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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)*
Partners Preferred Yield, Inc.
(Name of Issuer)
Common Stock Series A
(Title of Class of Securities)
702126 10 3
(CUSIP Number)
David Goldberg, 701 Western Avenue, Suite 200, Glendale,
California 91201-2397, 818/244-8080, ext. 529
--------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 15, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 702126 10 3 SCHEDULE 13D PAGE 2 OF 4 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PUBLIC STORAGE, INC.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
CALIFORNIA
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 438,503
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
N/A
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 438,503
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
N/A
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
438,503
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
12
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
14.25%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
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The Statement on Schedule 13D dated November 16, 1995, as amended and
restated by Amendment No. 1 dated March 20, 1996 and Amendment No. 2 dated April
22, 1996 and amended by Amendment No. 3 dated June 21, 1996 (the "Schedule 13D")
filed by Public Storage, Inc. (the "Reporting Person"), relating to the Common
Stock Series A, par value $.01 per share (the "Common Stock Series A" or the
"Series A Shares"), of Partners Preferred Yield, Inc., a California corporation
(the "Issuer"), is amended by this Amendment No. 4 as set forth below. Defined
terms that are not defined herein have the meanings assigned to those terms in
the Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration
The 184,200 Series A Shares acquired by the Reporting Person (as of
August 15, 1996) other than in the merger of Public Storage Management, Inc.
into the reporting Person were purchased for an aggregate cost (including
commissions) of approximately $2,928,727, with funds obtained from the Reporting
Person's working capital.
Item 4. Purpose of Transaction
The Reporting Person and the Issuer have entered into an Agreement and
Plan of Reorganization dated as of August 15, 1996 (the "Merger Agreement")
providing for the merger of the Issuer with and into the Reporting Person, which
is subject to certain conditions (as described below). Upon the merger, each
Series A Share (other than Series A Shares held by the Reporting Person or by
holders of Series A Shares of the Issuer who have properly exercised dissenters'
rights under California law ("Dissenting Shares")) would be converted into the
rights to receive cash, the Reporting Person's common stock or a combination of
the two, as follows: (i) with respect to a certain number of Series A Shares
(not to exceed 20% of the Series A Shares, less any Dissenting Shares), upon a
shareholder's election, $19.00 in cash, subject to reduction as described below
or (ii) that number (subject to rounding) of shares of the Reporting Person's
common stock determined by dividing $19.00, subject to reduction as described
below, by the average of the per share closing prices on the New York Stock
Exchange of the Reporting Person's common stock during the 20 consecutive
trading days ending on the fifth trading day prior to the special meeting of the
shareholders of the Issuer. The consideration paid by the Reporting Person in
the merger will be reduced on a pro rata basis by the amount of cash
distributions required to be paid by the Issuer to its shareholders prior to
completion of the merger in order to satisfy the Issuer's REIT distribution
requirements ("Required REIT Distributions"). The consideration received by the
holders of the Issuer's Series A Shares in the merger, however, along with any
Required REIT Distributions, will not be less than $19.00 per Series A Share,
which amount represents the market value of the Issuer's real estate assets at
June 30, 1996 (based on an independent appraisal) and the estimated net asset
value of its other assets at December 31, 1996. Additional distributions would
be made to the shareholders of the Issuer to cause the Issuer's estimated net
asset value as of the date of the merger to be substantially equivalent to its
estimated net asset value as of December 31, 1996. Upon the merger, each share
of the Issuer's Common Stock Series B, Common Stock Series C and Common Stock
Series D would be converted into the right to receive $11.66 in the Reporting
Person's common stock (valued as in the case of the Series A Shares) plus any
Required REIT Distributions. There are 831,485 shares of the Issuer's Common
Stock Series B, Common Stock Series C and Common Stock Series D. The Series A
Shares and the shares of the Issuer's Common Stock Series B, Common Stock
Series C and Common Stock Series D held by the Reporting Person will be
cancelled in the merger. The merger is subject to (among other things) approval
by the Issuer's shareholders and receipt of a satisfactory fairness opinion by
the Issuer. The Reporting Person believes that the conditions to the merger
will be satisfied, although there can be no assurance.
For further information regarding the merger, see the Merger Agreement
which is filed as Exhibit 4 hereto and is incorporated herein by this reference.
Item 5. Interest in Securities of the Issuer
As of August 15, 1996, the Reporting Person beneficially owned 438,503
Series A Shares, representing approximately 14.25% of the 3,077,028 Series A
Shares outstanding. The Reporting Person has the sole power to vote and the
sole power to dispose of all of these shares.
3
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During the period commencing June 22, 1996 (i.e., after the date of the
last transaction reported in the Schedule 13D) and ending August 15, 1996, the
Reporting Person engaged in the following acquisitions of Series A Shares at the
following prices (not including commissions):
<TABLE>
<CAPTION>
No. of Price
Series A Type per
Transaction Shares of Series A
Date Bought Transaction Share
- ----------- -------- ----------- --------
<S> <C> <C> <C>
6/24/96 200 open market $16.50
6/25/96 600 open market $16.125
6/27/96 300 open market $16.375
6/27/96 4,900 open market $16.625
6/28/96 500 open market $16.50
7/01/96 800 open market $16.50
7/02/96 800 open market $16.50
7/03/96 500 open market $16.375
7/05/96 800 open market $16.375
7/08/96 900 open market $16.375
7/09/96 500 open market $16.625
7/09/96 400 open market $16.375
7/10/96 900 open market $16.25
7/11/96 500 open market $16.375
7/15/96 600 open market $16.875
7/15/96 300 open market $16.625
7/16/96 900 open market $16.625
7/17/96 200 open market $16.25
7/17/96 200 open market $16.125
7/18/96 900 open market $16.25
7/19/96 200 open market $16.375
7/22/96 300 open market $16.375
</TABLE>
Item 7. Material to be Filed as Exhibits
(Exhibits 1 through 3 are listed in the Schedule 13D)
Exhibit 4 - Agreement and Plan of Reorganization dated as of August 15,
1996 by and among the Reporting Person, the Issuer, Partners Preferred Yield II,
Inc. and Partners Preferred Yield III, Inc.
4
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: August 23, 1996 PUBLIC STORAGE, INC.
By: /s/ SARAH HASS
-----------------------------
Sarah Hass
Vice President
5
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Exhibit 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into as
of this 15th day of August, 1996, by and among PUBLIC STORAGE, INC., a
California corporation ("PSI"), PARTNERS PREFERRED YIELD, INC., a California
corporation ("PPY"), PARTNERS PREFERRED YIELD II, INC., a California corporation
("PPY2") and PARTNERS PREFERRED YIELD III, INC., a California corporation
("PPY3").
A. The parties intend that this Agreement shall constitute a Plan of
Reorganization for purposes of Section 368(a) of the Internal Revenue Code of
1986, as amended. The Plan of Reorganization provides for the mergers of PPY,
PPY2 and PPY3 with and into PSI in accordance with the applicable provisions of
the General Corporation Law of California (the "GCLC") and the Agreements of
Merger substantially in the form attached hereto as Exhibit A ("Merger
Agreements").
B. The Boards of Directors of PSI, PPY, PPY2 and PPY3 believe that it is
in the best interests of such corporations and their respective shareholders to
enter into and complete this Agreement and they have approved this Agreement and
the transactions contemplated hereby.
NOW, THEREFORE, the parties agree as follows:
1. ADOPTION OF PLAN. The parties hereby adopt the Plan of Reorganization
hereinafter set forth.
2. THE MERGER.
2.1 COMPLETION OF THE MERGER. At the Effective Time (as defined
below), PPY, PPY2 and PPY3 will be merged with and into PSI (the "Mergers") in
accordance with the terms, conditions and provisions of this Agreement and the
Merger Agreements. The Mergers shall become effective at the time at which the
Merger Agreements, together with the requisite Officers' Certificates of PSI,
PPY, PPY2 and PPY3 are filed with the California Secretary of State in
accordance with the GCLC (the "Effective Time"). PSI, PPY, PPY2 and PPY3 are
sometimes collectively referred to herein as the "Constituent Corporations" and
PSI, as the surviving corporation of the Mergers, is sometimes referred to
herein as the "Surviving Corporation." The merger of PPY into PSI, the merger
of PPY2 into PSI and the merger of PPY3 into PSI are not conditioned on each
other.
2.2 EFFECT OF THE MERGER. At the Effective Time:
2.2.1 CONSTITUENT CORPORATIONS. The separate corporate existence
of PPY, PPY2 and PPY3 shall cease and the Surviving Corporation shall thereupon
succeed, without other transfer, to all the rights and property of PPY, PPY2 and
PPY3 and shall be subject to all the debts and liabilities of PPY, PPY2 and PPY3
in the same manner as if the Surviving Corporation had itself incurred them; all
rights of creditors and all liens upon the property of each of the Constituent
Corporations shall be preserved unimpaired, provided that such liens upon
property of PPY, PPY2 and PPY3 shall be limited to the property affected thereby
immediately prior to the Effective Time; and any action or proceeding pending by
or against PPY, PPY2 and PPY3 may be prosecuted to judgment, which shall bind
the Surviving Corporation, or the Surviving Corporation may be proceeded against
or substituted in its place.
2.2.2 ARTICLES AND BYLAWS. The Articles of Incorporation and the
Bylaws of PSI, as then amended, shall continue to be the Articles of
Incorporation and the Bylaws of the Surviving Corporation until changed as
provided by law and their respective provisions.
2.2.3 OFFICERS AND DIRECTORS. The officers and directors of PSI
shall continue as officers and directors of the Surviving Corporation until
their successors are elected and qualified as provided by law and in accordance
with the Articles of Incorporation and Bylaws of the Surviving Corporation.
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2.3 CONVERSION OF COMMON STOCK SERIES A. The manner of converting the
outstanding shares of (i) Common Stock Series A ($.01 par value) of PPY (the
"PPY Shares"), (ii) Common Stock Series A ($.01 par value) of PPY2 (the "PPY2
Shares") and (iii) Common Stock Series A ($.01 par value) of PPY3 (the "PPY3
Shares") into cash and/or shares of Common Stock ($.10 par value) of PSI (the
"PSI Shares") shall be as follows:
2.3.1 CASH ELECTION. At the Effective Time, subject to Sections
2.6 and 6.8 hereof, each PPY Share, PPY2 Share and PPY3 Share as to which a cash
election has been made in accordance with the provisions of Section 2.5 hereof
and has not been revoked, relinquished or lost pursuant to Section 2.5 hereof
(the "Cash Election Shares") shall be converted into and shall represent the
right to receive $19, $20.39 and $20.47, respectively, in cash (the "Cash
Election Price"). As soon as practicable after the Effective Time, the
registered holders of Cash Election Shares shall be paid the cash to which they
are entitled hereunder in respect of such Cash Election Shares.
2.3.2 SHARE EXCHANGE. At the Effective Time, subject to Sections
2.4, 2.5, 2.7 and 6.8 hereof, each PPY Share, PPY2 Share and PPY3 Share (other
than Cash Election Shares and PPY, PPY2 and PPY3 Shares owned by PSI) shall be
converted into that number of PSI Shares equal to, rounded to the nearest
thousandth, the quotient (the "Conversion Number") derived by dividing $19,
$20.39 and $20.47, respectively, by the average of the per share closing prices
on the New York Stock Exchange, Inc. (the "NYSE") of PSI Shares during the 20
consecutive trading days ending on the fifth trading day prior to the meeting of
shareholders of PPY, PPY2 and PPY3, respectively, provided for in Section 6.2
hereof. If, prior to the Effective Time, PSI should split or combine the PSI
Shares, or pay a stock dividend, the Conversion Number will be appropriately
adjusted to reflect such action.
2.4 NO FRACTIONAL SHARES. Notwithstanding any other term or provision
of this Agreement, no fractional PSI Shares and no certificates or script
therefor, or other evidence of ownership thereof, will be issued in the Mergers.
In lieu of any such fractional share interests, each holder of PPY, PPY2 and
PPY3 Shares who would otherwise be entitled to such fractional share will, upon
surrender of the certificate representing such PPY, PPY2 and PPY3 Shares,
receive a whole PSI Share if such fractional share to which such holder would
otherwise have been entitled is .5 of an PSI Share or more, and such fractional
share shall be disregarded if it represents less than .5 of an PSI Share;
provided, however, that, such fractional share shall not be disregarded if such
fractional share to which such holder would otherwise have been entitled
represents .5 of 1% or more of the total number of PSI Shares such holder is
entitled to receive in the Mergers. In such event, such holder shall be paid an
amount in cash (without interest), rounded to the nearest $.01, determined by
multiplying (i) the per share closing price on the NYSE of the PSI Shares at the
Effective Time by (ii) the fractional interest.
2.5 PROCEDURE FOR CASH ELECTION. At the time of the mailing of the
Combined Proxy Statement and Prospectus provided for in Section 6.5 hereof, PSI
will send to each holder of record of PPY, PPY2 and PPY3 Shares at the record
date for PPY, PPY2 and PPY3 meetings of shareholders referred to in Section 6.2
hereof a cash election form (the "Form of Election") providing such holder with
the option to elect to receive the Cash Election Price with respect to all or
any portion of such holder's PPY, PPY2 or PPY3 Shares. Any such election to
receive the cash payment contemplated by Section 2.3.1 hereof shall have been
properly made only if The First National Bank of Boston (the "Exchange Agent")
shall have received at its designated office, by 5:00 p.m., New York time, on
the last business day preceding the day of such meeting of shareholders, a Form
of Election properly completed and accompanied by certificates for the shares to
which such Form of Election relates (or an appropriate guarantee of delivery in
a form and on terms satisfactory to PSI), as set forth in such Form of Election.
Any Form of Election may be revoked by the person submitting the same to the
Exchange Agent only by written notice received by the Exchange Agent prior to
5:00 p.m., New York time, on the last business day before the day of the meeting
of shareholders referred to in Section 6.2 hereof. In addition, all Forms of
Election shall automatically be revoked if the Exchange Agent is notified in
writing by the parties hereto that the Mergers have been abandoned. If a Form
of Election is revoked pursuant to this Section 2.5, the certificate or
certificates or any guarantee of delivery in respect of the PPY, PPY2 and PPY3
Shares to which such Form of Election relates shall be promptly returned to the
person submitting the same to the Exchange Agent. The Exchange Agent may
determine whether or not elections to receive cash have been properly made or
revoked pursuant to this Section 2.5, and any such determination shall be
conclusive and binding. If the Exchange Agent determines that any election to
receive cash was not properly or timely made, the PPY, PPY2 and PPY3 Shares
covered thereby shall not be treated as Cash Election Shares, and shall be
converted in the Mergers as provided in Section 2.3.2 hereof. The Exchange
Agent may, with the agreement of PSI, PPY, PPY2 and PPY3,
A-2
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establish such procedures, not inconsistent with this Section 2.5, as may be
necessary or desirable to implement this Section 2.5.
2.6 PROCEDURE FOR PRORATION.
2.6.1 NO PRORATION OF PPY SHARES. If the aggregate number of
Cash Election Shares and Dissenting Shares (as defined below) of PPY is 20% or
less than the number of PPY Shares outstanding as of the record date for the
meeting of shareholders of PPY referred to in Section 6.2, then each Cash
Election Share of PPY shall be converted in the Mergers into the right to
receive the Cash Election Price for PPY Shares.
2.6.2 NO PRORATION OF PPY2 SHARES. If the aggregate number of
Cash Election Shares and Dissenting Shares (as defined below) of PPY2 is 20% or
less than the number of PPY2 Shares outstanding as of the record date for the
meeting of shareholders of PPY2 referred to in Section 6.2, then each Cash
Election Share of PPY2 shall be converted in the Mergers into the right to
receive the Cash Election Price for PPY2 Shares.
2.6.3 NO PRORATION OF PPY3 SHARES. If the aggregate number of
Cash Election Shares and Dissenting Shares (as defined below) of PPY3 is 20% or
less than the number of PPY3 Shares outstanding as of the record date for the
meeting of shareholders of PPY3 referred to in Section 6.2, then each Cash
Election Share of PPY3 shall be converted in the Mergers into the right to
receive the Cash Election Price for PPY3 Shares.
2.6.4 PRORATION OF PPY SHARES. If the aggregate number of Cash
Election Shares and Dissenting Shares of PPY exceeds 20%, then each Cash
Election Share of PPY shall be converted in the Mergers into the right to
receive cash or into PSI Shares as follows: the number of Cash Election Shares
of PPY owned by a holder of PPY Shares that shall be converted into the right to
receive the Cash Election Price for PPY Shares shall equal the number obtained
by multiplying (i) (A) 20% of outstanding PPY Shares less (B) the number of
Dissenting Shares (as hereinafter defined) of PPY, if any, by (ii) a fraction of
which the numerator shall be the number of Cash Election Shares owned by such
holder and the denominator shall be the aggregate number of Cash Election Shares
of PPY. The balance of such Cash Election Shares shall be converted into PSI
Shares in accordance with the provisions of Section 2.3.2 hereof.
Notwithstanding the foregoing, PSI, in its sole discretion, may allow Cash
Election Shares of PPY to receive the Cash Election Price for PPY Shares even if
the aggregate number of Cash Election Shares and Dissenting Shares of PPY
exceeds 20% (but not 50%) of the number of PPY Shares outstanding as of the
record date for the meeting of shareholders of PPY referred to in Section 6.2.
2.6.5 PRORATION OF PPY2 SHARES. If the aggregate number of Cash
Election Shares and Dissenting Shares of PPY2 exceeds 20%, then each Cash
Election Share of PPY2 shall be converted in the Mergers into the right to
receive cash or into PSI Shares as follows: the number of Cash Election Shares
of PPY2 owned by a holder of PPY2 Shares that shall be converted into the right
to receive the Cash Election Price for PPY2 Shares shall equal the number
obtained by multiplying (i) (A) 20% of outstanding PPY2 Shares less (B) the
number of Dissenting Shares (as hereinafter defined) of PPY2, if any, by (ii) a
fraction of which the numerator shall be the number of Cash Election Shares
owned by such holder and the denominator shall be the aggregate number of Cash
Election Shares of PPY2. The balance of such Cash Election Shares shall be
converted into PSI Shares in accordance with the provisions of Section 2.3.2
hereof. Notwithstanding the foregoing, PSI, in its sole discretion, may allow
Cash Election Shares of PPY2 to receive the Cash Election Price for PPY2 Shares
even if the aggregate number of Cash Election Shares and Dissenting Shares of
PPY2 exceeds 20% (but not 50%) of the number of PPY2 Shares outstanding as of
the record date for the meeting of shareholders of PPY2 referred to in Section
6.2.
2.6.6 PRORATION OF PPY3 SHARES. If the aggregate number of Cash
Election Shares and Dissenting Shares of PPY3 exceeds 20%, then each Cash
Election Share of PPY3 shall be converted in the Mergers into the right to
receive cash or into PSI Shares as follows: the number of Cash Election Shares
of PPY3 owned by a holder of PPY3 Shares that shall be converted into the right
to receive the Cash Election Price for PPY3 Shares shall equal the number
obtained by multiplying (i) (A) 20% of outstanding PPY3 Shares less (B) the
number of Dissenting Shares (as hereinafter defined) of PPY3, if any, by (ii) a
fraction of which the numerator shall be the number of Cash Election Shares
owned by such holder and the denominator shall be the aggregate number of Cash
Election Shares of PPY3. The balance of such Cash Election Shares shall be
converted into PSI Shares in accordance with the provisions
A-3
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of Section 2.3.2 hereof. Notwithstanding the foregoing, PSI, in its sole
discretion, may allow Cash Election Shares of PPY3 to receive the Cash Election
Price for PPY3 Shares even if the aggregate number of Cash Election Shares and
Dissenting Shares of PPY3 exceeds 20% (but not 50%) of the number of PPY3 Shares
outstanding as of the record date for the meeting of shareholders of PPY3
referred to in Section 6.2.
2.7 DISSENTING SHARES. PPY, PPY2 and PPY3 Shares held by a holder who
has demanded and perfected his right to an appraisal of such shares in
accordance with Section 1300 et seq. of the GCLC and who has not effectively
withdrawn or lost his right to appraisal ("Dissenting Shares") shall not be
converted into or represent the right to receive cash and/or PSI Shares, but the
holder thereof shall be entitled only to such rights as are granted by Section
1300 et seq. of the GCLC. Each holder of Dissenting Shares who becomes entitled
to payment for PPY, PPY2 or PPY3 Shares pursuant to these provisions of the GCLC
shall receive payment therefor from the Surviving Corporation in accordance
therewith. If any holder of PPY, PPY2 or PPY3 Shares who demands appraisal in
accordance with Section 1300 et seq. of the GCLC shall effectively withdraw with
the consent of the Surviving Corporation or lose (through failure to perfect or
otherwise) his right to appraisal with respect to PPY, PPY2 or PPY3 Shares, such
PPY, PPY2 or PPY3 Shares shall automatically be converted into the right to
receive PSI Shares pursuant to Section 2.3.2 hereof.
2.8 PSI SHARES UNAFFECTED. The Mergers shall effect no change in any
of the outstanding PSI Shares and no outstanding PSI Shares shall be converted
or exchanged as a result of the Mergers, and no cash shall be exchangeable, and
no securities shall be issuable, with respect thereto.
2.9 CANCELLATION OF SHARES HELD OR OWNED BY PARTIES. At the Effective
Time, any PPY, PPY2 and PPY3 Shares owned by PSI shall be cancelled and retired
and no shares shall be issuable, and no cash shall be exchangeable, with respect
thereto.
2.10 EXCHANGE OF CERTIFICATES. After the Effective Time, each holder
of a certificate theretofore evidencing outstanding PPY, PPY2 and PPY3 Shares
which were converted into PSI Shares pursuant hereto, upon surrender of such
certificate to the Exchange Agent or such other agent or agents as shall be
appointed by the Surviving Corporation, shall be entitled to receive a
certificate representing the number of whole PSI Shares into which the PPY, PPY2
and PPY3 Shares theretofore represented by the certificate so surrendered shall
have been converted as provided in Section 2.3.2 hereof and cash payment in lieu
of fractional share interests, if any, as provided in Section 2.4 hereof. As
soon as practicable after the Effective Time, the Exchange Agent will send a
notice and a transmittal form to each holder of PPY, PPY2 and PPY3 Shares of
record at the Effective Time whose stock shall have been converted into PSI
Shares, advising such holder of the effectiveness of the Mergers and the
procedure for surrendering to the Exchange Agent certificates evidencing PPY,
PPY2 and PPY3 Shares in exchange for certificates evidencing PSI Shares.
2.11 STATUS UNTIL SURRENDERED. Until surrendered as provided in
Section 2.10 hereof, each outstanding certificate which, prior to the Effective
Time, represented PPY, PPY2 or PPY3 Shares (other than Cash Election Shares and
Dissenting Shares, if any) will be deemed for all corporate purposes to evidence
ownership of the number of whole PSI Shares into which the PPY, PPY2 or PPY3
Shares evidenced thereby were converted. However, until such outstanding
certificates formerly evidencing PPY, PPY2 or PPY3 Shares are so surrendered, no
dividend payable to holders of record of PSI Shares shall be paid to the holders
of such outstanding certificates in respect of PPY, PPY2 or PPY3 Shares, but
upon surrender of such certificates by such holders there shall be paid to such
holders the amount of any dividends (without interest) theretofore paid with
respect to such whole PSI Shares as of any record date on or subsequent to the
Effective Time and the amount of any cash (without interest) payable to such
holder in lieu of fractional share interests pursuant to Section 2.4 hereof.
2.12 TRANSFER OF SHARES. After the Effective Time, there shall be no
further registration of transfers of PPY, PPY2 and PPY3 Shares on the records of
PPY, PPY2 and PPY3, respectively, and, if certificates formerly evidencing such
shares are presented to the Surviving Corporation, they shall be cancelled and
exchanged for certificates evidencing PSI Shares and cash in lieu of fractional
share interests as herein provided.
A-4
<PAGE>
2.13 CONVERSION OF COMMON STOCK SERIES B, C AND D. At the Effective
Time, subject to Section 6.8 hereof, each share of (i) Common Stock Series B, C
and D ($.01 par value) of PPY, (ii) Common Stock Series B, C and D ($.01 par
value) of PPY2 and (iii) Common Stock Series B, C and D ($.01 par value) of PPY3
(in each case, other than shares owned by PSI) shall be converted into that
number of PSI Shares equal to, rounded to the nearest thousandth, the quotient
derived by dividing $11.66, $12.26 and $12.30, respectively, by the average per
share closing prices on the NYSE of PSI Shares during the 20 consecutive trading
days ending on the fifth trading day prior to the meeting of shareholders of
PPY, PPY2 and PPY3, respectively, provided for in Section 6.2 hereof. If, prior
to the Effective Time, PSI should split or combine the PSI Shares, or pay a
stock dividend, such conversion number will be appropriately adjusted to reflect
such action. At the Effective Time, any Common Stock Series B, C and D of PPY,
PPY2 and PPY3 owned by PSI shall be cancelled and retired and no shares shall be
issuable with respect thereto.
3. CLOSING.
3.1 TIME AND PLACE OF CLOSING. If this Agreement is approved by the
shareholders of PPY, PPY2 or PPY3, a meeting (the "Closing") shall take place as
promptly as practicable thereafter at which the applicable parties will exchange
certificates and other documents as required by this Agreement. Such Closing
shall take place at such time and place as PSI may designate. The date of the
Closing shall be referred to as the "Closing Date."
3.2 EXECUTION AND FILING OF MERGER AGREEMENT. At or before the
Closing and after shareholder approval of PPY, PPY2 or PPY3, the applicable
parties shall execute and deliver the Merger Agreements, together with the
requisite Officers' Certificates, for filing with the California Secretary of
State. The Merger Agreements, together with the requisite Officers'
Certificates, shall be duly filed with the California Secretary of State in
accordance with the GCLC as soon as practicable following the Closing.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PPY, PPY2 AND PPY3.
4.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PPY. PPY
represents, warrants and agrees with PSI that:
4.1.1 AUTHORIZATION. Subject to approval of this Agreement by
the shareholders of PPY, (i) the execution, delivery and performance of this
Agreement by PPY has been duly authorized and approved by all necessary
corporate action of PPY, and (ii) PPY has necessary corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to complete the transactions contemplated hereby.
4.1.2 ORGANIZATION AND RELATED MATTERS. PPY is a corporation
duly organized, existing and in good standing under the laws of the State of
California with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as and where now owned,
leased, operated or carried on, as the case may be; and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business carried on by it requires such qualification and where the failure to
so qualify would have a material adverse effect on the business, properties,
results of operations or financial condition of PPY. PPY has no direct or
indirect equitable or beneficial interest in any other corporation other than
PSCC, Inc.
4.1.3 CAPITAL STOCK. The authorized capital stock of PPY
consists solely of (i) 4,456,328 shares of Common Stock Series A ($.01 par
value), 3,077,028 of which were issued and outstanding as of July 31, 1996, (ii)
420,875 shares of Common Stock Series B ($.01 par value), all of which were
issued and outstanding as of July 31, 1996, (iii) 247,574 shares of Common Stock
Series C ($.01 par value), all of which were issued and outstanding as of July
31, 1996 and (iv) 163,036 shares of Common Stock Series D ($.01 par value), all
of which were issued and outstanding as of July 31, 1996. All of the issued and
outstanding shares of Common Stock Series A, B, C and D of PPY have been duly
and validly authorized and issued, and are fully paid and nonassessable. There
are no options or agreements to which PPY is a party or by which it is bound
calling for or requiring the issuance of any of PPY's capital stock, except that
the shares of Common Stock Series B and C are convertible into shares of Common
Stock Series A in accordance with PPY's Articles of Incorporation.
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4.1.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming approval of
the Mergers and of this Agreement by the shareholders of PPY, neither the
execution and delivery of this Agreement nor the consummation by PPY of the
transactions contemplated hereby will: (i) conflict with or result in any breach
of any provision of its Articles of Incorporation or Bylaws; (ii) require any
consent, waiver, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (A) in
connection with the applicable requirements, if any, of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (B) pursuant to
the applicable requirements of the federal securities laws and the rules and
regulations promulgated thereunder, (C) the filing of the Merger Agreement(s)
and Officers' Certificates pursuant to the GCLC and appropriate documents with
the relevant authorities of other states in which PPY is authorized to do
business, (D) in connection with any state or local tax which is attributable to
the beneficial ownership of PPY's real property, (E) as may be required by any
applicable state securities or takeover laws, or (F) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect on PPY
or adversely affect the ability of PPY to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license, mortgage,
agreement or other instrument or obligation to which PPY is a party or any of
its properties or assets may be bound, except for such violations, breaches and
defaults which, in the aggregate, would not have a material adverse effect on
PPY or adversely affect the ability of PPY to consummate the transactions
contemplated hereby; or (iv) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 4.1.4 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to PPY or its properties or assets,
except for violations which would not in the aggregate have a material adverse
effect on PPY or adversely affect the ability of PPY to consummate the
transactions contemplated hereby.
4.1.5 LITIGATION. There is no litigation, proceeding or
governmental investigation which, individually or in the aggregate, is or may be
material and adverse, pending or, to the knowledge of PPY, threatened against
PPY or involving any of its properties or assets.
4.1.6 SEC REPORTS. Since January 1, 1993, PPY has filed all
forms, reports and documents with the Securities and Exchange Commission ("SEC")
required to be filed by it pursuant to the federal securities laws and the rules
and regulations promulgated by the SEC thereunder, all of which complied in all
material respects with all applicable requirements of the federal securities
laws and such rules and regulations (collectively, the "PPY SEC Reports"). None
of the PPY SEC Reports, including without limitation any financial statements or
schedules included therein, at the time filed contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.1.7 FINANCIAL STATEMENTS. The financial statements included in
the PPY SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods (except
as otherwise noted therein), and present fairly the financial position of PPY as
of their respective dates, and the results of operations of PPY for the periods
presented therein (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
4.1.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1,
1996, the business of PPY has been carried on only in the ordinary and usual
course and there has not been any material adverse change in its business,
results of operations or financial condition, or any damage or destruction in
the nature of a casualty loss, whether covered by insurance or not, that would
materially and adversely affect its properties, business or results of
operations.
4.1.9 S-4 REGISTRATION STATEMENT AND COMBINED PROXY STATEMENT AND
PROSPECTUS. None of the information supplied or to be supplied by PPY for
inclusion or incorporation by reference in the S-4 Registration Statement or the
Combined Proxy Statement and Prospectus (as such terms are defined in Section
6.5 hereof) will (i) in the case of the S-4 Registration Statement, at the time
it becomes effective and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or
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necessary in order to make the statements therein not misleading, or (ii) in the
case of the Combined Proxy Statement and Prospectus, at the time of the mailing
of the Combined Proxy Statement and Prospectus and at the time of the meetings
of the shareholders of PPY, PPY2 and PPY3, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.1.10 INSURANCE. All material insurance of PPY is currently in
full force and effect and PPY has reported all claims and occurrences to the
extent required by such insurance.
4.1.11 DISCLOSURE. The representations and warranties by PPY in
this Agreement and any certificate or document delivered by it pursuant hereto
do not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
4.2 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PPY2. PPY2
represents, warrants and agrees with PSI that:
4.2.1 AUTHORIZATION. Subject to approval of this Agreement by
the shareholders of PPY2, (i) the execution, delivery and performance of this
Agreement by PPY2 has been duly authorized and approved by all necessary
corporate action of PPY2, and (ii) PPY2 has necessary corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to complete the transactions contemplated hereby.
4.2.2 ORGANIZATION AND RELATED MATTERS. PPY2 is a corporation
duly organized, existing and in good standing under the laws of the State of
California with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as and where now owned,
leased, operated or carried on, as the case may be; and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business carried on by it requires such qualification and where the failure to
so qualify would have a material adverse effect on the business, properties,
results of operations or financial condition of PPY2. PPY2 has no direct or
indirect equitable or beneficial interest in any other corporation other than
PSCC, Inc.
4.2.3 CAPITAL STOCK. The authorized capital stock of PPY2
consists solely of (i) 4,619,515 shares of Common Stock Series A ($.01 par
value), 3,130,103 of which were issued and outstanding as of July 31, 1996, (ii)
420,875 shares of Common Stock Series B ($.01 par value), all of which were
issued and outstanding as of July 31, 1996, (iii) 247,574 shares of Common Stock
Series C ($.01 par value), all of which were issued and outstanding as of July
31, 1996 and (iv) 163,036 shares of Common Stock Series D ($.01 par value), all
of which were issued and outstanding as of July 31, 1996. All of the issued and
outstanding shares of Common Stock Series A, B, C and D of PPY2 have been duly
and validly authorized and issued, and are fully paid and nonassessable. There
are no options or agreements to which PPY2 is a party or by which it is bound
calling for or requiring the issuance of any of PPY2's capital stock, except
that the shares of Common Stock Series B and C are convertible into shares of
Common Stock Series A in accordance with PPY2's Articles of Incorporation.
4.2.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming approval of
the Mergers and of this Agreement by the shareholders of PPY2, neither the
execution and delivery of this Agreement nor the consummation by PPY2 of the
transactions contemplated hereby will: (i) conflict with or result in any breach
of any provision of its Articles of Incorporation or Bylaws; (ii) require any
consent, waiver, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (A) in
connection with the applicable requirements, if any, of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (B) pursuant to
the applicable requirements of the federal securities laws and the rules and
regulations promulgated thereunder, (C) the filing of the Merger Agreement(s)
and Officers' Certificates pursuant to the GCLC and appropriate documents with
the relevant authorities of other states in which PPY2 is authorized to do
business, (D) in connection with any state or local tax which is attributable to
the beneficial ownership of PPY2's real property, (E) as may be required by any
applicable state securities or takeover laws, or (F) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect on PPY2
or adversely affect the ability of PPY2 to consummate the transactions
contemplated hereby;
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(iii) result in a violation or breach of, or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, license, mortgage, agreement or
other instrument or obligation to which PPY2 is a party or any of its properties
or assets may be bound, except for such violations, breaches and defaults which,
in the aggregate, would not have a material adverse effect on PPY2 or adversely
affect the ability of PPY2 to consummate the transactions contemplated hereby;
or (iv) assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in this Section 4.2.4 are duly and timely obtained
or made, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to PPY2 or its properties or assets, except for violations
which would not in the aggregate have a material adverse effect on PPY2 or
adversely affect the ability of PPY2 to consummate the transactions contemplated
hereby.
4.2.5 LITIGATION. There is no litigation, proceeding or
governmental investigation which, individually or in the aggregate, is or may be
material and adverse, pending or, to the knowledge of PPY2, threatened against
PPY2 or involving any of its properties or assets.
4.2.6 SEC REPORTS. Since January 1, 1993, PPY2 has filed all
forms, reports and documents with the SEC required to be filed by it pursuant to
the federal securities laws and the rules and regulations promulgated by the SEC
thereunder, all of which complied in all material respects with all applicable
requirements of the federal securities laws and such rules and regulations
(collectively, the "PPY2 SEC Reports"). None of the PPY2 SEC Reports, including
without limitation any financial statements or schedules included therein, at
the time filed contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.2.7 FINANCIAL STATEMENTS. The financial statements included in
the PPY2 SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly the financial position
of PPY2 as of their respective dates, and the results of operations of PPY2 for
the periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
4.2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1,
1996, the business of PPY2 has been carried on only in the ordinary and usual
course and there has not been any material adverse change in its business,
results of operations or financial condition, or any damage or destruction in
the nature of a casualty loss, whether covered by insurance or not, that would
materially and adversely affect its properties, business or results of
operations.
4.2.9 S-4 REGISTRATION STATEMENT AND COMBINED PROXY STATEMENT AND
PROSPECTUS. None of the information supplied or to be supplied by PPY2 for
inclusion or incorporation by reference in the S-4 Registration Statement or the
Combined Proxy Statement and Prospectus (as such terms are defined in Section
6.5 hereof) will (i) in the case of the S-4 Registration Statement, at the time
it becomes effective and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or (ii) in
the case of the Combined Proxy Statement and Prospectus, at the time of the
mailing of the Combined Proxy Statement and Prospectus and at the time of the
meetings of the shareholders of PPY, PPY2 and PPY3, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.2.10 INSURANCE. All material insurance of PPY2 is currently in
full force and effect and PPY2 has reported all claims and occurrences to the
extent required by such insurance.
4.2.11 DISCLOSURE. The representations and warranties by PPY2 in
this Agreement and any certificate or document delivered by it pursuant hereto
do not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
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4.3 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PPY3. PPY3
represents, warrants and agrees with PSI that:
4.3.1 AUTHORIZATION. Subject to approval of this Agreement by
the shareholders of PPY3, (i) the execution, delivery and performance of this
Agreement by PPY3 has been duly authorized and approved by all necessary
corporate action of PPY3, and (ii) PPY3 has necessary corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to complete the transactions contemplated hereby.
4.3.2 ORGANIZATION AND RELATED MATTERS. PPY3 is a corporation
duly organized, existing and in good standing under the laws of the State of
California with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as and where now owned,
leased, operated or carried on, as the case may be; and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business carried on by it requires such qualification and where the failure to
so qualify would have a material adverse effect on the business, properties,
results of operations or financial condition of PPY3. PPY3 has no direct or
indirect equitable or beneficial interest in any other corporation other than
PSCC, Inc.
4.3.3 CAPITAL STOCK. The authorized capital stock of PPY3
consists solely of (i) 1,851,696 shares of Common Stock Series A ($.01 par
value), 1,313,384 of which were issued and outstanding as of July 31, 1996, (ii)
168,709 shares of Common Stock Series B ($.01 par value), all of which were
issued and outstanding as of July 31, 1996, (iii) 99,241 shares of Common Stock
Series C ($.01 par value), all of which were issued and outstanding as of July
31, 1996 and (iv) 65,354 shares of Common Stock Series D ($.01 par value), all
of which were issued and outstanding as of July 31, 1996. All of the issued and
outstanding shares of Common Stock Series A, B, C and D of PPY3 have been duly
and validly authorized and issued, and are fully paid and nonassessable. There
are no options or agreements to which PPY3 is a party or by which it is bound
calling for or requiring the issuance of any of PPY3's capital stock, except
that the shares of Common Stock Series B and C are convertible into shares of
Common Stock Series A in accordance with PPY3's Articles of Incorporation.
4.3.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming approval of
the Mergers and of this Agreement by the shareholders of PPY3, neither the
execution and delivery of this Agreement nor the consummation by PPY3 of the
transactions contemplated hereby will: (i) conflict with or result in any breach
of any provision of its Articles of Incorporation or Bylaws; (ii) require any
consent, waiver, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (A) in
connection with the applicable requirements, if any, of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (B) pursuant to
the applicable requirements of the federal securities laws and the rules and
regulations promulgated thereunder, (C) the filing of the Merger Agreement(s)
and Officers' Certificates pursuant to the GCLC and appropriate documents with
the relevant authorities of other states in which PPY3 is authorized to do
business, (D) in connection with any state or local tax which is attributable to
the beneficial ownership of PPY3's real property, (E) as may be required by any
applicable state securities or takeover laws, or (F) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect on PPY3
or adversely affect the ability of PPY3 to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license, mortgage,
agreement or other instrument or obligation to which PPY3 is a party or any of
its properties or assets may be bound, except for such violations, breaches and
defaults which, in the aggregate, would not have a material adverse effect on
PPY3 or adversely affect the ability of PPY3 to consummate the transactions
contemplated hereby; or (iv) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 4.2.4 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to PPY3 or its properties or assets,
except for violations which would not in the aggregate have a material adverse
effect on PPY3 or adversely affect the ability of PPY3 to consummate the
transactions contemplated hereby.
4.3.5 LITIGATION. There is no litigation, proceeding or
governmental investigation which, individually or in the aggregate, is or may be
material and adverse, pending or, to the knowledge of PPY3, threatened against
PPY3 or involving any of its properties or assets.
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4.3.6 SEC REPORTS. Since January 1, 1993, PPY3 has filed all
forms, reports and documents with the SEC required to be filed by it pursuant to
the federal securities laws and the rules and regulations promulgated by the SEC
thereunder, all of which complied in all material respects with all applicable
requirements of the federal securities laws and such rules and regulations
(collectively, the "PPY3 SEC Reports"). None of the PPY3 SEC Reports, including
without limitation any financial statements or schedules included therein, at
the time filed contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.3.7 FINANCIAL STATEMENTS. The financial statements included in
the PPY3 SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly the financial position
of PPY3 as of their respective dates, and the results of operations of PPY3 for
the periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
4.3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1,
1996, the business of PPY3 has been carried on only in the ordinary and usual
course and there has not been any material adverse change in its business,
results of operations or financial condition, or any damage or destruction in
the nature of a casualty loss, whether covered by insurance or not, that would
materially and adversely affect its properties, business or results of
operations.
4.3.9 S-4 REGISTRATION STATEMENT AND COMBINED PROXY STATEMENT AND
PROSPECTUS. None of the information supplied or to be supplied by PPY3 for
inclusion or incorporation by reference in the S-4 Registration Statement or the
Combined Proxy Statement and Prospectus (as such terms are defined in Section
6.5 hereof) will (i) in the case of the S-4 Registration Statement, at the time
it becomes effective and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or (ii) in
the case of the Combined Proxy Statement and Prospectus, at the time of the
mailing of the Combined Proxy Statement and Prospectus and at the time of the
meetings of the shareholders of PPY, PPY3 and PPY3, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.3.10 INSURANCE. All material insurance of PPY3 is currently in
full force and effect and PPY3 has reported all claims and occurrences to the
extent required by such insurance.
4.3.11 DISCLOSURE. The representations and warranties by PPY3 in
this Agreement and any certificate or document delivered by it pursuant hereto
do not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PSI. PSI hereby
represents, warrants and agrees with PPY, PPY2 and PPY3 that:
5.1 AUTHORIZATION. The execution, delivery and performance of this
Agreement by PSI have been duly authorized and approved by all necessary
corporate action of PSI, and PSI has all necessary corporate power and authority
to enter into this Agreement, to perform its obligations hereunder and to
complete the transactions contemplated hereby.
5.2 ORGANIZATION AND RELATED MATTERS. PSI is a corporation duly
organized, existing and in good standing under the laws of the State of
California, with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as and where now owned,
leased, operated or carried on, as the case may be; and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business carried on by it requires such
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qualification and where the failure to so qualify would have a material adverse
effect on the business, properties, results of operations or financial condition
of PSI.
5.3 CAPITAL STOCK. The authorized capital stock of PSI consists
solely of (i) 200,000,000 shares of Common Stock ($.10 par value), 77,013,724 of
which were issued and outstanding as of July 31, 1996, (ii) 7,000,000 shares of
Class B Common Stock ($.10 par value), all of which were issued and outstanding
as of July 31, 1996 and (iii) 50,000,000 shares of Preferred Stock ($.10 par
value), 13,447,180 of which were issued and outstanding as of July 31, 1996. All
of the issued and outstanding shares of Common Stock and Preferred Stock of PSI
have been duly and validly authorized and issued, and are fully paid and
nonassessable. The issuance of the PSI Shares in the Mergers has been duly and
validly authorized and, when issued and delivered as provided in this Agreement,
the PSI Shares will have been duly and validly issued, fully paid and
nonassessable; and the shareholders of PSI have no preemptive rights with
respect to any shares of capital stock of PSI.
5.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement nor the consummation by PSI of the transactions
contemplated hereby will: (i) conflict with or result in any breach of any
provision of its Articles of Incorporation or Bylaws; (ii) require any consent,
waiver, approval, authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, except (A) in connection with the
applicable requirements, if any, of the HSR Act, (B) pursuant to the applicable
requirements of the federal securities laws and the rules and regulations
promulgated thereunder, (C) the filing of the Merger Agreements and Officers'
Certificates pursuant to the GCLC and appropriate documents with the relevant
authorities of other states in which PSI is authorized to do business, (D) in
connection with any state or local tax which is attributable to the beneficial
ownership of the real property of PPY, PPY2 and PPY3, (E) as may be required by
any applicable state securities or takeover laws, or (F) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not in the aggregate have a material adverse effect on
PSI or adversely affect the ability of PSI to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license, mortgage,
agreement or other instrument or obligation to which PSI is a party or any of
its properties or assets may be bound, except for such violations, breaches and
defaults which, in the aggregate, would not have a material adverse effect on
PSI or adversely affect the ability of PSI to consummate the transactions
contemplated hereby; or (iv) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 5.4 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to PSI or its properties or assets,
except for violations which would not in the aggregate have a material adverse
effect on PSI or adversely affect the ability of PSI to consummate the
transactions contemplated hereby.
5.5 LITIGATION. There is no litigation, proceeding or governmental
investigation which, individually or in the aggregate, is or may be material and
adverse, pending or, to the knowledge of PSI, threatened against PSI or
involving any of its properties or assets.
5.6 SEC REPORTS. Since January 1, 1993, PSI has filed all forms,
reports and documents with the SEC required to be filed by it pursuant to the
federal securities laws and the rules and regulations promulgated by the SEC
thereunder, all of which complied in all material respects with all applicable
requirements of the federal securities laws and such rules and regulations
(collectively, the "PSI SEC Reports"). None of the PSI SEC Reports, including
without limitation any financial statements or schedules included therein, at
the time filed contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
5.7 FINANCIAL STATEMENTS. The financial statements included in PSI's
SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods (except
as otherwise noted therein), and present fairly the financial position of PSI as
of their respective dates, and the results of operations of PSI for the periods
presented therein (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
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5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1, 1995, the
business of PSI has been carried on only in the ordinary and usual course and
there has not been any material adverse change in its business, results of
operations or financial condition, or any damage or destruction in the nature of
a casualty loss, whether covered by insurance or not, that would materially and
adversely affect its properties, business or results of operations.
5.9 S-4 REGISTRATION STATEMENT AND COMBINED PROXY STATEMENT AND
PROSPECTUS. None of the information supplied or to be supplied by PSI for
inclusion or incorporation by reference in the S-4 Registration Statement or the
Combined Proxy Statement and Prospectus (as those terms are defined in Section
6.5 hereof) will (i) in the case of the S-4 Registration Statement, at the time
it becomes effective and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or (ii) in
the case of the Combined Proxy Statement and Prospectus, at the time of the
mailing of the Combined Proxy Statement and Prospectus and at the time of the
meetings of the shareholders of PPY, PPY2 and PPY3, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
5.10 INSURANCE. All material insurance of PSI is currently in full
force and effect and PSI has reported all claims and occurrences to the extent
required by such insurance.
5.11 DISCLOSURE. The representations and warranties by PSI in this
Agreement and any certificate or document delivered by it pursuant hereto do not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained herein or therein not
misleading.
6. COVENANTS AND AGREEMENTS.
6.1 ORDINARY COURSE. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, each of PSI,
PPY, PPY2 and PPY3 will carry on its business in the ordinary course in
substantially the same manner as heretofore conducted and use all reasonable
efforts to: (a) preserve intact its present business, organization and
goodwill, (b) maintain all permits, licenses and authorizations required by
applicable laws, and (c) keep available the services of its present employees
and preserve its relationships with customers, suppliers, lenders, lessors,
governmental entities and others having business or regulatory dealings with it.
PPY, PPY2 and PPY3 will not issue any capital stock or debt securities
convertible into capital stock. PSI, PPY, PPY2 and PPY3 will promptly notify
the others of any event or occurrence not in the ordinary and usual course of
business or which may have a material adverse effect on the properties or
financial condition of such party.
6.2 MEETINGS OF SHAREHOLDERS. PPY, PPY2 and PPY3 will take all action
necessary in accordance with applicable law to convene a meeting of its
shareholders as promptly as practicable to consider and vote upon approval of
this Agreement, it being understood that the principal terms of the Agreement
must be approved by (i) in the case of PPY, the affirmative vote of a majority
of the outstanding shares of Common Stock Series A, B, C and D of PPY, counted
together as a single class with the shares of Common Stock Series B, C and D
voted with the holders of a majority of the unaffiliated shares of Common Stock
Series A; (ii) in the case of PPY2, the affirmative vote of a majority of the
outstanding shares of Common Stock Series A, B, C and D of PPY2, counted
together as a single class with the shares of Common Stock Series B, C and D
voted with the holders of a majority of the unaffiliated shares of Common Stock
Series A; and (iii) in the case of PPY3, the affirmative vote of a majority of
the outstanding shares of Common Stock Series A, B, C and D of PPY3, counted
together as a single class with the shares of Common Stock Series B, C and D
voted with the holders of a majority of the unaffiliated shares of Common Stock
Series A.
6.3 TAX REPORTING. Each of PSI, PPY, PPY2 and PPY3 agrees to report
the Mergers for federal and state income tax purposes, as a reorganization of
the type described in Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended.
6.4 ACQUISITION PROPOSALS. PPY, PPY2 and PPY3 will not initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of any
proposal with respect to a merger, consolidation, share exchange or similar
transaction involving PPY, PPY2 or PPY3, or any purchase of all or any
significant portion of either of their
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assets, or any equity interest in either of them, other than the transactions
contemplated hereby (an "Acquisition Proposal"), or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal; provided,
however, that the respective Board of Directors on behalf of PPY, PPY2 or PPY3
may furnish or cause to be furnished information and may participate in such
discussions and negotiations through its representatives with persons who have
sought the same if the failure to provide such information or participate in
such negotiations and discussions might cause the members of the Board of
Directors of PPY, PPY2 or PPY3 to breach their fiduciary duty to the
shareholders of the respective corporation under applicable law as advised by
counsel. PPY, PPY2 and PPY3 will notify PSI immediately if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with PPY,
PPY2 or PPY3, and will keep PSI informed of the status and terms of any such
proposals and any such negotiations or discussions.
6.5 REGISTRATION AND PROXY STATEMENTS. PPY, PPY2 and PPY3 will
promptly prepare and file with the SEC a combined preliminary proxy statement in
connection with the vote of shareholders of PPY, PPY2 and PPY3 with respect to
the Mergers. PSI will, as promptly as practicable, prepare and file with the
SEC a registration statement on Form S-4 (the "S-4 Registration Statement"),
containing a combined proxy statement/prospectus, in connection with the
registration under the Securities Act of 1933, as amended (the "Securities Act")
of the PSI Shares to be issued to holders of PPY, PPY2 and PPY3 Shares in the
Mergers (such combined proxy statement/prospectus, together with any amendments
thereof or supplements thereto, in each case in the form or forms to be mailed
to the shareholders of PPY, PPY2 and PPY3, being herein called the "Combined
Proxy Statement and Prospectus"). PSI, PPY, PPY2 and PPY3 will use their best
efforts to have or cause the S-4 Registration Statement to be declared effective
as promptly as practicable, and also will take any other action required to be
taken under federal or state securities laws, and PPY, PPY2 and PPY3 will each
use its best efforts to cause the Combined Proxy Statement and Prospectus to be
mailed to its respective shareholders at the earliest practicable date. PPY,
PPY2 and PPY3 agree that if at any time prior to the Effective Time any event
with respect to PPY, PPY2 and PPY3, respectively, should occur which is required
to be described in an amendment of, or a supplement to, the Combined Proxy
Statement and Prospectus or the S-4 Registration Statement, such event shall be
so described, and such amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the shareholders of PPY, PPY2 and
PPY3 and (ii) the Combined Proxy Statement and Prospectus will (with respect to
PPY, PPY2 and PPY3) comply as to form in all material respects with the
requirements of the federal securities laws. PSI agrees that (i) if at any time
prior to the Effective Time any event with respect to PSI should occur which is
required to be described in an amendment of, or a supplement to, the Combined
Proxy Statement and Prospectus or the S-4 Registration Statement, such event
shall be so described, and such amendment or supplement shall be promptly filed
with the SEC and, as required by law, disseminated to the shareholders of PPY,
PPY2 and PPY3 and (ii) the Combined Proxy Statement and Prospectus will (with
respect to PSI) comply as to form in all material respects with the requirements
of the federal securities laws.
6.6 BEST EFFORTS. Each of PSI, PPY, PPY2 and PPY3 shall: (i) promptly
make its respective filings and thereafter make any other required submissions
under all applicable laws with respect to the Mergers and the other transactions
contemplated hereby; and (ii) use its best efforts to promptly take, or cause to
be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.
6.7 REGISTRATION AND LISTING OF PSI SHARES. PSI will use its best
efforts to register the PSI Shares under the applicable provisions of the
Securities Act and to cause the PSI Shares to be listed for trading on the NYSE
upon official notice of issuance.
6.8 DISTRIBUTIONS.
6.8.1 PPY DISTRIBUTIONS. PPY will not, at any time prior to the
Effective Time, declare or pay any cash distribution on its capital stock or
make any other distribution of assets to its shareholders, except (i) regular
quarterly dividends on its Common Stock at a quarterly rate not in excess of
$.27 per share, (ii) distributions to shareholders of record immediately prior
to the Effective Time in an aggregate amount equal to the amount by which the
estimated Net Asset Value of PPY (as defined below) as of the Effective Time
exceeds the estimated Net Asset Value of PPY as of December 31, 1996 and (iii)
pre-Mergers cash distributions required to satisfy PPY's REIT
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distribution requirements (the number of PSI Shares issued in the Mergers and
the amount receivable upon Cash Elections would be reduced on a pro rata basis
in an aggregate amount equal to such additional distributions). For this
purpose, the Net Asset Value of PPY is the sum of (a) the fair market value of
PPY's real estate assets as determined by appraisal by Nicholson-Douglas Realty
Consultants, Inc. as of June 30, 1996, and (b) the book value of PPY's non-real
estate assets as of the date of determination, and less (c) PPY's liabilities as
of the date of determination. The determination of book value and liabilities
shall be from PPY's financial statements prepared in accordance with generally
accepted accounting principles on a basis consistent with prior periods.
6.8.2 PPY2 DISTRIBUTIONS. PPY2 will not, at any time prior to
the Effective Time, declare or pay any cash distribution on its capital stock or
make any other distribution of assets to its shareholders, except (i) regular
quarterly dividends on its Common Stock at a quarterly rate not in excess of
$.28 per share, (ii) distributions to shareholders of record immediately prior
to the Effective Time in an aggregate amount equal to the amount by which the
estimated Net Asset Value of PPY2 (as defined below) as of the Effective Time
exceeds the estimated Net Asset Value of PPY2 as of December 31, 1996 and (iii)
pre-Mergers cash distributions required to satisfy PPY2's REIT distribution
requirements (the number of PSI Shares issued in the Mergers and the amount
receivable upon Cash Elections would be reduced on a pro rata basis in an
aggregate amount equal to such additional distributions). For this purpose, the
Net Asset Value of PPY2 is the sum of (a) the fair market value of PPY2's real
estate assets as determined by appraisal by Nicholson-Douglas Realty
Consultants, Inc. as of June 30, 1996, and (b) the book value of PPY2's non-real
estate assets as of the date of determination, and less (c) PPY2's liabilities
as of the date of determination. The determination of book value and liabilities
shall be from PPY2's financial statements prepared in accordance with generally
accepted accounting principles on a basis consistent with prior periods.
6.8.3 PPY3 DISTRIBUTIONS. PPY3 will not, at any time prior to
the Effective Time, declare or pay any cash distribution on its capital stock or
make any other distribution of assets to its shareholders, except (i) regular
quarterly dividends on its Common Stock at a quarterly rate not in excess of
$.34 per share, (ii) distributions to shareholders of record immediately prior
to the Effective Time in an aggregate amount equal to the amount by which the
estimated Net Asset Value of PPY3 (as defined below) as of the Effective Time
exceeds the estimated Net Asset Value of PPY3 as of December 31, 1996 and (iii)
pre-Mergers cash distributions required to satisfy PPY3's REIT distribution
requirements (the number of PSI Shares issued in the Mergers and the amount
receivable upon Cash Elections would be reduced on a pro rata basis in an
aggregate amount equal to such additional distributions). For this purpose, the
Net Asset Value of PPY3 is the sum of (a) the fair market value of PPY3's real
estate assets as determined by appraisal by Nicholson-Douglas Realty
Consultants, Inc. as of June 30, 1996, and (b) the book value of PPY3's non-real
estate assets as of the date of determination, and less (c) PPY3's liabilities
as of the date of determination. The determination of book value and liabilities
shall be from PPY3's financial statements prepared in accordance with generally
accepted accounting principles on a basis consistent with prior periods.
7. CONDITIONS.
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Closing of each of
the following conditions, any or all of which may be waived in whole or in part,
to the extent permitted by applicable law:
7.1.1 PPY, PPY2 AND PPY3 SHAREHOLDER APPROVAL. This Agreement
and the transactions contemplated hereby shall have been duly approved by the
shareholders of PPY, PPY2 and PPY3 as contemplated by Section 6.2.
7.1.2 GOVERNMENTAL AND REGULATORY CONSENTS. All filings
required to be made prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained prior to the
Effective Time from, governmental and regulatory authorities in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby (including the expiration of the waiting period
requirements of the HSR Act) shall have been made or obtained (as the case may
be) without material restrictions, except where the failure to obtain such
consents, approvals, permits and authorizations could not reasonably be expected
to have a material adverse effect on PSI, PPY, PPY2 or PPY3.
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7.1.3 LITIGATION. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) or taken any action
which prohibits the consummation of the transactions contemplated by this
Agreement; provided, however, that the party invoking this condition shall use
its best efforts to have any such judgment, decree, injunction or other order
vacated.
7.1.4 REGISTRATION STATEMENT. The S-4 Registration Statement
shall have been declared effective and no stop order suspending effectiveness
shall have been issued, no action, suit, proceeding or investigation by the SEC
to suspend the effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under federal and state securities laws
relating to the issuance or trading of the PSI Shares shall have been received.
7.1.5 LISTING OF PSI SHARES ON NYSE. The PSI Shares shall have
been approved for listing on the NYSE upon official notice of issuance.
7.1.6 FAIRNESS OPINION. The Boards of Directors of PPY, PPY2 and
PPY3 shall have received the opinion of Robert A. Stanger & Co., Inc. in form
and substance satisfactory to them to the effect that the consideration to be
received by the shareholders of PPY, PPY2 and PPY3 in the Mergers is fair to
such shareholders from a financial point of view, and such opinion shall not
have been withdrawn or revoked.
7.1.7 TAX OPINION. The Boards of Directors of PSI, PPY, PPY2 and
PPY3 shall have received a legal opinion of Hogan & Hartson that the Merger will
qualify as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended.
7.1.8 PSI BOARD APPROVAL. This Agreement and the transactions
contemplated hereby shall have been duly approved by the Board of Directors of
PSI.
7.2 CONDITIONS TO OBLIGATIONS OF PSI. The obligations of PSI to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Closing of the following conditions, which may be
waived in whole or in part by PSI to the extent permitted by applicable law:
7.2.1 ACCURACY OF REPRESENTATIONS; PERFORMANCE OF AGREEMENTS.
Each of the representations and warranties of PPY, PPY2 and PPY3 contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date as if made at and as of the Closing Date (except to the extent
they relate to a particular date) and PPY, PPY2 and PPY3 shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing.
7.2.2 CERTIFICATE OF OFFICERS. PSI shall have received such
certificates of officers of PPY, PPY2 and PPY3 as PSI may reasonably request in
connection with the Closing, including upon request a certificate satisfactory
to it of the Chief Executive Officer and the Chief Financial Officer of PPY,
PPY2 and PPY3, to the effect that, to the best of their knowledge, all
representations and warranties of PPY, PPY2 and PPY3 contained in this Agreement
are true and correct in all material respects at and as of the Closing Date as
if made at and as of the Closing Date, and PPY, PPY2 and PPY3 have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by them at or prior to the Closing.
7.2.3 TITLE TO PROPERTIES; ENVIRONMENTAL AUDITS. PSI in its sole
discretion shall be satisfied as to the status of title to (including the
existence and effect of liens and encumbrances), and the results of an
environmental audit of, each of the real properties owned by PPY, PPY2 and PPY3.
7.2.4 TRADING PRICE OF PSI SHARES. The average of the per share
closing prices of the PSI Shares on the NYSE during the 20 consecutive trading
days ending on the fifth trading day prior to the meeting of shareholders of
PPY, PPY2 and PPY3 provided for in Section 6.2 hereof (the "Average PSI Share
Price") shall be not less than $20.
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7.2.5 DISSENTING SHARES. The number of Dissenting Shares shall
be less than 5% of the outstanding PPY Shares in the case of PPY, less than 5%
of the outstanding PPY2 Shares in the case of PPY2 and less than 5% of the
outstanding PPY3 Shares in the case of PPY3.
7.3 CONDITIONS TO OBLIGATIONS OF PPY, PPY2 AND PPY3. The obligations
of PPY, PPY2 and PPY3 to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Closing of the
following conditions, which may be waived in whole or in part by PPY, PPY2 and
PPY3 to the extent permitted by applicable law.
7.3.1 ACCURACY OF REPRESENTATIONS; PERFORMANCE OF AGREEMENTS.
Each of the representations and warranties of PSI contained in this Agreement
shall be true and correct in all material respects at and as of the Closing Date
as if made at and as of the Closing Date (except to the extent they relate to a
particular date) and PSI shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing.
7.3.2 CERTIFICATE OF OFFICERS. PPY, PPY2 and PPY3 shall have
received such certificates of officers of PSI as PPY, PPY2 and PPY3 may
reasonably request in connection with the Closing, including upon request a
certificate satisfactory to them of the Chief Executive Officer and the Chief
Financial Officer of PSI, to the effect that, to the best of their knowledge,
all representations and warranties of PSI contained in this Agreement are true
and correct in all material respects at and as of the Closing Date as if made at
and as of the Closing Date, and PSI has performed or complied with all
agreements and covenants required by this Agreement to be performed or complied
with by it at or prior to the Closing.
7.4 SEPARATE MERGERS. The merger of PPY into PSI, the merger of PPY2
into PSI and the merger of PPY3 into PSI are not conditioned on the others. If
the conditions to one of the Mergers are satisfied or waived, such merger will
be consummated on the terms provided in this Agreement, notwithstanding that the
conditions to the other Merger have not been satisfied or waived.
8. TERMINATION.
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Mergers may be abandoned at any time prior to the Effective Time, before
or after shareholder approval, by the mutual written consent of PSI, PPY, PPY2
or PPY3.
8.2 TERMINATION BY PSI, PPY, PPY2 OR PPY3. This Agreement may be
terminated and the Mergers may be abandoned by action of the Board of Directors
of PSI, PPY, PPY2 or PPY3 if (i) the Mergers shall not have been consummated by
June 30, 1997 (provided that the right to terminate this Agreement under this
Section 8.2(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Mergers to occur on or before such date); (ii) any court of competent
jurisdiction in the United States or some other governmental body or regulatory
authority shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Mergers and such
order, decree, ruling or other action shall have become final and nonappealable;
or (iii) (A) the shareholders of PPY, in the case of the merger of PPY into PSI,
or (B) the shareholders of PPY2, in the case of the merger of PPY2 into PSI, or
(C) the shareholders of PPY3, in the case of the merger of PPY3 into PSI, shall
have failed to approve this Agreement and the transactions contemplated hereby
at their respective meetings of shareholders.
8.3 TERMINATION BY PSI. This Agreement may be terminated by PSI, and
the Mergers may be abandoned at any time prior to the Effective Time, as to the
defaulting party if (i) PPY, PPY2 or PPY3 shall have failed to comply in any
material respect with any of the covenants, conditions or agreements contained
in this Agreement to be complied with or performed by such party at or prior to
such date of termination, which failure to comply has not been cured within five
business days following notice to such party of such failure to comply, or (ii)
any representation or warranty of PPY, PPY2 or PPY3 contained in this Agreement
shall not be true in all material respects when made, which inaccuracy or breach
(if capable of cure) has not been cured within five business days
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following notice to such party of the inaccuracy or breach, or on and as of the
Closing as if made on and as of the Closing Date.
8.4 TERMINATION BY PPY, PPY2 OR PPY3. This Agreement may be
terminated by PPY, PPY2 or PPY3 and the Mergers may be abandoned at any time
prior to the Effective Time, before or after shareholder approval, if (i) PSI
shall have failed to comply in any material respect with any of the covenants,
conditions or agreements contained in this Agreement to be complied with or
performed by PSI at or prior to such date of termination, which failure to
comply has not been cured within five business days following notice to PSI of
such failure to comply, or (ii) any representation or warranty of PSI contained
in this Agreement shall not be true in all material respects when made, which
inaccuracy or beach (if capable of cure) has not been cured within five business
days following notice to PSI of the inaccuracy or breach, or on and as of the
Closing as if made on and as of the Closing Date.
8.5 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and abandonment of the Mergers pursuant to this
Section 8, no party (or any directors, officers, employees, agents or
representatives of any party) shall have any liability or further obligation to
any other party or any person who controls a party within the meaning of the
Securities Act, except as provided in Section 9.1 and except that nothing herein
will relieve any party from liability for any breach of this Agreement.
9. MISCELLANEOUS.
9.1 PAYMENT OF EXPENSES. If the Mergers are consummated, the
Surviving Corporation shall pay all the expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby. If the Mergers are not consummated, each of
PSI, PPY, PPY2 and PPY3 shall pay its own expenses, except that any expenses
incurred in connection with the printing of the S-4 Registration Statement and
the Combined Proxy Statement and Prospectus, the real estate appraisals and
environmental audits of the properties of PPY, PPY2 and PPY3 and preparation for
real estate closings, and any filing fees under the HSR Act, the Securities Act
and the Securities Exchange Act of 1934, as amended shall be paid 50% by PSI and
the balance by PPY, PPY2 and PPY3 in equal shares.
9.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
respective representations and warranties of PSI, PPY, PPY2 and PPY3 contained
herein or in any certificate or document delivered pursuant hereto shall expire
with and be terminated and extinguished by the effectiveness of the Mergers and
shall not survive the Effective Time. The sole right and remedy arising from a
misrepresentation or breach of warranty, or from the failure of any of the
conditions to be met, shall be the termination of this Agreement by the other
party. This Section 9.2 shall not limit any covenant or agreement of the
parties, which by its terms contemplates performance after the Effective Time.
9.3 MODIFICATION OR AMENDMENT. The parties may modify or amend this
Agreement by written agreement authorized by the Boards of Directors and
executed and delivered by officers of the respective parties; provided, however,
that after approval of this Agreement by the shareholders of a party, no
amendment shall be made which changes any of the principal terms of the Mergers
or this Agreement, without the approval of such shareholders.
9.4 WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Mergers are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
the principles of conflict of laws thereof.
9.6 INTERPRETATION. This Agreement has been negotiated by the parties
and is to be interpreted according to its fair meaning as if the parties had
prepared it together and not strictly for or against any party. Each of the
capitalized terms defined in this Agreement shall, for all purposes of this
Agreement (and whether defined in the plural and used in the singular, or vice
versa), have the respective meaning assigned to such term in the Section
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in which such meaning is set forth. References in this Agreement to "parties" or
a "party" refer to parties to this Agreement unless expressly indicated
otherwise. At each place in this Agreement where the context so requires, the
masculine, feminine or neuter gender includes the others and the singular or
plural number includes the other. "Including" means "including without
limitation."
9.7 HEADINGS. The descriptive headings contained in the Sections and
subsections of this Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this Agreement.
9.8 PARTIES IN INTEREST. This Agreement, and the rights, interests
and obligations created by this Agreement, shall bind and inure to the benefit
of the parties and their respective successors and permitted assigns, and shall
confer no right, benefit or interest upon any other person, including
shareholders of the respective parties.
9.9 NOTICES. All notices or other communications required or
permitted under this Agreement shall be in writing and shall be delivered
personally or sent by U.S. mail, postage prepaid, addressed as follows or such
other address as the party to be notified has furnished in writing by a notice
given in accordance with this Section 9.9:
If to PSI:
Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Attention: Harvey Lenkin
President
If to PPY:
Partners Preferred Yield, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Attention: B. Wayne Hughes
Chief Executive Officer
If to PPY2:
Partners Preferred Yield II, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Attention: B. Wayne Hughes
Chief Executive Officer
If to PPY3:
Partners Preferred Yield III, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Attention: B. Wayne Hughes
Chief Executive Officer
Any such notice or communication shall be deemed given as of the date of
delivery, if delivered personally, or on the second day after deposit with the
U.S. Postal Service, if sent by U.S. mail.
9.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same agreement.
A-18
<PAGE>
9.11 ASSIGNMENT. No rights, interests or obligations of either party
under this Agreement may be assigned or delegated without the prior written
consent of the other party.
9.12 ENTIRE AGREEMENT. This Agreement, including the Merger Agreement,
embodies the entire agreement and understanding between the parties pertaining
to the subject matter hereof, and supersedes all prior agreements,
understandings, negotiations, representations and discussions, whether written
or oral.
9.13 SEVERABLE PROVISIONS. If any of the provisions of this Agreement
may be determined to be illegal or otherwise unenforceable, in whole or in part,
the remaining provisions, and any partially enforceable provisions to the extent
enforceable, shall nevertheless be binding and enforceable.
9.14 FURTHER ACTION. If at any time after the Effective Time, the
Surviving Corporation shall determine that any assignments, transfers, deeds or
other assurances are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, title to any property or
rights of PPY, PPY2 or PPY3, the officers of any Constituent Corporation are
fully authorized in the name of PPY or PPY2 or otherwise to execute and deliver
such documents and do all things necessary and proper to vest, perfect or
confirm title to such property or rights in the Surviving Corporation.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first above written.
PUBLIC STORAGE, INC.
By: /s/ HARVEY LENKIN
------------------------------
Harvey Lenkin
President
PARTNERS PREFERRED YIELD, INC.
By: /s/ B. WAYNE HUGHES
------------------------------
B. Wayne Hughes
Chief Executive Officer
PARTNERS PREFERRED YIELD II, INC.
By: /s/ B. WAYNE HUGHES
------------------------------
B. Wayne Hughes
Chief Executive Officer
PARTNERS PREFERRED YIELD III, INC.
By: /s/ B. WAYNE HUGHES
------------------------------
B. Wayne Hughes
Chief Executive Officer
A-19
<PAGE>
Exhibit A to
Exhibit 4
---------
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is entered into as of this
_____ day of _______________, 1996, by and between PUBLIC STORAGE, INC., a
California corporation ("PSI"), and [PARTNERS PREFERRED YIELD, INC., a
California corporation ("PPY"), PARTNERS PREFERRED YIELD II, INC., a California
corporation ("PPY2") or PARTNERS PREFERRED YIELD III, INC. a California
corporation ("PPY3")], with reference to the following:
A. PSI was incorporated in 1980 under the laws of California, and on
the date hereof its authorized capital stock consists of 200,000,000 shares of
Common Stock, $.10 par value (the "PSI Shares"), ___________ of which are issued
and outstanding, 7,000,000 shares of Class B Common Stock, _________ of which
are issued and outstanding and 50,000,000 shares of Preferred Stock ($.01 par
value), ___________ of which are issued and outstanding.
B. __________ was incorporated in 1991 under the laws of California,
and on the date hereof has outstanding __________ shares of Common Stock Series
A, $.01 par value (the "_____ Shares"), _________ shares of Common Stock Series
B, _________ shares of Common Stock Series C and _________ shares of Common
Stock Series D.
C. PSI, PPY, PPY2 and PPY3 have entered into an Agreement and Plan
of Reorganization dated as of _______________, 1996 (the "Plan"), setting forth
certain representations, warranties, conditions and agreements pertaining to the
Merger (as defined below).
D. The Boards of Directors of PSI and __________ have approved the
Plan and this Agreement of Merger, and the requisite shareholder approval has
been obtained.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
---------
1.1 THE MERGER. At the Effective Time (as defined below),
__________ will be merged with and into PSI (the "Merger") and PSI shall be the
surviving corporation. PSI and __________ are sometimes collectively referred
to herein as the "Constituent Corporations" and PSI, as the surviving
corporation of the Merger, is sometimes referred to herein as the "Surviving
Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at the
time at which this Agreement, together with the requisite Officers' Certificates
of PSI and __________, are filed with the California Secretary of State (the
"Effective Time").
1.3 EFFECT OF THE MERGER. At the Effective Time:
(a) The separate corporate existence of __________ shall
cease and the Surviving Corporation shall thereupon succeed, without other
transfer, to all the rights and property of __________ and shall be subject to
all the debts and liabilities of __________ in the same manner as if the
Surviving Corporation had itself incurred them; all rights of creditors and all
liens upon the property of each of the Constituent Corporations shall be
preserved unimpaired, provided that such liens upon property of __________ shall
be limited to the property affected thereby immediately prior to the Effective
Time; and any action or proceeding pending by or against __________ may be
prosecuted to judgment, which shall bind the Surviving Corporation, or the
Surviving Corporation may be proceeded against or substituted in its place.
E.A-1
<PAGE>
(b) The Articles of Incorporation and the Bylaws of PSI, as
then amended, shall continue to be the Articles of Incorporation and the Bylaws
of the Surviving Corporation until changed as provided by law and their
respective provisions.
(c) The directors of PSI shall continue as directors of the
Surviving Corporation until their successors are elected and qualified as
provided by law and in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation.
ARTICLE II
----------
2.1 CONVERSION OF __________ SHARES. The manner of converting
the outstanding __________ Shares into cash and/or PSI Shares shall be as
follows:
(a) At the Effective Time, subject to Section 2.6 of the
Plan, each __________ Share as to which a cash election has been made in
accordance with the provisions of Section 2.5 of the Plan and has not been
revoked, relinquished or lost pursuant to Section 2.5 of the Plan (the "Cash
Election Shares") shall be converted into and shall represent the right to
receive $_______ in cash (the "Cash Election Price"). As soon as practicable
after the Effective Time, the registered holders of Cash Election Shares shall
be paid the cash to which they are entitled hereunder in respect of such Cash
Election Shares.
(b) At the Effective Time, subject to Sections 2.4, 2.5 and
2.7 of the Plan, each __________ Share (other than Cash Election Shares and
__________ Shares owned by PSI) shall be converted into ______ PSI Shares.
2.2 NO FRACTIONAL SHARES. Notwithstanding any other term or
provision of this Agreement or the Plan, no fractional PSI Shares and no
certificates or script therefor, or other evidence of ownership thereof, will be
issued in the Merger. In lieu of any such fractional share interests, each
holder of __________ Shares who would otherwise be entitled to such fractional
share will, upon surrender of the certificate representing such __________
shares, receive a whole PSI Share if such fractional share to which such holder
would otherwise have been entitled is .5 of an PSI Share or more, and such
fractional share shall be disregarded if it represents less than .5 of an PSI
Share; provided, however, that, such fractional share shall not be disregarded
if such fractional share to which such holder would otherwise have been entitled
represents .5 of 1% or more of the total number of PSI Shares such holder is
entitled to receive in the Merger. In such event, such holder shall be paid an
amount in cash (without interest), rounded to the nearest $.01, determined by
multiplying (i) the per share closing price on the New York Stock Exchange, Inc.
of the PSI Shares at the Effective Time by (ii) the fractional interest.
2.3 DISSENTING SHARES. __________ Shares held by a holder who
has demanded and perfected his right to an appraisal of such shares in
accordance with Section 1300 et seq. of the General Corporation Law of
California (the "GCLC") and who has not effectively withdrawn or lost his right
to appraisal ("Dissenting Shares") shall not be converted into or represent the
right to receive cash and/or PSI Shares, but the holder thereof shall be
entitled only to such rights as are granted by Section 1300 et seq. of the GCLC.
Each holder of Dissenting Shares who becomes entitled to payment for __________
Shares pursuant to these provisions of the GCLC shall receive payment therefor
from the Surviving Corporation in accordance therewith. If any holder of
__________ Shares who demands appraisal in accordance with Section 1300 et seq.
of the GCLC shall effectively withdraw with the consent of the Surviving
Corporation or lose (through failure to perfect or otherwise) his right to
appraisal with respect to __________ Shares, such __________ Shares shall
automatically be converted into the right to receive PSI Shares pursuant to
Section 2.1(b) hereof.
2.4 PSI SHARES UNAFFECTED. The Merger shall effect no change in
any of the outstanding PSI Shares and no outstanding PSI shares shall be
converted or exchanged as a result of the Merger, and no cash shall be
exchangeable and no securities shall be issuable, with respect thereto.
E.A-2
<PAGE>
2.5 CANCELLATION OF SHARES HELD OR OWNED BY PARTIES. At the
Effective Time, any __________ Shares owned by PSI shall be cancelled and
retired and no shares shall be issuable, and no cash shall be exchangeable, with
respect thereto.
2.6 EXCHANGE OF CERTIFICATES. After the Effective Time, each
holder of a certificate theretofore evidencing outstanding __________ Shares
which were converted into PSI Shares pursuant hereto, upon surrender of such
certificate to First National Bank of Boston (the "Exchange Agent") or such
other agent or agents as shall be appointed by the Surviving Corporation, shall
be entitled to receive a certificate representing the number of whole PSI Shares
into which the __________ Shares theretofore represented by the certificate so
surrendered shall have been converted and cash payment in lieu of fractional
share interests, if any. As soon as practicable after the Effective Time, the
Exchange Agent will send a notice and a transmittal form to each holder of
__________ Shares of record at the Effective Time whose stock shall have been
converted into PSI Shares, advising such holder of the effectiveness of the
Merger and the procedure for surrendering to the Exchange Agent certificates
evidencing __________ Shares in exchange for certificates evidencing PSI Shares.
2.7 STATUS UNTIL SURRENDERED. Until surrendered as provided in
Section 2.6 hereof, each outstanding certificate which, prior to the Effective
Time, represented __________ Shares (other than Cash Election Shares and
Dissenting Shares, if any) will be deemed for all corporate purposes to evidence
ownership of the number of whole PSI Shares into which the __________ Shares
evidenced thereby were converted. However, until such outstanding certificates
formerly evidencing __________ Shares are so surrendered, no dividend payable to
holders of record of PSI Shares shall be paid to the holders of such outstanding
certificates in respect of __________ Shares, but upon surrender of such
certificates by such holders there shall be paid to such holders the amount of
any dividends (without interest) theretofore paid with respect to such whole PSI
Shares as of any record date on or subsequent to the Effective Time and the
amount of any cash (without interest) payable to such holder in lieu of
fractional share interests.
2.8 TRANSFER OF SHARES. After the Effective Time, there shall
be no further registration of transfers of __________ Shares on the records of
__________ and, if certificates formerly evidencing such shares are presented to
the Surviving Corporation, they shall be cancelled and exchanged for
certificates evidencing PSI Shares and cash in lieu of fractional share
interests as herein provided.
2.9 CONVERSION OF COMMON STOCK SERIES B, C AND D. At the
Effective Time, each share of Common Stock Series B (other than shares owned by
PSI) shall be converted into ______ PSI Shares and each share of Common Stock
Series C and D (other than shares owned by PSI) shall be converted into ______
PSI Shares.
ARTICLE III
-----------
3.1 HEADINGS. The descriptive headings contained in the
Sections of this Agreement are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
3.2 PARTIES IN INTEREST. This Agreement, and the rights,
interests and obligations created by this Agreement, shall bind and inure to the
benefit of the parties and their respective successors and permitted assigns.
3.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same agreement.
3.4 FURTHER ACTION. If at any time after the Effective Time,
the Surviving Corporation shall determine that any assignments, transfers, deeds
or other assurances are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, title to any property or
rights of __________, the officers of either Constituent Corporation are fully
authorized in the name of __________ or otherwise to execute and deliver such
documents and do all things necessary and proper to vest, perfect or confirm
title to such property or rights in the Surviving Corporation.
E.A-3
<PAGE>
3.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to the principles of conflict of laws thereof.
3.6 ABANDONMENT OF MERGER. The Constituent Corporations have
the power to abandon the Merger by mutual written consent prior to the filing of
this Agreement with the California Secretary of State.
IN WITNESS WHEREOF, the parties have entered into this Agreement
as of the date first above written.
PUBLIC STORAGE, INC.
By:
-----------------------------
Harvey Lenkin
President
By:
-----------------------------
Obren B. Gerich
Senior Vice President
[PARTNERS PREFERRED YIELD, INC.
PARTNERS PREFERRED YIELD II, INC.
or
PARTNERS PREFERRED YIELD III, INC.
By:
-----------------------------
B. Wayne Hughes
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------
Obren B. Gerich
Secretary
E.A-4
