Material Adverse Effect. Since January 1, 1997, neither Pan Pacific nor any of
its Subsidiaries has received any written notice from any Governmental Entity
with jurisdiction over Pan Pacific or any such Subsidiaries to the effect that
(i) any condemnation or rezoning proceedings are pending or threatened with
respect to any Pan Pacific 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 Pan Pacific 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 Pan Pacific Material Adverse Effect.
(f) Except as would not cause, individually or in the aggregate, a Pan
Pacific Material Adverse Effect, to Pan Pacific's Knowledge, (i) there are no
material structural defects relating to any Pan Pacific Real Property, (ii)
there is no Pan Pacific Real Property whose building systems are not in working
order in any material respect and (iii) there is no uninsured
42
physical damage to any Pan Pacific Real Property in an amount in excess of
$150,000 with respect to any individual property, except for the payment by
the Pan Pacific of a deductible under the applicable insurance policy or any
current renovation or restoration to any Pan Pacific Real Property the
remaining cost of which exceeds $150,000 with respect to any individual
property.
(g) True and correct copies of the Pan Pacific Leases as amended to
date have been delivered to, or made available for review by, the Company.
Section 4.13(g) of the Pan Pacific Disclosure Schedule lists the following
information with respect to the Pan Pacific Leases:
(i) the name of the lessee;
(ii) the expiration date of the Pan Pacific Lease; and
(iii) the amount (or method of determining the amount) of minimum
monthly base rentals due under each Pan Pacific Lease.
(h) Pan Pacific has delivered to the Company a copy of its aging of
accounts receivable as of June 30, 2000, which copy is true and correct in all
material respects. Except as set forth in Section 4.13(h) of the Pan Pacific
Disclosure Schedule, as of the date hereof, neither Pan Pacific nor any of its
Subsidiaries has delivered written notice to any tenant to any Pan Pacific 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 Pan Pacific Material Adverse Effect.
(i) There are no agreements, written or oral, between Pan Pacific or
any of its Subsidiaries and any other Person relating to the use and occupancy
of the Pan Pacific Real Property other than the Pan Pacific Leases. Except as
set forth in Section 4.13(i) of the Pan Pacific Disclosure Schedule, as of the
date hereof, no defaults (unless subsequently cured) by Pan Pacific or its
Subsidiaries have been alleged in writing by the lessees thereunder that have
not been cured in all material respects and, to the Knowledge of Pan Pacific,
none of Pan Pacific nor any of its Subsidiaries is in default under any Pan
Pacific Lease other than such defaults which would, individually or in the
aggregate, cause a Pan Pacific Material Adverse Effect.
SECTION 4.14 CONTRACTS.
(a) Section 4.14(a) of the Pan Pacific Disclosure Schedule contains a
complete and accurate list of all Pan Pacific Contracts in effect as of the date
hereof, other than the Pan Pacific Contracts which have been filed as an exhibit
to the Pan Pacific SEC Reports. Each copy of a Pan Pacific Contract which has
been delivered to, or made available for review by, Pan Pacific is a true and
correct copy of such Pan Pacific Contract as amended to date.
43
(b) As of the date of this Agreement, (i) there is no material breach
or violation of or material default by Pan Pacific or any of its Subsidiaries
under any of the Pan Pacific Contracts, except if such breach, violation of or
material default has been waived, and (ii) no event has occurred with respect to
Pan Pacific or any of its Subsidiaries which, with notice or lapse of time or
both, would constitute a material 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 Pan Pacific Contracts, which
breach, violation or default referred to in clauses (i) or (ii), individually or
in the aggregate with other such material breaches, violations or defaults
referred to in clauses (i) or (ii), would cause a Pan Pacific Material Adverse
Effect. True copies of the Pan Pacific 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 Pan Pacific Disclosure Schedule, or as would not cause a Pan Pacific
Material Adverse Effect, (i) there are no controversies pending or, to the
Knowledge of Pan Pacific, threatened between Pan Pacific or any of its
Subsidiaries and any of their respective employees; (ii) neither Pan Pacific 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 Pan Pacific 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 Pan Pacific or any of its Subsidiaries; and
(iv) there is no strike, slowdown, work stoppage or lockout, or, to the
Knowledge of Pan Pacific, threat thereof, by or with respect to any employees of
Pan Pacific or any of its Subsidiaries.
SECTION 4.16 [INTENTIONALLY OMITTED.]
SECTION 4.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 4.17(a) of the Pan Pacific
Disclosure Schedule, Pan Pacific, each of its Subsidiaries and, to the actual
knowledge of the individuals listed in Section 1 of the Pan Pacific Disclosure
Schedule (after an inquiry of Pan Pacific's property managers but no other third
parties), each tenant or operator of Pan Pacific Real Property (i) have obtained
all material permits, licenses and other authorizations which are required to be
obtained under all applicable Environmental Laws by Pan Pacific or its
Subsidiaries; (ii) are in material compliance with all terms and conditions of
such required permits, licenses and authorizations, and also are in material
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 Pan Pacific Material Adverse Effect.
44
(b) Except as set forth in Section 4.17(b) of the Pan Pacific
Disclosure Schedule, Pan Pacific, each of its Subsidiaries and, to the actual
knowledge of the individuals listed on Section 1 of the Pan Pacific Disclosure
Schedule, each tenant or operator of Pan Pacific 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 giving rise to any common
law environmental liability, or forming the basis of any Action against Pan
Pacific 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.
(c) SECTION 4.17 constitutes the sole representation of Pan Pacific
concerning any Environmental Law or Hazardous Material.
SECTION 4.18 OPINION OF FINANCIAL ADVISOR. Pan Pacific has received
the opinion of Prudential Securities Incorporated (the "PAN PACIFIC FINANCIAL
ADVISOR"), as of the date of this Agreement, to the effect that the Exchange
Ratio is fair to Pan Pacific from a financial point of view. Pan Pacific has
been authorized by the Pan Pacific Financial Advisor to permit, subject to prior
review and consent by such Pan Pacific Financial Advisor, the inclusion of such
fairness opinion (or a reference thereto) in the Joint Proxy
Statement/Prospectus and the Registration Statement.
SECTION 4.19 BROKERS. No broker, finder or investment banker (other
than the Pan Pacific Financial Advisor, the fees and expenses of which shall be
paid by Pan Pacific) 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 Pan Pacific or
any of its Subsidiaries. Pan Pacific has heretofore furnished to the Company a
complete and correct copy of all agreements between Pan Pacific and the Pan
Pacific Financial Advisor pursuant to which such firm would be entitled to any
such payment..
SECTION 4.20 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Pan Pacific Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of Pan Pacific's
stock necessary to approve the Pan Pacific Voting Proposals. The Pan Pacific
Board, at a meeting duly called and held, (i) determined that this Agreement and
the transactions contemplated hereby, including the Merger, are fair to, and in
the best interests of the stockholders of Pan Pacific, (ii) approved this
Agreement and the transactions contemplated hereby, including the Merger, (iii)
declared that the Merger, this Agreement and the transactions contemplated
thereby are advisable, and (d) resolved to recommend that the holders of the
shares of the Pan Pacific Common Stock approve the Pan Pacific Voting Proposals.
SECTION 4.21 TAX MATTERS. Neither Pan Pacific nor any of its
Affiliates has taken or agreed to take any action, nor does Pan Pacific have
Knowledge of any circumstances,
45
that (without regard to any action taken or agreed to be taken 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.
SECTION 4.22 INSURANCE. Pan Pacific 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 Pan Pacific or any of its Subsidiaries as of the date
hereof.
SECTION 4.23 NO MATERIAL ADVERSE EFFECT. Except as disclosed in the
Pan Pacific SEC Reports, to the Knowledge of Pan Pacific no fact alone or
together with another fact, would cause a Pan Pacific Material Adverse Effect
prior to the Termination Date.
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 Pan
Pacific 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 Pan
Pacific, the Company shall not and shall not permit any of its Subsidiaries to:
46
(a) adopt or propose any amendment to its Organizational Documents,
except as contemplated by this Agreement;
(b) (i) 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 or upon the exercise of rights of the limited partners in
the Company DownREITs to convert their Company DownREIT Units outstanding on the
date of this Agreement into Company Common Shares), 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 beneficial interest 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,
including without limitation, the Company Stock Rights and the Company Stock
Plans, or authorize cash payments in exchange for any options granted under any
of such plans, or (iii) adopt or implement any shareholder rights plan;
(c) except as set forth in SECTIONS 5.3 and 5.4, 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 the regular
quarterly dividend paid by the Company in an amount not to exceed $0.28 per
Company Common Share.
(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 conversions or redemptions of Company DownREIT Units for cash, Company
Common Shares or otherwise, in accordance with the Company DownREIT Partnership
Agreements;
(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 not required by any existing plan,
arrangement or practice (including, without limitation, the granting of stock
(or beneficial interest) options, stock (or beneficial interest) appreciation
rights, shares of restricted stock (or beneficial interest) 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 any collective bargaining agreements or Employee Plan as in
effect on the date of this Agreement consistent with past practices, (iii) for
salary and benefit increases in the ordinary
47
course of business consistent with past practice to employees other than
officers of the Company earning an annual base salary in excess of $100,000,
or (iv) pursuant to SECTION 2.8, (v) pursuant to existing agreements,
policies or practices previously disclosed in writing to Pan Pacific, which
shall be interpreted and implemented in a manner consistent with past
practice, (vi) for payments permitted by SECTION 6.18 and (vii) as disclosed
in Section 5.1(e) of the Company Disclosure Schedule.
(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 $5,000,000; provided that nothing herein shall prevent the Company or
its Subsidiaries from entering into leases of their real property Assets and
provided further that the Company shall notify Pan Pacific 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 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 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 or 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, 1999;
48
(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, other than
repayments of revolving lines of credit and the repayment of all obligations
under the First Amended and Restated Credit Agreement among the Company, the
Banks named therein, and Sanwa Bank California, as Agent, dated October 19,
1998, as amended to the date hereof;
(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;
(l) change in any material manner its methods of accounting as in
effect on June 30, 2000 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 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 would
prevent the Merger from qualifying as a reorganization as described in Section
368(a) of the Code;
(q) 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
49
aggregate, excluding capital expenditures made with funds (A) held in like
kind escrows established 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
(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 PAN PACIFIC 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, Pan Pacific
agrees as to itself and each of its Subsidiaries, 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
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 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 the Company 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, Pan Pacific shall not and shall not permit any of its
Subsidiaries to:
(a) adopt or propose any amendment to its Organizational Documents,
except in furtherance of this Agreement and the Merger;
(b) (i) issue, pledge or sell (other than upon exercise of Pan Pacific
Stock Rights outstanding on the date of this Agreement upon payment of the
exercise price thereof or
50
upon the exercise of rights of the members in the Pan Pacific DownREITs to
convert their Pan Pacific DownREIT Units into shares of Pan Pacific 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
stock or any other of its securities; provided, however, that the Pan Pacific
DownREITs are permitted to issue Pan Pacific DownREIT Units; (ii) amend,
waive or otherwise modify any of the terms of any option, warrant or stock
option plan of Pan Pacific or any of its Subsidiaries, including without
limitation, the Pan Pacific Stock Rights and the Pan Pacific Stock Plans, 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 SECTIONS 5.3 and 5.4, declare, set aside or
pay any dividend or make any other distribution or payment with respect to any
shares of Pan Pacific Common Stock (including any dividend distribution payable
in, or otherwise make a distribution of, shares of stock of any existing or
subsequently formed Subsidiary of Pan Pacific), except the regular quarterly
dividend paid by Pan Pacific in an amount not to exceed $.42 per share of Pan
Pacific Common Stock;
(d) 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 Pan Pacific Common Stock required under Pan
Pacific's charter in order to preserve the status of Pan Pacific as a REIT under
the Code, and (ii) conversions or redemptions of Pan Pacific DownREIT Units for
cash, Pan Pacific Common Stock or otherwise, in accordance with the
Organizational Documents of the Pan Pacific DownREITs;
(e) (i) sell, pledge, dispose of, grant or encumber any of the Assets
of Pan Pacific or any of its Subsidiaries consisting of stock or partnership
interests of its Subsidiaries or fee interests in real property, in an aggregate
amount not to exceed $40,000,000, or (ii) acquire any Assets consisting of fee
interests in real property, other than Assets in an aggregate amount not to
exceed $50,000,000; or (iii) acquire all or substantially all of the capital
stock or equity securities of any Person, or all or substantially all of the
assets of any division or line of business of any Person, whether by purchase,
merger or consolidation if the aggregate value of the assets of such Person,
division or line of business exceeds $50,000,000; provided that nothing herein
shall prevent Pan Pacific or its Subsidiaries from entering into leases of their
real property Assets;
(f) take or agree to take or cause to be taken any action that would
prevent the Merger from qualifying as a reorganization as described in Section
368(a) of the Code; or
(g) 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.
51
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 Pan Pacific 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 foregoing, if necessary to
enable the Company to make aggregate dividend distributions during its final
taxable period equal to the Minimum Distribution Dividend (after taking into
account the dividend paid in accordance with SECTION 5.4), the Company shall
declare and pay a dividend (the "FINAL COMPANY DIVIDEND") to holders of Company
Common Shares 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 Pan Pacific
at least ten days prior to the date for the Company Shareholders Meeting so that
Pan Pacific may declare and pay a dividend per share to holders of Pan Pacific
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; SPECIAL DIVIDEND.
(a) Unless the Parties hereto otherwise mutually agree in writing, (i)
if the Closing would otherwise occur on or before November 15, 2000, the Closing
shall be postponed to a date, selected by the Parties, as soon as practicable
after November 15, 2000; (ii) the Company shall set a record date for its
regular fourth quarter 2000 dividend as close as practicable to October 26,
2000, and shall be entitled to authorize, declare and pay (or commit to pay)
such dividend in the amount of $0.28 per share to holders of record of Company
Common Shares at that date; and (iii) Pan Pacific shall set a record date for a
special dividend on or before November 15, 2000, and shall be entitled to pay a
special dividend in the amount of $0.28 per share to holders of record of Pan
Pacific Common Stock at that date.
(b) With respect to dividends in respect of Pan Pacific Common Stock
and Company Common Shares permitted under this Agreement other than those
referred to in SECTION 5.4(A), each of Pan Pacific and the Company shall
coordinate with the other the declaration and the record and payment dates
therefor, it being the intention of the Parties that holders of Company Common
Shares shall not receive (i) dividends for any single calendar quarter with
respect to both Company Common Shares and shares of Pan Pacific Common Stock
received in exchange therefor in connection with the Merger or (ii) fail to
receive dividends for any single calendar quarter on shares of Company Common
Shares or shares of Pan Pacific Common Stock received in exchange therefor in
connection with the Merger. Notwithstanding
52
the foregoing provisions of this SECTION 5.4(B), Pan Pacific's declaration of
any such dividends shall be at its option.
SECTION 5.5 [INTENTIONALLY OMITTED].
SECTION 5.6 RESTRUCTURING OF COMPANY BOARD. The Company shall take all
actions necessary to cause the following events to occur immediately prior to
the Effective Time: (i) the resignation of two of its trustees, which trustees
shall not be among the individuals listed on Schedule 2.7 hereto, and (ii) the
appointment of two directors of Pan Pacific listed on Schedule 2.7 hereof by at
least a two-thirds vote of the remaining Company trustees.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1 PREPARATION OF FORM S-4 AND THE PROXY STATEMENT;
STOCKHOLDER AND SHAREHOLDER MEETINGS.
(a) As promptly as practicable after the execution of this Agreement,
the Company and Pan Pacific shall cooperate with each other regarding, and,
prepare and file with the SEC, the Joint Proxy Statement/Prospectus and Pan
Pacific shall prepare and file the Registration Statement, PROVIDED that Pan
Pacific may delay the filing of the Registration Statement until approval of the
Joint Proxy Statement/Prospectus by the SEC. The Company and Pan Pacific will
cause the Joint 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 Pan Pacific and the Company shall use all reasonable efforts to have or cause
the Joint 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 Pan Pacific
shall cause its respective Representatives to fully cooperate with the other
Party and its respective Representatives in the preparation of the Joint 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 Joint Proxy Statement/Prospectus and the Registration
Statement. The Company hereby agrees that the recommendations of the Company
Board described in SECTION 3.20 (subject to the right of the Company Board to
withdraw, amend or modify such recommendation in accordance with SECTION 6.3)
may be included in the Registration Statement and the Joint Proxy
Statement/Prospectus. Pan Pacific 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 Pan Pacific 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 and Pan Pacific shall cause the Joint Proxy Statement/Prospectus to be
mailed to their respective shareholders or stockholders.
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(b) The Company and Pan Pacific each agrees that none of the
information supplied by the Company or its Subsidiaries to be included or
incorporated by reference in the Joint Proxy Statement/Prospectus or any
amendment thereof or supplement thereto, will, on the date of the mailing of the
Joint Proxy Statement/Prospectus or any amendment or supplement thereto, and at
the time of the Company Shareholders Meeting and the Pan Pacific 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 Pan Pacific 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 Pan Pacific 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 Joint Proxy
Statement/Prospectus or the Registration Statement, and (ii) the Company and Pan
Pacific 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 Joint 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 and Pan Pacific shall each take all action necessary
to duly call the Company Shareholders Meeting and the Pan Pacific Stockholders
Meeting, respectively, each to be held as promptly as practicable for the
purpose of voting upon the approval of the Company Voting Proposals, in the case
of the Company, and the Pan Pacific Voting Proposals, in the case of Pan
Pacific. Subject to the right of the Company Board to withdraw, amend or modify
such recommendation in accordance with SECTION 6.3, each of the Company and Pan
Pacific shall, through its respective board of trustees or board of directors,
as applicable, recommend to their respective stockholders adoption of this
Agreement and approval of the Merger and related matters, shall coordinate and
cooperate with respect to the timing of such meetings and shall use their best
efforts to hold the Company Shareholders Meeting and Pan Pacific Stockholders
Meeting on the same day and each of the Company and Pan Pacific shall use all
reasonable efforts to solicit from its stockholders proxies in favor of the
Company Voting Proposals, in the case of the Company, and the Pan Pacific Voting
Proposals, in the case of Pan Pacific. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to this SECTION
6.1(D) to conduct the Company Shareholders Meeting shall not be affected by the
commencement, public proposal or communication to the Company of any Acquisition
Proposal.
54
SECTION 6.2 COOPERATION; NOTICE; CURE. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Pan
Pacific 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 Pan Pacific 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 practical after it becomes known to such Party, that causes or will
cause any covenant or agreement of Pan Pacific 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
Pan Pacific 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(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 Pan Pacific 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
shares 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. Nothing
in this SECTION 6.3(A) shall 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, trustees, 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 or implement such Acquisition Proposal, (iii) agree to or
recommend or endorse any such Acquisition Proposal with or by any Third Party,
(iv) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Pan Pacific, its approval and recommendation of the Merger and this
Agreement, (v) participate in discussions and negotiations with such Third Party
relating to such Acquisition Proposal and (vi) cause the Company to enter into
an agreement
55
implementing an Acquisition Proposal, provided that the Company
simultaneously terminates this Agreement pursuant to SECTION 8.1(G), if and
only to the extent that (x) the Company Board believes in good faith (after
consultation with its financial advisor) that such Acquisition Proposal is
more favorable or is likely to result in an Acquisition Proposal that is more
favorable to the Company Shareholders from a financial point of view 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)
the Company Board, after having consulted with and considered the advice of
outside counsel, has reasonably determined in good faith that the failure to
do so would reasonably be expected to cause the members of the Company Board
to breach their legal duties to shareholders of the Company 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. The Company agrees that, in the event of a
Superior Proposal, for the five Business Day period commencing on the date on
which it delivers notice of such Superior Proposal to Pan Pacific in
accordance with SECTION 6.3(C), it shall offer to negotiate with, and cause
its respective financial and legal advisors to negotiate with, Pan Pacific to
attempt to make such commercially reasonable adjustments in the terms and
conditions of this Agreement as would enable Pan Pacific to proceed with the
transactions contemplated herein.
(c) The Company shall notify Pan Pacific reasonably promptly after
receipt by the Company (or any of their 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 is it considering making, or has made, an
Acquisition Proposal. Such notice shall be made orally and in writing and shall
indicate the status thereof (including the specific terms thereof but not the
identity of the Third Party making such request or Acquisition Proposal). The
Company shall promptly (but in any event within one calendar day) furnish to Pan
Pacific a copy of any written proposals relating to a possible Acquisition
Proposal and copies of any written information provided to or by any third party
relating thereto to the extent such information has not previously been provided
to Pan Pacific (but redacting the name of the Third Party). The Company shall
promptly (but in any event within one calendar day) advise Pan Pacific 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 shareholders a position contemplated by Rule
14e-2 promulgated under the Exchange Act or from making any disclosure to its
shareholders if the Company Board determines in good faith after consultation
with its outside counsel (who may be its regularly engaged outside counsel) that
failure to do so would reasonably be expected to result in a breach of its
fiduciary duties to shareholders under any applicable law, provided, however,
that neither the Company nor the 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
56
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 Pan
Pacific 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 Pan Pacific 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 Pan Pacific 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 the identity of any Third Party making
any Acquisition Proposal after the date hereof, or any advice or analysis by the
Company or any of its representatives of the Company or any such Third Party or
any such Acquisition Proposal or of any report from its financial advisors,
counsel or management regarding Pan Pacific. 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 July 25, 2000, among Pan Pacific, Revenue Properties Company Limited 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 Pan Pacific, 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 Pan Pacific
otherwise requests in writing, prior to the Closing, (i) the Company Board shall
adopt resolutions terminating, effective prior to the Effective Time, the
Company's Investment 401(k) Plan (each such plan, a "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
57
all Third Parties and Governmental Entities which are necessary to consummate
the transactions 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. Pan Pacific 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 Pan Pacific and the Company, as the case may be, and any of their
respective Subsidiaries, directors, trustees, 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 Pan
Pacific 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) Pan Pacific 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.
Pan Pacific 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, Pan Pacific 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
Pan Pacific, whether on the date hereof or at any time in the future.
SECTION 6.7 PUBLICITY. Pan Pacific 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.
58
SECTION 6.8 AFFILIATE AGREEMENTS. No later than 45 days prior to the
Closing the Company shall deliver to Pan Pacific a list identifying, in the view
of the Company, each person who will be, at the time of the Company Shareholders
Meeting, a Company Affiliate. The Company shall provide to Pan Pacific such
information and documents as Pan Pacific shall reasonably request for purposes
of reviewing such list and shall notify Pan Pacific 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 Pan Pacific shall be added
to the list of Company Affiliates if Pan Pacific shall receive from the Company,
on or before the date of the Company Shareholders Meeting, an opinion of counsel
reasonably satisfactory to Pan Pacific 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 Pan Pacific as promptly as practicable but in no
event later than 15 days prior to the Closing (and in any case prior to the
Effective Time) an Affiliate Agreement 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, Pan Pacific, nor any of their respective
Subsidiaries or other Affiliates shall take any action, or fail to take any
action, that is not specifically provided for by this Agreement that would or
would be reasonably likely to adversely affect the treatment of the Merger as a
reorganization under Section 368(a) of the Code. Pan Pacific 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, Pan Pacific, 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, Pan Pacific, 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) Pan Pacific and the Company shall cooperate and use their best
efforts in obtaining the opinions of O'Melveny & Xxxxx, LLP, counsel to the
Company, and Xxxxxx & Xxxxxxx, counsel to Pan Pacific, 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. Pan
Pacific and Company shall use their best efforts to provide O'Melveny & Xxxxx,
LLP and Xxxxxx & Xxxxxxx 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
59
transactions contemplated by this Agreement, including, without limitation,
(i) using their respective reasonable efforts to obtain all licenses,
permits, consents, approvals, authorizations, 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(C) and
8.1(G).
SECTION 6.11 STOCK EXCHANGE LISTING. Pan Pacific shall use its best
efforts to list on the NYSE prior to the Effective Time, subject to official
notice of issuance, the shares of Pan Pacific 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 Pan Pacific a letter of
KPMG 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 Pan Pacific and
its directors, in form reasonably satisfactory to Pan Pacific 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 PAN PACIFIC'S ACCOUNTANTS. Pan Pacific shall
use all reasonable efforts to cause to be delivered to the Company and Pan
Pacific a letter of KPMG LLP, Pan Pacific'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
shareholders of the Company in accordance with SECTION 5.3 or otherwise.
SECTION 6.15 PAN PACIFIC REIT STATUS. Notwithstanding anything to the
contrary set forth in this Agreement, nothing in this Agreement shall prohibit
Pan Pacific from taking, and Pan Pacific hereby agrees to take any action at any
time or from time to time that in the reasonable judgment of Pan Pacific Board,
upon advice of counsel, is legally necessary for Pan Pacific 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,
60
including without limitation, making dividend or distribution payments to
stockholders of Pan Pacific, in accordance with SECTION 5.3 or otherwise.
SECTION 6.16 OBTAINING CONSENTS.
(a) Pan Pacific 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 Pan Pacific Disclosure Schedule or (ii) required to prevent a
Pan Pacific 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 BOARD REPRESENTATION. At or before the Effective Time,
Pan Pacific shall increase the size of the Pan Pacific Board from five directors
to seven directors. At the Effective Time, the two resulting vacancies on the
Pan Pacific Board shall be filled by two of the individuals listed on SCHEDULE
6.17, which shall consist of the independent members of the Company Board, which
individuals shall be selected from such list by Pan Pacific and elected to the
Pan Pacific Board by a majority of the directors on the Pan Pacific Board.
SECTION 6.18 EMPLOYEE BENEFITS.
(a) At the Effective Time (and not before the Effective Time, unless
otherwise required by law or by contract), the employees of the Company listed
in Section 6.18 of the Company Disclosure Schedule shall be entitled to the
severance payments, bonuses, 401(k) profit sharing and matching contributions
and vacation accrual payments (the "EMPLOYEE BENEFITS") listed opposite their
names in Section 6.18 of the Company Disclosure Schedule; provided, however,
that the Company is expressly permitted to pay (or commit to pay) the applicable
amount set forth in Section 6.18 of the Company Disclosure Schedule to any
employee listed on such schedule whose employment is terminated prior to the
Effective Time, at the time of such termination, so long as any such payments
and commitments do not exceed $15,000 to any individual or $100,000 in the
aggregate; provided further that no individual shall be entitled to any Employee
Benefits under this SECTION 6.18(A) (other than those which the Company or the
Surviving Company is required to pay by law or by contract) unless such
individual first delivers to the Company or the Surviving Company, as
applicable, a writing indicating that the Employee Benefits received by such
individual represent a full settlement of all Employee Benefits due such
employee and waiving any rights to Employee Benefits accrued as of the Effective
Time. To the extent that any severance payments, bonuses, 401(k) profit sharing
and matching contributions, vacation accrual payments or substantially similar
benefits are paid to any employee listed in Section 6.18 of the Company
Disclosure Schedule after the date hereof in
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connection with services rendered by such employee prior to the Effective
Time, the Employee Benefits payable to such employee under this SECTION
6.18(A) shall be reduced on a dollar-for-dollar basis.
(b) The Company shall have the right to offer to each employee listed
in Section 6.18(b) of the Company Disclosure Schedule, with respect to each
Company Option referred to in Section 6.18(b) of the Company Disclosure
Schedule, in exchange for the cancellation of such Company Option, the amount of
cash set forth on such schedule, provided, however, that any such offer shall be
conditioned upon the applicable employee's written agreement, delivered to the
Company at least five Business Days prior to the Closing Date, to cancel all of
the Company Options held by such employee on the terms set forth in Section
6.18(b) of the Company Disclosure Schedule.
SECTION 6.19 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 6.20 ACQUISITION OF WRESI STOCK.. Pan Pacific will cause
Xxxxxx X. Xxxx and Xxxxxx X. Xxxxx to acquire, at the Effective Time, all of the
capital stock of WRESI held by Xxxxxx Xxxx and by Xxxx Xxxxx for a payment in
cash of $336,000 (plus interest) to each such person. Such purchase shall be
made without recourse, representation or warranty.
SECTION 6.21 ADJUSTMENT TO PAN PACIFIC DIVIDEND PAYMENTS. Pan Pacific
shall change its record date for its regular quarterly dividend payable in the
first quarter of 2001 to a date on or about the last Friday of February and the
payment date for such dividend to a date as close as practicable to March 15,
2001. After the Merger, Pan Pacific intends to change its record dates for its
regular quarterly dividends to dates on or about the last Friday of February,
May, August and November in each year, and payment dates for such dividends to
dates as close as practicable to March 15, June 15, September 15 and December 15
in each year, but the timing of such dividends shall be at the discretion of the
Pan Pacific Board. The regular dividend paid by Pan Pacific in the first
calendar quarter after the Effective Time shall be in a per share amount equal
to or exceeding the quotient of $0.28 divided by the Exchange Ratio. Pan Pacific
intends to maintain or exceed the dividend rate referred to in the immediately
preceding sentence after the first quarter following the Effective Time, but the
amount of subsequent dividends shall be at the discretion of the Pan Pacific
Board.
SECTION 6.22 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, trustee or director of the Company or any of its Subsidiaries,
(together with the WRESI Shareholders (as defined below)
62
the "Indemnified Parties") which is the same as the exculpation and
indemnification provided to the Indemnified Parties by the Company or WPT 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. From and after the Effective Time, the Surviving Company
shall also provide exculpation and indemnification for Xxxxxxx Xxxxx and
Xxxxxx Xxxx in their capacities as shareholders, officers and/or directors of
WRESI (in such capacity, the "WRESI Shareholders") for all actions on or
before the Effective Time, including, without limitation, all transactions
contemplated by this Agreement, to the maximum extent permitted by law.
(b) In addition to the rights provided in SECTION 6.22(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, WPT, or Pan Pacific, or any Subsidiary of the Company or Pan Pacific,
or by or in the right of the Company, WPT, or Pan Pacific, or any Subsidiary of
the Company or Pan Pacific, or any claim, action, suit, proceeding or
investigation (collectively, for this SECTION 6.22 "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, trustee 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, trustee or director, or
(ii) the Company Transaction Documents or the Company DownREIT Transaction
Documents or the Company Transactions or the transactions contemplated thereby,
whether in any case asserted or arising before or after the Effective Time, Pan
Pacific and the Surviving Company (the "Indemnifying 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. Purchaser, the
Surviving Corporation 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
63
unreasonably withheld or delayed). 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 6.22, 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 6.22(B)
prior to the Effective Time.
(c) For six years after the Effective Time, Pan Pacific 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 trustees, 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 insurance for the benefit of persons
currently covered by the Company's officers' and directors' insurance policy
under this SECTION 6.22(C) are in excess of 150% of the aggregate premiums paid
by the Company in 1999 on an annualized basis for such purpose then Pan Pacific
shall only be obligated to maintain such insurance coverage as is reasonably
available for such amount.
(d) This SECTION 6.22 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 Pan
Pacific, including without limitation the Surviving Company. Each of the
Indemnified Parties shall be entitled to enforce the covenants contained in this
SECTION 6.22 and Pan Pacific 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 6.22.
(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 6.22, which obligations are expressly intended to be for the
irrevocable benefit of, and shall be enforceable by, each director and officer
covered hereby.
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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 Proposals shall have been approved by the
shareholders of the Company in the manner required under the CGCL and the
Organizational Documents of the Company;
(b) the Pan Pacific Voting Proposals shall have been approved by the
stockholders of Pan Pacific in the manner required under the MGCL, the rules of
the NYSE and the Organizational Documents of Pan Pacific;
(c) 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, enjoins or restricts the 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;
(d) there shall not be instituted or pending any Action by a
Governmental Entity or any other Person as a result of this Agreement or any of
the transactions contemplated herein which causes a Company Material Adverse
Effect or a Pan Pacific Material Adverse Effect (assuming for purposes of this
SECTION 7.1(D) that the Merger shall have occurred);
(e) 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 Pan Pacific Common Stock to be
exchanged for Company Shares shall have been obtained;
(f) 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 Pan Pacific Material Adverse Effect and could not reasonably be
expected to subject the Parties or their Affiliates or any directors, trustees,
officers, agents or advisors of any of the foregoing to the risk of criminal
liability;
65
(g) all consents or approvals of all Persons (other than Governmental
Entities and the limited partners of Western/Pinecreek Partnership) 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 of which to obtain would not cause a Company Material Adverse Effect
or a Pan Pacific Material Adverse Effect; and
(h) the shares of Pan Pacific 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
INCORPORATION AND THE MERGER. The obligation of the Company to effect the
Incorporation and 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 Pan Pacific 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 Effective
Time as if made at and as of the Effective Time, 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 Pan Pacific Material Adverse Effect;
(b) Pan Pacific 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 Pan Pacific by the Chief Executive Officer or Chief Financial Officer of Pan
Pacific to the effect set forth in clauses (a) and (b) of this SECTION 7.2;
(d) The Company shall have received an opinion of O'Melveny & Xxxxx
LLP, dated as of the date of the Effective Time, 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, (i) the Merger will constitute a "reorganization" within
the meaning of Section 368(a) of the Code, and (ii) no income or gain will be
recognized by the Company or any Company Shareholders as a result of the Merger,
except to the extent that Company Shareholders receive cash pursuant to the
transactions contemplated by this Agreement. In rendering such opinion,
O'Melveny & Xxxxx LLP may receive and rely upon
66
representations including those contained in this Agreement or in
certificates of officers of the Parties and others; and
(e) The Company shall have received the opinion of Xxxxxx & Xxxxxxx in
the form attached as EXHIBIT C hereto (based upon customary representations
including those contained in this Agreement or in certificates of officers of
the Parties and others), dated as of the date of the Effective Time, to the
effect that, (i) commencing with its taxable year ended December 31, 1997, Pan
Pacific 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.
(f) The average closing price of Pan Pacific Common Stock on the NYSE
for the period of ten trading days prior to the Closing Date shall not be less
than $15 per share.
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF PAN PACIFIC TO EFFECT THE
MERGER. The obligations of Pan Pacific 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 Effective
Time as if made at and as of the Effective Time, 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;
(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 it at or prior to the Closing Date;
(c) Pan Pacific 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) Pan Pacific shall have received an opinion of Xxxxxx & Xxxxxxx,
dated as of the date of the Effective Time, in form and substance reasonably
satisfactory to Pan Pacific, 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, (i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and (ii) no income or gain will be
recognized by Pan Pacific or any of its stockholders as a result of the Merger.
In rendering such opinion, Xxxxxx & Xxxxxxx may
67
receive and rely upon representations including those contained in this
Agreement or in certificates of officers of the Parties or others; and
(e) Pan Pacific shall have received the opinion of O'Melveny & Xxxxx
LLP in the form attached as EXHIBIT D hereto (based upon customary
representations including those contained in this Agreement or in certificates
of officers of the Parties and others), dated as of the date of the Effective
Time, to the effect that, commencing with its taxable year ended December 31,
1992 (and without regard to whether such opinion is true or accurate for any
taxable year prior to the taxable year ended December 31, 1992), 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 Effective Time, the requirements for qualification and taxation as a
REIT under the Code.
(f) KPMG LLP shall have delivered to Pan Pacific each of the letters
described in SECTIONS 6.12 and 6.13, at the times provided for in such Sections.
(g) Effective demands for payment under Chapter 13 of the CGCL shall
not have been received by the Company or WPT with respect to more than 5.0% of
the outstanding Company Common Shares or WPT Common Stock.
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 the shareholders of the Company and the stockholders of
Pan Pacific referred to in SECTIONS 7.1(A) and (B), by written notice from Pan
Pacific to the Company or the Company to Pan Pacific, as the case may be, as
follows:
(a) by mutual written consent of each of Pan Pacific and the Company;
(b) by either the Company or Pan Pacific, if the Effective Time shall
not have occurred on or before February 28, 2001 (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 Pan Pacific, 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 Pan Pacific or the Company if the requisite vote in
favor of the Company Voting Proposals shall not have been obtained at a duly
held meeting of the
68
shareholders of the Company 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 under SECTION
6.1(D);
(e) by either the Company or Pan Pacific if the requisite vote in
favor of the Pan Pacific Voting Proposals shall not have been obtained at a duly
held meeting of stockholders of Pan Pacific or at any adjournment thereof;
PROVIDED that the right to terminate this Agreement under this SECTION 8.1(E)
shall not be available to Pan Pacific if it fails to fulfill its obligations
under SECTION 6.1(D);
(f) by Pan Pacific, 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 any of the
Company Voting Proposals, (ii) after the receipt by the Company of an
Acquisition Proposal (which Acquisition Proposal is public), Pan Pacific
requests in writing that the Company Board publicly reconfirm its recommendation
of the Company Voting Proposals to the shareholders of the Company and the
Company Board fails to do so within thirty Business Days after its receipt of
Pan Pacific's request; (iii) the Company Board shall have recommended to the
shareholders of the Company an Alternative Transaction; (iv) a tender offer or
exchange offer for 27.5% or more of the outstanding Company Common Shares is
commenced (other than by the Company or an Affiliate of the Company) and the
Company Board recommends that the shareholders of the Company 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
Shareholders Meeting by the Termination Date.
(g) by the Company, prior to the approval of the Company Voting
Proposals by the shareholders of the Company, if the Company has complied in all
respects with SECTION 6.3, and the Company Board has determined to accept a
Superior Proposal; PROVIDED, HOWEVER, that no termination shall be effective
pursuant to this SECTION 8.1(G) under circumstances in which a Break-Up Fee is
payable by the Company pursuant to SECTION 8.2(C)(III), unless concurrently with
such termination, 50% of such Break-Up Fee is paid by the Company in accordance
with SECTION 8.2(C)(III);
(h) by Pan Pacific, 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 Termination Date, for so long as the Company continues in
good faith to attempt to cure such breach, Pan Pacific may not terminate this
Agreement under this SECTION 8.1(H); or
69
(i) by the Company, upon a material breach of any covenant or
agreement on the part of Pan Pacific set forth in this Agreement, or if (i) any
representation or warranty of Pan Pacific that is qualified as to materiality
shall have become untrue or (ii) any representation or warranty of Pan Pacific
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 PAN PACIFIC BREACH"); PROVIDED, HOWEVER,
that, if such Terminating Pan Pacific Breach is capable of being cured by Pan
Pacific prior to the Termination Date, for so long as Pan Pacific continues in
good faith to attempt to cure such breach, the Company may not terminate this
Agreement under this SECTION 8.1(I).
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 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 this Agreement is terminated by Pan Pacific pursuant to
SECTION 8.1(H), then the Company shall pay the Expenses incurred by Pan
Pacific up to a maximum of $2,000,000; provided, however that the Company
shall not be obligated to pay such Expenses incurred by Pan Pacific 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(I), then Pan Pacific shall pay the Expenses incurred by the Company
up to a maximum of $2,000,000.
The Company's payment of the Expenses incurred by the Pan Pacific
pursuant to this subsection shall be the sole and exclusive remedy of Pan
Pacific 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. Pan Pacific's payment of the
Expenses incurred by the Company pursuant to this subsection shall be the sole
and exclusive remedy of the Company against Pan Pacific 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
70
payment, except for liabilities or damages caused by the willful breach of
any representations, warranties, covenants or agreements herein by Pan
Pacific.
(c) The Company shall pay Pan Pacific a Break-Up Fee if any of the
following events occur:
(i) the termination of this Agreement by either Pan Pacific 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
Shareholders 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;
(ii) the termination of this Agreement by Pan Pacific pursuant to
SECTION 8.1(F); or
(iii) the termination of this Agreement by the Company pursuant to
SECTION 8.1(G).
The Break-Up Fee shall be paid by the Company to Pan Pacific, in
immediately available funds, as follows: (a) 50% of the Break-Up Fee shall be
payable upon the date of the earliest to occur of the events described in
clauses (i), (ii) and (iii) of this SECTION 8.2(C) and (b) 50% of the Break-Up
Fee shall be payable within 90 days of such date. The Company's payment of a
Break-Up Fee pursuant to this subsection shall be the sole and exclusive remedy
of Pan Pacific 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 27.5% of
the outstanding Company Common Shares 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 27.5% of the outstanding Company Common Shares or 27.5% of
the equity securities of the entity surviving such merger or business
combination, or (iii) any other transaction 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 having a fair market
value (as determined by the Company Board in good faith) equal to more than
27.5% of the fair market value of all the assets of the Company and its
Subsidiaries, taken as a whole, immediately prior to such transaction.
71
(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 Pan Pacific 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 income described in Sections
856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("QUALIFYING INCOME"), and (b)
Pan Pacific 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 Pan
Pacific which was not Qualifying Income), in each case as determined by
independent accountants to Pan Pacific. Notwithstanding the foregoing, in the
event Pan Pacific receives a reasoned opinion from outside counsel or a ruling
from the IRS (the "TAX GUIDANCE") providing that Pan Pacific's receipt of the
Base 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 Break-Up Fee shall be an amount equal to the Base
Amount and the Company shall, upon receiving notice that Pan Pacific has
received the Tax Guidance, pay to Pan Pacific the unpaid Base Amount within five
Business Days. In the event that Pan Pacific 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 Pan Pacific unless and until Pan Pacific receives
either one or a combination of the following once or more often: (i) a letter
from Pan Pacific's independent accountants indicating the maximum amount that
can be paid at that time to Pan Pacific without causing Pan Pacific 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 Pan Pacific 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 Pan Pacific 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 $7,000,000; PROVIDED
that the Base Amount shall mean $10,000,000 if the Break-Up Fee is payable under
(a) Section 8.2(c)(i) as a result of an Alternative Transaction publicly
announced after November 1, 2000, or (b) under Section 8.2(c)(ii) in connection
with (i) an Acquisition Proposal received by the Company, (ii) a tender or
exchange offer commenced, or (iii) a recommendation by the Company Board of an
Alternative Transaction, in each case after November 1, 2000 or (c) under
Section 8.2(c)(iii) in connection with the receipt by the Company of a Superior
Proposal after November 1, 2000.
SECTION 8.3 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Pan Pacific as provided in SECTION 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Pan Pacific or the Company or their respective
officers, members or directors except as (i) set forth in
72
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 the shareholders of the Company and the stockholders of Pan Pacific;
PROVIDED, HOWEVER, that after any such approval, there shall be made no
amendment that by law requires further approval by such shareholders or
stockholders without the further approval of such shareholders or 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 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 6.22, 9.6 and 9.7 shall survive the Effective
Time and (b) the agreements set forth in the Confidentiality Agreement and in
SECTIONS 6.19, 8.2 and 8.3, this SECTION 9.1, SECTION 9.6 and SECTION 9.7 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):
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If to Pan Pacific:
Pan Pacific Retail Properties, Inc
0000-X Xxxxx Xxxxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
with an additional copy to:
Latham & Xxxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to the Company:
Western Properties Trust
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx
Fax No.: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx, LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx
Attention: Xxxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
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.
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SECTION 9.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Company Disclosure Schedule and the Pan Pacific 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 except that,
in the case of the Company, this Agreement shall be binding upon WPT as its
successor after the Incorporation, 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 6.22.
SECTION 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA 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.
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 Pan Pacific to take any
action, such requirement shall be deemed to include an undertaking on the part
of the Company or Pan Pacific 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
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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, Pan Pacific 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/ XXXXXX X. XXXX
--------------------------------
Xxxxxx X. Xxxx, President and
Chief Executive Officer
WESTERN PROPERTIES TRUST
By: /s/ XXXXXXX XXXXX
--------------------------------
Xxxxxxx Xxxxx, Chief Executive
Officer
By: /s/ XXXXXX XXXX
--------------------------------
Xxxxxx Xxxx, Chief Financial
Officer
[Signature Page to the Agreement and Plan of Merger]
