<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1997
REGISTRATION NO. 333-28715
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3 TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PAN PACIFIC RETAIL PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Governing Instruments)
------------------------
1631-B SOUTH MELROSE DRIVE
VISTA, CALIFORNIA 92083
(760) 727-1002
(Address of Principal Executive Offices)
------------------------
STUART A. TANZ
1631-B SOUTH MELROSE DRIVE
VISTA, CALIFORNIA 92083
(760) 727-1002
(Name and Address of Agent for Service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
WILLIAM J. CERNIUS JONATHAN A. BERNSTEIN
LAURA I. BUSHNELL BLAKE HORNICK
LATHAM & WATKINS PRYOR, CASHMAN, SHERMAN & FLYNN
650 TOWN CENTER DRIVE, 20TH FLOOR 410 PARK AVENUE, 10TH FLOOR
COSTA MESA, CALIFORNIA 92626 NEW YORK, NEW YORK 10022
(714) 540-1235 (212) 421-4100
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- ---------------------------- .
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ---------------------------- .
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE (2) PRICE (2) (3)
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share........... 8,050,000 $21.00 $169,050,000 $51,227.27
</TABLE>
(1) Includes 1,050,000 shares which the Underwriters have the option to purchase
solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The registration fee has been previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Exhibits.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement between the Company and the
Representatives
1.2 Financial Advisory Agreement between the Company and Prudential
Securities Incorporated
3.1 Articles of Amendment and Restatement of the Company
3.2 Amended and Restated Bylaws of the Company
3.3* Form of Certificate of Common Stock
5.1** Form of Opinion of Ballard Spahr Andrews & Ingersoll regarding the
validity of the securities being registered
8.1** Form of Opinion of Latham & Watkins regarding tax matters
10.1 The 1997 Stock Option and Incentive Plan of Pan Pacific Retail
Properties, Inc.
10.2** Form of Officers and Directors Indemnification Agreement
10.3* Employment Agreement between the Company and Mr. Stuart A. Tanz
10.4* Employment Agreement between the Company and Mr. David L. Adlard
10.5* Employment Agreement between the Company and Mr. Jeffrey S. Stauffer
10.6* Miscellaneous Rights Agreement
10.7** Form of Non-Competition Agreement
10.8** Commitment Letter with Bank of America NT&SA
10.9** Form of Articles of Merger for the PPD entities that owned Laguna
Village, Sports Unlimited, Foothill Center, Laurentian Center, Sunset
Square, Melrose Village Plaza, Chico Crossroads, Sahara Pavilion South,
Vineyard Village East, Arlington Courtyard, Cheyenne Commons and
Tanasbourne Village
10.10** Form of Asset Transfer Agreement for Ocee Plaza, Winterwood and Canyon
Ridge
10.11** Purchase and Sale Agreement for Green Valley Town & Country Shopping
Center
21.1** Subsidiaries of the Registrant
23.1** Consent of KPMG Peat Marwick LLP
23.2** Consent of Robert Charles Lesser & Co.
23.3** Consent of Latham & Watkins (contained in Exhibits 5.1 and 8.1)
23.4** Consent of Russell E. Tanz
23.5* Consent of Ballard Spahr Andrews & Ingersoll
23.6** Consent of Mark. J. Riedy
23.7** Consent of Bernard M. Feldman
23.8** Consent of Melvin S. Adess
24.** Power of Attorney
27.** Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-11 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Vista, State of California on the 1st day of August, 1997.
PAN PACIFIC RETAIL PROPERTIES, INC.
By: /s/ STUART A. TANZ
-----------------------------------------
Stuart A. Tanz
CHIEF EXECUTIVE OFFICER
AND PRESIDENT
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities
indicated on August 1, 1997.
TITLE
--------------------------
/s/ STUART A. TANZ
- ------------------------------ Director, Chief Executive
Stuart A. Tanz Officer and President
II-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. NUMBERED PAGE
- --------- -----------------
<C> <S> <C>
1.1 Form of Underwriting Agreement between the Company and the Representatives
1.2 Financial Advisory Agreement between the Company and Prudential Securities
Incorporated
3.1 Articles of Amendment and Restatement of the Company
3.2 Amended and Restated Bylaws of the Company
3.3* Form of Certificate of Common Stock
5.1** Form of Opinion of Ballard Spahr Andrews & Ingersoll regarding the validity of the
securities being registered
8.1** Form of Opinion of Latham & Watkins regarding tax matters
10.1 The 1997 Stock Option and Incentive Plan of Pan Pacific Retail Properties, Inc.
10.2** Form of Officers and Directors Indemnification Agreement
10.3* Employment Agreement between the Company and Mr. Stuart A. Tanz
10.4* Employment Agreement between the Company and Mr. David L. Adlard
10.5* Employment Agreement between the Company and Mr. Jeffrey S. Stauffer
10.6* Miscellaneous Rights Agreement
10.7** Form of Non-Competition Agreement
10.8** Commitment Letter with Bank of America NT&SA
10.9** Form of Articles of Merger for the PPD entities that owned Laguna Village, Sports
Unlimited, Foothill Center, Laurentian Center, Sunset Square, Melrose Village Plaza,
Chico Crossroads, Sahara Pavilion South, Vineyard Village East, Arlington Courtyard,
Cheyenne Commons, and Tanasbourne Village
10.10** Form of Asset Transfer Agreement for Ocoee Plaza, Winterwood and Canyon Ridge
10.11** Purchase and Sale Agreement for Green Valley Town & Country Shopping Center
21.1** Subsidiaries of the Registrant
23.1** Consent of KPMG Peat Marwick LLP
23.2** Consent of Robert Charles Lesser & Co.
23.3** Consent of Latham & Watkins (contained in Exhibits 5.1 and 8.1)
23.4** Consent of Russell E. Tanz
23.5* Consent of Ballard Spahr Andrews & Ingersoll
23.6** Consent of Mark J. Riedy
23.7** Consent of Bernard M. Feldman
23.8** Consent of Melvin S. Adess
24.** Power of Attorney
27.** Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
<PAGE>
Draft of July 30, 1997
PAN PACIFIC RETAIL PROPERTIES, INC.
7,000,000 Shares(1)
Common Stock
UNDERWRITING AGREEMENT
August , 1997
----
PRUDENTIAL SECURITIES INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SMITH BARNEY INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Dear Sirs:
Pan Pacific Retail Properties, Inc., a Maryland corporation intending to
qualify as a real estate investment trust (the "Company") hereby confirms its
agreement with the several underwriters named in Schedule 1 hereto (the
"Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth
below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be to the Underwriters.
1. SECURITIES. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the several Underwriters an
aggregate of 7,000,000 shares (the "Firm Securities") of the Company's common
stock, par value $.01 per share ("Common Stock"). The Company also proposes
to issue and sell to the several Underwriters not more than 1,050,000
additional shares of Common Stock if requested by the Representatives as
provided in Section 3 of this Agreement. Any and all shares of Common Stock
to be purchased by the Underwriters pursuant to such option are referred to
herein as the "Option Securities", and the Firm Securities and any Option
Securities are collectively referred to herein as the "Securities".
- --------------------
(1) Plus an option to purchase from Pan Pacific Retail
Properties, Inc. up to 1,050,000 additional shares to cover
over-allotments.
1
<PAGE>
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, each of the several Underwriters that:
(a) A registration statement on Form S-11 (File No. 333-28715)
with respect to the Securities, including a prospectus subject to completion,
has been filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"),
and one or more amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify the
Preliminary Prospectus (as hereinafter defined) that it supplements
containing such information as is required or permitted by Rules 434, 430A
and 424(b) under the Act or (B) if the Company does not rely on Rule 434
under the Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall have
been filed, in such registration statement), with such changes or insertions
as are required by Rule 430A under the Act or permitted by Rule 424(b) under
the Act, and in the case of either clause (i)(A) or (i)(B) of this sentence
as have been provided to and approved by the Representatives prior to the
execution of this Agreement, or (ii) if such registration statement, as it
may have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to such registration statement,
including a form of prospectus, a copy of which amendment has been furnished
to and approved by the Representatives prior to the execution of this
Agreement. The Company may also file a related registration statement with
the Commission pursuant to Rule 462(b) under the Act for the purpose of
registering certain additional Securities, which registration, assuming
compliance with the requirements of Rule 462(b), shall be effective upon
filing with the Commission. As used in this Agreement, the term "Original
Registration Statement" means the registration statement initially filed
relating to the Securities, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and
including any information omitted therefrom pursuant to Rule 430A under the
Act and included in the Prospectus (as hereinafter defined); the term "Rule
462(b) Registration Statement" means any registration statement filed with
the Commission pursuant to Rule 462(b) under the Act (including the
Registration Statement and any Preliminary Prospectus or Prospectus
incorporated therein at the time such Registration Statement becomes
effective); the term "Registration Statement" includes both the Original
Registration Statement and any Rule 462(b) Registration Statement; the term
"Preliminary Prospectus" means each prospectus subject to completion filed
with such registration statement and any amendment or supplement thereto
(including the prospectus subject to completion, if any, included in the
Registration Statement or any amendment thereto at the time it was or is
declared effective); the term "Prospectus" means:
(i) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(ii) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or
2
<PAGE>
(iii) if the Company does not rely on Rule 434 under the Act and
if no prospectus is required to be filed pursuant to Rule 424(b)
under the Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending use of any Preliminary Prospectus. Each Preliminary Prospectus
provided to Underwriters for use in connection with the issuance and sale of
the Securities (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder and
(ii) did not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. When
the Registration Statement or any amendment thereto was or is declared
effective, it (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the Prospectus
or any Term Sheet that is a part thereof or any amendment or supplement to
the Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if
the Prospectus or part thereof or such amendment or supplement is not
required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective) and on the Firm Closing Date and any Option Closing Date
(both as hereinafter defined), the Prospectus, as amended or supplemented at
any such time, (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (b) do not apply to statements or omissions made
in any Preliminary Prospectus, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by
any Underwriter through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing pursuant to Rule 462(b) and has received confirmation
of its receipt and (ii) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of
the Rule 462(b) Registration Statement, in compliance with Rule 111
promulgated under the Act or the Commission has received payment of such
filing fee.
(d) The Company and each of its subsidiaries (which are
corporations) have been duly organized and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation and are duly qualified to transact business as
foreign corporations and are in good standing under the laws of all other
jurisdictions where the
3
<PAGE>
ownership or leasing of their respective properties or the conduct of their
respective businesses requires such qualification, except where the failure
to be so qualified does not amount to a material liability or disability to
the Company and its subsidiaries, taken as a whole. Each of the Company's
subsidiaries (which are partnerships or limited liability companies) have
been duly organized and are validly existing as partnerships or limited
liability companies, as the case may be, in good standing under the laws of
their respective jurisdictions of organization and, as applicable, are duly
qualified to transact business as foreign partnerships and are in good
standing under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the
Company and its subsidiaries, taken as a whole,
(e) The Company and each of its subsidiaries have full power
(corporate or other) to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement and
the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus; and the Company has full power (corporate or other)
to enter into this Agreement and to carry out all the terms and provisions
hereof to be carried out by it.
(f) The issued shares of capital stock of each of the Company's
subsidiaries (which are corporations) have been duly authorized and validly
issued, are fully paid and nonassessable and, except as otherwise set forth
in the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus, are owned beneficially by the Company free and clear
of any security interests, liens, encumbrances, equities or claims. The
partnership agreements of the Company's subsidiaries (which are partnerships)
have been duly authorized, executed and delivered by the general partners
thereof and constitute the valid and binding obligation of the general
partners thereof. Such partnership agreements reflect the Company and/or one
or more of the Company's subsidiaries as the sole beneficial owners of the
partnership interests in such partnerships. The operating agreements of the
Company's subsidiaries (which are limited liability companies) have been duly
authorized, executed and delivered by the members thereof and constitute the
valid and binding obligation of the members. Such operating agreements
reflect the Company and/or one or more of the Company's subsidiaries as the
sole beneficial owners of all the membership interests in such limited
liability companies.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares
of capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable. The Firm Securities and the Option
Securities have been duly authorized and at the Firm Closing Date or the
related Option Closing Date (as the case may be), after payment therefor in
accordance herewith, will be validly issued, fully paid and nonassessable.
No holders of outstanding shares of capital stock of the Company are entitled
as such to any preemptive or other rights to subscribe for any of the
Securities, and no holder of securities of the Company has any right which
has not been fully exercised or waived to require the Company to register the
offer or sale of any securities owned by such holder under the Act in the
public offering contemplated by this Agreement.
(h) The capital stock of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary
4
<PAGE>
Prospectus.
(i) Except as disclosed in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there are no
outstanding (A) securities, equity interests or obligations of the Company or
any of its subsidiaries convertible into or exchangeable for any capital
stock or equity interests (as the case may be) of the Company or any such
subsidiary, (B) warrants, rights or options to subscribe for or purchase from
the Company or any such subsidiary any such capital stock or equity interests
or any such convertible or exchangeable securities, equity interests or
obligations, or (C) obligations of the Company or any such subsidiary to
issue any shares of capital stock, equity interests, any such convertible or
exchangeable securities, equity interests or obligations, or any such
warrants, rights or options.
(j) The balance sheet of the Company (including the notes thereto)
included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly presents the financial position of the Company at the date therein
specified. The combined financial statements (including the notes thereto)
of Pan Pacific Development Properties (as defined in the notes thereto) and
schedule of Pan Pacific Development Properties included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) fairly present the financial position,
the results of operations and cash flows and changes in financial condition
of Pan Pacific Development Properties, at the date and for the periods
therein specified. The combined historical summaries of certain revenues and
certain expenses (including the notes thereto) of the Properties included in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) fairly present the
combined certain revenues and certain expenses of the Properties for the
periods therein specified. All of the foregoing financial statements
(including the notes thereto) and schedules have been prepared in accordance
with generally accepted accounting principles consistently applied for each
of the periods presented. The selected financial data set forth under the
caption "Selected Financial Data" in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) fairly present, on
the basis stated in the Prospectus (or such Preliminary Prospectus), the
information included therein.
(k) The pro forma condensed combined financial statements
(including the notes thereto) of the Company included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) comply in all material respects with the
applicable requirements of Rule 11-02 of Regulation S-X of the Commission and
the pro forma adjustments have been properly applied to the historical
amounts in the compilation of such information and the assumptions used in
the preparation thereof are, in the opinion of the Company, reasonable.
Other than the historical and pro forma financial statements (and schedules)
included therein, no other historical or pro forma financial statements (or
schedules) are required to be included in the Registration Statement or
Prospectus.
(l) KPMG Peat Marwick LLP, who have audited certain financial
statements and schedules, and delivered their reports with respect to the
financial statements and schedules, included in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), are independent public accountants as
required by the Act and the applicable rules and regulations thereunder.
5
<PAGE>
(m) The adjustments made to the Company's pro forma Funds
from Operations for the 12 months ended March 31, 1997 fairly reflect (A) the
net increase in contractual rental income for the 12 months ending July 31,
1998 (over actual rental revenue included in pro forma Funds from Operations
for the 12 months ended March 31, 1997); (B) the net increase in revenue from
new executed leases commencing on or after April 1, 1996 for the 12 months
ending July 31, 1998; (C) the net effect of lease expirations for leases
which expired on or after April 1, 1996 for the 12 months ending July 31,
1998 versus rental revenue included in pro forma Funds from Operations for
the 12 months ended March 31, 1997; and (D) the effect of a net increase in
interest expense, calculated in accordance with GAAP, from the pro forma 12
months ended March 31, 1997 to the 12 months ending July 31, 1998. The
assumptions made by the Company disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
under the caption "Distribution Policy" are reasonable in light of the
expected and intended method of operation of the Company.
(n) The execution and delivery of this Agreement have been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company, and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws relating to creditors' rights
generally and to the application of equitable principles in any proceeding,
whether at law or in equity.
(o) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
are not described therein, and no such proceedings have been threatened
against the Company or any of its subsidiaries or with respect to any of
their respective properties; and no contract or other document is required to
be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement that is not described therein
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) or filed as required.
(p) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of
the other transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required
(and shall be obtained as provided in this Agreement) under the Act, or (ii)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, lease or other agreement or instrument 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 properties are bound, or the charter
documents or by-laws or certificate of limited partnership or partnership
agreement (as the case may be) of the Company or any of its subsidiaries, or
any statute or any judgment, decree, order, rule or regulation of any court
or other governmental authority or any arbitrator applicable to the Company
or any of its subsidiaries.
6
<PAGE>
(q) Each of Revenue Properties Companies Limited, a publicly-held
Canadian real estate company ("Revenue Properties"), Pan Pacific Development
(U.S.) Inc., a Delaware corporation and its affiliates ("PPD") and the
Company and its subsidiaries has full power (corporate or other) to enter
into and deliver (as applicable) the agreements set forth on Schedule 2
hereto and all other agreements and other documents related to the Formation
Transactions (as defined in the Registration Statement and the Prospectus,
or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) (collectively, the "Transaction Documents") to which each is
party and to carry out all the terms and provisions thereof to be carried out
by each, respectively. The execution and delivery of the Transaction
Documents have been duly authorized by Revenue Properties, PPD and the
Company and its subsidiaries (as applicable), and the Transaction Documents
have been or will be on the Firm Closing Date duly executed and delivered by
Revenue Properties, PPD and the Company and its subsidiaries (as applicable),
and each is the valid and binding agreement of Revenue Properties, PPD and
the Company and its subsidiaries (as applicable), enforceable against Revenue
Properties, PPD and the Company and its subsidiaries (as applicable) in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and similar laws relating
to creditors' rights generally and to the application of equitable principles
in any proceeding, whether at law or in equity.
(r) The execution and delivery of the Transaction Documents, the
compliance by Revenue Properties, PPD and the Company and its subsidiaries
(as applicable) with their respective obligations under the Transaction
Documents and the consummation of the Formation Transactions do not (i)
require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained,
such as may be required under state securities or blue sky laws and, if the
registration statement filed with respect to the Securities (as amended) is
not effective under the Act as of the time of execution hereof, such as may
be required (and shall be obtained as provided in this Agreement) under the
Act, or (ii) conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument 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 properties are bound, or the
charter documents or by-laws or certificate of limited partnership or
partnership agreement (as the case may be) of the Company or any of its
subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to the Company or any of its subsidiaries.
(s) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), neither the
Company nor any of its subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance,
or from any labor dispute or any legal or governmental proceeding and there
has not been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise), management, business prospects, net worth, or results of
operations of the Company and its subsidiaries, taken as a whole, except in
each case as described in or contemplated by the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
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(t) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale
of the Securities or (ii) since the filing of the Registration Statement (A)
sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Securities or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
(u) The Company has not distributed and, prior to the later of (i)
the Closing Date and (ii) the completion of the distribution of the
Securities, will not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration Statement or
any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or other materials, if any, permitted by the
Act.
(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), (1) the Company
and its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (2) the Company has not purchased any of its
outstanding capital stock (other than as contemplated by Section 2(j)
hereof); and (3) there has not been any material change in the capital stock
or partnership interests (as the case may be), short-term debt or long-term
debt of the Company and its consolidated subsidiaries, except in each case as
described in or contemplated by the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(w) Upon consummation of the Formation Transactions including, for
purposes of this Agreement, the consummation of the issuance and sale of the
Firm Securities pursuant to Section 3 hereof, the borrowings under the
Unsecured Credit Facility (as defined in the Registration Statement and the
Prospectus, or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and the application of the proceeds from such
issuance and sale and such borrowings (which application shall occur
concurrently with such issuance and sale) as set forth under the caption "Use
of Proceeds" in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), the
Company or its subsidiaries will have good and marketable title in fee simple
to all items of real property comprising part of the Properties (as defined
in the Registration Statement and the Prospectus, or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) (except with
respect to the Partially-Owned Properties (as defined in the Registration
Statement and the Prospectus, or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and to land held pursuant to a ground
lease or subject to an air space lease) and marketable title to all personal
property comprising part of the Properties, in each case free and clear of
any security interests, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect the value of
such property and do not interfere with the use made or proposed to be made
of such property by the Company or such subsidiary, and any real property and
buildings comprising part of the Properties held pursuant to or subject to a
ground lease, air space lease or other lease will be held by the Company or
any such subsidiary under or subject to valid, subsisting and enforceable
ground leases, air space leases or other leases, with such exceptions as are
not material and do not interfere with the use made or proposed to be made of
such property and buildings by the Company or such subsidiary, in each case
except as described in or contemplated by the Prospectus (or, if the
Prospectus is
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not in existence, the most recent Preliminary Prospectus).
(x) No labor dispute with the employees of the Company or any of
its subsidiaries exists or is threatened or imminent that could result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(y) Upon consummation of the Formation Transactions, the Company
and its subsidiaries will own or possess, or will be able to acquire on
reasonable terms, all material patents, patent applications, trademarks,
service marks, trade names, licenses, copyrights and proprietary or other
confidential information currently employed or proposed to be employed by
them in connection with the business now operated or proposed to be operated
by them as described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and neither the Company
nor any such subsidiary has received any notice of infringement of or
conflict with asserted rights of any third party with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or results
of operations of the Company and its subsidiaries, taken as a whole, except
as described in or contemplated by the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(z) Upon consummation of the Formation Transactions, the Company
and each of its subsidiaries will own or possess all contract rights that are
material to the businesses now operated or proposed to be operated by them
taken as a whole as described in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), including all such
contract rights referred to in the Prospectus. All such contracts are in
full force and effect, and neither the Company nor any such subsidiary is
aware of any material breach by any party under any of such contracts.
(aa) As of the Firm Closing Date, the Company and each of its
subsidiaries will be insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are or will be engaged
as described in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus); and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew such
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a cost that would not materially and adversely affect the condition
(financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(bb) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any
other distribution on such subsidiary's capital stock or partnership
interests, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such subsidiary's
property or assets to the Company or any other subsidiary of the Company,
except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent
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<PAGE>
Preliminary Prospectus) and except pursuant to (i) existing indebtedness as
in effect on the date hereof, (ii) the Unsecured Credit Facility, (iii)
applicable law and (iv) with respect to prohibitions only against
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, (A) customary non-assignment provisions
contained in leases to which the Company or any of its subsidiaries is a
party and (B) security interests, including purchase money obligations,
applicable to any property of the Company or any of its subsidiaries as of
the date hereof.
(cc) The Company and its subsidiaries will possess as of the Firm
Closing Date all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of any unfavorable decision,
ruling or finding, would result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(dd) The Company is not, and as of the Firm Closing Date and the
Option Closing Date will not be, subject to registration as an investment
company under the Investment Company Act of 1940, as amended.
(ee) Each of the Company and its subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed
or has requested in a timely manner and/or has received extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole) and has
paid all taxes required to be paid by it and any other interest, assessment,
fine or penalty levied or assessed against it, to the extent that any of the
foregoing is due and payable and for which the Company has adequately
provided for on its financial statements under generally accepted accounting
principles ("GAAP"), except for any such interest, assessment, fine or
penalty that is currently being contested in good faith or as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(ff) (i) Except as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), the Company and its subsidiaries, the Properties and each
business operating at the Properties are in full compliance with
Environmental Laws, and have obtained and are in compliance with all permits,
licenses or other authorizations ("Permits") that are required under
Environmental Laws except where any non-compliance with Environmental Laws or
the failure to obtain or otherwise comply with any such Permits would not,
individually or in the aggregate, result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or results
of operations of the Company and its subsidiaries, taken as a whole.
(ii) None of the Properties are currently or, to the knowledge of the
Company and its subsidiaries, have in the past been used for the
generation, storage, treatment, transportation disposal of Hazardous
Material except in full compliance with Environmental Laws and only in
reasonable amounts that are customary and necessary for the businesses
located on the Properties.
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(iii) There are no Releases of Hazardous Materials at, from, onto or
under any of the Properties nor have their been any Releases of Hazardous
Substances in the past at, from, onto or under any of the Properties.
(iv) No Remedial Actions are currently being performed or, to the
best knowledge of the Company, are planned to be performed at any of the
Properties.
(v) None of the Properties have been listed or, to the best of the
Company's knowledge, have been proposed to be listed on the National
Priorities List ("NPL"), the CERCLA Information System ("CERCLIS") or any
similar state list or inventory of sites which have been potentially
contaminated with Release of Hazardous Materials.
(vi) No Environmental Claims have been asserted against the Company
and its subsidiaries, the Properties or any of the businesses operating at
the Properties.
(vii) Except as disclosed in the environmental site assessments, the
property condition reports or seismic risk assessments performed on the
Properties, the Company is not aware of any environmental or engineering
conditions at any of the Properties that would, individually or in the
aggregate, result in a material adverse change in the condition (financial
or otherwise), or business prospects, net worth or results of operations of
the Company and its subsidiaries, taken as a whole,
(viii) None of the environmental consultants who have been retained
to prepare environmental site assessments, the property condition reports
or seismic risk assessments performed on the Properties nor the real estate
advisor, Robert Charles Lesser & Co. who prepared regional economic
overviews and market analysis for the Company, have been employed on a
contingent basis for such purposes or have any substantial interest in the
Company or any of its subsidiaries and none of them or any of their
directors, officers or employees are connected in any way with the Company
and its subsidiaries as a promoter, selling agent, voting trustee,
director, officer or employee.
As used herein, "Environmental Claims" refers to any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation,
judicial or administrative proceeding, judgment, letter or other
communication from any governmental agency, department, bureau, office or
other authority, or any third party involving (i) violations of Environmental
Laws at the Properties or (ii) Releases of Hazardous Materials at, from, onto
or under any of the Properties; (iii) Releases of Hazardous Materials
migrating from adjoining properties or businesses onto or under the
Properties; or (iv) Releases of Hazardous Materials migrating from the
Properties onto or under adjoining properties or businesses "Environmental
Laws" includes the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., as amended; the Resource
Conservation and Recovery Act ("RCRA), 42 U.S.C. 6901 et seq., as amended;
the Clean Air Act ("CAA"), 42 U.S.C. 7401 et seq., as amended; the Clean
Water Act ("CWA"), 33 U.S.C. 1251 et seq., as amended; the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq., and any other federal,
state, local or municipal laws, statutes, regulations, rules or ordinances
imposing liability or establishing standards of conduct for protection of the
environment.
As used herein, "Environmental Liabilities" means any monetary
obligations, losses, liabilities (including strict liability), damages,
punitive damages, consequential damages,
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treble damages, costs and expenses (including all reasonable out-of-pocket
fees, disbursements and expenses of counsel, out-of-pocket expert and
consulting fees and out-of-pocket costs for environmental site assessments,
remedial investigation and feasibility studies), fines, penalties, sanctions
and interest incurred as a result of any Environmental Claim filed by any
Governmental Authority or any third party which relate to any violations of
Environmental Laws, Remedial Actions, Releases or threatened Releases of
Hazardous Materials from or onto (i) any property presently or formerly owned
by the Corporation or any of its Subsidiaries or a predecessor in interest,
or (ii) any facility which received Hazardous Materials generated by the
Corporation or any of its Subsidiaries or a predecessor in interest.
As used herein, "Hazardous Materials"- shall include (a) any
element, compound, or chemical that is defined, listed or otherwise
classified as a contaminants, pollutant, toxic pollutant, toxic or hazardous
substances, extremely hazardous substance or chemical, hazardous waste,
biohazardous or infectious waste, special waste, or solid waste under
Environmental Laws; (b) petroleum, petroleum-based or petroleum-derived
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic including but not limited to corrosivity,
ignitibility, toxicity or reactivity as well as any radioactive or explosive
materials; and (e) any asbestos-containing materials
As used herein, "Release" means any spilling, leaking, pumping,
emitting, emptying, discharging, injecting, escaping, leaching, migrating,
dumping, or disposing of Hazardous Materials (including the abandonment or
discarding of barrels, containers or other closed receptacles containing
Hazardous Materials) into the environment.
As used herein, "Remedial Action" means all actions taken to (i) clean
up, remove, remediate, contain, treat, monitor, assess, evaluate or in any
other way address Hazardous Materials in the indoor or outdoor environment;
(ii) prevent or minimize a Release or threatened Release of Hazardous
Materials so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; (iii) perform
pre-remedial studies and investigations and post-remedial operation and
maintenance activities; or (iv) any other actions authorized by 42 U.S.C.
9601.
(gg) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters on the Firm
Closing Date or on the Option Closing Date shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(hh) Except for the shares of capital stock of, or partnership
interests in (as applicable), each of its subsidiaries owned by the Company
and such subsidiaries, neither the Company nor any such subsidiary owns any
shares of stock or any other equity securities of any corporation or has any
equity interest in any firm, partnership, association or other entity, except
as described in or contemplated by the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(ii) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(1) transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to
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assets is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(jj) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument 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 properties is
bound or may be affected in any material adverse respect with regard to
property, business or operations of the Company and its subsidiaries taken as
a whole.
(kk) No foreclosures have been instituted and none are currently
threatened with respect to any property or assets directly or indirectly
owned (whether now or in the past) by PPD, or the Company or any of its
subsidiaries. Except with respect to the Excluded Assets (as defined in the
Registration Statement and the Prospectus, or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), PPD and the Company do
not own or operate any real property other than the real properties
comprising part of the Properties.
(ll) Except as otherwise described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), (i)
no proceeding or filing of a petition seeking relief under Title 11 of the
United States Code or any other federal, state or foreign bankruptcy,
insolvency, liquidation or similar law has been commenced or instituted
(whether voluntary or involuntary) by or with respect to PPD or the Company,
(ii) neither PPD nor the Company has applied for or consented to the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for any such persons or for a substantial part of any such persons'
property or assets and (iii) neither PPD nor the Company has made a general
assignment for the benefit of its creditors.
(mm) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
tenants, customers or suppliers of the Company on the other hand, which is
required to be described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) which is not so described.
(nn) The transfer of interests or other assets pursuant to the
agreements and instruments set forth on Schedule 3 hereto (the "Transfer
Documents") does not violate the articles or certificate of incorporation,
by-laws, limited liability company operating agreement, declaration of trust,
certificate of limited partnership, partnership agreement or other
organizational documents, as the case may be, of PPD or the Company or any of
their respective subsidiaries. The Transfer Documents are sufficient to
effect the transfer to the Company or its subsidiaries of all direct or
indirect interests in the Properties and other assets specified therein upon
payment of the consideration therefor. Pursuant to the Transfer Documents,
the Properties and other assets specified therein will be transferred to the
Company or its subsidiaries directly and not by way of a transfer of
interests in partnerships or other types of entities which, immediately prior
to the transfer, own the Properties and such other assets.
(oo) Commencing with the Firm Closing Date, after giving effect to
the Formation Transactions, the Company will be organized in conformity with
the requirements for
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qualification as a real estate investment trust (a "REIT") under the Internal
Revenue Code of 1986, as amended and the rules and regulations thereunder
(the "Code"), and will have no earnings and profits accumulated in a non-REIT
year within the meaning of Section 857(a)(3)(B) of the Code, and the proposed
method of operation of the Company and its subsidiaries will enable the
Company to meet the requirements for taxation as a REIT under the Code
beginning with its taxable year ending December 31, 1997 and for its
subsequent taxable years except as described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus). All
statements in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) regarding the Company's qualification as
a REIT are true, complete and correct in all material respects.
(pp) (i) Each of the Properties (including, for purposes of this
paragraph, the Excluded Assets) complies with all applicable codes, laws,
ordinances and regulations (including, without limitation, building and
zoning codes and laws and regulations relating to access to the Properties)
and deed restrictions or other covenants, except for such failures to comply
that would not materially impair the value of any of the Properties or would
not result in a forfeiture or reversion of title; (ii) neither the Company
nor any of its subsidiaries has knowledge of any pending or threatened
litigation, moratorium, condemnation proceedings, zoning change, or other
similar proceeding or action that could in any manner affect the size of, use
of, improvements on, construction on, access to or availability of utilities
or other necessary services to, the Properties, except such proceedings or
actions which are not reasonably expected to, singly or in the aggregate,
result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries, taken as a whole; (iii) all liens, charges,
encumbrances, claims, or restrictions on or affecting the properties and
assets (including the Properties) of the Company or any of its subsidiaries
that are required to be disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) are disclosed
therein; (iv) neither the Company, any of its subsidiaries nor any tenant of
any portion of any of the Properties is in default under any of the ground
leases or air space leases (as lessee), space leases (as lessor or lessee, as
the case may be) or other occupancy or license agreement relating to, or
under any of the mortgages or other security documents or other agreements
encumbering or otherwise recorded against, the Properties and there is no
event which, but for the passage of time or the giving of notice or both,
would constitute a default under any of such documents or agreements, except
such defaults that would not, singly or in the aggregate, result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole; and (v) except as described in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) and except as otherwise provided by law, upon consummation of the
Formation Transactions, no tenant under any lease pursuant to which the
Company or any of its subsidiaries will lease the Properties will have an
option or right of first refusal to purchase the premises leased thereunder
or the building of which such premises are a part.
(qq) Each of the Properties (including, for purposes of this
paragraph, the Excluded Assets) is in substantial compliance with all
presently applicable provisions of the Americans with Disabilities Act and no
failure of the Company or any of its subsidiaries to comply with all
presently applicable provisions of the Americans with Disabilities Act would
result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries, taken as a whole.
14
(rr) No real estate transfer or similar taxes are or will
become due and payable by the Company or any of its subsidiaries as a result
of the acquisition by the Company or any of its subsidiaries of any direct or
indirect interest in any Property in connection with the Formation
Transactions, other than customary documentary transfer taxes which will be
paid in full on or prior to the Firm Closing Date, or as otherwise described
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(ss) At the Firm Closing Date, the Company or its subsidiaries will
have obtained title insurance on each of the Properties which constitute real
property (including ground leasehold estates) in an amount at least equal to
$______ and with a tie-in endorsement attached to each owner policy and
without coinsurance provisions.
(tt) At or prior to the Firm Closing Date, each of the transactions
constituting the Formation Transactions will have occurred in the manner
described in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), except for those transactions
contemplated in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) to occur subsequent to the Firm
Closing Date.
(uu) All of the representations and warranties of the Company, PPD
and Revenue Properties contained in the Transaction Documents are true and
correct in all material respects.
Each reference in this Section 2 to "the condition (financial or
otherwise), management, business prospects, net worth, or results of
operations of the Company and its subsidiaries, taken as a whole" means the
condition (financial or otherwise), management, business prospects, net
worth, or results of operations of the Company and its subsidiaries, taken as
a whole, upon consummation of the Formation Transactions.
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. (a) On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company, at a purchase
price of $__ per share, the number of Firm Securities set forth opposite the
name of such Underwriter in Schedule 1 hereto. One or more certificates in
definitive form for the Firm Securities that the several Underwriters have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Representatives request upon notice
to the Company at least 48 hours prior to the Firm Closing Date, shall be
delivered by or on behalf of the Company to the Representatives for the
respective accounts of the Underwriters, against payment by or on behalf of
the Underwriters of the purchase price therefor by wire transfer in same-day
funds (the "Wired Funds") to the account of the Company. Such delivery of
and payment for the Firm Securities shall be made at the offices of Latham &
Watkins, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626 at
9:30 A.M., local time, on August [13], 1997, or at such other place, time or
date as the Representatives and the Company may agree upon or as the
Representatives may determine pursuant to Section 9 hereof, such time and
date of delivery against payment being herein referred to as the "Firm
Closing Date". The Company will make such certificate or certificates for
the Firm Securities available for checking and packaging by the
Representatives at the offices in New York, New York of the Company's
transfer agent or registrar or of Prudential
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Securities Incorporated at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option
to purchase, severally and not jointly, the Option Securities. The purchase
price to be paid for any Option Securities shall be the same price per share
as the price per share for the Firm Securities set forth above in paragraph
(a) of this Section 3, plus, if the purchase and sale of any Option
Securities takes place after the Firm Closing Date and after the Firm
Securities are trading "ex-dividend", an amount equal to the dividends
payable on such Option Securities. The option granted hereby may be exercised
as to all or any part of the Option Securities from time to time within
thirty days after the date of the Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading). The Underwriters shall not be
under any obligation to purchase any of the Option Securities prior to the
exercise of such option. The Representatives may from time to time exercise
the option granted hereby by giving notice in writing or by telephone
(confirmed in writing) to the Company setting forth the aggregate number of
Option Securities as to which the several Underwriters are then exercising
the option and the date and time for delivery of and payment for such Option
Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in
such notice, or such other time on such other date as the Representatives and
Company may agree upon or as the Representatives may determine pursuant to
Section 9 hereof, is herein called the "Option Closing Date" with respect to
such Option Securities. Upon exercise of the option as provided herein, the
Company shall become obligated to sell to each of the several Underwriters,
and, subject to the terms and conditions herein set forth, each of the
Underwriters (severally and not jointly) shall become obligated to purchase
from the Company, the same percentage of the total number of the Option
Securities as to which the several Underwriters are then exercising the
option as such Underwriter is obligated to purchase of the aggregate number
of Firm Securities, as adjusted by the Representatives in such manner as they
deem advisable to avoid fractional shares. If the option is exercised as to
all or any portion of the Option Securities, one or more certificates in
definitive form for such Option Securities, and payment therefor, shall be
delivered on the related Option Closing Date in the manner, and upon the
terms and conditions, set forth in paragraph (a) of this Section 3, except
that reference therein to the Firm Securities and the Firm Closing Date shall
be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) The Company hereby acknowledges that the wire transfer by or
on behalf of the Underwriters of the purchase price for any Securities does
not constitute closing of a purchase and sale of the Securities. Only
execution and delivery of a receipt for Securities by the Underwriters
indicates completion of the closing of a purchase of the Securities from the
Company. Furthermore, in the event that the Underwriters wire funds to the
Company prior to the completion of the closing of a purchase of Securities,
the Company hereby acknowledges that until the Underwriters execute and
deliver a receipt for the Securities, by facsimile or otherwise, the Company
will not be entitled to the Wired Funds and shall return the Wired Funds to
the Underwriters as soon as practicable (by wire transfer of same-day funds)
upon demand. In the event that the closing of a purchase of Securities is
not completed and the Wired Funds are not returned by the Company to the
Underwriters on the same day the Wired Funds were received by the Company,
the Company agrees to pay to the Underwriters in respect of each
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day the Wired Funds are not returned by it, in same-day funds, interest on
the amount of such Wired Funds in an amount representing the Underwriters'
cost of financing as reasonably determined by Prudential Securities
Incorporated.
(d) It is understood that any of you, individually and not as one
of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall relieve
such Underwriter or Underwriters from any of its or their obligations
hereunder.
4. OFFERING BY THE UNDERWRITERS. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with
each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as promptly as
possible. If required, the Company will file the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement thereto
with the Commission in the manner and within the time period required by
Rules 434 and 424(b) under the Act. During any time when a prospectus
relating to the Securities is required to be delivered under the Act, the
Company (i) will comply with all requirements imposed upon it by the Act and
the rules and regulations of the Commission thereunder to the extent
necessary to permit the continuance of sales of or dealings in the Securities
in accordance with the provisions hereof and of the Prospectus, as then
amended or supplemented, and (ii) will not file with the Commission the
Prospectus, Term Sheet or the amendment referred to in the second sentence of
Section 2(a) hereof, any amendment or supplement to such Prospectus, Term
Sheet or any amendment to the Registration Statement or any Rule 462(b)
Registration Statement unless the Representatives previously have been
advised and furnished with a copy for a reasonable period of time prior to
the proposed filing and as to which filing the Representatives shall not have
given their consent. The Company will prepare and file with the Commission,
in accordance with the rules and regulations of the Commission, promptly upon
request by the Representatives or counsel for the Underwriters, any
amendments to the Registration Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the several Underwriters, and will use its
best efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission as promptly as possible. The Company
will advise the Representatives, promptly after receiving notice thereof, of
the time when the Registration Statement or any amendment thereto has been
filed or declared effective or the Prospectus or any amendment or supplement
thereto has been filed and will provide evidence satisfactory to the
Representatives of each such filing or effectiveness.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto,
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(ii) the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, (iii) the institution, threatening or contemplation
of any proceeding for any such purpose or (iv) any request made by the
Commission for amending the Original Registration Statement or any Rule
462(b) Registration Statement, for amending or supplementing the Prospectus
or for additional information. The Company will use its best efforts to
prevent the issuance of any such stop order and, if any such stop order is
issued, to obtain the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws of
such jurisdictions as the Representatives may designate and will continue
such qualifications in effect for as long as may be necessary to complete the
distribution of the Securities, PROVIDED, HOWEVER, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(d) If, at any time prior to the later of (i) the final date when
a prospectus relating to the Securities is required to be delivered under the
Act or (ii) the Option Closing Date, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Prospectus to comply with
the Act or the rules or regulations of the Commission thereunder, the Company
will promptly notify the Representatives thereof and, subject to Section 5(a)
hereof, will prepare and file with the Commission, at the Company's expense,
an amendment to the Registration Statement or an amendment or supplement to
the Prospectus that corrects such statement or omission or effects such
compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a conformed copy of the
registration statement originally filed with respect to the Securities and
each amendment thereto (in each case including exhibits thereto) or any Rule
462(b) Registration Statement, certified by the Secretary or an Assistant
Secretary of the Company to be true and complete copies thereof as filed with
the Commission by electronic transmission, (ii) to each other Underwriter, a
conformed copy of such registration statement or any Rule 462(b) Registration
Statement and each amendment thereto (in each case without exhibits thereto)
and (iii) so long as a prospectus relating to the Securities is required to
be delivered under the Act, as many copies of each Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request; without limiting the application of clause (iii) of
this sentence, the Company, not later than (A) 6:00 P.M., New York City time,
on the date of determination of the public offering price, if such
determination occurred at or prior to 10:00 A.M., New York City time, on such
date or (B) 2:00 P.M., New York City time, on the business day following the
date of determination of the public offering price, if such determination
occurred after 10:00 A.M., New York City time, on such date, will deliver to
the Underwriters, without charge, as many copies of the Prospectus and any
amendment or supplement thereto as the Representatives may reasonably request
for purposes of confirming orders that are expected to settle on the Firm
Closing Date. The Company will provide or cause to be provided to each of
the Representatives, and to each Underwriter that so requests in writing, a
copy of each report on Form SR filed by the Company as required by Rule 463
under the Act.
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(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or other capital
stock of the Company or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock or other capital stock of the Company
for a period of 180 days after the date hereof, except (A) pursuant to this
Agreement, (B) pursuant to a dividend reinvestment plan of the Company, (C)
pursuant to the Company's 1997 Stock Incentive Plan, and (D) in connection
with the acquisition by the Company of real property or interests in entities
holding real property, PROVIDED that the recipient or transferee of such
securities or interests agrees in writing to be subject to the lock-up
contained in this Section 5(h) (without giving effect to clauses (A), (B),
(C) and (D)) for a period ending on the date that is 180 days after the date
hereof.
(i) The Company will not cause any shelf or other registration
statement for the resale of Common Stock of the Company owned by Revenue
Properties, PPD or any of their corporate affiliates, to be filed with the
Commission for a period of three years from the Firm Closing Date without the
prior written consent of Prudential Securities Incorporated; provided,
however, that the filing of a registration statement to cover the resale of
Common Stock in connection with the exercise of remedies pursuant to a pledge
by Revenue Properties or PPD of all of its respective shares of Common Stock
to an affiliate of Prudential Securities Incorporated or its transferees
shall be permitted.
(j) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale
of the Securities or (ii) (A) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities or (B) pay or agree
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(k) The Company will obtain the agreements described in Section
7(f) hereof prior to the Firm Closing Date.
(l) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date,
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in your opinion the market price of the Common
Stock has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or amendment of
the Prospectus), subject to the Company's policy on issuing public
statements, the Company will, after notice from you advising the Company to
the effect set forth above, forthwith prepare,
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<PAGE>
consult with you concerning the substance of, and disseminate a press release
or other public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(m) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern
time on the date of this Agreement and (ii) the time confirmations are sent
or given, as specified by Rule 462(b)(2).
(n) The Company will cause the Securities to be duly authorized
for listing by the New York Stock Exchange prior to the Firm Closing Date,
subject to official notice of issuance.
(o) The Company will use its best efforts to meet the requirements
to qualify, commencing with the taxable year ending December 31, 1997, as a
REIT under the Code and will file with its United States federal income tax
return for each taxable year commencing with the taxable year ending December
31, 1997, the election to be a REIT as described in Section 856(c)(1) of the
Code.
6. EXPENSES. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto,
any Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company, (iv) preparation, issuance and delivery to
the Underwriters of any certificates evidencing the Securities, including
transfer agent's and registrar's fees, (v) the qualification of the
Securities under state securities and blue sky laws, including filing fees
and fees and disbursements of counsel for the Underwriters relating thereto,
(vi) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Securities, (vii) any listing of the
Securities on the New York Stock Exchange, (viii) any meetings with
prospective investors in the Securities (other than as shall have been
specifically approved by the Representatives to be paid for by the
Underwriters) and (ix) advertising relating to the offering of the Securities
(other than as shall have been specifically approved by the Representatives
to be paid for by the Underwriters). If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 11 hereof or because of any
failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or
satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. The Company shall not in any
event be liable to any of the Underwriters for the loss of anticipated
profits from the
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transactions covered by this Agreement.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm
Closing Date, to the accuracy of the statements of the Company's officers
made pursuant to the provisions hereof, to the performance by the Company of
its covenants and agreements hereunder and to the following additional
conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared effective
as of the time of execution hereof, the Original Registration Statement or
such amendment and, if the Company has elected to rely upon Rule 462(b), the
Rule 462(b) Registration Statement shall have been declared effective not
later than the earlier of (i) 11:00 A.M., New York City time, on the date on
which the amendment to the registration statement originally filed with
respect to the Securities or to the Registration Statement, as the case may
be, containing information regarding the initial public offering price of the
Securities has been filed with the Commission and (ii) the time confirmations
are sent or given as specified by Rule 462(b)(2), or with respect to the
Original Registration Statement, or such later time and date as shall have
been consented to by the Representatives; if required, the Prospectus or any
Term Sheet that constitutes a part thereof and any amendment or supplement
thereto shall have been filed with the Commission in the manner and within
the time period required by Rules 434 and 424(b) under the Act; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall
have been instituted or threatened or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission; and the Company
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus
or otherwise).
(b) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Latham & Watkins, counsel for the Company and its
subsidiaries, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Maryland and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of the States of
California and Delaware, and based solely on certificates from public
officials, such counsel confirms that the Company is duly qualified to
transact business as a foreign corporation and is in good standing
under the laws of the States of Florida, Kentucky, Nevada, New Mexico,
Oregon, Tennessee and Washington.
(ii) the Company and each of its subsidiaries have corporate or
partnership power (as the case may be) to own or lease their
respective properties and conduct their respective businesses as
described in the Registration Statement and the Prospectus, and the
Company has corporate or partnership power (as the case may be) to
enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it;
21
(iii) the issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and, except as otherwise set forth in
the Prospectus, are owned of record and, to the knowledge of such
counsel, beneficially by the Company free and clear of any perfected
security interests or any other security interests, liens,
encumbrances, equities or claims. The issued shares of capital stock
of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and are owned of record and, to the knowledge
of such counsel, beneficially by the Company free and clear of any
perfected security interests or any other security interests, liens,
encumbrances, equities or claims;
(iv) the authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; all necessary and proper corporate proceedings have been
taken in order to authorize validly the Common Stock referred to
therein; all outstanding shares of Common Stock (including the Firm
Securities, when issued and paid for by the Underwriters in accordance
with the terms of this Agreement) have been (or, in the case of the
Firm Securities, will be) duly and validly issued, are fully paid and
nonassessable, have been issued in compliance with the registration
requirements of federal securities laws (or pursuant to an exemption
therefrom), were not, to the knowledge of such counsel, issued in
violation of or subject to, under the Company's charter or Maryland
law or any agreement to which the Company is a party and which is
known to such counsel based on a certificate of the Company's Chairman
of the Board of Directors and its President and Chief Executive
Officer, any preemptive rights or other rights to subscribe for or
purchase any securities, and conform to the description thereof
contained in the Prospectus; to the knowledge of such counsel, no
holders of outstanding shares of capital stock of the Company are
entitled under the Company's charter or Maryland law or any agreement
to which the Company is a party and which is known to such counsel
based on a certificate of the Company's Chairman of the Board of
Directors and its President and Chief Executive Officer, as such, to
any preemptive or other rights to subscribe for any of the Firm
Securities; and to the knowledge of such counsel, no holders of
securities of the Company are entitled to have such securities
registered under the Registration Statement;
(v) except as disclosed in the Registration Statement and the
Prospectus, to the knowledge of such counsel there are no outstanding
(A) securities, equity interests or obligations of the Company or any
of its subsidiaries convertible into or exchangeable for any capital
stock or equity interests (as the case may be) of the Company or any
such subsidiary, (B) warrants, rights or options to subscribe for or
purchase from the Company to any such subsidiary any such capital
stock or equity interests or any such convertible or exchangeable
securities, equity interests or obligations, or (C) obligations of the
Company or any such subsidiary to issue any shares of capital stock,
equity interests, any such convertible or exchangeable securities,
equity interests or obligations, or any such warrants, rights or
options;
(vi) the statements set forth under the headings "Description of
Capital
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Stock", "Structure and Formation Transactions of the Company",
"Certain Relationships and Related Transactions", "Certain Provisions
of Maryland Law and of the Company's Charter and Bylaws", "Shares
Available for Future Sale", "Federal Income Tax Consequences" and
"ERISA Considerations" in the Prospectus, insofar as such statements
describe statutes, rules or regulations, legal conclusions with
respect to their application or provisions of the organizational
documents of the Company, have been reviewed by such counsel, are
correct in all material respects and present fairly the information
required to be disclosed therein;
(vii) the execution and delivery of this Agreement have been
duly authorized by all necessary corporate or partnership (as the case
may be) action of the Company, and this Agreement has been duly
executed and delivered by the Company, and is the valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and
similar laws relating to creditors' rights generally, to the
application of equitable principles in any proceeding, whether at law
or in equity, as limited by the unenforceability under certain
circumstances under law or court decisions of provisions providing for
the indemnification of or contribution to a party with respect to a
liability where such indemnification or contribution is contrary to
public policy and to the extent that enforceability of such provisions
may be limited due to the existence of an untrue statement of a
material fact in the Prospectus or the Registration Statement or
omission to state a material fact therein necessary to make the
statements in the Prospectus or the Registration Statement,
respectively, not misleading, it being understood that such counsel
need express no view with respect thereto other than as set forth in
the paragraph immediately following clause (xvii) below;
(viii) to the knowledge of such counsel based on the
representations of the Company contained herein, review of the letters
of attorneys delivered to the Company's auditors with respect to the
existence of contingent liabilities of the Company and a certificate
of the chief executive officer and the principal financial or
accounting officer of the Company, (A) no legal or governmental
proceedings are pending to which the Company or any of its
subsidiaries is a party or to which the property of the Company or any
of its subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not described
therein, and no such proceedings have been threatened against the
Company or any of its subsidiaries or with respect to any of their
respective properties and (B) no contract or other document is
required to be disclosed in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not disclosed therein or filed as required;
(ix) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance
by the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or
qualification of or with any federal, or California, New York or
Maryland governmental authority, except such as have
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been obtained under the Act and such as may be required under state
securities or blue sky laws, or (B) conflict with or result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
lease or other agreement or instrument 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 properties are bound
identified by an officer of the Company as material to the Company or
any of its subsidiaries (the "Material Agreements"), or the charter
documents or by-laws or certificate of limited partnership or
partnership agreement (as the case may be) of the Company or any of
its subsidiaries, or any provision of any California, New York or
Maryland statute, rule or regulation (other than federal or state
securities laws, which are addressed elsewhere herein), or court
orders specifically directed to the Company and identified by an
officer of the Company as material to the Company or any of its
subsidiaries (the "Court Orders");
(x) each of the Company and its subsidiaries has the corporate
or partnership power (as the case may be) to enter into and deliver
(as applicable) the agreements and instruments set forth on Schedule 4
hereto (the "Operative Documents") to which it is party and to carry
out all the terms and provisions thereof to be carried out by it. The
execution and delivery of the Operative Documents have been duly
authorized by the Company and its subsidiaries (as applicable) and the
Operative Documents have been or will be on the Firm Closing Date duly
executed and delivered by the Company and its subsidiaries (as
applicable), and each is the valid and binding agreement of the
Company and its subsidiaries (as applicable), enforceable against the
Company and its subsidiaries (as applicable) in accordance with its
terms, subject to the effect of bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws relating to
creditors' rights generally and to the application of equitable
principles in any proceeding, whether at law or in equity;
(xi) the execution and delivery of the Operative Documents, the
compliance by the Company and its subsidiaries (as applicable) with
their respective obligations under the Operative Documents and the
consummation of the Formation Transactions do not (A) require the
consent, approval, authorization, registration or qualification of or
with any federal, California, New York or Maryland governmental
authority, except such as have been obtained under the Act, such as
may be required under state securities or blue sky laws and, if the
registration statement filed with respect to the Securities (as
amended) is not effective under the Act as of the time of execution
hereof, such as may be required (and shall be obtained as provided in
this Agreement) under the Act, or (B) conflict with or result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any Material Agreement, or the charter
documents or by-laws or certificate of limited partnership or
partnership agreement (as the case may be) of the Company or any of
its subsidiaries, or any provision of any California, New York,
Maryland, Florida, Kentucky, Nevada, New Mexico, Oregon, Tennessee or
Washington statute, rule or regulation (other than federal or state
securities laws, which are addressed elsewhere herein), or any Court
Order;
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(xii) the Company is not, and after giving effect to the
Formation Transactions and the other transactions contemplated by this
Agreement will not be, subject to registration as an investment
company under the Investment Company Act of 1940, as amended;
(xiii) the transfer of interests or other assets pursuant to
the Transfer Documents does not violate the articles or certificate of
incorporation, by-laws, limited liability company agreement,
declaration of trust, certificate of limited partnership, partnership
agreement or other organizational documents, as the case may be, of
PPD, the Company or any of its subsidiaries. Subject to certain
assumptions acceptable to the Underwriters with respect to due
authorization, execution and delivery by certain parties to the
Transfer Documents, each of the Transfer Documents has been duly
authorized, executed and delivered by the respective party and is a
valid and binding agreement of the respective party, enforceable in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and
similar laws relating to creditors rights generally and to the
application of equitable principles in any proceeding, whether at law
or in equity;
(xiv) the Registration Statement is effective under the Act;
any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, pursuant to Rules 424(b) and 434 has been
made in the manner and within the time period required thereby; and
based upon such counsel's due inquiry made to the Office of the
Secretary of the Commission, no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto
has been issued, and no proceedings for that purpose have been
instituted or threatened or, to the knowledge of such counsel, are
contemplated by the Commission;
(xv) the Registration Statement originally filed with respect to
the Securities and each amendment thereto, any Rule 462(b)
Registration Statement and the Prospectus (in each case, other than
the financial statements, schedules and other financial and
statistical data contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the applicable requirements of the Act and the rules and regulations
of the Commission thereunder;
(xvi) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different", as such term is used in Rule
434, from the prospectus included in the Registration Statement at the
time of its effectiveness or an effective post-effective amendment
thereto (including such information that is permitted to be omitted
pursuant to Rule 430A); and
(xvii) upon completion of the Formation Transactions, the
Company will be organized in conformity with the requirements for
qualification as a real estate investment trust under the Code, and
the proposed method of operation of the Company as described in the
Registration Statement and the Prospectus and a certificate of a
responsible officer of the Company will enable the Company to meet the
requirements for taxation as a real estate investment trust under the
Code beginning with the year ended December 31, 1997.
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Such counsel shall also state that they have participated in conferences
with officers and other representatives of the Company, representatives of
the independent public accountants for the Company, and representatives of
the Underwriters, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is
not passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and has not made any independent check or
verification thereof, during the course of such participation (relying as to
materiality to a large extent upon the statements of officers and other
representatives of the Company) no facts came to the attention of such
counsel that caused such counsel to believe that the Registration Statement,
at the time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus, as of its date or as of the Firm Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that such counsel
need express no belief with respect to the financial statements, schedules
and other financial data included in the Registration Statement or the
Prospectus.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. As to matters involving the
application of laws of any jurisdiction other than the State of California,
the State of New York, the Delaware General Corporation Law and the Delaware
Revised Limited Partnership Act or the United States, to the extent
satisfactory in form and scope to counsel for the Underwriters, such counsel
may rely upon the opinions of Ballard Spahr Andrews & Ingersoll, Baltimore,
Maryland, a copy of which shall be delivered to the Underwriters and their
counsel and which must be in form and scope satisfactory to the Underwriters
and their counsel. As to matters involving the application of laws of
Florida, Kentucky, Nevada, New Mexico, Oregon, Tennessee and Washington,
portions of the above opinions may be rendered directly by local counsel to
the Company in such jurisdictions, provided that the identity of such counsel
and the form and scope of such opinions must be satisfactory to the
Underwriters and their counsel.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date
of such opinion.
(c) The Representatives shall have received an opinion, dated
the Firm Closing Date, of Pryor, Cashman, Sherman & Flynn, counsel for the
Underwriters, with respect to the issuance and sale of the Firm Securities,
the Registration Statement and the Prospectus, and such other related matters
as the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(d) The Representatives shall have received from KPMG Peat
Marwick LLP a letter or letters dated, respectively, the date hereof and the
Firm Closing Date, in form and substance satisfactory to the Representatives,
to the effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries, Pan Pacific Development
Properties, Chico
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Crossroads, Monterey Plaza, Fairmont Shopping Center and
Lakewood Shopping Center within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) in their opinion, the financial statements and
schedules and pro forma condensed combined financial statements
audited by them and included in the Registration Statement and the
Prospectus comply in form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations;
(iii) on the basis of a reading of the latest available
interim unaudited financial statements of the Company, Pan Pacific
Development Properties, Chico Crossroads, Monterey Plaza, Fairmont
Shopping Center and Lakewood Shopping Center, carrying out certain
specified procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the
comments set forth in this paragraph (iii), a reading of the minute
books of the stockholders, the board of directors and any committees
thereof of the Company and PPD and its subsidiaries and inquiries of
certain officials of the Company and PPD and its subsidiaries who have
responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that:
(A) the unaudited consolidated condensed financial
statements of the Company, Pan Pacific Development Properties, Chico
Crossroads, Monterey Plaza, Fairmont Shopping Center and Lakewood
Shopping Center included in the Registration Statement and the
Prospectus do not comply in form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations thereunder or are not in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and the
Prospectus;
(B) at a specific date (not more than five business
days prior to the date of such letter), there were any increases in
indebtedness or decrease in owner's equity of Pan Pacific Development
Properties as compared with amounts shown in the March 31, 1997
unaudited combined balance sheet included in the Registration
Statement and the Prospectus, or for the period from April 1, 1997 to
June 30, 1997, there were any decreases, as compared with the
corresponding period of the preceding year, in net income, total
revenue or funds from operations of Pan Pacific Development
Properties, except in all instances for increases or decreases which
the Registration Statement and the Prospectus disclose have occurred
or may occur; and
(C) at a specific date (not more than five business
days prior to the date of such letter), with respect to Pan Pacific
Development Properties, there were any increases in borrowings as
compared with amounts shown in the March 31, 1997 balance sheet
included in the Registration Statement and the Prospectus, except in
all instances for increases which the Registration
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Statement and the Prospectus disclose have occurred or may occur.
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general accounting
records of the Company, Pan Pacific Development Properties, Chico
Crossroads, Monterey Plaza, Fairmont Shopping Center and Lakewood
Shopping Center and are included in the Registration Statement and the
Prospectus and have compared such amounts, percentages and financial
information with such records of the Company, Pan Pacific Development
Properties, Chico Crossroads, Monterey Plaza, Fairmont Shopping Center
and Lakewood Shopping Center and with information derived from such
records and have found them to be in agreement, excluding any
questions of legal interpretation; and
(v) on the basis of a reading of the unaudited pro forma
condensed combined financial statements included in the Registration
Statement and the Prospectus, carrying out certain specified
procedures that would not necessarily reveal matters of significance
with respect to the comments set forth in this paragraph (v),
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the unaudited pro forma condensed combined
financial statements, nothing came to their attention that caused them
to believe that the unaudited pro forma condensed combined financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(e) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the chief executive officer and the principal financial or
accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as
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amended or supplemented as of the Firm Closing Date, does not include
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and
the Company has performed all covenants and agreements and satisfied
all conditions on its part to be performed or satisfied at or prior
to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and
no proceedings for that purpose have been instituted or threatened or,
to the best of the Company's knowledge, are contemplated by the
Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries has sustained any
material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise), management,
business prospects, net worth or results of operations of the Company
and its subsidiaries, taken as a whole, except in each case as
described in or contemplated by the Registration Statement and the
Prospectus (exclusive of any amendment or supplement thereto).
(f) The Representatives shall have received from PPD and
the executive officers of the Company agreements to the effect that such
person will not, directly or indirectly, without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase
or otherwise sell or dispose (or announce any offer, sale, offer of sale,
contract of sale, pledge, grant of an option to purchase or other sale or
disposition) of any shares of Common Stock or other capital stock of the
Company or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock or other capital stock of the Company, for a
period of three years after the date of this Agreement; provided, however,
that PPD's agreement shall apply only to 2,932,802 shares of Common Stock
owned by it and providing that a pledge by PPD of all of its shares of Common
Stock to an affiliate of Prudential Securities Incorporated shall be
permitted.
(g) On or before the Firm Closing Date, the
Representatives and counsel for the Underwriters shall have received such
further certificates, documents or other information as they may have
reasonably requested from the Company.
(h) Prior to the commencement of the offering of the
Securities, the Securities shall have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
(i) The Formation Transactions shall have been
consummated or shall occur simultaneously with the closing of the purchase
and sale of the Firm Securities hereunder.
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(j) On or before the Firm Closing Date, all necessary consents to
the Formation Transactions shall have been obtained.
(k) On or before the Firm Closing Date, the Company shall have
delivered to you with respect to each of the Properties (including, for
purposes of the applicable provisions of this paragraph, the Excluded Assets)
copies of:
(i) an owner's policy or policies of title insurance
insuring that the Company owns fee simple title to the real property (other
than the Partially-Owned Properties or the land in which the Company is
acquiring a ground leasehold estate) comprising the Properties, in an
amount not less than the fair market value, which policies shall be issued
by a title insurance company acceptable to (the "Title Company"), which
policies shall include tie-in endorsements, but shall not contain any
coinsurance provisions. The Title Company shall take as exception to title
only those exceptions acceptable to the Representatives;
(ii) all third party consents, waivers, licenses,
permits, authorizations, agreements, certificates and the like necessary
to operate each of the Properties;
(iii) policies or certificates of insurance (including
earthquake insurance) relating to each of the Properties evidencing
coverages and in amounts as are prudent and customary in the businesses in
which they are or will be engaged;
(iv) UCC, judgment and tax lien searches confirming
that the real and personal property comprising the Properties is subject
to no liens, charges, encumbrances, claims or restrictions;
(v) such affidavits, certificates and instruments of
indemnification as shall reasonably be required to induce the Title Company
to issue the policies contemplated in clause (i) of this Section 7(k);
(vii) checks payable to the appropriate public officials
in payment of all recording costs and transfer taxes (or checks or wire
transfers to the Title Company in respect of such amounts) due in respect
of the recording of any instruments to be recorded in connection with the
Formation Transactions, together with a check or wire transfer for the
Title Company in payment of the Title Company's premium, search and
examination charges, survey costs and any other amounts due in connection
with the issuance of its policy; and
(viii) if any of the Properties is subject to an existing
mortgage, a current payoff letter from the holder of such existing mortgage
indicating the principal amount required to satisfy all amounts then
secured by such existing mortgage and the additional amount required for
each day after the date of such letter necessary to satisfy all obligations
secured thereby.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the
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Representatives such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Representatives and counsel for the
Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each
of the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed
to refer to such Option Securities and the related Option Closing Date,
respectively.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934 (the "Exchange Act"),
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter or such controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (B) any application or other
document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed with
the Commission or any securities association or securities exchange
(each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application a material fact required to be stated therein or
necessary to make the statements therein not misleading or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including, without
limitation, slides, videos, films and tape recordings,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with
any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or
31
<PAGE>
omission or alleged omission made in such registration statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein; and
PROVIDED, FURTHER, that the Company will not be liable to any Underwriter or
any person controlling such Underwriter with respect to any such untrue
statement or omission made in any Preliminary Prospectus that is corrected in
the Prospectus (or any amendment or supplement thereto) if the person
asserting any such loss, claim, damage or liability purchased Securities from
such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented) at or prior to the written confirmation of the sale
of such Securities to such person in any case where such delivery of the
Prospectus (as amended or supplemented) is required by the Act, unless such
failure to deliver the Prospectus (as amended or supplemented) was a result
of noncompliance by the Company with Section 5(d) and (e) of this Agreement.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have. The Company will not, without the prior written
consent of the Underwriter or Underwriters purchasing, in the aggregate, more
than fifty percent (50%) of the Securities, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit
or proceeding in respect of which indemnification may be sought hereunder
(whether or not any such Underwriter or any person who controls any such
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of
all of the Underwriters and such controlling persons from all liability
arising out of such claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify
and hold harmless the Company, each of its directors, each of its officers
who signed the Registration Statement and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or any Application or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein; and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by
the Company or any such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
any action in respect thereof. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have. No Underwriter
will, without the prior consent of the Company, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not the Company, any of its directors or officers who
signed the Registration Statement or any person who controls the
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Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of
the Company, its officers and directors who signed the Registration Statement
and such controlling persons from all liability arising out of such claim,
action, suit or proceeding.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from (i) any liability which it may have to any indemnified party
under this Section 8 except to the extent that the indemnifying party has
been prejudiced as a result thereof or (ii) any liability which it may have
to any indemnified party otherwise than under this Section 8. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party;
PROVIDED, HOWEVER, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnifying
party shall not have the right to direct the defense of such action on behalf
of such indemnified party or parties and such indemnified party or parties
shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed
to defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for
the expenses of more than one separate counsel (in addition to local counsel)
in any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this
Section 8, representing the indemnified parties under such paragraph (a) who
are parties to such action or actions) or (ii) the indemnifying party does
not promptly retain counsel satisfactory to the indemnified party or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the
consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 8 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof), each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect (i) the relative benefits received by the indemnifying party or
parties on
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the one hand and the indemnified party on the other from the offering of the
Securities or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault
of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in
the circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro rata
or per capita allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to above in this paragraph
(d). Notwithstanding any other provision of this paragraph (d), no
Underwriter shall be obligated to make contributions hereunder that in the
aggregate exceed the total public offering price of the Securities purchased
by such Underwriter under this Agreement, less the aggregate amount of any
damages that such Underwriter has otherwise been required to pay in respect
of the same or any substantially similar claim, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11 (f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective
underwriting obligations and not joint, and contributions among Underwriters
shall be governed by the provisions of the Prudential Securities Incorporated
Master Agreement Among Underwriters. For purposes of this paragraph (d), each
person, if any, who controls an Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, shall have the same rights to contribution
as the Company.
9. DEFAULT OF UNDERWRITERS. If one or more Underwriters default in
their obligations to purchase Firm Securities or Option Securities hereunder
and the aggregate number of such Securities that such defaulting Underwriter
or Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by
all of the Underwriters at such time hereunder, the other Underwriters may
make arrangements satisfactory to the Representatives for the purchase of
such Securities by other persons (who may include one or more of the
non-defaulting Underwriters, including the Representatives), but if no such
arrangements are made by the Firm Closing Date or the related Option Closing
Date, as the case may be, the other Underwriters shall be obligated severally
in proportion to their respective commitments hereunder to purchase the Firm
Securities or Option Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If one or more Underwriters so
default with respect to an aggregate number of Securities that is more than
ten percent of the aggregate number of Firm Securities or Option Securities,
as the case
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may be, to be purchased by all of the Underwriters at such time hereunder,
and if arrangements satisfactory to the Representatives are not made within
36 hours after such default for the purchase by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representatives) of the Securities with respect to which such default occurs,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company other than as provided in Section
10 hereof. In the event of any default by one or more Underwriters as
described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may
be, established as provided in Section 3 hereof for not more than seven
business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Firm
Securities or Option Securities, as the case may be. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 9. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
10. SURVIVAL. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and
the several Underwriters set forth in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement shall remain in full force
and effect, regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, any Underwriter or any controlling
person referred to in Section 8 hereof and (ii) delivery of and payment for
the Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
11. TERMINATION. (a) This Agreement may be terminated with respect
to the Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date
or the related Option Closing Date, respectively, in the event that the
Company shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on its part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Firm Closing Date or such
Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall have,
in the sole judgment of the Representatives, sustained any material
loss or interference with their respective businesses or properties
from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse
change, or any development involving a prospective material adverse
change (including without limitation a change in management or control
of the Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, except in each case as described in or
contemplated by the Registration Statement and the Prospectus
(exclusive of any amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended
by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been
suspended or minimum or maximum prices shall have been established
on any such exchange;
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(iii) a banking moratorium shall have been declared by New
York, California or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section(s) 6 and 10 hereof.
12. INFORMATION SUPPLIED BY UNDERWRITERS. The statements set forth in
the last paragraph on the front cover page and under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by any Underwriter through the Representatives to the Company for
the purposes of Sections 2(b) and 8 hereof. The Underwriters confirm that
such statements (to such extent) are correct.
13. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, One New York Plaza, New York, New York 10292, Attention: Equity
Transactions Group; and if sent to the Company, shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to the Company
at 1631-B South Melrose Drive, Vista, California 92083, Attention: Chief
Executive Officer.
14. SUCCESSORS. This Agreement shall inure to the benefit of and shall
be binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person
except that (i) the indemnities of the Company contained in Section 8 of this
Agreement shall also be for the benefit of any person or persons who control
any Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Securities from any Underwriter shall be deemed a successor
because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO
36
<PAGE>
CONFLICTS OF LAWS.
16. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings arising out of or relating to this Agreement may be brought in
any state or federal court of competent jurisdiction in the State of New
York, and by execution and delivery of this Agreement, the Company accepts
for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
waives any defense of forum non conveniens and irrevocably agrees to be bound
by any judgment rendered thereby in connection with this Agreement. The
Company designates and appoints [Corporation Service Company], and such other
persons as may hereafter be selected by the Company irrevocably agreeing in
writing to so serve, as its agent to receive on its behalf service of all
process in any such proceedings in any such court, such service being hereby
acknowledged by the Company to be effective and binding service in every
respect. A copy of any such process so served shall be mailed by registered
mail to the Company at its address provided in Section 13 hereof; PROVIDED,
HOWEVER, that, unless otherwise provided by applicable law, any failure to
mail such copy shall not affect the validity of service of such process. If
any agent appointed by the Company refuses to accept service, the Company
hereby agrees that service of process sufficient for personal jurisdiction in
any action against the Company in the State of New York may be made by
registered or certified mail, return receipt requested, to the Company at its
address provided in Section 13 hereof, and the Company hereby acknowledges
that such service shall be effective and binding in every respect. Nothing
herein shall affect the right to serve process in any other manner permitted
by law or shall limit the right of any Underwriter to bring proceedings
against the Company in the courts of any other jurisdiction.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
37
<PAGE>
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and
each of the several Underwriters.
Very truly yours,
PAN PACIFIC RETAIL PROPERTIES, INC.
By:
----------------------------------
Name: Stuart A. Tanz
Title: President and Chief Executive
Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SMITH BARNEY INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By
---------------------------------------
Jean-Claude Canfin, Managing Director
For itself and on behalf of the Representatives.
38
<PAGE>
SCHEDULE 1
UNDERWRITERS
NUMBER OF FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
- ----------- -------------------------
Prudential Securities Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
39
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
FINANCIAL ADVISORY AGREEMENT
----------------------------
, 1997
Pan Pacific Retail Properties, Inc.
1631-B South Melrose Drive
Vista, California 92083
Attention: Stuart A. Tanz, Chairman, President
and Chief Executive Officer
Gentlemen:
The purpose of this agreement (the "Agreement") is to confirm the
engagement set forth in the engagement letter dated April 1, 1997 (the
"Letter"), between Prudential Securities Incorporated ("Prudential") and a
predecessor of Pan Pacific Retail Properties, Inc. (together with its
affiliates and subsidiaries, the "Company") that Prudential has been retained
as the exclusive financial advisor to the Company to perform such financial
consulting services as the Company may reasonably request in connection with
the initial public offering (the "Offering") of the common stock, par value
$0.01 per share, of the Company (the "Common Stock"). Such services may
include, but are not limited to, the following:
(i) developing a business plan and marketing story, along
with providing advice regarding the Company's Offering
prospectus;
(ii) reviewing the existing and pro forma accounting
statements of the Company, including existing and pro
forma funds from operations, funds available for
distribution and dividend payout ratio strategies;
(iii) providing assistance to the Company in the development of
a financing plan for achieving the Company's immediate
and long-term financial objectives;
(iv) evaluating and recommending financial and strategic
alternatives with respect to the Offering;
<PAGE>
(v) advising the Company as to the timing, structure (debt
and equity) and pricing of the Offering, along with an
analysis of comparable existing public real estate
investment trusts ("REITs"); and
(vi) providing such other financial advisory services as are
customary for public REITs and as may be mutually agreed
upon by the Company and Prudential.
The term of this Agreement shall commence on the date hereof and shall
extend through and until the consummation of the Offering, provided, however,
that either the Company or Prudential may terminate this Agreement prior to
such date and as of the end of any month upon no less than 30 days' prior
written notice.
As compensation for Prudential's financial advisory services, the
Company will pay Prudential upon the consummation of the Offering a fee equal
to 0.75% of the total proceeds of the Offering. The Company will further pay
Prudential a fee equal to 0.75% of the total proceeds, if any, attributable
to the exercise by the Underwriters of their over-allotment option at each
time any such option is exercised.
Any fees which Prudential shall become entitled to receive from the
Company in connection with the performance of any investment banking or
underwriting services (as distinguished from financial advisory services) in
connection with the Offering shall be set forth in a separate agreement
between the Company and Prudential and shall be in addition to the
compensation provided for herein.
In order to enable Prudential to render its services hereunder, the
Company agrees to provide to Prudential, among other things, all reasonable
information requested or required by Prudential including, but not limited
to, information concerning historical and projected financial results and
possible and known litigious, environmental and other contingent liabilities.
The Company also agrees to make available to Prudential such representatives of
the Company, including, among others, directors, officers, employees, outside
counsel and independent certified public accountants, as Prudential may
reasonably request. The Company will promptly advise Prudential of any
material changes in its business or finances. The Company represents that all
information made available to Prudential by the Company will be complete and
correct in all material respects and will not contain any untrue statements
of a material fact or omit to state a material fact necessary in order to
make the statement therein not misleading in light of circumstances under
which such statements are made. In rendering its services hereunder,
Prudential will be using and relying primarily on such information without
independent verification
2
<PAGE>
thereof or independent appraisal of any of the Company's assets. Prudential
does not assume responsibility for the accuracy or completeness of the
information to which reference is made hereto.
The services provided are to be rendered solely to the Company. They are
not being rendered by Prudential as an agent or as a fiduciary of the
shareholders of the Company, and Prudential shall not have any liability or
obligation with respect to its services hereunder to such shareholder or any
other person, firm or corporation. The Company will not permit any third
party to disclose or otherwise refer to the advice or information rendered by
Prudential pursuant to this Agreement in any manner without Prudential's
prior written consent.
The Company hereby agrees to indemnify Prudential in accordance with the
terms and conditions of the indemnification agreement dated April 1, 1997
(the "Indemnification Agreement'), between Prudential and the Company, the
provisions of which are incorporated herein in their entirety.
All communications hereunder shall be in writing and, if sent to
Prudential, shall be delivered or sent by registered or certified mail
(return receipt requested), telex or facsimile transmission and confirmed in
writing to Prudential Securities Incorporated, One New York Plaza, New York,
New York 10292, Attention: Equity Transactions Group; and if sent to the
Company, shall be delivered or sent by registered or certified mail (return
receipt requested), telex or facsimile transmission and confirmed in writing
to the Company at 1631-B South Melrose Drive, Vista, California 92083,
Attention: Chief Executive Officer.
The benefits of this Agreement, together with the Indemnification
Agreement, shall inure to the respective successors and assigns of the
parties hereto and of the indemnified parties under the Indemnification
Agreement and their successors, assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
This Agreement may not be amended or modified except in writing and
shall be governed by and construed in accordance with the laws of the State
of New York, without regard to principles of conflicts of laws. This
Agreement may be executed in any number of counterparts, all of which
together shall constitute one and the same agreement.
Each of Prudential and the Company waives all right to trial by jury in
any action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) related to or arising out of the engagement of Prudential pursuant
to,
3
<PAGE>
or the performance by Prudential of the services contemplated by this
Agreement.
This Agreement supersedes and replaces all prior understanding, written
or oral, with respect to the matters addressed herein.
Please confirm that the foregoing is in accordance with your
understanding by signing upon behalf of the Company and returning an executed
copy of this Agreement whereupon after the execution by Prudential this
Agreement shall become binding between the Company and Prudential.
Very truly yours,
PRUDENTIAL SECURITIES INCORPORATED
By:
-----------------------------------
Name: Richard Schoninger
Title: Managing Director
ACCEPTED AND AGREED TO:
PAN PACIFIC RETAIL PROPERTIES, INC.
By:
---------------------------------------
Name: Stuart A. Tanz
Title: Chairman, President
and Chief Executive Officer
Date: , 1997
4
<PAGE>
PAN PACIFIC RETAIL PROPERTIES, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: Pan Pacific Retail Properties, Inc., a Maryland
corporation (the "Corporation"), desires to amend and restate its charter as
currently in effect and as hereinafter amended.
SECOND: The following provisions are all the provisions of the
charter currently in effect and as hereinafter amended:
ARTICLE I
INCORPORATOR
The undersigned, James J. Hanks, Jr., whose address is c/o Ballard
Spahr Andrews & Ingersoll, 300 East Lombard Street, Baltimore, Maryland
21202, being at least 18 years of age, does hereby form a corporation under
the general laws of the State of Maryland.
ARTICLE II
NAME
The name of the corporation (the "Corporation") is:
Pan Pacific Retail Properties, Inc.
ARTICLE III
PURPOSE
The purposes for which the Corporation is formed are to engage in
any lawful act or activity (including, without limitation or obligation,
engaging in business as a real estate investment trust under the Internal
Revenue Code of 1986, as amended, or any successor statute (the "Code")) for
which corporations may be organized under the general laws of the
<PAGE>
State of Maryland as now or hereafter in force. For purposes of these
Articles, "REIT" means a real estate investment trust under Sections 856
through 860 of the Code.
ARTICLE IV
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State
of Maryland is c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard
Street, Baltimore, Maryland 21202, Attention: James J. Hanks, Jr. The name
of the resident agent of the Corporation in the State of Maryland is James J.
Hanks, Jr., whose post address is c/o Ballard Spahr Andrews & Ingersoll, 300
East Lombard Street, Baltimore, Maryland 21202. The resident agent is a
citizen of and resides in the State of Maryland.
ARTICLE V
THE BOARD OF DIRECTORS
Section 5.1 NUMBER OF DIRECTORS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
The number of directors of the Corporation initially shall be five, which
number may be increased or decreased pursuant to the Bylaws, but shall never
be less than the minimum number required by the Maryland General Corporation
Law nor more than 15. In addition, Independent Directors shall at all times
comprise a majority of the Board of Directors. For the purposes hereof,
"Independent Director" shall mean an individual who is not (a) an employee,
officer, or affiliate of the Corporation or a subsidiary or division thereof
or any entity directly or indirectly in control of the Corporation or any
subsidiary or division thereof, (b) a blood relative of a principal executive
officer of the Corporation, or (c) a stockholder, partner, director, officer,
member or employee of any person acting as advisor, consultant or legal
2
<PAGE>
counsel, receiving compensation on a continuing basis from the Corporation in
addition to director's fees. The names of the directors who shall serve
until the first annual meeting of stockholders held in the year adjacent to
their names below and until their successors are duly elected and qualify are:
Stuart A. Tanz (2000)
Russell E. Tanz (2000)
Mark J. Riedy (1999)
Bernard M. Feldman (1999)
Melvin S. Adess (1998)
These directors may increase the number of directors and may fill any
vacancy, whether resulting from an increase in the number of directors or
otherwise, on the Board of Directors occurring before the first annual
meeting of stockholders in the manner provided in the Bylaws.
The Corporation's Board of Directors (other than any director
elected solely by holders of one or more classes or series of Preferred Stock
or of stock other than the Common Stock) is divided into three classes of
directors, as nearly equal in number as possible, one class to hold office
initially for a term expiring at the next succeeding annual meeting of
stockholders, another class to hold office initially for a term expiring at
the second succeeding annual meeting of stockholders and another class to
hold office initially for a term expiring at the third succeeding annual
meeting of stockholders, with the members of each class to hold office until
their successors are duly elected and qualify. At each annual meeting of the
stockholders, the successors to the class of directors whose term expires at
such meeting shall be elected to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the year of
their election.
3
<PAGE>
Section 5.2 EFFECT OF INCREASES AND DECREASES IN THE AUTHORIZED
NUMBER OF DIRECTORS. In the event of any increase or decrease in the
authorized number of directors:
(a) Each director then serving shall nevertheless continue as
a director of the class of which such director is a member until the
expiration of such director's term or such director's prior death,
retirement, resignation or removal; and
(b) Except to the extent that an increase or decrease in the
authorized number of the directors occurs in connection with the rights of
holders of Preferred Stock to elect additional directors, the newly-created
or eliminated directorships resulting from any increase or decrease shall be
apportioned by the Board of Directors among the three classes so as to keep
the number of directors in each class as nearly equal as possible.
Section 5.3 GENERAL TERM OF OFFICE. Notwithstanding the
provisions of Sections 5.1 and 5.2, each director shall serve until such
director's successor is elected and qualified or until such director's death,
retirement, resignation or removal.
Section 5.4 REMOVAL OF DIRECTORS. Subject to the rights of
holders of one or more classes or series of Preferred Stock or of any stock
other than the Common Stock to elect one or more directors, any director, or
the entire Board of Directors may be removed from office only for cause and
then only by the affirmative vote of the holders of at least a majority of
the votes entitled to be cast generally in the election of directors without
cumulative voting. For the purpose of this paragraph, "cause" shall mean with
respect to any particular director a final judgment of a court of competent
jurisdiction holding that such director caused demonstrable, material harm to
the Corporation through bad faith or active and deliberate dishonesty.
4
<PAGE>
Section 5.5 FILLING VACANCIES. Except as may otherwise be
provided in the terms of Preferred Stock or of any stock other than the
Common Stock to elect additional directors, or in any agreement relating to
the right to designate nominees for election to the Board of Directors,
should a vacancy on the Board of Directors occur or be created (whether
arising through death, retirement, resignation or removal), other than
through an increase but not a decrease, in the number of authorized
directors, such vacancy shall be filled by the affirmative vote of a majority
of the remaining directors, even though less than a quorum of the Board of
Directors. A vacancy on the Board of Directors resulting from an increase in
the number of directors shall be filled by the affirmative vote of a majority
of the entire Board of Directors. By the vote required to elect a director,
the stockholders may fill any vacancy on the Board of Directors resulting
from the removal of a director, except for directors elected by a class or
series of stock.
Section 5.6 DIRECTORS ELECTED BY HOLDERS OF LESS THAN ALL CLASSES
OR SERIES OF STOCK.
(a) AUTHORITY AND TERM OF OFFICE. The holders of each class
of Preferred Stock or of any stock other than the Common Stock, voting as a
separate class, shall be entitled to elect one or more directors, and to fill
vacancies thereafter occurring in such directorships, only to the extent
expressly so provided in the terms of such class of stock as set forth in the
Charter. A director, if any, so elected by holders of Preferred Stock or any
stock other than the Common Stock shall serve for a term ending on the date
of the next annual meeting of stockholders following the annual meeting of
stockholders at which such director was elected, or until such director's
successor shall have been duly elected and qualified, or until such
director's right to hold such office terminates pursuant to the terms of such
class or
5
<PAGE>
series of stock entitled to elect such director, whichever occurs earlier,
and subject to such director's earlier death, disqualification, resignation
or removal.
(b) EFFECT OF PREFERRED DIRECTORSHIPS. Upon commencement of
and for the duration of any period in which the holders of any class or
series of Preferred Stock or of stock other than the Common Stock have
elected an additional director or directors, the authorized number of
directors of the Corporation shall automatically be increased by such number
of directors authorized to be elected by holders of such stock. Except as
otherwise in the terms of such stock as set forth in the Charter, whenever
the holders of such class or series of stock having such right to elect
additional directors are divested of such right pursuant to the provisions of
such class or series of stock, the terms of office of all such additional
directors elected by the holders of such stock, or elected to fill any
vacancies resulting from the death, resignation, disqualification or removal
of such additional directors, shall forthwith terminate and the total
authorized number of directors of the Corporation shall be reduced
accordingly.
Section 5.7 AUTHORIZATION BY BOARD OF STOCK ISSUANCE. The Board
of Directors may authorize the issuance from time to time of shares of stock
of the Corporation of any class or series, whether now or hereafter
authorized, or securities or rights convertible into shares of its stock of
any class or series, whether now or hereafter authorized, for such
consideration as the Board of Directors may deem advisable (or without
consideration in the case of a stock split or stock dividend), subject to
such restrictions or limitations, if any, as may be set forth in the charter
of the Corporation or the Bylaws.
Section 5.8 AMENDMENTS TO THE BYLAWS. Subject to applicable law,
the stockholders shall have the right to adopt, alter and repeal any
provision of the Bylaws of the
6
<PAGE>
Corporation. Any such amendment shall be effective if approved by the
affirmative vote of holders of not less than a majority of all of the votes
entitled to be cast on the matter. Subject to the right of the stockholders
to adopt, alter and repeal Bylaws, the Board of Directors is expressly
authorized, by the affirmative vote of a majority of the Corporation's
directors, to adopt, alter or repeal Bylaws of the Corporation.
Section 5.9 DETERMINATIONS BY THE BOARD OF DIRECTORS. The
determination as to any of the following matters, made in good faith by or
pursuant to the direction of the Board of Directors consistent with the
charter of the Corporation and in the absence of actual receipt of an
improper benefit in money, property or services or active and deliberate
dishonesty established by a court, shall be final and conclusive and shall be
binding upon the Corporation and every holder of shares of its stock: the
amount of the net income of the Corporation for any period and the amount of
assets at any time legally available for the payment of dividends, redemption
of its stock or the payment of other distributions on its stock; the amount
of paid-in surplus, net assets, other surplus, annual or other net profit,
net assets in excess of capital, undivided profits or excess of profits over
losses on sales of assets; the amount, purpose, time of creation, increase or
decrease, alteration or cancellation of any reserves or charges and the
propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or
discharged); the fair value, or any sale, bid or asked price to be applied in
determining the fair value, of any asset owned or held by the Corporation;
any matter relating to the acquisition, holding and disposition of any assets
by the Corporation; or any matter relating to the construction or
interpretation of the Charter or Bylaws of the Corporation.
7
<PAGE>
Section 5.10 RESERVED POWERS OF THE BOARD OF DIRECTORS. The
enumeration and definition of particular powers of the Board of Directors
included in this Article V shall in no way be limited or restricted by
reference to or inference from the terms of any other clause of this or any
other provision of the charter of the Corporation, or construed or deemed by
inference or otherwise in any manner to exclude or limit the powers conferred
upon the Board of Directors under the general laws of the State of Maryland
as now or hereafter in force.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION
AND OF THE STOCKHOLDERS AND DIRECTORS
Section 6.1 PREEMPTIVE RIGHTS. Except as may be specifically
provided by the Board of Directors in setting the terms of classified or
reclassified shares of stock pursuant to Section 7.4 or pursuant to a written
contract, no holder of shares of stock of the Corporation shall, as such
holder, have any preemptive right to purchase or subscribe for any additional
shares of stock of the Corporation or any other security of the Corporation
which it may issue or sell.
Section 6.2 ADVISOR AGREEMENTS. Subject to such approval of
stockholders and other conditions, if any, as may be required by any
applicable statute, rule or regulation, the Board of Directors may authorize
the execution and performance by the Corporation of one or more agreements
with any person, corporation, association, company, trust, partnership
(limited or general) or other organization whereby, subject to the
supervision and control of the Board of Directors, any such other person,
corporation, association, company, trust, partnership (limited or general) or
other organization shall render or make available to the Corporation
managerial, investment, advisory and/or related services, office space and
other
8
<PAGE>
services and facilities (including, if deemed advisable by the Board of
Directors, the management or supervision of the investments of the
Corporation) upon such terms and conditions as may be provided in such
agreement or agreements (including, if deemed fair and equitable by the Board
of Directors, the compensation payable thereunder by the Corporation).
Section 6.3 RELATED PARTY TRANSACTIONS. Without limiting any
other procedures available by law or otherwise to the Corporation, the Board
of Directors may authorize any agreement of the character described in
Section 6.2 or other transaction with any person, corporation, association,
company, trust, partnership (limited or general) or other organization,
although one or more of the directors or officers of the Corporation may be a
party to any such agreement or an officer, director, stockholder or member of
such other party (an "Interested Officer/Director"), and no such agreement or
transaction shall be invalidated or rendered void or voidable solely by
reason of the existence of any such relationship if: (i) the existence is
disclosed or known to the Board of Directors, and the contract or transaction
is authorized, approved or ratified by the affirmative vote of a majority of
the disinterested directors, even if they constitute less than a quorum of
the Board of Directors; or (ii) the existence is disclosed to the
stockholders entitled to vote, and the contract or transaction is authorized,
approved or ratified by a majority of the votes cast by the stockholders
entitled to vote, other than the votes of the shares held of record by the
Interested Officers/Directors; or (iii) the contract or transaction is fair
and reasonable to the Corporation. Any Interested Officer/Director of the
Corporation or the stock owned by them or by a corporation, association,
company, trust, partnership (limited or general) or other organization in
which an Interested Officer/Director may have an interest, may be counted in
determining the presence of a quorum at a meeting of the Board of Directors
or a committee of the Board of Directors
9
<PAGE>
or at a meeting of the stockholders, as the case may be, at which the
contract or transaction is authorized, approved or ratified.
Section 6.4 OTHER ACTIVITIES OF MANAGEMENT. Certain of the
officers and directors of the Corporation and their affiliates are
continuously engaged in acquiring, developing, constructing, operating and
managing real property. By virtue of these activities, opportunities to
acquire, develop and own properties will become available to the officers and
directors of the Corporation and their affiliates in the future. Any of the
officers and directors of the Corporation and their affiliates may continue
to engage in such activities, independently or with others, the officers and
directors of the Corporation and their affiliates shall have no obligation to
make any such business opportunities available to the Corporation, and the
Corporation shall have no interest in any such business opportunities other
than business opportunities which the officers and directors of the
Corporation and their affiliates, in their sole discretion, have made
available to the Corporation and in which the Corporation has invested.
Section 6.5 INDEMNIFICATION. The Corporation shall have the
power, to the maximum extent permitted by Maryland law in effect from time to
time, to obligate itself to indemnify, and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to, (a) any
individual who is a present or former director or officer of the Corporation
or (b) any individual who, while a director of the Corporation and at the
request of the Corporation, serves or has served as a director, officer,
partner or trustee of another corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or any other
enterprise from and against any claim or liability to which such person may
become subject or which such person may incur by reason of his status as a
present or former
10
<PAGE>
director or officer of the Corporation. The Corporation shall have the
power, with the approval of the Board of Directors, to provide such
indemnification and advancement of expenses to a person who served a
predecessor of the Corporation in any of the capacities described in (a) or
(b) above and to any employee or agent of the Corporation or a predecessor of
the Corporation.
Section 6.6 REIT QUALIFICATION. The Board of Directors shall use
its reasonable best efforts to take such actions as are necessary or
appropriate to preserve the status of the Corporation as a REIT; however, if
the Board of Directors determines that it is no longer in the best interests
of the Corporation to qualify or to continue to be qualified as a REIT and
such determination is approved by the affirmative vote of the holders of not
less than two-thirds of all votes entitled to be cast on the matter, the
Board of Directors may revoke or otherwise terminate the Corporation's REIT
election pursuant to Section 856(g) of the Code. The Board of Directors also
may determine that compliance with any restriction or limitation on stock
ownership and transfers set forth in Article VIII is no longer required for
REIT qualification.
ARTICLE VII
STOCK
Section 7.1 AUTHORIZED SHARES. The Corporation has authority to
issue 100,000,000 shares of Common Stock, $.01 par value per share ("Common
Stock"), and 30,000,000 shares of Preferred Stock, $.01 par value per share
("Preferred Stock"). The aggregate par value of all authorized shares of
stock having par value is $1,300,000.
11
<PAGE>
Section 7.2 COMMON STOCK. Subject to the provisions of Article
VIII, each share of Common Stock shall have the following preferences,
rights, powers, restrictions, limitations and qualifications, and such others
as may be afforded by law:
(a) VOTING RIGHTS. Except as may otherwise be required by
law, and subject to action, if any, by the Board of Directors, pursuant to
Sections 7.3 and 7.4, granting to the holders of one or more classes of
Preferred Stock exclusive voting powers with respect to specified matters,
each holder of Common Stock shall have one vote in respect of each share of
Common Stock held of record on all matters to be voted upon by the
stockholders.
(b) DIVIDEND RIGHTS. After provision for preferential
dividends on any then outstanding classes of Preferred Stock, if any, fixed
by the Board of Directors pursuant to Sections 7.3 and 7.4 hereof, shall have
been satisfied, and after satisfaction of any other requirements, if any,
including with respect to redemption rights and preferences, in any such
classes of Preferred Stock, then and thereafter the holders of Common Stock
shall be entitled to receive, pro rata in relation to the number of shares of
Common Stock held by them, such dividends as may be authorized from time to
time by the Board of Directors out of funds legally available therefor.
(c) LIQUIDATION RIGHTS. In the event of the voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, after
distribution in full of the preferential amounts, if any, fixed pursuant to
Sections 7.3 and 7.4, to be distributed to the holders of any then
outstanding shares of Preferred Stock, and subject to the right, if any, of
the holders of any outstanding shares of Preferred Stock to participate
further in any liquidating distributions, all of the assets of the
Corporation, if any, remaining, of whatever kind available for distribution
to stockholders after the foregoing distributions have been made
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shall be distributed to the holders of the Common Stock, ratably in
proportion to the number of shares of Common Stock held by them.
(d) RECLASSIFICATION. The Board of Directors may reclassify
any unissued shares of Common Stock from time to time in one or more classes
or series of stock.
Section 7.3 PREFERRED STOCK. The Board of Directors may classify
any unissued shares of Preferred Stock and reclassify any previously
classified but unissued shares of Preferred Stock of any series from time to
time, in one or more series of stock.
Section 7.4 CLASSIFIED OR RECLASSIFIED SHARES. Prior to issuance
of classified or reclassified shares of any class or series, the Board of
Directors by resolution shall: (a) designate that class or series to
distinguish it from all other classes and series of stock of the Corporation;
(b) specify the number of shares to be included in the class or series; (c)
set or change, subject to the provisions of Article VIII and subject to the
express terms of any class or series of stock of the Corporation outstanding
at the time, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to transferability, limitations as to dividends
or other distributions, qualifications and terms and conditions of redemption
for each class or series; and (d) cause the Corporation to file articles
supplementary with the State Department of Assessments and Taxation of
Maryland ("SDAT"). Any of the terms of any class or series of stock set or
changed pursuant to clause (c) of this Section 7.4 may be made dependent upon
facts or events ascertainable outside the charter of the Corporation
(including determinations by the Board of Directors or other facts or events
within the control of the Corporation) and may vary among holders thereof,
provided that the manner in which such facts, events or variations shall
operate upon the terms of such class or series of stock is clearly and
expressly set forth in the articles supplementary filed with the SDAT.
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Section 7.5 CHARTER AND BYLAWS. All persons who shall acquire
stock in the Corporation shall acquire the same subject to the provisions of
the charter of the Corporation and the Bylaws.
ARTICLE VIII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 8.1 DEFINITIONS. For the purpose of this Article VIII,
the following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of shares of Common
Stock by a Person who is or would be treated as an owner of such shares of
Common Stock either actually or constructively through the application of
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code.
The terms "Beneficial Owner," "Beneficially Own," "Beneficially Owns" and
"Beneficially Owned" shall have the correlative meanings.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 8.3(f).
"Constructive Ownership" shall mean ownership of shares of Common
Stock by a Person who is or would be treated as an owner of such shares of
Common Stock either actually or constructively through the application of
Section 318 of the Code, as modified by Section 856(d)(5) of the Code. The
terms "Constructive Owner," "Constructively Own," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.
"Initial Date" means the date upon which the Articles of Amendment
containing this Article VIII are filed with the SDAT.
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"Initial Public Offering" shall mean the sale of shares of Common
Stock pursuant to the Corporation's first effective registration statement for
such shares of Common Stock filed under the Securities Act of 1933, as amended.
"IRS" means the United States Internal Revenue Service.
"Market Price" shall mean the last reported sales price reported on
the New York Stock Exchange of the shares of Common Stock on the trading day
immediately preceding the relevant date, or if the shares of Common Stock are
not then traded on the New York Stock Exchange ("NYSE"), the last reported sales
price of the shares of Common Stock on the trading day immediately preceding the
relevant date as reported on any exchange or quotation system over which the
shares of Common Stock may be traded, or if the shares of Common Stock are not
then traded over any exchange or quotation system, then the market price of the
shares of Common Stock on the relevant date as determined in good faith by the
Board of Directors of the Corporation.
"Ownership Limit" shall mean 6.25 percent (by value or by number of
shares, whichever is more restrictive) of the outstanding shares of Common Stock
of the Corporation.
"Person" shall mean an individual, corporation, partnership, limited
liability company, estate, trust (including a trust qualified under Section
401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section 642(c) of
the Code, association, private foundation within the meaning of Section 509(a)
of the Code, joint stock company or other entity; but does not include an
underwriter acting in a capacity as such in a public offering of the shares of
Common Stock (or securities convertible into or exchangeable for shares of
Common Stock); provided that the ownership of shares of Common Stock by such
underwriter would not result in the
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Corporation being "closely held" within the meaning of Section 856(h) of the
Code or otherwise result in the Corporation failing to qualify as a REIT.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which results in a transfer to a Trust, as provided in
Section 8.2(b), the Purported Record Transferee, unless the Purported Record
Transferee would have acquired or owned shares of Common Stock for another
Person who is the beneficial transferee or owner of such Shares, in which case
the Purported Beneficial Transferee shall be such Person.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in a transfer to a Trust, as provided in
Section 8.2(b), the record holder of the shares of Common Stock if such Transfer
had been valid under Section 8.2(a).
"Restriction Termination Date" shall mean the first day after the
Initial Date on which the Board of Directors of the Corporation determines that
it is no longer in the best interests of the Corporation to attempt to, or
continue to, qualify as a REIT, and such determination is approved by the
affirmative vote of the holders of not less than two-thirds of all votes
entitled to be cast on the matter.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of shares of Common Stock, or any other event that results in
a change in Beneficial Ownership or Constructive Ownership of shares of Common
Stock including (i) the granting of any option or entering into any agreement
for the sale, transfer or other disposition of shares of Common Stock or
(ii) the sale, transfer, assignment or other disposition of any securities (or
rights convertible into or exchangeable for shares of Common Stock), whether
voluntary or involuntary, whether of record or beneficially or Beneficially or
Constructively (including but not limited to transfers of interests in other
entities which result in changes in
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Beneficial or Constructive Ownership of shares of Common Stock), and whether
by operation of law or otherwise.
"Trust" shall mean each of the trusts provided for in Section 8.2.
"Trustee" shall mean the Person unaffiliated with the Corporation, the
Purported Beneficial Transferee, and the Purported Record Transferee, that is
appointed by the Corporation to serve as trustee of the Trust.
Section 8.2 RESTRICTION ON OWNERSHIP AND TRANSFERS.
(a) BASIC RESTRICTIONS. During the period commencing on
the date of the Initial Public Offering and prior to the Restriction Termination
Date:
(i) except as provided in Section 8.9, no Person shall
Beneficially Own shares of Common Stock in excess of the Ownership Limit;
(ii) except as provided in Section 8.9, no Person shall
Constructively Own in excess of 9.8% (by value or by number of shares, whichever
is more restrictive) of the outstanding shares of Common Stock of the
Corporation; and
(iii) no Person shall Beneficially or
Constructively Own shares of Common Stock to the extent that such Beneficial or
Constructive Ownership of Common Stock would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code (without regard
to whether the ownership interest is held during the last half of a taxable
year), or otherwise failing to qualify as a REIT (including, but not limited to
ownership that would result in the Corporation actually or Constructively Owning
an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if
the income derived by the Corporation (either directly or indirectly through one
or more partnerships, limited liability companies, qualified REIT subsidiaries
as described in Section 856(i)(2) of the Code,
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or other entities) from such tenant would cause the Corporation to fail to
satisfy any of the gross income requirements of Section 856(c) of the Code).
(b) TRANSFER IN TRUST. If, during the period commencing on
the date of the Initial Public Offering and prior to the Restriction Termination
Date, any Transfer (whether or not such Transfer is the result of a transaction
entered into through the facilities of the NYSE or any other foreign or domestic
exchange or quotation system) or any other event occurs which, if effective,
would result in any Person Beneficially Owning or Constructively Owning shares
of Common Stock in violation of Section 8.2(a):
(i) then that number of shares of Common Stock the
Beneficial or Constructive Ownership of which otherwise would cause such Person
to violate Section 8.2(a) (rounded up to the nearest whole share) (whether or
not such shares are owned by such Person or any other Person) shall be
automatically transferred to a Trust for the benefit of a Charitable
Beneficiary, as described in Section 8.3, effective as of the close of business
on the business day prior to the date of such Transfer or other event, and such
Purported Beneficial Transferee shall thereafter have no rights in such shares
of Common Stock; or
(ii) if, for any reason, the transfer to the Trust
described in clause (i) of this sentence is not automatically effective as
provided therein to prevent any Person from Beneficially or Constructively
Owning shares of Common Stock in violation of Section 8.2(a), then the Transfer
of that number of shares of Common Stock that otherwise would cause any Person
to violate Section 8.2(a) shall be void AB INITIO, and the Purported Beneficial
Transferee shall have no rights in such shares of Common Stock, or, in the case
of a transfer of interests in other entities which results in changes in
Beneficial or
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Constructive Ownership of shares of Common Stock, the number of shares of
Common Stock owned by such Person or any other Person which would cause any
Person to violate Section 8.2(a) above shall be redeemable by the Corporation
at its sole option at a price equal to the fair market value of such shares
at the time of such transfer.
(c) Subject to Section 8.12, notwithstanding any other
provisions contained herein, during the period commencing on the Initial Date
and prior to the Restriction Termination Date, any Transfer of shares of Common
Stock (whether or not such Transfer is the result of a transaction entered into
through the facilities of the NYSE or any other foreign or domestic exchange or
quotation system) that, if effective, would result in the capital stock of the
Corporation being beneficially owned by less than 100 Persons (determined
without reference to any rules of attribution) shall be void AB INITIO, and the
intended transferee shall acquire no rights in such shares of Common Stock.
Section 8.3 TRANSFER OF SHARES OF COMMON STOCK IN TRUST.
(a) OWNERSHIP IN TRUST. Upon any purported Transfer or other
event described in Section 8.2(b) that would result in a transfer of shares of
Common Stock to a Trust, such shares of Common Stock shall be deemed to have
been transferred to the Trustee in his capacity as trustee of a Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the purported Transfer or other event that results in a
transfer to the Trust pursuant to Section 8.2(b). The Trustee shall be
appointed by the Corporation and shall be a Person unaffiliated with the
Corporation, any Purported Beneficial Transferee or Purported Record Transferee.
Each Charitable Beneficiary shall be designated by the Corporation as provided
in Section 8.3(f).
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(b) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Common
Stock held by the Trustee shall be issued and outstanding shares of Common Stock
of the Corporation. The Purported Beneficial Transferee or Purported Record
Transferee shall not benefit economically from ownership of any shares of Common
Stock held in trust by the Trustee, shall have no rights to dividends or other
distributions and shall not possess any rights to vote or other rights
attributable to the shares of Common Stock held in the Trust.
(c) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends or other distributions with respect to
shares of Common Stock held in the Trust, which rights shall be exercised for
the exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Corporation that the shares of
Common Stock have been transferred to the Trustee shall be paid by the recipient
of such dividend or distribution to the Trustee upon demand, and any dividend or
other distribution authorized or declared but unpaid shall be paid when due to
the Trustee with respect to such shares of Common Stock. Any dividends or
distributions so paid to the Trustee shall be held in trust for the Charitable
Beneficiary. The Purported Record Transferee and Purported Beneficial
Transferee shall have no voting rights with respect to shares of Common Stock
held in the Trust and, subject to Maryland law, effective as of the date that
the shares of Common Stock have been transferred to the Trustee, the Trustee
shall have the authority (at the Trustee's sole discretion) (i) to rescind as
void any vote cast by a Purported Record Transferee prior to the discovery by
the Corporation that the shares of Common Stock have been transferred to the
Trustee and (ii) to recast such vote in accordance with the desires of the
Trustee acting for the benefit of the Charitable Beneficiary; provided, however,
that if the Corporation has already taken irreversible corporate action, then
the Trustee shall not have
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the authority to rescind and recast such vote. Notwithstanding the provisions
of this Article VIII, until the Corporation has received notification that
shares of Common Stock have been transferred into a Trust, the Corporation
shall be entitled to rely on its share transfer and other stockholder records
for purposes of preparing lists of stockholders entitled to vote at meetings,
determining the validity and authority of proxies and otherwise conducting
votes of stockholders.
(d) SALE OF SHARES BY TRUSTEE. Within 20 days of receiving
notice from the Corporation that shares of Common Stock have been transferred to
the Trust, the Trustee of the Trust shall sell the shares of Common Stock held
in the Trust to a person, designated by the Trustee, whose ownership of the
shares of Common Stock will not violate the ownership limitations set forth in
Section 8.2(a). Upon such sale, the interest of the Charitable Beneficiary in
the shares of Common Stock sold shall terminate and the Trustee shall distribute
the net proceeds of the sale to the Purported Record Transferee and to the
Charitable Beneficiary as provided in this Section 8.3(d). The Purported Record
Transferee shall receive the lesser of (1) the price paid by the Purported
Record Transferee for the shares of Common Stock in the transaction that
resulted in such transfer to the Trust (or, if the event which resulted in the
transfer to the Trust did not involve a purchase of such shares of Common Stock
at Market Price, the Market Price of the shares of Common Stock on the day of
the event which resulted in the transfer of the shares of Common Stock to the
Trust) and (2) the price per share received by the Trustee (net of any
commissions and other expenses of sale) from the sale or other disposition of
the shares of Common Stock held in the Trust. Any net sales proceeds in excess
of the amount payable to the Purported Record Transferee shall be immediately
paid to the Charitable Beneficiary, together with any dividends or other
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distributions thereon. If, prior to the discovery by the Corporation that
such shares of Common Stock have been transferred to the Trustee, such shares
of Common Stock are sold by a Purported Record Transferee, then (i) such
shares of Common Stock shall be deemed to have been sold on behalf of the
Trust and (ii) to the extent that the Purported Record Transferee received an
amount for such shares of Common Stock that exceeds the amount that such
Purported Record Transferee was entitled to receive pursuant to this Section
8.3(d), such excess shall be paid to the Trustee upon demand.
(e) PURCHASE RIGHT IN COMMON STOCK TRANSFERRED TO THE TRUSTEE.
Shares of Common Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price paid by the Purported Record Transferee for the
shares of Common Stock in the transaction that resulted in such transfer to the
Trust (or, if the event which resulted in the transfer to the Trust did not
involve a purchase of such shares of Common Stock at Market Price, the Market
Price of such shares of Common Stock on the day of the event which resulted in
the transfer of the shares of Common Stock to the Trust) and (ii) the Market
Price on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer until the Trustee has sold
the shares of Common Stock held in the Trust pursuant to Section 8.3(d). Upon
such a sale to the Corporation, the interest of the Charitable Beneficiary in
the shares of Common Stock sold shall terminate and the Trustee shall distribute
the net proceeds of the sale to the Purported Record Transferee and any
dividends or other distributions held by the Trustee with respect to such shares
of Common Stock shall thereupon be paid to the Charitable Beneficiary.
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(f) DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
such that (i) the shares of Common Stock held in the Trust would not violate
the restrictions set forth in Section 8.2(a) in the hands of such Charitable
Beneficiary and (ii) each such Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
Section 8.4 REMEDIES FOR BREACH. If the Board of Directors of
the Corporation or any duly authorized committee thereof (or other designees
if permitted by Maryland law) shall at any time determine in good faith that
a Transfer or other event has taken place that results in a violation of
Section 8.2 or that a Person intends to acquire, has attempted to acquire or
may acquire beneficial ownership (determined without reference to any rules
of attribution), Beneficial Ownership or Constructive Ownership of any shares
of Common Stock in violation of Section 8.2 (whether or not such violation is
intended), the Board of Directors or a committee thereof (or other designees
if permitted by Maryland law) shall take such action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, without limitation, causing the Corporation to redeem shares of
Common Stock, refusing to give effect to such Transfer on the books of the
Corporation or instituting proceedings to enjoin such Transfer or other
event; PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or, in
the case of events other than a Transfer, ownership or Constructive Ownership
or Beneficial Ownership) in violation of Section 8.2(a) shall automatically
result in the transfer to the Trust described in Section 8.2(b) above, and,
where applicable, such Transfer (or other event) shall be void AB INITIO as
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provided above irrespective of any action (or non-action) by the Board of
Directors or a committee thereof (or other designees if permitted by Maryland
law).
Section 8.5 NOTICE OF RESTRICTED TRANSFER. Any Person who
acquires or attempts or intends to acquire shares of Common Stock in
violation of Section 8.2(a), or any Person who is a Purported Transferee such
that an automatic transfer to a Trust results under Section 8.2(b), shall
immediately give written notice to the Corporation of such event, or in the
case of such a proposed or attempted transaction, give at least 15 days prior
written notice, and shall provide to the Corporation such other information
as the Corporation may request in order to determine the effect, if any, of
such Transfer on the Corporation's status as a REIT.
Section 8.6 OWNERS REQUIRED TO PROVIDE INFORMATION. From the
date of the Initial Public Offering and prior to the Restriction Termination
Date each Person who is a beneficial owner or Beneficial Owner or
Constructive Owner of shares of Common Stock and each Person (including the
stockholder of record) who is holding shares of Common Stock for a Beneficial
Owner or Constructive Owner shall provide to the Corporation such information
as the Corporation may request, in good faith, in order to determine the
Corporation's status as a REIT and to comply with requirements of any taxing
authority or governmental authority or to determine such compliance.
Section 8.7 REMEDIES NOT LIMITED. Nothing contained in this
Article VIII (but subject to Section 6.6 and Section 8.12) shall limit the
authority of the Board of Directors of the Corporation to take such other
action as it deems necessary or advisable to protect the Corporation and the
interests of its stockholders in preserving the Corporation's status as a
REIT.
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Section 8.8 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of Sections 8.2 through 8.10, or any
definition contained in Section 8.1, the Board of Directors of the
Corporation shall have the power to determine the application of the
provisions of Sections 8.2 through 8.10 with respect to any situation based
on the facts known to it (subject, however, to the provisions of Section
8.12). In the event any of Sections 8.2 through 8.10 requires an action by
the Board of Directors and the charter of the Corporation fails to provide
specific guidance with respect to such action, the Board of Directors shall
have the power to determine the action to be taken so long as such action is
not contrary to the provisions of Sections 8.2 through 8.10. Absent a
decision to the contrary by the Board of Directors (which the Board may make
in its sole and absolute discretion), if a Person would have (but for the
remedies set forth in Section 8.2(b)) acquired Beneficial Ownership or
Constructive Ownership of shares of Common Stock in violation of Section
8.2(a) such remedies (as applicable) shall apply first to the shares of
Common Stock which, but for such remedies, would have been actually owned by
such Person, and second to shares of Common Stock which, but for such
remedies, would have been Beneficially Owned or Constructively Owned (but not
actually owned) by such Person, pro rata among the Persons who actually own
such shares of Common Stock based upon the relative number of the shares of
Common Stock held by each such Person.
Section 8.9 EXCEPTIONS AND ADJUSTMENTS.
(a) Subject to Section 8.2(a)(iii), the Board of
Directors of the Corporation, in its sole discretion, may exempt a Person
from the limitation on a Person Beneficially Owning shares of Common Stock in
excess of the Ownership Limit if the Board of Directors obtains such
representations and undertakings from such Person as are reasonably
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necessary to ascertain that no individual's Beneficial Ownership of such
shares of Common Stock will violate the Ownership Limit or that any such
violation will not cause the Corporation to fail to qualify as a REIT under
the Code and such Person agrees that any violation or attempted violation of
such representations or undertakings (or other action which is contrary to
the restrictions contained in Section 8.2) or attempted violation will result
in such shares of Common Stock being transferred to a Trust in accordance
with Section 8.2(b). The Board of Directors may, but is not required to make
the exemption described in this Section 8.9(a) irrevocable.
(b) Subject to Section 8.2(a)(iii), the Board of
Directors, in its sole discretion, may exempt a Person from the limitation on
a Person Constructively Owning shares of Common Stock in excess of 9.8% (by
value or by number of shares of Common Stock, whichever is more restrictive)
of the outstanding shares of Common Stock of the Corporation, if such Person
does not and represents that it will not own, actually or Constructively, an
interest in a tenant of the Corporation (or a tenant of any entity owned in
whole or in part by the Corporation) that would cause the Corporation to own,
actually or Constructively, more than a 9.8% interest (as set forth in
Section 856(d)(2)(B) of the Code) in such tenant and the Board of Directors
obtains such representations and undertakings from such Person as are
reasonably necessary to ascertain this fact and such Person agrees that any
violation or attempted violation of such representations or undertakings (or
other action which is contrary to the restrictions contained in Section 8.2)
will result in such shares of Common Stock being automatically transferred to
a Trust in accordance with Section 8.2(b). Notwithstanding the foregoing, the
inability of a Person to make the certification described in this Section
8.9(b) shall not prevent the Board of Directors, in its sole discretion, from
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exempting such Person from the limitation on a Person Constructively Owning
shares of Common Stock in excess of 9.8% of the outstanding shares of Common
Stock if the Board of Directors determines that the resulting application of
Section 856(d)(2)(B) of the Code would affect the characterization of less
than 0.5% of the gross income (as such term is used in Section 856(c)(2) of
the Code) of the Corporation in any taxable year after taking into account
the effect of this sentence with respect to all other shares of Common Stock
to which this sentence applies. The Board of Directors may, but is not
required to, make the exemption described in this Section 8.9(b) irrevocable.
(c) Prior to granting any exception pursuant to Section
8.9(a) or 8.9(b), the Board of Directors may require a ruling from the IRS,
or an opinion of counsel, in either case in form and substance satisfactory
to the Board of Directors in its sole discretion, as it may deem necessary or
advisable in order to determine or ensure the Corporation's status as a REIT.
(d) During the period commencing on the date of the
Initial Public Offering and prior to the Restriction Termination Date, the
Board of Directors may from time to time increase or decrease the Ownership
Limit provided:
(i) After giving effect to any such increase, five
Beneficial Owners of shares of Common Stock could not (taking into account
the Ownership Limit and any exceptions granted to such limit pursuant to this
Section 8.9) Beneficially Own, in the aggregate, more than 49% of the
outstanding shares of Common Stock;
(ii) The Ownership Limit may not be increased to a
percentage which is greater than 9.8%; and
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(iii) Any such increase or decrease will not
adversely affect the Corporation's ability to qualify as a REIT.
Section 8.10 LEGEND. Each certificate for shares of Common
Stock shall bear substantially the following legend:
The Corporation is authorized to issue stock of more than one
class, consisting of shares of Common Stock and one or more
classes of shares of Preferred Stock or any class or series
of stock other than Common Stock. The Board of Directors is
authorized to determine the preferences, limitations and
relative rights of shares of Preferred Stock before the
issuance of any shares of Preferred Stock. The Corporation
will furnish, without charge, to any stockholder making a
written request therefor, a copy of the charter of the
Corporation and a written statement of the designations,
relative rights, preferences and limitations applicable to
each such class of stock. Requests for such written
statement may be directed to the Corporate Secretary at the
Corporation's principal office.
The shares represented by this certificate are subject to
restrictions on Beneficial and Constructive Ownership and
Transfer for the purpose of the Corporation's maintenance of
its status as a Real Estate Investment Trust under the
Internal Revenue Code of 1986, as amended (the "Code").
Subject to certain further restrictions and except as
expressly provided in the Corporation's Charter, (i) no
Person may Beneficially Own shares of the Corporation's
Common Stock in excess of 6.25 percent (by value or number
of shares, whichever is more restrictive) of the outstanding
shares of Common Stock of the Corporation; (ii) no Person
may Constructively Own in excess of 9.8 percent of the
outstanding shares of Common Stock of the Corporation (by
value or number of shares, whichever is more restrictive);
(iii) no Person may Beneficially or Constructively Own
shares of Common Stock that would result in the Corporation
being "closely held" under Section 856(h) of the Code or
otherwise cause the Corporation to fail to qualify as a
REIT; and (iv) no Person may Transfer shares of Common Stock
if such Transfer would result in the Common Stock of the
Corporation being owned by fewer than 100 Persons or
otherwise cause the Corporation to fail to qualify as a
REIT. Any Person who Beneficially or Constructively Owns or
attempts to Beneficially or Constructively Own shares of
Common Stock which causes or will cause a Person to
Beneficially or Constructively Own shares of Common Stock in
excess or in violation of the above limitations must
immediately notify the Corporation. If any of the
restrictions on transfer or ownership are violated, the
shares of Common Stock represented hereby will be
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automatically transferred to a Trustee of a Trust for the
benefit of one or more Charitable Beneficiaries. In
addition, the Corporation may redeem shares upon the terms
and conditions specified by the Board of Directors in its
sole discretion if the Board of Directors determines that
ownership or a Transfer or other event may violate the
restrictions described above. Furthermore, upon the
occurrence of certain events, attempted Transfers in
violation of the restrictions described above may be void AB
INITIO. All capitalized terms in this legend have the
meanings defined in the charter of the Corporation, as the
same may be amended from time to time, a copy of which,
including the restrictions on transfer and ownership, will
be furnished to each holder of shares of Common Stock of the
Corporation on request and without charge. Requests for
such a copy may be directed to the Corporate Secretary, at
the Corporation's principal office.
Instead of the foregoing legend, the certificate may state that the
Corporation will furnish a full statement about certain restrictions on
transferability to a Stockholder on request and without charge.
Section 8.11 SEVERABILITY. If any provision of this Article VIII
or any application of any such provision is determined to be invalid by any
Federal or state court having jurisdiction over the issues, the validity of
the remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
Section 8.12 NYSE TRANSACTIONS. Nothing in this Article VIII
shall preclude the settlement of any transaction entered into through the
facilities of the NYSE. The fact that the settlement of any transaction is
occurring shall not negate the effect of any other provision of this Article
VIII and any transferee in such a transaction shall be subject to all of the
provisions and limitations set forth in this Article VIII.
ARTICLE IX
AMENDMENTS
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The Corporation reserves the right from time to time to make any
amendment to its charter, now or hereafter authorized by law, including any
amendment altering the terms or contract rights, as expressly set forth in
this charter, of any shares of outstanding stock. All rights and powers
conferred by the charter of the Corporation on stockholders, directors and
officers are granted subject to this reservation. No provision of the charter
of the Corporation shall be added, amended or repealed unless, in addition to
any vote of the holders of Preferred Stock or of any class or series of stock
other than Common Stock required by the terms of then outstanding shares of
such stock, such action is approved by the affirmative vote of a majority of
all votes entitled to be cast on the matter. In addition, the Corporation
shall not dissolve, merge, sell all or substantially all of its assets,
engage in a share exchange or engage in similar transactions outside the
ordinary course of business unless approved by the affirmative vote of a
majority of all votes entitled to be cast on the matter.
ARTICLE X
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time to
time permits limitation of the liability of directors and officers of a
corporation, no director or officer of the Corporation shall be liable to the
Corporation or its stockholders for money damages. Neither the amendment nor
repeal of this Article X, nor the adoption or amendment of any other
provision of the charter of the Corporation or the Bylaws inconsistent with
this Article X, shall apply to or affect in any respect the applicability of
the preceding sentence with respect to any act or failure to act which
occurred prior to such amendment, repeal or adoption.
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THIRD: The amendment to and restatement of the charter of the
Corporation as hereinabove set forth have been duly advised by the Board of
Directors and approved by the stockholders of the Corporation as required by
law.
FOURTH: The current address of the principal office of the
Corporation is as set forth in Article IV of the foregoing amendment and
restatement of the charter.
FIFTH: The name and address of the Corporation's current resident
agent is as set forth in Article IV of the foregoing amendment and
restatement of the charter.
SIXTH: The number of directors of the Corporation and the names
of those currently in office are as set forth in Article V of the foregoing
amendment and restatement of the charter.
SEVENTH: The total number of shares of stock which the Corporation
had authority to issue immediately prior to this amendment and restatement
was 20,000,000, consisting of 20,000,000 shares of Common Stock, $.01 par
value per share and no shares of Preferred Stock, $.01 par value per share.
The aggregate par value of all shares of stock having par value was
$200,000.00.
EIGHTH: The total number of shares of stock which the Corporation
has authority to issue pursuant to the foregoing amendment and restatement of
the charter is 130,000,000, consisting of 100,000,000 shares of Common Stock,
$.01 par value per share, and 30,000,000 shares of Preferred Stock, $.01 par
value per share. The aggregate par value of all authorized shares of stock
having par value is $1,300,000.
NINTH: The undersigned Chief Executive Officer acknowledges these
Articles of Amendment and Restatement to be the corporate act of the
Corporation and as to all matters or facts required to be verified under
oath, the undersigned President acknowledges
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that to the best of his knowledge, information and belief, these matters and
facts are true in all material respects and that this statement is made under
the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment and Restatement to be signed in its name and on its behalf by its
Chief Executive Officer and attested to by its Secretary on this _____ day of
August, 1997.
ATTEST: PAN PACIFIC RETAIL PROPERTIES, INC.
By:
- -------------------------------- ---------------------------- (SEAL)
David L. Adlard Stuart A. Tanz
Secretary Chief Executive Officer
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PAN PACIFIC RETAIL PROPERTIES, INC.
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation
shall be located at such place or places as the Board of Directors may
designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional
offices at such places as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the
principal office of the Corporation or at such other place within the United
States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the stockholders for
the election of directors and the transaction of any business within the
powers of the Corporation shall be held on a date and at the time set by the
Board of Directors during the month of May in each year, unless the Board of
Directors elects to hold the meeting in any other month.
Section 3. SPECIAL MEETINGS. The president, chief executive officer
or Board of Directors may call special meetings of the stockholders. Special
meetings of stockholders shall also be called by the secretary of the
Corporation upon the written request of the holders of shares entitled to
cast not less than a majority of all the votes entitled to be cast at such
meeting. Any request to call a special meeting shall state the purpose of
such meeting and the matters proposed to be acted on at such meeting. The
secretary shall inform such stockholders of the reasonably estimated cost of
preparing and mailing notice of the meeting and, upon payment to the
Corporation by such stockholders of such costs, the secretary shall give
notice to each stockholder entitled to notice of the meeting.
Section 4. NOTICE. Not less than ten nor more than 90 days before
each meeting of stockholders, the secretary shall give to each stockholder
entitled to vote at such meeting and to each stockholder not entitled to vote
who is entitled to notice of the meeting written or printed notice stating
the time and place of the meeting and, in the case of a special meeting or as
otherwise may be required by any statute, the purpose for which the meeting
is called, either by mail or by presenting it to such stockholder personally
or by leaving it at his residence or usual place of business. If mailed,
such notice shall be deemed to be given when deposited in the
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United States mail addressed to the stockholder at his post office address as
it appears on the records of the Corporation, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may be
transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by any statute
to be stated in such notice. No business shall be transacted at a special
meeting of stockholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of stockholders, the
chairman of the board, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the chairman of the board, one of the
following officers present shall conduct the meeting in the order stated:
the vice chairman of the board, if there be one, the president, the vice
presidents in their order of rank and seniority, or a chairman chosen by the
stockholders entitled to cast a majority of the votes which all stockholders
present in person or by proxy are entitled to cast, shall act as chairman,
and the secretary, or, in his absence, an assistant secretary, or in the
absence of both the secretary and assistant secretaries, a person appointed
by the chairman shall act as secretary.
Section 7. QUORUM. At any meeting of stockholders, the presence in
person or by proxy of stockholders entitled to cast a majority of all the
votes entitled to be cast at such meeting shall constitute a quorum; but this
section shall not affect any requirement under any statute or the charter of
the Corporation for the vote necessary for the adoption of any measure. If,
however, such quorum shall not be present at any meeting of the stockholders,
the stockholders entitled to vote at such meeting, present in person or by
proxy, shall have the power to adjourn the meeting from time to time to a
date not more than 120 days after the original record date without notice
other than announcement at the meeting. At such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient
to elect a director. Each share may be voted for as many individuals as
there are directors to be elected and for whose election the share is
entitled to be voted. A majority of the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient
to approve any other matter which may properly come before the meeting,
unless more than a majority of the votes cast is required by statute or by
the charter of the Corporation. Unless otherwise provided in the charter,
each outstanding share, regardless of class, shall be entitled to one vote on
each matter submitted to a vote at a meeting of stockholders.
Section 9. PROXIES. A stockholder may vote the stock owned of
record by him, either in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney in fact. Such proxy shall be
filed with the secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
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Section 10. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the
Corporation registered in the name of a corporation, partnership, trust or
other entity, if entitled to be voted, may be voted by the president or a
vice president, a general partner or trustee thereof, as the case may be, or
a proxy appointed by any of the foregoing individuals, unless some other
person who has been appointed to vote such stock pursuant to a bylaw or a
resolution of the governing body of such corporation or other entity or
agreement of the partners of a partnership presents a certified copy of such
bylaw, resolution or agreement, in which case such person may vote such
stock. Any director or other fiduciary may vote stock registered in his name
as such fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by
it shall not be voted at any meeting and shall not be counted in determining
the total number of outstanding shares entitled to be voted at any given
time, unless they are held by it in a fiduciary capacity, in which case they
may be voted and shall be counted in determining the total number of
outstanding shares at any given time.
The Board of Directors may adopt by resolution a procedure by which
a stockholder may certify in writing to the Corporation that any shares of
stock registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth
the class of stockholders who may make the certification, the purpose for
which the certification may be made, the form of certification and the
information to be contained in it; if the certification is with respect to a
record date or closing of the stock transfer books, the time after the record
date or closing of the stock transfer books within which the certification
must be received by the Corporation; and any other provisions with respect to
the procedure which the Board of Directors considers necessary or desirable.
On receipt of such certification, the person specified in the certification
shall be regarded as, for the purposes set forth in the certification, the
stockholder of record of the specified stock in place of the stockholder who
makes the certification.
Notwithstanding any other provision of the charter of the
Corporation or these Bylaws, Title 3, Subtitle 7 of the Corporations and
Associations Article of the Annotated Code of Maryland (or any successor
statute) shall not apply to any acquisition by any person of shares of stock
of the Corporation. This section may be repealed, in whole or in part, at any
time, whether before or after an acquisition of control shares by affirmative
vote of holders of not less than a majority of the shares of stock entitled
to vote and, upon such repeal, may, to the extent provided by any successor
bylaw, apply to any prior or subsequent control share acquisition.
Section 11. INSPECTORS. At any meeting of stockholders, the chairman
of the meeting may appoint one or more persons as inspectors for such
meeting. Such inspectors shall ascertain and report the number of shares
represented at the meeting based upon their determination of the validity and
effect of proxies, count all votes, report the results and perform such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the stockholders.
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Each report of an inspector shall be in writing and signed by him or by a
majority of them if there is more than one inspector acting at such meeting.
If there is more than one inspector, the report of a majority shall be the
report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting
shall be PRIMA FACIE evidence thereof.
Section 12. NOMINATIONS AND PROPOSALS BY STOCKHOLDERS
(a) ANNUAL MEETINGS OF STOCKHOLDERS.
(1) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the Corporation who was a
stockholder of record both at the time of giving of notice provided for in
this Section 12(a) and at the time of the annual meeting, who is entitled to
vote at the meeting and who complied with the notice procedures set forth in
this Section 12(a).
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) of
paragraph (a)(1) of this Section 12, the stockholder must have given timely
notice thereof in writing to the secretary of the Corporation and such other
business must otherwise be a proper matter for action by stockholders. To be
timely, a stockholder's notice shall be delivered to the secretary at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such stockholder's
notice shall set forth (i) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected);
(ii) as to any other business that the stockholder proposes to bring before
the meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and of the beneficial
owner, if any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (x) the name and address of such
stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (y) the number of shares of each class of stock of the
Corporation which are owned beneficially and of record by such stockholder
and such beneficial owner.
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(3) Notwithstanding anything in the second sentence of
paragraph (a)(2) of this Section 12 to the contrary, in the event that the
number of directors to be elected to the Board of Directors is increased and
there is no public announcement by the Corporation naming all of the nominees
for director or specifying the size of the increased Board of Directors at
least 70 days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 12(a) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement
is first made by the Corporation.
(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made at
a special meeting of stockholders at which directors are to be elected (i)
pursuant to the Corporation's notice of meeting, (ii) by or at the direction
of the Board of Directors or (iii) provided that the Board of Directors has
determined that directors shall be elected at such special meeting, by any
stockholder of the Corporation who is a stockholder of record both at the
time of giving of notice provided for in this Section 12(b) and at the time
of the special meeting, who is entitled to vote at the meeting and who
complied with the notice procedures set forth in this Section 12(b). In the
event the Corporation calls a special meeting of stockholders for the purpose
of electing one or more directors to the Board of Directors, any such
stockholder may nominate a person or persons (as the case may be) for
election to such position as specified in the Corporation's notice of
meeting, if the stockholder's notice containing the information required by
paragraph (a)(2) of this Section 12 shall be delivered to the secretary at
the principal executive offices of the Corporation not earlier than the close
of business on the 90th day prior to such special meeting and not later than
the close of business on the later of the 60th day prior to such special
meeting or the tenth day following the day on which public announcement is
first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting. In no event shall the
public announcement of a postponement or adjournment of a special meeting to
a later date or time commence a new time period for the giving of a
stockholder's notice as described above.
(c) GENERAL.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 12 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 12. The chairman of the meeting
shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made or proposed, as
the case may be, in accordance with the procedures set forth in this Section
12 and, if any proposed nomination or business is not in compliance with this
Section 12, to declare that such defective nomination or proposal shall be
disregarded.
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(2) For purposes of this Section 12, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section
12, a stockholder shall also comply with all applicable requirements of state
law and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 12. Nothing in this Section
12 shall be deemed to affect any rights of stockholders to request inclusion
of proposals in the Corporation's proxy statement pursuant to Rule 14a-8
under the Exchange Act.
Section 13. INFORMAL ACTION BY STOCKHOLDERS. Any action required or
permitted to be taken at a meeting of stockholders may be taken without a
meeting provided that a consent in writing, setting forth such action, is
signed by each stockholder entitled to vote on the matter and each
stockholder entitled to notice of a meeting of stockholders (but not to vote
thereat) has waived in writing any right to dissent from such action, and
such consent and waiver are filed with the minutes of proceedings of the
stockholders.
Section 14. VOTING BY BALLOT. Voting on any question or in any
election may be VIVA VOCE unless the chairman of the meeting shall order or
any stockholder shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting
or at any special meeting called for that purpose, a majority of the entire
Board of Directors may establish, increase or decrease the number of
directors, provided that the number thereof shall never be less than the
minimum number required by the Maryland General Corporation Law ("MGCL"), nor
more than 15, and further provided that the tenure of office of a director
shall not be affected by any decrease in the number of directors. Pursuant
to the charter of the Corporation, the directors have been divided into
classes with terms of three years, with the term of office of one class
expiring at the annual meeting of stockholders in each year. Each director
shall hold office for the term for which he is elected and until his
successor is elected and qualified, or until his resignation, removal (in
accordance with the charter of the Corporation and these Bylaws) or death.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the
Board of Directors shall be held immediately after and at the same place as
the annual meeting
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of stockholders, no notice other than this Bylaw being necessary. The Board
of Directors may provide, by resolution, the time and place, either within or
without the State of Maryland, for the holding of regular meetings of the
Board of Directors without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the chairman of the board,
president or by a majority of the directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Board of Directors called by them.
Section 5. NOTICE. Notice of any special meeting of the Board of
Directors shall be delivered personally or by telephone, facsimile
transmission, United States mail or courier to each director at his business
or residence address. Notice by personal delivery, by telephone or a
facsimile transmission shall be given at least two days prior to the meeting.
Notice by mail shall be given at least five days prior to the meeting and
shall be deemed to be given when deposited in the United States mail properly
addressed, with postage thereon prepaid. Telephone notice shall be deemed to
be given when the director is personally given such notice in a telephone
call to which he is a party. Facsimile transmission notice shall be deemed to
be given upon completion of the transmission of the message to the number
given to the Corporation by the director and receipt of a completed
answer-back indicating receipt. Neither the business to be transacted at, nor
the purpose of, any annual, regular or special meeting of the Board of
Directors need be stated in the notice, unless specifically required by
statute or these Bylaws.
Section 6. QUORUM. A majority of the directors shall constitute a
quorum for transaction of business at any meeting of the Board of Directors,
provided that, if less than a majority of such directors are present at said
meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice, and provided further that if, pursuant
to the charter of the Corporation or these Bylaws, the vote of a majority of
a particular group of directors is required for action, a quorum must also
include a majority of such group.
The directors present at a meeting which has been duly called and
convened may continue to transact business until adjournment, notwithstanding
the withdrawal of enough directors to leave less than a quorum.
Section 7. VOTING. The action of the majority of the directors
present at a meeting at which a quorum is present shall be the action of the
Board of Directors, unless the concurrence of a greater proportion is
required for such action by the charter of the Corporation, these Bylaws or
applicable statute.
Section 8. TELEPHONE MEETINGS. Directors may participate in a
meeting by means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear each other at
the same time. Participation in a meeting by these means shall constitute
presence in person at the meeting.
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Section 9. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a consent in writing to such action is signed by each
director and such written consent is filed with the minutes of proceedings of
the Board of Directors.
Section 10. VACANCIES. If for any reason any or all the directors
cease to be directors, such event shall not terminate the Corporation or
affect these Bylaws or the powers of the remaining directors hereunder (even
if fewer than three directors remain). Any vacancy on the Board of Directors
for any cause other than an increase in the number of directors shall be
filled at any regular meeting or at any special meeting called for that
purpose by a majority vote of the remaining directors, even if such majority
is less than a quorum. Any vacancy in the number of directors created by an
increase in the number of directors shall be filled by a majority vote of the
entire Board of Directors. In addition, by the vote required to elect a
director, the stockholders may fill any vacancy on the Board of Directors
resulting from the removal of a director. Any individual so elected as
director shall serve for the remainder of the term of the class to which such
director was elected.
Section 11. COMPENSATION. Directors shall not receive any stated
salary for their services as directors but, by resolution of the Board of
Directors, may receive compensation per year and/or per meeting and/or per
visit to real property or other facilities owned or leased by the Corporation
and for any service or activity they performed or engaged in as directors.
Directors may be reimbursed for expenses of attendance, if any, at each
annual, regular or special meeting of the Board of Directors or of any
committee thereof and for their expenses, if any, in connection with each
property visit and any other service or activity they performed or engaged in
as directors; but nothing herein contained shall be construed to preclude any
directors from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 12. REMOVAL OF DIRECTORS. The stockholders may remove any
director only in the manner provided in the charter of the Corporation.
Section 13. LOSS OF DEPOSITS. No director shall be liable for any
loss which may occur by reason of the failure of the bank, trust company,
savings and loan association, or other institution with whom moneys or stock
have been deposited.
Section 14. SURETY BONDS. Unless required by law, no director shall
be obligated to give any bond or surety or other security for the performance
of any of his duties.
Section 15. RELIANCE. Each director, officer, employee and agent of
the Corporation shall, in the performance of his duties with respect to the
Corporation, be fully justified and protected with regard to any act or
failure to act in reliance in good faith upon the books of account or other
records of the Corporation, upon an opinion of counsel or upon reports made
to the Corporation by any of its officers or employees or by the adviser,
accountants, appraisers or other experts or consultants selected by the Board
of Directors or officers of the Corporation, regardless of whether such
counsel or expert may also be a director.
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Section 16. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. The directors shall have no responsibility to devote their full time
to the affairs of the Corporation. Any director or officer, employee or
agent of the Corporation, in his personal capacity or in a capacity as an
affiliate, employee, or agent of any other person, or otherwise, may have
business interests and engage in business activities similar to or in
addition to or in competition with those of or relating to the Corporation.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors
may appoint from among its members an Executive Committee, an Audit
Committee, a Corporate Governance Committee, a Compensation Committee, and
other committees, composed of one or more directors, to serve at the pleasure
of the Board of Directors.
Section 2. POWERS. The Board of Directors may delegate to committees
appointed under Section 1 of this Article any of the powers of the Board of
Directors, except as prohibited by law.
Section 3. MEETINGS. Notice of committee meetings shall be given in
the same manner as notice for special meetings of the Board of Directors. A
majority of the members of the committee shall constitute a quorum for the
transaction of business at any meeting of the committee. The act of a
majority of the committee members present at a meeting shall be the act of
such committee. The Board of Directors may designate a chairman of any
committee, and such chairman or any two members of any committee may fix the
time and place of its meeting unless the Board shall otherwise provide. In
the absence of any member of any such committee, the members thereof present
at any meeting, whether or not they constitute a quorum, may appoint another
director to act in the place of such absent member. Each committee shall
keep minutes of its proceedings.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Board
of Directors may participate in a meeting by means of a conference telephone
or similar communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a meeting by
these means shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or
permitted to be taken at any meeting of a committee of the Board of Directors
may be taken without a meeting, if a consent in writing to such action is
signed by each member of the committee and such written consent is filed with
the minutes of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of
Directors shall have the power at any time to change the membership of any
committee, to fill all vacancies,
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to designate alternate members to replace any absent or disqualified member or
to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall
include a chief executive officer, a president, a secretary and a treasurer
and may include a chairman of the board, a vice chairman of the board, one or
more vice presidents, a chief operating officer, a chief financial officer,
one or more assistant secretaries and one or more assistant treasurers. In
addition, the Board of Directors may from time to time appoint such other
officers with such powers and duties as they shall deem necessary or
desirable. The officers of the Corporation shall be elected annually by the
Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of stockholders, except that the chief executive officer
may appoint one or more vice presidents, assistant secretaries and assistant
treasurers. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as may be convenient. Each
officer shall hold office until his successor is elected and qualifies or
until his death, resignation or removal in the manner hereinafter provided.
Any two or more offices except president and vice president may be held by
the same person. In its discretion, the Board of Directors may leave
unfilled any office except that of president, treasurer and secretary.
Election of an officer or agent shall not of itself create contract rights
between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
Corporation may be removed by the Board of Directors if in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Any officer of the Corporation may resign at any time by giving
written notice of his resignation to the Board of Directors, the chairman of
the board (or any co-chairman of the board if more than one), the president
or the secretary. Any resignation shall take effect at any time subsequent
to the time specified therein or, if the time when it shall become effective
is not specified therein, immediately upon its receipt. The acceptance of a
resignation shall not be necessary to make it effective unless otherwise
stated in the resignation. Such resignation shall be without prejudice to
the contract rights, if any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the
Board of Directors for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may
designate a chief executive officer. In the absence of such designation, the
chairman of the board shall be the chief executive officer of the
Corporation. The chief executive officer shall have general responsibility
for implementation of the policies of the Corporation, as determined by the
Board of Directors, and for the management of the business and affairs of the
Corporation.
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Section 5. CHIEF OPERATING OFFICER. The Board of Directors may
designate a chief operating officer. The chief operating officer shall have
the responsibilities and duties as set forth by the Board of Directors or the
chief executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may
designate a chief financial officer. The chief financial officer shall have
the responsibilities and duties as set forth by the Board of Directors or the
chief executive officer.
Section 7. CHAIRMAN OF THE BOARD. The Board of Directors shall
designate a chairman of the board (or one or more co-chairmen of the board).
The chairman of the board shall preside over the meetings of the Board of
Directors and of the stockholders at which he shall be present. If there be
more than one, the co-chairmen designated by the Board of Directors will
perform such duties. The chairman of the board shall perform such other
duties as may be assigned to him or them by the Board of Directors.
Section 8. PRESIDENT. The president or chief executive officer, as
the case may be, shall in general supervise and control all of the business
and affairs of the Corporation. In the absence of a designation of a chief
operating officer by the Board of Directors, the president shall be the chief
operating officer. He may execute any deed, mortgage, bond, contract or
other instrument, except in cases where the execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some
other officer or agent of the Corporation or shall be required by law to be
otherwise executed; and in general shall perform all duties incident to the
office of president and such other duties as may be prescribed by the Board
of Directors from time to time.
Section 9. VICE PRESIDENTS. In the absence of the president or in
the event of a vacancy in such office, the vice president (or in the event
there be more than one vice president, the vice presidents in the order
designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall perform the duties of
the president and when so acting shall have all the powers of and be subject
to all the restrictions upon the president; and shall perform such other
duties as from time to time may be assigned to him by the president or by the
Board of Directors. The Board of Directors may designate one or more vice
presidents as executive or senior vice president, or as vice president for
particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep the minutes of
the proceedings of the stockholders, the Board of Directors and committees of
the Board of Directors in one or more books provided for that purpose; (b)
see that all notices are duly given in accordance with the provisions of
these Bylaws or as required by law; (c) be custodian of the corporate records
and of the seal of the Corporation; (d) keep a register of the post office
address of each stockholder which shall be furnished to the secretary by such
stockholder; (e) have general charge of the share transfer books of the
Corporation; and (f) in general perform such other duties as from time to
time may be assigned to him by the chief executive officer, the president or
by the Board of Directors.
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Section 11. TREASURER. The treasurer shall have the custody of the
funds and securities of the Corporation and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation
and shall deposit all moneys and other valuable effects in the name and to
the credit of the Corporation in such depositories as may be designated by
the Board of Directors. In the absence of a designation of a chief financial
officer by the Board of Directors, the treasurer shall be the chief financial
officer of the Corporation.
The treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and Board of Directors, at
the regular meetings of the Board of Directors or whenever it may so require,
an account of all his transactions as treasurer and of the financial
condition of the Corporation.
If required by the Board of Directors, the treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of
his death, resignation, retirement or removal from office, of all books,
papers, vouchers, moneys and other property of whatever kind in his
possession or under his control belonging to the Corporation.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretaries and assistant treasurers, in general, shall perform
such duties as shall be assigned to them by the secretary or treasurer,
respectively, or by the president or the Board of Directors. The assistant
treasurers shall, if required by the Board of Directors, give bonds for the
faithful performance of their duties in such sums and with such surety or
sureties as shall be satisfactory to the Board of Directors.
Section 13. SALARIES. The salaries and other compensation of the
officers shall be fixed from time to time by the Board of Directors and no
officer shall be prevented from receiving such salary or other compensation
by reason of the fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any
officer or agent to enter into any contract or to execute and deliver any
instrument in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances. Any agreement, deed,
mortgage, lease or other document executed by one or more of the directors or
by an authorized person shall be valid and binding upon the Board of
Directors and upon the Corporation when authorized or ratified by action of
the Board of Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation
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shall be signed by such officer or agent of the Corporation in such manner as
shall from time to time be determined by the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the Board
of Directors may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of each class of stock held by him in the Corporation. Each
certificate shall be signed by the chief executive officer, the president or
a vice president and countersigned by the secretary or an assistant secretary
or the treasurer or an assistant treasurer and may be sealed with the seal,
if any, of the Corporation. The signatures may be either manual or
facsimile. Certificates shall be consecutively numbered; and if the
Corporation shall, from time to time, issue several classes of stock, each
class may have its own number series. A certificate is valid and may be
issued whether or not an officer who signed it is still an officer when it is
issued. Each certificate representing shares which are restricted as to
their transferability or voting powers, which are preferred or limited as to
their dividends or as to their allocable portion of the assets upon
liquidation or which are redeemable at the option of the Corporation, shall
have a statement of such restriction, limitation, preference or redemption
provision, or a summary thereof, plainly stated on the certificate. If the
Corporation has authority to issue stock of more than one class, the
certificate shall contain on the face or back a full statement or summary of
the designations and any preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of each class of stock
and, if the Corporation is authorized to issue any preferred or special class
in series, the differences in the relative rights and preferences between the
shares of each series to the extent they have been set and the authority of
the Board of Directors to set the relative rights and preferences of
subsequent series. In lieu of such statement or summary, the certificate may
state that the Corporation will furnish a full statement of such information
to any stockholder upon request and without charge. If any class of stock is
restricted by the Corporation as to transferability, the certificate shall
contain a full statement of the restriction or state that the Corporation
will furnish information about the restrictions to the stockholder on request
and without charge.
Section 2. TRANSFERS. Upon surrender to the Corporation or the
transfer agent of the Corporation of a stock certificate duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
The Corporation shall be entitled to treat the holder of record of
any share of stock as the holder in fact thereof and, accordingly, shall not
be bound to recognize any
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equitable or other claim to or interest in such share or on the part of any
other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of any class of
stock will be subject in all respects to the charter of the Corporation and
all of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the
Board of Directors may direct a new certificate to be issued in place of any
certificate previously issued by the Corporation alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen or destroyed. When
authorizing the issuance of a new certificate, an officer designated by the
Board of Directors may, in his discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or the owner's legal representative to advertise the same in such
manner as he shall require and/or to give bond, with sufficient surety, to
the Corporation to indemnify it against any loss or claim which may arise as
a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Board of Directors may set, in advance, a record date for the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or determining stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in
any case, shall not be prior to the close of business on the day the record
date is fixed and shall be not more than 90 days and, in the case of a
meeting of stockholders, not less than ten days, before the date on which the
meeting or particular action requiring such determination of stockholders of
record is to be held or taken.
In lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not
longer than 20 days. If the stock transfer books are closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the
date of such meeting.
If no record date is fixed and the stock transfer books are not
closed for the determination of stockholders, (a) the record date for the
determination of stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day on which the
notice of meeting is mailed or the 30th day before the meeting, whichever is
the closer date to the meeting; and (b) the record date for the determination
of stockholders entitled to receive payment of a dividend or an allotment of
any other rights shall be the close of business on the day on which the
resolution of the directors, declaring the dividend or allotment of rights,
is adopted.
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When a determination of stockholders entitled to vote at any meeting
of stockholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except when (i) the determination has
been made through the closing of the transfer books and the stated period of
closing has expired or (ii) the meeting is adjourned to a date more than 120
days after the record date fixed for the original meeting, in either of which
case a new record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its
principal office or at the office of its counsel, accountants or transfer
agent, an original or duplicate share ledger containing the name and address
of each stockholder and the number of shares of each class held by such
stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of
Directors may issue fractional stock or provide for the issuance of scrip,
all on such terms and under such conditions as they may determine.
Notwithstanding any other provision of the charter of the Corporation or
these Bylaws, the Board of Directors may issue units consisting of different
securities of the Corporation. Any security issued in a unit shall have the
same characteristics as any identical securities issued by the Corporation,
except that the Board of Directors may provide that for a specified period
securities of the Corporation issued in such unit may be transferred on the
books of the Corporation only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix
the fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the
stock of the Corporation may be authorized and declared by the Board of
Directors, subject to the provisions of law and the charter of the
Corporation. Dividends and other distributions may be paid in cash, property
or stock of the Corporation, subject to the provisions of law and the charter
of the Corporation.
Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any assets of the Corporation
available for dividends or other distributions such sum or sums as the Board
of Directors may from time to time, in its absolute discretion, think proper
as a reserve fund for contingencies, for equalizing dividends or other
distributions, for repairing or maintaining any property of the Corporation
or for such other purpose as the Board of Directors shall determine to be in
the best interest of the Corporation, and
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the Board of Directors may modify or abolish any such reserve in the manner in
which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the charter of the Corporation, the Board of
Directors may from time to time adopt, amend, revise or terminate any policy
or policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption
of a seal by the Corporation. The seal shall contain the name of the
Corporation and the year of its incorporation and the words "Incorporated
Maryland." The Board of Directors may authorize one or more duplicate seals
and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or
required to affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to place the
word "(SEAL)" adjacent to the signature of the person authorized to execute
the document on behalf of the Corporation.
ARTICLE XII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation shall indemnify and, without requiring a preliminary
determination of the ultimate entitlement to indemnification, to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding
to (a) any individual who is a present or former director or officer of the
Corporation and who is made a party to the proceeding by reason of his
service in that capacity or (b) any individual who, while a director of the
Corporation and at the request of the Corporation, serves or has served
another corporation, real estate investment trust, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or other
enterprise and who is made a party to the proceeding by reason of his service
in that capacity. The Corporation shall have the power, with the approval of
its Board of Directors, to provide such indemnification and advance for
expenses to a person who served a predecessor of the Corporation in any of
the capacities described in (a) or (b) above and to any employee or agent of
the Corporation or a predecessor of the Corporation.
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Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or charter of the Corporation
inconsistent with this Article, shall apply to or affect in any respect the
applicability of the preceding paragraph with respect to any act or failure
to act which occurred prior to such amendment, repeal or adoption.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the charter of
the Corporation or these Bylaws or pursuant to applicable law, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent
to the giving of such notice. Neither the business to be transacted at nor
the purpose of any meeting need be set forth in the waiver of notice, unless
specifically required by statute. The attendance of any person at any
meeting shall constitute a waiver of notice of such meeting, except where
such person attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
Subject to applicable law and the charter of the Corporation, by
affirmative vote of the holders of not less than a majority of the shares of
stock entitled to vote, the stockholders shall have the right to adopt, alter
and repeal any provision of these Bylaws and to make new Bylaws. Subject to
the right of the stockholders provided in the preceding sentence, by the
affirmative vote of a majority of the Corporation's directors, the Board of
Directors shall have the power to adopt, alter or repeal any provision of
these Bylaws and to make new Bylaws.
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THE 1997 STOCK OPTION AND INCENTIVE PLAN
OF PAN PACIFIC RETAIL PROPERTIES, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Award Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Company Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Company Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Corporate Transaction . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Deferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 Dividend Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20 Grantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Incentive Stock Option. . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 Independent Director. . . . . . . . . . . . . . . . . . . . . . . . . 4
1.23 Non-Qualified Stock Option. . . . . . . . . . . . . . . . . . . . . . 4
1.24 Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.25 Optionee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.27 Performance Award . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.28 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.29 QDRO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.30 Restricted Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.31 Restricted Stockholder. . . . . . . . . . . . . . . . . . . . . . . . 5
1.32 Rule 16b-3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.33 Stock Appreciation Right. . . . . . . . . . . . . . . . . . . . . . . 5
1.34 Stock Ownership Limit . . . . . . . . . . . . . . . . . . . . . . . . 5
1.35 Stock Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.36 Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.37 Termination of Consultancy. . . . . . . . . . . . . . . . . . . . . . 5
1.38 Termination of Directorship . . . . . . . . . . . . . . . . . . . . . 5
1.39 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . 6
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ARTICLE II - SHARES SUBJECT TO PLAN. . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Shares Subject to Plan. . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Add-back of Options and Other Rights. . . . . . . . . . . . . . . . . 7
ARTICLE III - GRANTING OF OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Disqualification for Stock Ownership. . . . . . . . . . . . . . . . . 7
3.3 Qualification of Incentive Stock Options. . . . . . . . . . . . . . . 7
3.4 Granting of Options . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - TERMS OF OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Option Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Option Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Option Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Option Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 No Right to Continue as Employee or Consultant. . . . . . . . . . . . 11
4.6 Exercise of Option after Termination of Employment or
Directorship . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V - EXERCISE OF OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Partial Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Manner of Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Transfer of Shares to a Company Employee or Independent Director. . . 14
5.4 Conditions to Issuance of Stock Certificates. . . . . . . . . . . . . 14
5.5 Rights as Stockholders. . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Ownership and Transfer Restrictions . . . . . . . . . . . . . . . . . 14
5.7 Restrictions on Exercise of Option. . . . . . . . . . . . . . . . . . 15
ARTICLE VI - AWARD OF RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . 15
6.1 Award of Restricted Stock . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Restricted Stock Agreement. . . . . . . . . . . . . . . . . . . . . . 16
6.3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Rights as Stockholders. . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 Repurchase of Restricted Stock. . . . . . . . . . . . . . . . . . . . 17
6.7 Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.8 Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII - PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK,
STOCK PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Performance Awards. . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2 Dividend Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . 18
7.3 Stock Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Deferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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7.5 Performance Award Agreement, Dividend Equivalent Agreement,
Deferred Stock Agreement, Stock Payment Agreement . . . . . . . . . . 18
7.6 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 Exercise Upon Termination of Employment . . . . . . . . . . . . . . . 18
7.8 Payment on Exercise . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.9 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII - STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . 19
8.1 Grant of Stock Appreciation Rights. . . . . . . . . . . . . . . . . . 19
8.2 Coupled Stock Appreciation Rights . . . . . . . . . . . . . . . . . . 20
8.3 Independent Stock Appreciation Rights . . . . . . . . . . . . . . . . 20
8.4 Payment and Limitations on Exercise . . . . . . . . . . . . . . . . . 21
8.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX - ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Compensation Committee. . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Duties and Powers of Committee. . . . . . . . . . . . . . . . . . . . 22
9.3 Majority Rule; Unanimous Written Consent. . . . . . . . . . . . . . . 22
9.4 Compensation; Professional Assistance; Good Faith Actions . . . . . . 22
9.5 Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . 23
9.6 No Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE X - MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 23
10.1 Not Transferable. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.2 Amendment, Suspension or Termination of this Plan . . . . . . . . . . 24
10.3 Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events. . . . . . . 24
10.4 Approval of Plan by Stockholders. . . . . . . . . . . . . . . . . . . 28
10.5 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.6 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.7 Forfeiture Provisions.. . . . . . . . . . . . . . . . . . . . . . . . 28
10.8 Limitations Applicable to Section 16 Persons and Performance-Based
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.9 Effect of Plan Upon Options and Compensation Plans. . . . . . . . . . 29
10.10 Section 83(b) Election Prohibited . . . . . . . . . . . . . . . . . . 29
10.11 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . 29
10.12 Titles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.14 Conflicts with Company's Restated Articles. . . . . . . . . . . . . . 30
iii
</TABLE>
<PAGE>
THE 1997 STOCK OPTION AND INCENTIVE PLAN
OF PAN PACIFIC RETAIL PROPERTIES, INC.
Pan Pacific Retail Properties, Inc., a Maryland corporation (the
"Company") has adopted The 1997 Stock Option and Incentive Plan of Pan Pacific
Retail Properties, Inc. (the "Plan"), effective ______________ 1997, for the
benefit of their eligible employees, consultants and directors.
The purposes of this Plan are as follows:
(1) To enable executive officers, key employees and directors of the
Company to participate in the ownership of the Company.
(2) To attract and retain executive officers, other key employees and
directors of the Company and to provide incentives to such persons to maximize
the Company's cash flow available for distribution.
ARTICLE 1
DEFINITIONS
1.1 GENERAL. Wherever the following terms are used in this Plan they
shall have the meaning specified below, unless the context clearly indicates
otherwise.
1.2 AWARD LIMIT. "Award Limit" shall mean 300,000 shares of Common
Stock.
1.3 BENEFICIARY. "Beneficiary" shall mean the person or persons
properly designated by the Optionee, including his spouse or heirs at law, to
exercise such Optionee's rights under this Plan in the event of the Optionee's
death, or if the Optionee has not designated such person or persons, or such
person or persons shall all have pre-deceased the Optionee, the executor or
administrator of the Optionee's estate. Designation, revocation and
redesignation of Beneficiaries must be made in writing in accordance with rules
established by the Committee and shall be effective upon delivery to the
Committee.
1.4 BOARD. "Board" shall mean the Board of Directors of the Company.
1.5 CAPITAL STOCK. "Capital Stock" shall mean all classes or series
of stock of the Company.
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1.6 CHANGE IN CONTROL. "Change in Control" shall mean a change in
ownership or control of the Company effected through either of the following
transactions:
(a) any person or related of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pursuant to a
tender or exchange offer made directly to the Company's stockholders which
the Board does not recommend such stockholders to accept; or
(b) there is a change in the composition of the Board over a period
of thirty-six (36) consecutive months (or less) such that a majority of the
Board members (rounded up to the nearest whole number) ceases, by reason of
one or more proxy contests for the election of Board members, to be
comprised of individuals who either (i) have been Board members
continuously since the beginning of such period or (ii) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the Board.
1.7 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.8 COMMITTEE. "Committee" shall mean the Compensation Committee of
the Board, or another committee, or a subcommittee of the Board, appointed as
provided in Section 9.1.
1.9 COMMON STOCK. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any preferred stock and
any warrants, options or other rights to purchase Common Stock. Debt securities
of the Company convertible into Common Stock shall be deemed equity securities
of the Company.
1.10 COMPANY. "Company" shall mean Pan Pacific Retail Properties,
Inc., a Maryland corporation.
1.11 COMPANY EMPLOYEE. "Company Employee" shall mean any officer or
other employee (as defined in accordance with Section 3401(c) of the Code) of
the Company, or of any corporation which is then a Company Subsidiary.
1.12 COMPANY SUBSIDIARY. "Company Subsidiary" shall mean any
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing 50 percent or more of the total combined voting power
of all classes of stock in one of the
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other corporations in such chain. Except with respect to Incentive Stock
Options, "Company Subsidiary" shall also mean any partnership in which the
Company and/or any Company Subsidiary owns more than 50 percent of the
capital or profits interests.
1.13 CORPORATE TRANSACTION. "Corporate Transaction" shall mean any of
the following stockholder-approved transactions to which the Company is a party:
(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State in which the Company is incorporated, form a holding
company or effect a similar reorganization as to form whereupon this Plan
and all Options are assumed by the successor entity;
(b) the sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions
to clause (a), above; or
(c) any reverse merger in which the Company is the surviving entity
but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such
securities immediately prior to such merger.
1.14 DEFERRED STOCK. "Deferred Stock" shall mean Common Stock awarded
under Article VII of this Plan.
1.15 DIRECTOR. "Director" shall mean a member of the Board.
1.16 DIVIDEND EQUIVALENT. "Dividend Equivalent" shall mean a right to
receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock, awarded under Article VII of this Plan.
1.17 EMPLOYEE. "Employee" shall mean any Company Employee.
1.18 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.19 FAIR MARKET VALUE. "Fair Market Value" of a share of Common
Stock as of a given date shall be (i) the closing price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous
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to such date as reported by NASDAQ or such successor quotation system; or
(iii) if Common Stock is not publicly traded on an exchange and not quoted on
NASDAQ or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Committee (or the Board, in the case of
Options granted to Independent Directors) acting in good faith.
1.20 GRANTEE. "Grantee" shall mean an Employee or consultant granted
a Performance Award, Dividend Equivalent, Stock Payment or Stock Appreciation
Right, or an award of Deferred Stock, under this Plan.
1.21 INCENTIVE STOCK OPTION. "Incentive Stock Option" shall mean an
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.
1.22 INDEPENDENT DIRECTOR. "Independent Director" shall mean a member
of the Board who is not a Company Employee.
1.23 NON-QUALIFIED STOCK OPTION. "Non-Qualified Stock Option" shall
mean an Option which is not designated as an Incentive Stock Option by the
Committee.
1.24 OPTION. "Option" shall mean a stock option granted under Article
III of this Plan. An Option granted under this Plan shall, as determined by the
Committee, be either a Non-Qualified Stock Option or an Incentive Stock Option;
PROVIDED, HOWEVER, that Options granted to Directors of the Company, consultants
and other persons who are not regular salaried employees of the Company shall be
Non-Qualified Stock Options.
1.25 OPTIONEE. "Optionee" shall mean an Employee, consultant or
Independent Director granted an Option under this Plan.
1.26 PERFORMANCE AWARD. "Performance Award" shall mean a cash bonus,
stock bonus or other performance or incentive award that is paid in cash, Common
Stock or a combination of both, awarded under Article VII of this Plan.
1.27 PLAN. "Plan" shall mean The 1997 Stock Option and Incentive Plan
of Pan Pacific Retail Properties, Inc.
1.28 QDRO. "QDRO" shall mean a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder.
1.29 RESTRICTED STOCK. "Restricted Stock" shall mean Common Stock
awarded under Article VI of this Plan.
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1.30 RESTRICTED STOCKHOLDER. "Restricted Stockholder" shall mean an
individual or entity granted an award of Restricted Stock under Article VI of
this Plan.
1.31 RULE 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to time.
1.32 STOCK APPRECIATION RIGHT. "Stock Appreciation Right" shall mean
a stock appreciation right granted under Article VIII of this Plan.
1.33 STOCK OWNERSHIP LIMIT. "Stock Ownership Limit" shall mean (i)
the restrictions on ownership and transfer of Common Stock provided in Article
VIII of the Company's Articles of Amendment and Restatement (the "Restated
Articles"); and (ii) any other restrictions on ownership or transfer set forth
in the Restated Articles.
1.34 STOCK PAYMENT. "Stock Payment" shall mean (i) a payment in the
form of shares of Common Stock, or (ii) an option or other right to purchase
shares of Common Stock, as part of a deferred compensation arrangement, made in
lieu of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that would otherwise become payable to a key
Employee or consultant in cash, awarded under Article VII of this Plan.
1.35 SUBSIDIARY. "Subsidiary" shall mean any Company Subsidiary.
1.36 TERMINATION OF CONSULTANCY. "Termination of Consultancy" shall
mean the time when the engagement of an Optionee, Grantee or Restricted
Stockholder as a consultant to the Company or a Company Subsidiary is terminated
for any reason, with or without cause, including, but not by way of limitation,
by resignation, discharge, death or retirement; but excluding terminations where
there is a simultaneous commencement of employment with the Company or any
Company Subsidiary. The Committee, in its absolute discretion, shall determine
the effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Consultancy.
Notwithstanding any other provision of this Plan, the Company or any Company
Subsidiary has an absolute and unrestricted right to terminate a consultant's
service at any time for any reason whatsoever, with or without cause, except to
the extent expressly provided otherwise in writing.
1.37 TERMINATION OF DIRECTORSHIP. "Termination of Directorship" shall
mean the time when an Optionee who is an Independent Director ceases to be a
Director for any reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The Board, in its
sole and absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Directorship with respect to Independent
Directors.
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1.38 TERMINATION OF EMPLOYMENT. "Termination of Employment" shall mean
the time when the employee-employer relationship between an Optionee, Grantee
or Restricted Stockholder and the Company or a Company Subsidiary is
terminated for any reason, with or without cause, including, but not by way
of limitation, a termination by resignation, discharge, death, disability or
retirement; but excluding (i) terminations where there is a simultaneous
reemployment or continuing employment of an Optionee, Grantee or Restricted
Stockholder by the Company or any Company Subsidiary, (ii) at the discretion
of the Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Company Subsidiary with the
former employee. The Committee, in its absolute discretion, shall determine
the effect of all matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; PROVIDED, HOWEVER, that, with respect to Incentive Stock Options,
a leave of absence, change in status from an employee to an independent
contractor or other change in the employee-employer relationship shall
constitute a Termination of Employment if, and to the extent that, such leave
of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. Notwithstanding any other provision
of this Plan, the Company or any Company Subsidiary has an absolute and
unrestricted right to terminate an Employee's employment at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 SHARES SUBJECT TO PLAN.
(a) The shares of stock subject to Options or awards of Restricted
Stock, Performance Awards, Dividend Equivalents, awards of Deferred Stock,
Stock Payments or Stock Appreciation Rights shall be Common Stock, initially
shares of the Company's Common Stock, par value $.01 per share. The
aggregate number of such shares which may be issued upon exercise of such
options or rights or upon any such awards under the Plan shall not exceed one
million seven hundred fifty thousand (1,750,000). The shares of Common Stock
issuable upon exercise of such options or rights or upon any such awards may
be either previously authorized but unissued shares or treasury shares.
(b) The maximum number of shares which may be subject to options or
Stock Appreciation Rights granted under the Plan to any individual in any
calendar year shall not exceed the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Options which are canceled
continue to be counted against the Award Limit and if, after grant of an Option,
the price of shares subject to such Option is reduced, the transaction
6
<PAGE>
is treated as a cancellation of the Option and a grant of a new Option and
both the Option deemed to be canceled and the Option deemed to be granted are
counted against the Award Limit. Furthermore, to the extent required by
Section 162(m) of the Code, if, after grant of a Stock Appreciation Right,
the base amount on which stock appreciation is calculated is reduced to
reflect a reduction in the Fair Market Value of the Company's Common Stock,
the transaction is treated as a cancellation of the Stock Appreciation Right
and a grant of a new Stock Appreciation Right and both the Stock Appreciation
Right deemed to be canceled and the Stock Appreciation Right deemed to be
granted are counted against the Award Limit.
2.2 ADD-BACK OF OPTIONS AND OTHER RIGHTS. If any Option, or other
right to acquire shares of Common Stock under any other award under this
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by this Plan, the number
of shares subject to such Option or other right but as to which such Option
or other right was not exercised prior to its expiration, cancellation or
exercise may again be optioned, granted or awarded hereunder, subject to the
limitations of Section 2.1. Shares of Common Stock which are delivered by
the Optionee or Grantee or withheld by the Company upon the exercise of any
Option or other award under this Plan, in payment of the exercise price
thereof, may again be optioned, granted or awarded hereunder, subject to the
limitations of Section 2.1; PROVIDED, HOWEVER, that, no shares of Common
Stock delivered or withheld upon the exercise of an Incentive Stock Option,
in payment of the exercise thereof, may again be optioned, granted or awarded
if such action would cause the Option to fail to qualify as an Incentive
Stock Option under Section 422 of the Code. If any share of Restricted Stock
is forfeited by the Grantee or repurchased by the Company pursuant to
Section 6.6 hereof, such share may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1.
ARTICLE III
GRANTING OF OPTIONS
3.1 ELIGIBILITY. Any Employee or consultant selected by the Committee
pursuant to Section 3.4(a)(i) shall be eligible to be granted an Option.
Each Independent Director of the Company shall be eligible to be granted
Options at the times and in the manner set forth in Section 3.4(d).
3.2 DISQUALIFICATION FOR STOCK OWNERSHIP. No person may be granted an
Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or any then existing Company Subsidiary unless such Incentive
Stock Option conforms to the applicable provisions of Section 422 of the Code.
3.3 QUALIFICATION OF INCENTIVE STOCK OPTIONS. No Incentive Stock
Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option"
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under Section 422 of the Code. No Incentive Stock Option shall be granted to
any person who is not an employee as defined in Section 3401(c) of the Code.
3.4 GRANTING OF OPTIONS.
(a) The Committee shall from time to time, in its absolute discretion,
and subject to applicable limitations of this Plan:
(i) Determine which Employees are key Employees and select from
among the key Employees or consultants (including Employees or
consultants who have previously received Options or other awards under
this Plan) such of them as in its opinion should be granted Options;
(ii) Subject to the Award Limit and the Stock Ownership Limit,
determine the number of shares to be subject to such Options granted to
the selected key Employees or consultants;
(iii) Determine whether such Options are to be Incentive Stock
Options or Non-Qualified Stock Options and whether such Options are to
qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; PROVIDED, HOWEVER, that the terms and
conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code.
(b) Upon the selection of a key Employee or consultant to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue
the Option and may impose such conditions on the grant of the Option as it
deems appropriate. Without limiting the generality of the preceding
sentence, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option to an Employee
or consultant that the Employee or consultant surrender for cancellation some
or all of the unexercised Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments or other rights which have been previously granted to him
under this Plan or otherwise. An Option, the grant of which is conditioned
upon such surrender, may have an option price lower (or higher) than the
exercise price of such surrendered Option or other award, may cover the same
(or a lesser or greater) number of shares as such surrendered Option or other
award, may contain such other terms as the Committee deems appropriate, and
shall be exercisable in accordance with its terms, without regard to the
number of shares, price, exercise period or any other term or condition of
such surrendered Option or other award.
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(c) Any Incentive Stock Option granted under this Plan may be modified
by the Committee to disqualify such option from treatment as an "incentive
stock option" under Section 422 of the Code.
(d) During the term of the Plan and subject to the Stock Ownership
Limit, each person who is an Independent Director as of the date of the
consummation of the initial public offering of Common Stock automatically
shall be granted (i) an Option to purchase ten thousand (10,000) shares of
Common Stock (subject to adjustment as provided in Section 10.3) on the date
of such initial public offering. During the term of the Plan, a person who
is initially elected to the Board after the consummation of the initial
public offering of Common Stock and who is an Independent Director at the
time of such initial election automatically shall be granted (i) an Option to
purchase ten thousand (10,000) shares of Common Stock (subject to adjustment
as provided in Section 10.3) on the date of such initial election. Members
of the Board who are employees of the Company who subsequently retire from
the Company and remain on the Board will not receive an initial Option grant
pursuant to clause (i) of the preceding sentence, but to the extent that they
are otherwise eligible, will receive, after retirement from employment with
the Company, Options as described in clause (ii) of the preceding sentence.
All the foregoing Option grants authorized by this Section 3.4(d) are subject
to stockholder approval of the Plan.
ARTICLE IV
TERMS OF OPTIONS
4.1 OPTION AGREEMENT. Each Option shall be evidenced by a written
Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock
Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain
such terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422 of the Code.
4.2 OPTION PRICE. The price per share of the shares subject to each
Option shall be set by the Committee; PROVIDED, HOWEVER, that such price
shall be no less than the par value of a share of Common Stock unless
otherwise permitted by applicable state law, and (i) in the case of Incentive
Stock Options and Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, such price
shall not be less than 100% of the Fair Market Value of a share of Common
Stock on the date the Option is granted; (ii) in the case of Incentive Stock
Options granted to an individual then owning (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined
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voting power of all classes of stock of the Company or any Company Subsidiary
such price shall not be less than 110% of the Fair Market Value of a share of
Common Stock on the date the Option is granted; and (iii) in the case of
Options granted to Independent Directors, such price shall equal 100% of the
Fair Market Value of a share of Common Stock on the date the Option is
granted; PROVIDED, HOWEVER, that the price of each share subject to each
Option granted to Independent Directors on the date of the initial public
offering of Common Stock shall equal the initial public offering price (net
of underwriting discounts and commissions) per share of Common Stock.
4.3 OPTION TERM. The term of an Option shall be set by the Committee
in its discretion; PROVIDED, HOWEVER, that, (i) in the case of Options
granted to Independent Directors, the term shall be seven (7) years from the
date the Option is granted, without variation or acceleration hereunder, and
(ii) in the case of Incentive Stock Options, the term shall not be more than
seven (7) years from the date the Incentive Stock Option is granted or five
(5) years from such date if the Incentive Stock Option is granted to an
individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of
the Company or any Company Subsidiary. Except as limited by requirements of
Section 422 of the Code and regulations and rulings thereunder applicable to
Incentive Stock Options, the Committee may extend the term of any outstanding
Option in connection with any Termination of Employment or Termination of
Consultancy of the Optionee, or amend any other term or condition of such
Option relating to such a termination.
4.4 OPTION VESTING.
(a) The period during which the right to exercise an Option in whole or
in part vests in the Optionee shall be set by the Committee and the Committee
may determine that an Option may not be exercised in whole or in part for a
specified period after it is granted; PROVIDED, HOWEVER, that, unless the
Committee otherwise provides in the terms of the Option or otherwise, no
Option shall be exercisable by any Optionee who is then subject to Section 16
of the Exchange Act within the period ending six months and one day after the
date the Option is granted; and provided, further, that Options granted to
Independent Directors shall become exercisable in cumulative annual
installments of 33 1/3% on each of the first, second and third anniversaries of
the date of Option grant, without variation or acceleration hereunder except
as provided in Section 10.3(c). At any time after grant of an Option, the
Committee may, in its sole and absolute discretion and subject to whatever
terms and conditions it selects, accelerate the period during which an Option
(except an Option granted to an Independent Director) vests.
(b) No portion of an Option which is unexercisable at Termination of
Employment, Termination of Directorship or Termination of Consultancy, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Committee in the case of Options granted to Employees or
consultants either in the Stock Option Agreement or by action of the
Committee following the grant of the Option.
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(c) To the extent that the aggregate Fair Market Value of stock with
respect to which "incentive stock options" (within the meaning of Section 422
of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
Company Subsidiary) exceeds $100,000, such Options shall be treated as
Non-Qualified Options to the extent required by Section 422 of the Code. The
rule set forth in the preceding sentence shall be applied by taking Options
into account in the order in which they were granted. For purposes of this
Section 4.4(c), the Fair Market Value of stock shall be determined as of the
time the Option with respect to such stock is granted.
4.5 NO RIGHT TO CONTINUE AS EMPLOYEE OR CONSULTANT. Nothing in this
Plan or in any Stock Option Agreement hereunder shall confer upon any
Optionee any right to continue in the employ of, or as a consultant for, the
Company, any Company Subsidiary, or as a director of the Company, or shall
interfere with or restrict in any way the rights of the Company and any
Company Subsidiary, which are hereby expressly reserved, to discharge any
Optionee at any time for any reason whatsoever, with or without good cause.
4.6 EXERCISE OF OPTION AFTER TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) An Option granted to an Employee is exercisable by an Optionee only
while the Optionee is an Employee. The preceding notwithstanding, the
Committee may determine that an Option granted to an Employee may be
exercised subsequent to an Optionee's Termination of Employment, subject to
the following limitations:
(i) If the Optionee dies while an Option is exercisable under
the terms of this Plan, the Optionee's Beneficiary may exercise such
rights, to the extent the Optionee could have done so immediately
preceding his death. Any such Option must be exercised within twelve
(12) months after the Optionee's death and the Committee may in its sole
and absolute discretion extend such period to accommodate such exercise;
or
(ii) If the Optionee's Termination of Employment is due to the
Optionee's permanent and total disability, as defined in Section 22(e)(3)
of the Code, the Optionee may exercise his Option, to the extent
exercisable as of the Optionee's Termination of Employment, within twelve
(12) months after termination; or
(iii) If the Optionee's employment is terminated for any reason
other than those set forth in subsections (i) or (ii) above, the Optionee
may exercise his Option, to the extent exercisable as of his Termination
of Employment, within three (3) months after Termination of Employment,
unless the Employee dies within said three-month period.
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(iv) Notwithstanding (i) through (iii) above, an Option may not
be exercised later than the Option's Expiration Date.
(b) No Option granted to an Independent Director may be exercised to any
extent by anyone after the first to occur of the following events:
(i) The expiration of twelve (12) months from the date of the
Optionee's death; or
(ii) The expiration of twelve (12) months from the date of the
Optionee's Termination of Directorship by reason of his permanent and
total disability (within the meaning of Section 22(e)(3) of the Code); or
(iii) The expiration of three (3) months from the date of the
Optionee's Termination of Directorship for any reason other than such
Optionee's death or his permanent and total disability, unless the
Optionee dies within said three-month period.
(iv) Notwithstanding (i) through (iii) above, an Option may not
be exercised later than the Option's Expiration Date.
4.7 CONSIDERATION. In consideration of the granting of a Non-Qualified
Stock Option, the Optionee shall agree, in the written Stock Option
Agreement, to remain in the employ of the Company or a Company Subsidiary (or
to serve as an Independent Director of the Company) for a period of at least
one year after the Non-Qualified Stock Option is granted (or until the next
annual meeting of the stockholders of the Company, in the case of an
Independent Director). In consideration of the granting of an Incentive
Stock Option, the Optionee shall agree, in the written Stock Option
Agreement, to remain in the employ of the Company or a Company Subsidiary for
a period of at least one year after the Incentive Stock Option is granted.
Nothing in this Plan or in any Stock Option Agreement hereunder shall confer
upon any Optionee any right to continue in the employ of the Company, any
Company Subsidiary or as a director of the Company.
ARTICLE V
EXERCISE OF OPTIONS
5.1 PARTIAL EXERCISE. An exercisable Option may be exercised in whole
or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
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5.2 MANNER OF EXERCISE. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:
(a) A written notice complying with the applicable rules
established by the Committee (or the Board in the case of Options granted to
Independent Directors) or the Company stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Optionee or other
person then entitled to exercise the Option or such portion;
(b) Such representations and documents as the Committee (or the
Board, in the case of Options granted to Independent Directors), in its
absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act of 1933, as amended, and any
other federal or state securities laws or regulations. The Committee or
Board may, in its absolute discretion, also take whatever additional actions
it deems appropriate to effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-transfer notices to
agents and registrars;
(c) In the event that the Option shall be exercised pursuant to
Section 10.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment to (i) the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee (or the Board, in the case of Options granted to
Independent Directors), may in its discretion (i) allow a delay in payment up
to thirty (30) days from the date the Option, or portion thereof, is
exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionee, duly endorsed for transfer to
the Company with a Fair Market Value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof; (iii)
allow payment, in whole or in part, through the surrender of shares of Common
Stock then issuable upon exercise of the Option having a Fair Market Value on
the date of Option exercise equal to the aggregate exercise price of the
Option or exercised portion thereof; (iv) allow payment, in whole or in part,
through the delivery of property of any kind which constitutes good and
valuable consideration; (v) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code)
and payable upon such terms as may be prescribed by the Committee or the
Board; (vi) allow payment, in whole or in part, through the delivery of a
notice that the Optionee has placed a market sell order with a broker with
respect to shares of Common Stock then issuable upon exercise of the Option,
and that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise
price; or (vii) allow payment through any combination of the consideration
provided in the foregoing subparagraphs (ii), (iii), (iv), (v) and (vi). In
the case of a promissory note, the Committee (or the Board, in the case of
Options granted to Independent Directors) may also prescribe the form of such
note and the security to be given for such note. The Option may not be
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exercised, however, by delivery of a promissory note or by a loan from the
Company when or where such loan or other extension of credit is prohibited by
law.
5.3 TRANSFER OF SHARES TO A COMPANY EMPLOYEE OR INDEPENDENT
DIRECTOR. As soon as practicable after receipt by the Company, pursuant to
Section 5.2(d), of payment for the shares with respect to which an Option
(which in the case of a Company Employee was issued to and is held by such
Company Employee in his or her capacity as a Company Employee), or portion
thereof, is exercised by an Optionee who is a Company Employee or Independent
Director, with respect to each such exercise, the Company shall transfer to
the Optionee the number of shares equal to
(a) the amount of the payment made by the Optionee to the Company
pursuant to Section 5.2(d), DIVIDED BY
(b) the price per share of the shares subject to the Option as
determined pursuant to Section 4.2.
5.4 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Committee or Board shall, in its
absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee or Board shall, in
its absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may establish from time to
time for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
5.5 RIGHTS AS STOCKHOLDERS. The holders of Options shall not be,
nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares
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purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
5.6 OWNERSHIP AND TRANSFER RESTRICTIONS. Shares acquired through
the exercise of an Option shall be subject to the restrictions on ownership
and transfer set forth in the Company's Amended and Restated Charter. The
Committee (or the Board, in the case of Options granted to Independent
Directors), in its absolute discretion, may impose such additional
restrictions on the ownership and transferability of the shares purchasable
upon the exercise of an Option as it deems appropriate. Any such restriction
shall be set forth in the respective Stock Option Agreement and may be
referred to on the certificates evidencing such shares. The Committee may
require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option
within (i) two years from the date of granting such Option to such Employee
or (ii) one year after the transfer of such shares to such Employee. The
Committee (or the Board, in the case of Options granted to Independent
Directors) may direct that the certificates evidencing shares acquired by
exercise of an Option refer to such requirement to give prompt notice of
disposition.
5.7 RESTRICTIONS ON EXERCISE OF OPTION. An Option is not
exercisable if in the sole and absolute discretion of the Committee the
exercise of such Option would likely result in any of the following:
(a) the Optionee's or any other person's ownership of Capital
Stock being in violation of the Stock Ownership Limit;
(b) income to the Company that could impair the Company's status
as a real estate investment trust, within the meaning of Sections 856
through 860 of the Code; or
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 AWARD OF RESTRICTED STOCK.
(a) The Committee may from time to time, in its absolute
discretion:
(i) Select from among the key Employees or consultants
(including Employees or consultants who have previously received other
awards under this Plan) such of them as in its opinion should be awarded
Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms
and conditions applicable to such Restricted Stock, consistent with this
Plan.
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(b) The Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock; PROVIDED, HOWEVER, that such purchase
price shall be no less than the par value of the Common Stock to be purchased
unless otherwise permitted by applicable state law. In all cases, legal
consideration shall be required for each issuance of Restricted Stock.
(c) Upon the selection of a key Employee or consultant to be
awarded Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.
6.2 RESTRICTED STOCK AGREEMENT. Restricted Stock shall be issued
only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee or consultant and an authorized officer
of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with this Plan.
6.3 CONSIDERATION. As consideration for the issuance of
Restricted Stock, in addition to payment of any purchase price, the
Restricted Stockholder shall agree, in the written Restricted Stock
Agreement, to remain in the employ of, or to consult for, the Company or a
Company Subsidiary (whichever is applicable) for a period of at least one
year after the Restricted Stock is issued (or such shorter period as may be
fixed in the Restricted Stock Agreement or by action of the Committee
following grant of the Restricted Stock). Nothing in this Plan or in any
Restricted Stock Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of, or as a consultant for,
the Company or any Company Subsidiary or shall interfere with or restrict in
any way the rights of the Company or any Company Subsidiary, which are hereby
expressly reserved, to discharge any Restricted Stockholder at any time for
any reason whatsoever, with or without good cause.
6.4 RIGHTS AS STOCKHOLDERS. Upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 6.7, the Restricted
Stockholder shall have, unless otherwise provided by the Committee, all the
rights of a stockholder with respect to said shares, subject to the
restrictions in his Restricted Stock Agreement, including the right to
receive all dividends and other distributions paid or made with respect to
the shares; PROVIDED, HOWEVER, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall be subject
to the restrictions set forth in Section 6.5.
6.5 RESTRICTION. All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or
any other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation,
restrictions concerning voting rights and transferability and restrictions
based on duration of employment with the Company, Company performance and
individual performance; PROVIDED, HOWEVER,
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that, unless the Committee otherwise provides in the terms of the Restricted
Stock Agreement or otherwise, no share of Restricted Stock granted to a
person subject to Section 16 of the Exchange Act shall be sold, assigned or
otherwise transferred until at least six months have elapsed from (but
excluding) the date on which the Restricted Stock was issued, and PROVIDED,
FURTHER, that by action taken after the Restricted Stock is issued, the
Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of
the Restricted Stock Agreement. Restricted Stock may not be sold or
encumbered until all restrictions are terminated or expire. Unless provided
otherwise by the Committee, if no consideration was paid by the Restricted
Stockholder upon issuance, a Restricted Stockholder's rights in unvested
Restricted Stock shall lapse upon Termination of Employment or, if
applicable, upon Termination of Consultancy with the Company.
6.6 REPURCHASE OF RESTRICTED STOCK. The Committee shall provide
in the terms of each individual Restricted Stock Agreement that the Company
shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock
Agreement immediately upon a Termination of Employment or, if applicable,
upon a Termination of Consultancy between the Restricted Stockholder and the
Company, at a cash price per share equal to the price paid by the Restricted
Stockholder for such Restricted Stock; PROVIDED, HOWEVER, that provision may
be made that no such right of repurchase shall exist in the event of a
Termination of Employment or Termination of Consultancy without cause, or
following a change in control of the Company, or because of the Restricted
Stockholder's retirement, death or disability, or otherwise.
6.7 ESCROW. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions
imposed under the Restricted Stock Agreement with respect to the shares
evidenced by such certificate expire or shall have been removed.
6.8 LEGEND. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted
Stock that are still subject to restrictions under Restricted Stock
Agreements, which legend or legends shall make appropriate reference to the
conditions imposed thereby.
ARTICLE VII
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
7.1 PERFORMANCE AWARDS. Any key Employee or consultant selected
by the Committee may be granted one or more Performance Awards. The value of
such Performance Awards may be linked to the market value, book value, net
profits or other measure of
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the value of Common Stock or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or
over any period or periods determined by the Committee, or may be based upon
the appreciation in the market value, book value, net profits or other
measure of the value of a specified number of shares of Common Stock over a
fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee or
consultant.
7.2 DIVIDEND EQUIVALENTS. Any key Employee or consultant
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment
dates, during the period between the date an Option, Stock Appreciation
Right, Deferred Stock or Performance Award is granted, and the date such
Option, Stock Appreciation Right, Deferred Stock or Performance Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock
by such formula and at such time and subject to such limitations as may be
determined by the Committee. With respect to Dividend Equivalents granted
with respect to Options intended to be qualified performance-based
compensation for purposes of Section 162(m) of the Code, such Dividend
Equivalents shall be payable regardless of whether such Option is exercised.
7.3 STOCK PAYMENTS. Any key Employee or consultant selected by
the Committee may receive Stock Payments in the manner determined from time
to time by the Committee. The number of shares shall be determined by the
Committee and may be based upon the Fair Market Value, book value, net
profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, determined on
the date such Stock Payment is made or on any date thereafter.
7.4 DEFERRED STOCK. Any key Employee or consultant selected by
the Committee may be granted an award of Deferred Stock in the manner
determined from time to time by the Committee. The number of shares of
Deferred Stock shall be determined by the Committee and may be linked to the
market value, book value, net profits or other measure of the value of Common
Stock or other specific performance criteria determined to be appropriate by
the Committee, in each case on a specified date or dates or over any period
or periods determined by the Committee. Common Stock underlying a Deferred
Stock award will not be issued until the Deferred Stock award has vested,
pursuant to a vesting schedule or performance criteria set by the Committee.
Unless otherwise provided by the Committee, a Grantee of Deferred Stock shall
have no rights as a Company stockholder with respect to such Deferred Stock
until such time as the award has vested and the Common Stock underlying the
award has been issued.
7.5 PERFORMANCE AWARD AGREEMENT, DIVIDEND EQUIVALENT AGREEMENT,
DEFERRED STOCK AGREEMENT, STOCK PAYMENT AGREEMENT. Each Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall be
evidenced by a written
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agreement, which shall be executed by the Grantee and an authorized Officer
of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with this Plan.
7.6 TERM. The term of a Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment shall be set by the Committee in
its discretion.
7.7 EXERCISE UPON TERMINATION OF EMPLOYMENT. A Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment is
exercisable or payable only while the Grantee is an Employee or consultant;
provided that the Committee may determine that the Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment may be
exercised or paid subsequent to Termination of Employment or Termination of
Consultancy without cause, or following a change in control of the Company,
or because of the Grantee's retirement, death or disability, or otherwise.
7.8 PAYMENT ON EXERCISE. Payment of the amount determined under
Section 7.1 or 7.2 above shall be in cash, in Common Stock or a combination
of both, as determined by the Committee. To the extent any payment under
this Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.6 and 5.8.
7.9 CONSIDERATION. In consideration of the granting of a
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company or any Subsidiary for a period of
at least one year after such Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is granted (or such shorter period as may
be fixed in such agreement or by action of the Committee following such
grant). Nothing in this Plan or in any agreement hereunder shall confer on
any Grantee any right to continue on the employ of, or as a consultant for,
the Company or any Company Subsidiary or shall interfere with or restrict in
any way the rights of the Company or any Company Subsidiary, which are hereby
expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without good cause.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 GRANT OF STOCK APPRECIATION RIGHTS. A Stock Appreciation
Right may be granted to any key Employee or consultant selected by the
Committee. A Stock Appreciation Right may be granted (i) in connection and
simultaneously with the grant of an Option, (ii) with respect to a previously
granted Option, or (iii) independent of an Option. A Stock Appreciation
Right shall be subject to such terms and conditions not inconsistent with
this Plan as the Committee shall impose and shall be evidenced by a written
Stock Appreciation Right Agreement, which shall be executed by the Grantee
and an authorized officer of the Company.
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The Committee, in its discretion, may determine whether a Stock Appreciation
Right is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code and Stock Appreciation Right Agreements evidencing
Stock Appreciation Rights intended to so qualify shall contain such terms and
conditions as may be necessary to meet the applicable provisions of section
162(m) of the Code. Without limiting the generality of the foregoing, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition of the grant of a Stock Appreciation Right to an
Employee or consultant that the Employee or consultant surrender for
cancellation some or all of the unexercised Options, awards of Restricted
Stock or Deferred Stock, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments, or other rights which have been
previously granted to him under this Plan or otherwise. A Stock Appreciation
Right, the grant of which is conditioned upon such surrender, may have an
exercise price lower (or higher) than the exercise price of the surrendered
Option or other award, may cover the same (or a lesser or greater) number of
shares as such surrendered Option or other award, may contain such other
terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.
8.2 COUPLED STOCK APPRECIATION RIGHTS.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be related
to a particular Option and shall be exercisable only when and to the extent
the related Option is exercisable.
(b) A CSAR may be granted to the Grantee for no more than the
number of shares subject to the simultaneously or previously granted Option
to which it is coupled.
(c) A CSAR shall entitle the Grantee (or other person entitled to
exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company, as
provided in the CSAR agreement, in exchange therefor an amount determined by
multiplying the difference obtained by subtracting the Option exercise price
from the Fair Market Value of a share of Common Stock on the date of exercise
of the CSAR by the number of shares of Common Stock with respect to which the
CSAR shall have been exercised, subject to any limitations the Committee may
impose.
8.3 INDEPENDENT STOCK APPRECIATION RIGHTS.
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that unless the Committee otherwise provides in
the terms of the ISAR or otherwise, no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months
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have elapsed from (but excluding) the date on which the Option was granted.
The exercise price per share of Common Stock subject to each ISAR shall be
set by the Committee. An ISAR is exercisable only while the Grantee is an
Employee or consultant; provided that the Committee may determine that the
ISAR may be exercised subsequent to Termination of Employment or Termination
of Consultancy without cause, or following a change in control of the
Company, or because of the Grantee's retirement, death or disability, or
otherwise.
(b) An ISAR shall entitle the Grantee (or other person entitled
to exercise the ISAR pursuant to this Plan) to exercise all or a specified
portion of the ISAR (to the extent then exercisable pursuant to its terms)
and to receive from the Company, as provided in the ISAR agreement, an amount
determined by multiplying the difference obtained by subtracting the exercise
price per share of the ISAR from the Fair Market Value of a share of Common
Stock on the date of exercise of the ISAR by the number of shares of Common
Stock with respect to which the ISAR shall have been exercised, subject to
any limitations the Committee may impose.
8.4 PAYMENT AND LIMITATIONS ON EXERCISE.
(a) Payment of the amount determined under Section 8.2(c) and
8.3(b) above shall be in cash, in Common Stock (based on its Fair Market
Value as of the date the Stock Appreciation Right is exercised) or a
combination of both, as determined by the Committee. To the extent such
payment is effected in Common Stock it shall be made subject to satisfaction
of all provisions of Section 5.6 and Section 5.8 hereinabove pertaining to
Options.
(b) Grantees of Stock Appreciation Rights may be required to
comply with any timing or other restrictions with respect to the settlement
or exercise of a Stock Appreciation Right, including a window-period
limitation, as may be imposed in the discretion of the Board or Committee.
8.5 CONSIDERATION. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock
Appreciation Right Agreement, to remain in the employ of, or to consult for,
the Company or any Subsidiary for a period of at least one year after the
Stock Appreciation Right is granted (or such shorter period as may be fixed
in the Stock appreciation Right Agreement or by action of the Committee
following grant of the Restricted Stock). Nothing in this Plan or in any
Stock Appreciation Right Agreement hereunder shall confer on any Grantee any
right to continue on the employ of, or as a consultant for, the Company or
any Company Subsidiary or shall interfere with or restrict in any way the
rights of the Company or any Company Subsidiary, which are hereby expressly
reserved, to discharge any Grantee at any time for any reason whatsoever,
with or without good cause.
ARTICLE IX
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ADMINISTRATION
9.1 COMPENSATION COMMITTEE. Prior to the Company's initial
registration of Common Stock under Section 12 of the Exchange Act, the
Compensation Committee shall consist of the entire Board. Following such
registration, the Compensation Committee (or another committee or a
subcommittee of the Board assuming the functions of the Committee under this
Plan) shall consist solely of two or more Independent Directors appointed by
and holding office at the pleasure of the Board, each of whom is both a
"non-employee director" as defined by Rule 16b-3 and an "outside director"
for purposes of Section 162(m) of the Code. Appointment of Committee members
shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in
the Committee may be filled by the Board.
9.2 DUTIES AND POWERS OF COMMITTEE. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this
Plan and the agreements pursuant to which Options and awards of Restricted
Stock or Deferred Stock, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments are granted or awarded, and to adopt
such rules for the administration, interpretation, and application of this
Plan as are consistent therewith and to interpret, amend or revoke any such
rules. Notwithstanding the foregoing, the full Board, acting by a majority of
its members in office, shall conduct the general administration of the Plan
with respect to Options granted to Independent Directors. Any such grant or
award under this Plan need not be the same with respect to each Optionee,
Grantee or Restricted Stockholder. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under this Plan except with respect to matters which under Rule
16b-3 or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the sole discretion of the
Committee.
9.3 MAJORITY RULE; UNANIMOUS WRITTEN CONSENT. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by
all members of the Committee.
9.4 COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS.
Members of the Committee shall receive such compensation for their services
as members as may be determined by the Board. All expenses and liabilities
which members of the Committee incur in connection with the administration of
this Plan shall be borne by the Company. The Committee may, with the
approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, Grantees, Restricted
Stockholders, the Company and all other interested persons. No members
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of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options or awards of Restricted Stock, Deferred Stock, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments, and all
members of the Committee and the Board shall be fully protected by the
Company in respect of any such action, determination or interpretation.
9.5 DELEGATION OF AUTHORITY. The Committee may in its sole and
absolute discretion delegate to the Chief Financial Officer of the Company or
the Secretary of the Company, or both, any or all of the administrative
duties and authority of the Committee under this Plan, other than the
authority to make grants or awards under this Plan to Employees who are
officers of the Company within the meaning of Rule 16(a)-1(b) of the Exchange
Act or whose total compensation is required to be reported to the Company's
stockholders under the Exchange Act, to determine the price, timing or amount
of such grants or awards or to determine any other matter required by Rule
16b-3 or Code Section 162(m) to be determined in the sole and absolute
discretion of the Committee.
9.6 NO LIABILITY. No member of the Board or the Committee, or
director, officer or employee of the Company or any Company Subsidiary, shall
be liable, responsible or accountable in damages or otherwise for any
determination made or other action taken or any failure to act by such person
so long as such person is not determined to be guilty by a final adjudication
of willful misconduct with respect to such determination, action or failure
to act.
9.7 INDEMNIFICATION. To the fullest extent permitted by law,
each of the members of the Board and the Committee and each of the directors,
officers and employees of the Company and any Company Subsidiary, shall be
held harmless and be indemnified by the Company for any liability, loss
(including amounts paid in settlement), damages or expenses (including
reasonable attorneys' fees) suffered by virtue of any determinations, acts or
failures to act, or alleged acts or failures to act, in connection with the
administration of this Plan so long as such person is not determined by a
final adjudication to be guilty of willful misconduct with respect to such
determination, action or failure to act.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 NOT TRANSFERABLE. Options, Restricted Stock awards,
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of
descent and distribution or pursuant to a QDRO, unless and until such rights
or awards have been exercised, or the shares underlying such rights or awards
have been issued, and all restrictions applicable to such shares have lapsed.
No Option, Restricted Stock award, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend
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Equivalent or Stock Payment, or interest or right therein shall be liable for
the debts, contracts or engagements of the Optionee, Grantee or Restricted
Stockholder or his successors in interest or shall be subject to disposition
by transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other
legal or equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect, except to the
extent that such disposition is permitted by the preceding sentence.
During the lifetime of the Optionee or Grantee, only he may exercise
an Option or other right or award (or any portion thereof) granted to him
under the Plan, unless it has been disposed of pursuant to a QDRO. After the
death of the Optionee or Grantee, any exercisable portion of an Option or
other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or
other agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or Grantee's will or under
the then applicable laws of descent and distribution.
10.2 AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN. Except
as otherwise provided in this Section 10.2, this Plan may be wholly or
partially amended or otherwise modified, suspended or terminated at any time
or from time to time by the Board or the Committee. However, without
approval of the Company's stockholders given within twelve months before or
after the action by the Board or the Committee, no action of the Board or the
Committee may, except as provided in Section 10.3, increase the limits
imposed in Section 2.1 on the maximum number of shares which may be issued
under this Plan or modify the Award Limit, and no action of the Committee may
be taken that would otherwise require stockholder approval as a matter of
applicable law, regulation or rule. No amendment, suspension or termination
of this Plan shall, without the consent of the holder of Options, Restricted
Stock awards, Deferred Stock awards, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, alter or impair any rights or
obligations under any Options, Restricted Stock awards, Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, theretofore granted or awarded, unless the award itself otherwise
expressly so provides. No Options, Restricted Stock, Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted or awarded during any period of suspension or after
termination of this Plan, and in no event may any Incentive Stock Option be
granted under this Plan after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is
adopted by the Board; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 10.4.
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10.3 CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY,
ACQUISITION OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.
(a) Subject to Section 10.3(e), in the event that the Committee
(or the Board, in the case of Options granted to Independent Directors)
determines that any dividend or other distribution (whether in the form of
cash, Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company (including, but not limited
to, a Corporate Transaction), or exchange of Common Stock or other securities
of the Company, issuance of warrants or other rights to purchase Common Stock
or other securities of the Company, or other similar corporate transaction or
event, in the Committee's sole discretion (or in the case of Options granted
to Independent Directors, the Board's sole discretion), affects the Common
Stock such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with
respect to an Option, Restricted Stock award, Performance Award, Stock
Appreciation Right, Dividend Equivalent, Deferred Stock award, or Stock
Payment, then the Committee (or the Board, in the case of Options granted to
Independent Directors) shall, in such manner as it may deem equitable, adjust
any or all of
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be
granted under the Plan, or which may be granted as Restricted Stock or
Deferred Stock (including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares which
may be issued and adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments and in
the number and kind of shares of outstanding Restricted Stock or Deferred
Stock, and
(iii) the grant or exercise price with respect to any
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment.
(b) Subject to Section 10.3(e), in the event of any corporate
transaction or other transaction or event described in Section 10.3(a) which
results in shares of Common Stock being exchanged for or converted into cash,
securities (including securities of another corporation) or other property,
the Committee will have the right to terminate this Plan as of the date of
the event or transaction, in which case all options, rights and other awards
granted under this Plan shall become the right to receive such cash,
securities or other property, net of any applicable exercise price.
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(c) Subject to Sections 10.3(c)(vii) and 10.3(e), in the event
of any Corporate Transaction or other transaction or event described in Section
10.3(a) or any unusual or nonrecurring transactions or events affecting the
Company, any affiliate of the Company, or the financial statements of the
Company or any affiliate, or of changes in applicable laws, regulations, or
accounting principles, the Committee (or the Board, in the case of Options
granted to Independent Directors) in its discretion is hereby authorized to take
any one or more of the following actions whenever the Committee (or the Board,
in the case of Options granted to Independent Directors) determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any option, right or other award under this Plan, to facilitate
such transactions or events or to give effect to such changes in laws,
regulations or principles:
(i) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may provide, either by
the terms of the agreement or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the optionee's
request, for either the purchase of any such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment, or any
Restricted Stock or Deferred Stock for an amount of cash equal to the
amount that could have been attained upon the exercise of such option,
right or award or realization of the optionee's rights had such option,
right or award been currently exercisable or payable or fully vested as the
replacement of such option, right or award with other rights or property
selected by the Committee (or the Board, in the case of Options granted to
Independent Directors) in its sole discretion;
(ii) In its sole and absolute discretion, the Committee
(or the Board, in the case of Options granted to Independent Directors) may
provide, either by the terms of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment, or Restricted
Stock or Deferred Stock or by action taken prior to the occurrence of such
transaction or event that it cannot be exercised after such event;
(iii) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may provide, either by
the terms of such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payments, or Restricted Stock or Deferred
Stock or by action taken prior to the occurrence of such transaction or
event, that for a specified period of time prior to such transaction or
event, such option, right or award shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in (i) Section
4.4 or (ii) the provisions of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment, or Restricted
Stock or Deferred Stock;
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(iv) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may provide, either by
the terms of such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent, Stock Payment, or Restricted Stock or Deferred Stock
or by action taken prior to the occurrence of such transaction or event,
that upon such event, such option, right or award be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering the
stock of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares
and prices;
(v) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may make adjustments in
the number and type of shares of Common Stock (or other securities or
property) subject to outstanding Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments and in the
number and kind of outstanding Restricted Stock or Deferred Stock and/or in
the terms and conditions of (including the grant or exercise price), and
the criteria included in, outstanding options, rights and awards and
options, rights and awards which may be granted in the future;
(vi) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee may provide either by
the terms of a Restricted Stock award or Deferred Stock award or by action
taken prior to the occurrence of such event that, for a specified period of
time prior to such event, the restrictions imposed under a Restricted Stock
Agreement or Deferred Stock Agreement upon some or all shares of Restricted
Stock or Deferred Stock may be terminated, and, in the case of Restricted
Stock, some or all shares of such Restricted Stock may cease to be subject
to repurchase under Section 6.6 or forfeiture under Section 6.5 after such
event; and
(vii) None of the foregoing discretionary terms of this
Section 10.3(c) shall be permitted with respect to Options granted under
Section 3.4(d) to Independent Directors to the extent that such discretion
would be inconsistent with the applicable exemptive conditions of Rule
16b-3. In the event of a Change in Control or a Corporate Transaction, to
the extent that the Board does not have the ability under Rule 16b-3 to take
or to refrain from taking the discretionary actions set forth above, each
Option granted to an Independent Director shall be exercisable as to all
shares covered thereby upon such Change in Control or during the five days
immediately preceding the consummation of such Corporate Transaction and
subject to such consummation, notwithstanding anything to the contrary in
Section 4.4 or the vesting schedule of such Options. In the event of a
Corporate Transaction, to the extent that the Board does not have the
ability under Rule 16b-3 to take or to refrain from taking the
discretionary actions set forth above, no Option granted to an Independent
Director may be exercised
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following such Corporate Transaction; unless such Option is in connection
with such Corporate Transaction either assumed by the successor or survivor
corporation (or parent or subsidiary thereof) or replaced with a comparable
right with respect to shares of the capital stock of the successor or
survivor corporation (or parent or subsidiary thereof).
(d) Subject to Section 10.3(e) and 10.8, the Committee (or the
Board, in the case of Options granted to Independent Directors) may, in its
discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.
(e) With respect to Incentive Stock Options and Options and
Stock Appreciation Rights intended to qualify as performance-based compensation
under Section 162(m) of the Code, no adjustment or action described in this
Section 10.3 or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause the Plan to violate
Section 422(b)(1) of the Code or would cause such option or stock appreciation
right to fail to so qualify under Section 162(m) of the Code, as the case may
be, or any successor provisions thereto. Furthermore, no such adjustment or
action shall be authorized to the extent such adjustment or action would result
in short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Committee (or the Board, in the case of
Options granted to Independent Directors) determines that the option or other
award is not to comply with such exemptive conditions. The number of shares of
Common Stock subject to any option, right or award shall always be rounded to
the next whole number.
10.4 APPROVAL OF PLAN BY STOCKHOLDERS. This Plan will be submitted
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be granted
and Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments shall not be exercisable and such
Restricted Stock or Deferred Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments previously granted and all Restricted Stock or Deferred Stock
previously awarded under this Plan shall thereupon be canceled and become null
and void.
10.5 TAX WITHHOLDING. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to the issuance, vesting or exercise
of any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. The
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Committee (or the Board, in the case of Options granted to Independent
Directors) may in its discretion and in satisfaction of the foregoing
requirement allow such Optionee, Grantee or Restricted Stockholder to elect
to have the Company withhold shares of Common Stock otherwise issuable under
such Option or other award (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld.
10.6 LOANS. The Committee may, in its discretion, extend one or more
loans to key Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or the issuance of Restricted Stock or Deferred Stock awarded under this
Plan. The terms and conditions of any such loan shall be set by the Committee.
10.7 FORFEITURE PROVISIONS. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall have the right (to the extent consistent with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of Options or other
awards made under the Plan, or to require the recipient to agree by separate
written instrument, that (i) any proceeds, gains or other economic benefit
actually or constructively received by the recipient upon any receipt or
exercise of the award, or upon the receipt or resale of any Common Stock
underlying such award, must be paid to the Company, and (ii) the award shall
terminate and any unexercised portion of such award (whether or not vested)
shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, or
(b) the recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee (or
the Board, as applicable).
10.8 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND
PERFORMANCE-BASED COMPENSATION. Notwithstanding any other provision of this
Plan, this Plan, and any Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment granted, or Restricted Stock or Deferred
Stock awarded, to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable
law, the Plan, Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents, Stock Payments, Restricted Stock and Deferred Stock
granted or awarded hereunder shall be deemed amended to the extent necessary
to conform to such applicable exemptive rule. Furthermore,
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notwithstanding any other provision of this Plan, any Option or Stock
Appreciation Rights intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such
requirements.
10.9 EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The
adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Company Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company (i) to establish
any other forms of incentives or compensation for Employees, Directors or
Consultants of the Company or any Company Subsidiary or (ii) to grant or
assume options or other rights otherwise than under this Plan in connection
with any proper corporate purpose including but not by way of limitation, the
grant or assumption of options in connection with the acquisition by
purchase, lease, merger, consolidation or otherwise, of the business, stock
or assets of any corporation, partnership, firm or association.
10.10 SECTION 83(B) ELECTION PROHIBITED. No Grantee, Optionee or
Restricted Stockholder may make an election under Section 83(b) of the Code with
respect to any award or grant under this Plan.
10.11 COMPLIANCE WITH LAWS. This Plan, the granting and vesting of
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
10.12 TITLES. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan.
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10.13 GOVERNING LAW. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Maryland without regard to conflicts of laws thereof.
10.14 CONFLICTS WITH COMPANY'S RESTATED ARTICLES. Notwithstanding any
other provision of this Plan, no Optionee, Grantee or Restricted Stockholder
shall acquire or have any right to acquire any Common Stock, and shall not have
other rights under this Plan, which are prohibited under the Company's Restated
Articles.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers duly authorized on this ___ day of ___________,
1997.
PAN PACIFIC RETAIL PROPERTIES, INC.,
a Maryland corporation.
By _________________________________
Stuart A. Tanz
Chief Executive Officer and President
Attest:
_________________________________
David L. Adlard
Secretary
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