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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(A)
(AMENDMENT NO. 8)
REGENCY REALTY CORPORATION
--------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class of Securities)
758939 10 2
--------------------------
(CUSIP Number)
ARIEL AMIR
SECURITY CAPITAL U.S. REALTY
69, ROUTE D'ESCH
LUXEMBOURG L-1470
(44-352) 487878
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
SEPTEMBER 23, 1998
---------------------------------------------------------
(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 that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box: / /.
(Continued on following pages)
(Page 1 of 9 Pages)
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SCHEDULE 13D
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CUSIP NO. 758939 10 2 Page 2 of 9
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- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Security Capital U.S. Realty
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) /X/
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
BK, OO
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Luxembourg
- ------------------ ------ ------------------------------------------------------
Number of 7. SOLE VOTING POWER
Shares 11,720,216 (1)
------ --------------------------------------------- --------
Beneficially 8. SHARED VOTING POWER
Owned By 0
------ --------------------------------------------- --------
Each 9. SOLE DISPOSITIVE POWER
Reporting 11,720,216 (1)
------ --------------------------------------------- --------
Person With 10. SHARED DISPOSITIVE POWER
0
- ------------------ ------ --------------------------------------------- --------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,720,216 (1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45.96% (1)
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14. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
(1) Regency Realty Corporation, a Florida corporation ("Regency"), has entered
into an Agreement and Plan of Merger with Pacific Retail Trust, a Maryland real
estate investment trust ("PRT"), dated as of September 23, 1998 pursuant to
which PRT will be merged with and into Regency. Security Capital U.S. Realty and
Security Capital Holdings S.A. beneficially own 46,985,458.985 shares of common
stock, par value $.01 per share, of PRT as of the date hereof which will be
converted into the right to receive 22,553,020 shares of common stock, par value
$.01 per share, of Regency ("Regency Common Stock") upon completion of the
merger. After giving effect to the merger, Security Capital would beneficially
own 34,273,236 shares of Regency Common Stock, or 60.1% of the outstanding
shares of Regency Common Stock. See Item 4 and the exhibits hereto.
SCHEDULE 13D
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CUSIP NO. 758939 10 2 Page 3 of 9
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- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Security Capital Holdings S.A.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) /X/
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
BK, OO
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Luxembourg
- ------------------ ------ --------------------------------------------- --------
Number of 7. SOLE VOTING POWER
Shares 11,720,216 (1)
------ --------------------------------------------- --------
Beneficially 8. SHARED VOTING POWER
Owned By 0
------ --------------------------------------------- --------
Each 9. SOLE DISPOSITIVE POWER
Reporting 11,720,216 (1)
------ --------------------------------------------- --------
Person With 10. SHARED DISPOSITIVE POWER
0
- ------------------ ------ --------------------------------------------- --------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,720,216 (1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45.96% (1)
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
SCHEDULE 13D
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CUSIP NO. 758939 10 2 Page 4 of 9
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This Amendment No. 8 (this "Amendment") is being filed by Security
Capital U.S. Realty ("Security Capital U.S. Realty"), a corporation organized
and existing under the laws of Luxembourg, and by Security Capital Holdings S.A.
("Holdings"), a corporation organized and existing under the laws of Luxembourg
and a wholly owned subsidiary of Security Capital U.S. Realty (together with
Security Capital U.S. Realty, "SC-USREALTY"), and amends the Schedule 13D
originally filed on June 21, 1996 (as previously amended, the "Schedule 13D").
Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Schedule 13D.
The Schedule 13D is amended as follows:
ITEM 4 PURPOSE OF TRANSACTION
Item 4 is amended by adding the following to the response thereto:
Pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated as of September 23, 1998 between Regency Realty Corporation, a
Florida corporation ("Regency"), and Pacific Retail Trust, a Maryland real
estate investment trust ("PRT"), and subject to the terms thereof, PRT shall be
merged (the "Merger") with and into Regency. In the Merger, (i) each outstanding
share of common stock, par value $.01 per share, of PRT ("PRT Common Stock")
will be converted into the right to receive 0.48 of a share of common stock, par
value $.01 per share ("Regency Common Stock"), (ii) each Series A Cumulative
Convertible Redeemable Preferred Share of Beneficial Interest of PRT will be
converted into the right to receive 0.48 of a share of Series A Cumulative
Convertible Redeemable Preferred Stock of Regency, and (iii) each Series B
Cumulative Convertible Redeemable Preferred Share of Beneficial Interest of PRT
will be converted into the right to receive 0.48 of a share of Series B
Cumulative Convertible Redeemable Preferred Stock of Regency. The Merger is
subject to the conditions set forth in the Merger Agreement, including the
required approval of the shareholders of Regency and PRT. SC-USREALTY currently
beneficially owns 46,985,458.985 shares of PRT Common Stock, or 69.93% of the
outstanding shares of PRT Common Stock, and 11,720,216 shares of Regency Common
Stock, or 45.96% of the outstanding shares of Regency Common Stock. Upon
completion of the Merger, SC-USREALTY will beneficially own 34,273,236 shares of
Regency Common Stock, or 60.1% of the outstanding shares of Regency Common
Stock.
In connection with the Merger Agreement, Regency, Security Capital
U.S. Realty and Holdings entered into Amendment No. 3 to Stockholders Agreement
(the "Stockholders Agreement Amendment"), dated as of September 23, 1998. The
Stockholders Agreement Amendment modifies the rights and obligations of the
parties thereto by, among other things, (i) increasing the percentage of the
outstanding shares of Regency Common Stock that SC-USREALTY may own from 45% to
60%, on a fully diluted basis and in each case subject to certain adjustments;
(ii) changing the number of directors SC-USREALTY may appoint during the
standstill period (as described in the Schedule 13D) to the greater of (or,
after the standstill period, the lesser of) (a) three (increased from two prior
to the effectiveness of the Stockholders Agreement Amendment) or (b) the number
of directors proportionate to its ownership (but in no event more than 49% of
the board of directors); (iii) expanding the region in which certain of
SC-USREALTY's investment activities and certain limitations on Regency's actions
are restricted from a defined portion of the United States to all of the United
States; and (iv) allowing SC-USREALTY to vote a greater percentage of its shares
in its discretion in the event of an Extraordinary Transaction (as defined in
the Stockholders Agreement). Certain rights and obligations of the parties
(including those summarized above) cease under the Stockholders
SCHEDULE 13D
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CUSIP NO. 758939 10 2 Page 5 of 9
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Agreement upon the expiration or termination of the standstill period or once
SC-USREALTY owns less than 20% or 15% of the outstanding shares of Regency
Common Stock, as the case may be; upon the effectiveness of the Stockholders
Agreement Amendment, such rights and obligations of the parties will cease upon
the expiration or termination of the standstill period or once SC-USREALTY owns
less than 15% or 10% of the outstanding shares of Regency Common Stock,
respectively. The effectiveness of the Stockholders Agreement Amendment is
subject to the consummation of the Merger and the approval of the amendment to
Regency's Articles of Incorporation (attached as Exhibit A to the Stockholders
Agreement Amendment), except that Section 6(b) of the Stockholders Agreement
Amendment (which states that the Merger, the Merger Agreement, the Stockholders
Agreement Amendment and the transactions contemplated by the foregoing do not
violate the restrictions applicable during the standstill period) became
effective upon execution of the Stockholders Agreement Amendment.
To induce the parties to enter into the Merger Agreement, Security
Capital U.S. Realty and Holdings have entered into a Shareholder Voting
Agreement (the "Shareholder Voting Agreement") dated as of September 23, 1998
with Regency and PRT which, among other things and subject to the terms and
conditions thereof, requires Holdings to vote, or cause the record holder to
vote, all of the shares of Regency Common Stock that it beneficially owns or
that become beneficially owned by it prior to termination of the Shareholder
Voting Agreement (the "Regency Shares") and all of the shares of PRT Common
Stock that it beneficially owns or that become beneficially owned by it prior to
the termination of the Shareholder Voting Agreement (the "PRT Shares") (i) in
favor of the adoption of the Merger Agreement and approval of the Merger and
other transactions contemplated by the Merger Agreement, (ii) against any
alternative transaction to the Merger and (iii) in favor of certain amendments
to Regency's Articles of Incorporation, including an amendment that increases
the percentage of the outstanding shares of Regency that SC-USREALTY can
beneficially own from 45% to 60%, in each case on a fully-diluted basis. The
Shareholder Voting Agreement also requires SC-USREALTY not to initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including any proposal or offer to
Regency's or PRT's shareholders) with respect to any alternative transaction to
the Merger or engage in any negotiations or discussions concerning, or provide
any confidential information or data to, or have any discussions with, any
person with respect to any such alternative transaction or otherwise facilitate
any effort or attempt to make or implement such alternative transaction.
SCHEDULE 13D
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CUSIP NO. 758939 10 2 Page 6 of 9
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If either Regency or PRT exercises its rights under Section 5.4 of the Merger
Agreement, then SC-USREALTY shall be relieved of its obligations set forth in
clause (ii) of the preceding sentence with respect to such specific alternative
transaction. The Shareholder Voting Agreement will terminate upon the earlier of
the consummation of the Merger and the termination of the Merger Agreement.
Holdings has also entered into a Transfer Restriction Agreement
with PRT (the "PRT Transfer Restriction Agreement") dated as of September 23,
1998, pursuant to which Holdings has agreed, subject to the terms and conditions
thereof, not to sell, or otherwise dispose of, deposit into a voting trust,
enter into a voting agreement, or grant any proxy with respect to, any Regency
Shares prior to the earlier of (i) the termination of the Merger Agreement in
accordance with its terms or (ii) the close of business on the date of the later
to occur of the special meetings of shareholders of Regency and PRT called to
consider and vote on the Merger. Holdings has also entered into a Transfer
Restriction Agreement with Regency (the "Regency Transfer Restriction
Agreement") dated as of September 23, 1998, pursuant to which it has agreed to
substantially similar restrictions with respect to the PRT Shares.
A copy of each of the Merger Agreement, the Stockholders
Agreement, the Stockholders Agreement Amendment, the Shareholder Voting
Agreement, the Regency Transfer Restriction Agreement and the PRT Transfer
Restriction Agreement is attached hereto and is specifically incorporated by
reference herein, and the description herein of each such agreement is qualified
in its entirety by reference to each such agreement.
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
See response to Item 4.
SCHEDULE 13D
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CUSIP NO. 758939 10 2 Page 7 of 9
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ITEM 7 MATERIAL TO BE FILED AS EXHIBITS
Exhibit 8.1 Agreement and Plan of Merger dated as of September 23, 1998
between PRT and Regency
Exhibit 8.2 Amendment No. 3 to Stockholders Agreement dated as of September
23, 1998 between Regency, Security Capital U.S. Realty and
Holdings
Exhibit 8.3 Shareholder Voting Agreement dated as of September 23, 1998 among
Regency, PRT, Security Capital U.S. Realty and Holdings
Exhibit 8.4 Transfer Restriction Agreement dated as of September 23, 1998
between PRT and Holdings
Exhibit 8.5 Transfer Restriction Agreement dated as of September 23, 1998
between Regency and Holdings
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Page 8 of 9
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated as of: October 1, 1998
SECURITY CAPITAL U.S. REALTY
By:
Name: Ariel Amir
Title: Vice President
SECURITY CAPITAL HOLDINGS S.A.
By:
Name: Ariel Amir
Title: Vice President
INDEX OF EXHIBIT
Exhibit 8.1 Agreement and Plan of Merger dated as of September 23, 1998
between PRT and Regency
Exhibit 8.2 Amendment No. 3 to Stockholders Agreement dated as of September
23, 1998 between Regency, Security Capital U.S. Realty and
Holdings
Exhibit 8.3 Shareholder Voting Agreement dated as of September 23, 1998 among
Regency, PRT, Security Capital U.S. Realty and Holdings
Exhibit 8.4 Transfer Restriction Agreement dated as of September 23, 1998
between PRT and Holdings
Exhibit 8.5 Transfer Restriction Agreement dated as of September 23, 1998
between Regency and Holdings
EXHIBIT 8.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 23, 1998
BY AND BETWEEN
REGENCY REALTY CORPORATION
AND
PACIFIC RETAIL TRUST
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions.................................................................. 2
Section 1.1 Definitions............................................. 2
ARTICLE II.
The Merger................................................................... 6
Section 2.1 The Merger.................................................. 6
Section 2.2 The Closing................................................. 6
Section 2.3 Effective Time.............................................. 7
ARTICLE III.
Representations and Warranties of East....................................... 7
Section 3.1 Organization and Qualification............................... 7
Section 3.2 Capitalization............................................... 8
Section 3.3 Authority; Non-contravention; Approvals...................... 9
Section 3.4 Disclosure and Financial Statements.......................... 11
Section 3.5 Absence of Certain Changes or Events......................... 11
Section 3.6 Registration Statement and Proxy Statement and Prospectus.... 11
Section 3.7 Taxes........................................................ 12
Section 3.8 Absence of Undisclosed Liabilities........................... 14
Section 3.9 Litigation................................................... 14
Section 3.10 No Violation of Law.......................................... 14
Section 3.11 East Properties.............................................. 15
Section 3.12 Labor Matters................................................ 15
Section 3.13 Employee Benefit Plans....................................... 16
Section 3.14 Intellectual Property........................................ 16
Section 3.15 East Material Contracts...................................... 16
Section 3.16 Environmental Matters........................................ 16
Section 3.17 Insurance.................................................... 17
Section 3.18 Brokers and Finders.......................................... 17
Section 3.19 Investment Company Act....................................... 17
Section 3.20 HSR Act...................................................... 17
Section 3.21 State Antitakeover Laws Not Applicable....................... 18
Section 3.22 Required East Vote........................................... 18
Section 3.23 Board Recommendation......................................... 18
i
Section 3.24 Opinion Of Financial Advisor................................. 18
Section 3.25 Disclosure................................................... 18
Section 3.26 Definition of East's Knowledge............................... 18
ARTICLE IV.
Representations And Warranties Of West....................................... 19
Section 4.1 Organization And Qualification............................... 19
Section 4.2 Capitalization............................................... 19
Section 4.3 Authority; Non-contravention; Approvals...................... 21
Section 4.4 Disclosure And Financial Statements.......................... 22
Section 4.5 Absence Of Certain Changes Or Events......................... 22
Section 4.6 Registration Statement And Proxy Statement And Prospectus.... 23
Section 4.7 Taxes........................................................ 23
Section 4.8 Absence Of Undisclosed Liabilities........................... 25
Section 4.9 Litigation................................................... 25
Section 4.10 No Violation Of Law.......................................... 26
Section 4.11 West Properties.............................................. 26
Section 4.12 Labor Matters................................................ 27
Section 4.13 Employee Benefit Plans....................................... 27
Section 4.14 Intellectual Property........................................ 27
Section 4.15 West Material Contracts...................................... 27
Section 4.16 Environmental Matters........................................ 28
Section 4.17 Insurance.................................................... 28
Section 4.18 Brokers and Finders.......................................... 28
Section 4.19 Investment Company Act....................................... 29
Section 4.20 HSR Act...................................................... 29
Section 4.21 State Antitakeover Laws Not Applicable....................... 29
Section 4.22 Required West Vote........................................... 29
Section 4.23 Board Recommendation......................................... 29
Section 4.24 Opinion Of Financial Advisor................................. 29
Section 4.25 Disclosure................................................... 30
Section 4.26 Definition of West's Knowledge............................... 30
ARTICLE V.
Conduct Of Businesses Pending The Closing.................................... 30
Section 5.1 Conduct Of Business By East.................................. 30
Section 5.2 Conduct Of Business By West.................................. 33
Section 5.3 Coordination of Dividends.................................... 35
Section 5.4 No Solicitation.............................................. 35
ii
ARTICLE VI.
Additional Agreements........................................................ 37
Section 6.1 Access To Information........................................ 38
Section 6.2 Registration Statements And Proxy Statement And Prospectus... 38
Section 6.3 Letters of Accountants....................................... 38
Section 6.4 Legal Opinions............................................... 39
Section 6.5 Shareholders Approval........................................ 39
Section 6.6 Affiliate Agreements......................................... 39
Section 6.7 Exchange..................................................... 39
Section 6.8 Expenses..................................................... 40
Section 6.9 Agreement to Cooperate....................................... 40
Section 6.10 Coordination of Employee Benefit Plans....................... 40
Section 6.11 West Nominees to East Board of Directors..................... 40
Section 6.12 Public Statements............................................ 41
Section 6.13 Corrections to the Proxy Statement and Prospectus
and Registration Statement................................... 41
Section 6.14 Updated Schedules............................................ 41
Section 6.15 Standstill Agreements; Confidentiality Agreements............ 41
Section 6.16 Indemnification.............................................. 41
ARTICLE VII.
Conditions................................................................... 42
Section 7.1 Conditions To Each Party's Obligations For East/West Merger.. 42
ARTICLE VIII.
Termination, Amendment And Waiver............................................ 44
Section 8.1 Termination.................................................. 44
Section 8.2 Effect Of Termination........................................ 45
Section 8.3 Payment Upon Certain Terminations............................ 45
Section 8.4 Payment of Termination Amount................................ 46
Section 8.5 Amendment and Waiver......................................... 47
ARTICLE IX.
General Provisions........................................................... 48
Section 9.1 Nonsurvival Of Representations And Warranties................ 48
Section 9.2 Notices...................................................... 48
Section 9.3 Interpretation............................................... 49
Section 9.4 Miscellaneous................................................ 49
Section 9.5 Counterparts................................................. 50
Section 9.6 Parties In Interest.......................................... 50
iii
Section 9.7 Limitation Of Liability...................................... 50
Section 9.8 No Presumption Against Drafter............................... 50
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of September 23, 1998 by and between Pacific Retail Trust, a Maryland real
estate investment trust ("West"), and Regency Realty Corporation, a Florida
corporation ("East").
WHEREAS, the Board of Trustees of West and the Board of Directors of
East have approved, and deem it advisable and in the best interests of their
respective companies and shareholders to consummate, (a) a merger of West with
and into East (the "East/West Merger" or the "Merger") and (b) a merger of
Retail Property Partners Limited Partnership, a Delaware limited partnership
("West Operating Partnership"), with and into Regency Centers, L.P., a Delaware
limited partnership ("East Operating Partnership") (the "Operating Partnership
Merger") with East and East Operating Partnership as the respective successors
to the merger upon the terms and subject to the conditions set forth in this
Agreement, provided that the East/West Merger shall not be conditioned upon the
simultaneous closing of the Operating Partnership Merger;
WHEREAS, the Board of Trustees of West and Board of Directors of East
believe that it would be in the best interests of their respective companies and
shareholders for PRT Development Corporation, a Delaware corporation ("West
Management Company"), to merge with and into Regency Realty Group, Inc., a
Florida corporation ("East Management Company") (the "Management Company
Merger"), with East Management Company being the successor in the merger,
provided that the simultaneous closing of the Management Company Merger shall
not be a condition to the East/West Merger);
WHEREAS, the East/West Merger and this Agreement and the matters
contemplated hereby require approval by the affirmative vote of holders of the
outstanding shares of West Voting Stock (as defined herein) that are entitled to
cast a majority of the votes on the matter, and the affirmative vote of holders
of a majority of the outstanding shares of common stock, $.01 par value per
share, of East ("East Common Stock") entitled to vote thereon (the "West
Shareholders Approval" and "East Shareholders Approval," respectively);
WHEREAS, concurrently with the execution of this Agreement, Security
Capital U.S. Realty and its wholly-owned subsidiary, Security Capital Holdings
S.A. ("SCH" and collectively with Security Capital U.S. Realty, "Shareholder"),
are entering into an agreement with East and West providing, among other things,
that SCH will vote or cause to be voted at the shareholder meetings at which the
East Shareholders Approval and West Shareholders Approval are solicited all of
the shares of East Common Stock and West Common Stock beneficially owned by SCH
at such time in favor of the Merger; and
WHEREAS, for United States federal income tax purposes it is intended
that, with respect to the East/West Merger and the Management Company Merger,
such mergers shall each qualify as a reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and
this Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368 of the Code, and it is further intended that
the Operating Partnership Merger shall be a transaction governed by Section 721
of the Code.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Articles of Merger" shall have the meaning set forth in Section 2.1.
"Closing" and "Closing Date" shall have the respective meanings set
forth in Section 2.2.
"DGCL" shall have the meaning set forth in Section 2.3.
"East Affiliated Group" shall have the meaning set forth in Section
3.7.
"East Alternative Proposals" shall have the meaning set forth in
Section 5.4(a).
"East Benefit Plans" shall have the meaning set forth in Section 3.13.
"East Board" shall mean the Board of Directors of East.
"East Class B Common Stock" shall mean the non-voting Class B Common
Stock of East.
"East Common Stock" shall have the meaning set forth in the Recitals.
"East Disclosure Schedule" shall mean the schedule of disclosures,
delivered by East to West prior to the execution of this Agreement, setting
forth those items the disclosure of which is necessary or appropriate in
relation to any or all of East's representations and warranties herein.
"East Investor Agreement" shall mean that certain Stockholders
Agreement dated July 10, 1996, as amended, among East, The Regency Group, Inc.
and Shareholder.
"East Management Company" shall have the meaning set forth in the
Recitals.
"East Merging Entities" shall mean East, East Operating Partnership and
East Management Company.
2
"East Operating Partnership" shall have the meaning set forth in the
Recitals.
"East Organizational Documents" shall have the meaning set forth in
Section 3.1.
"East Required Consents" shall have the meaning set forth in Section
3.3(b).
"East Required Statutory Approvals" shall have the meaning set forth in
Section 3.3(c).
"East SEC Documents" shall have the meaning set forth in Section 3.4.
"East SEC Financial Statements" shall have the meaning set forth in
Section 3.4.
"East Shareholders Approval" shall have the meaning set forth in the
Recitals.
"East Stock Options" shall mean options to purchase East Common Stock
granted pursuant to East's Long-Term Omnibus Plan.
"East Restricted Stock Plan" shall mean the restricted stock plan that
is a part of East's Long-Term Omnibus Plan.
"East Subsidiaries" shall mean the entities listed as East's
subsidiaries in the East Disclosure Schedule.
"East/West Merger" shall have the meaning set forth in the Recitals.
"Effective Time" shall have the meaning set forth in Section 2.3.
"Environmental Laws" shall mean the Resource Conservation and Recovery
Act, as amended, and the Comprehensive Environmental Response Compensation and
Liability Act, as amended, and other federal laws governing the environment as
in effect on the date of this Agreement, together with their implementing
regulations as of the date of this Agreement, and all state, regional, county,
municipal and other local laws, regulations and ordinances as in effect on the
date hereof that are equivalent or similar to such federal laws or that purport
to regulate Hazardous Materials.
"Exchange" shall mean the New York Stock Exchange.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FBCA" shall have the meaning set forth in Section 2.3.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, polychlorinated biphenyls and, only to the extent it exists at levels
which are considered hazardous to human health, radon gas
3
and (b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants" or words of similar import, under any applicable
Environmental Laws.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Intellectual Property" shall mean all United States and foreign
patents, patent applications, patent licenses, trade names, trademarks, trade
names and trademark registrations (and applications therefor), copyrights and
copyright registrations (and applications therefor), trade secrets, inventions,
processes, designs, know-how and formulae.
"Liens" shall mean pledges, claims, liens, charges, encumbrances, and
security interests of any kind or nature.
"Maryland REIT Law" shall have the meaning set forth in Section 2.3.
"Management Company Merger" shall have the meaning set forth in the
Recitals.
"Merger" shall have the meaning set forth in the Recitals.
"Merger Consideration" shall have the meaning set forth in the Articles
of Merger.
"Operating Partnership Merger" shall have the meaning set forth in the
Recitals.
"Proxy Statement and Prospectus" shall mean the definitive joint proxy
statement and prospectus to be filed with the SEC as a part of the Registration
Statement.
"Registration Statement" shall mean the registration statement on Form
S-4 of East, of which the Proxy Statement and Prospectus will form a part, to be
filed with the Commission in connection with the transactions contemplated
hereby.
"Representatives" shall have the meaning set forth in Section 6.1.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shareholder" shall have the meaning set forth in the recitals.
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States, or any state, local or foreign government
4
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable or imposed on or with
respect to any such taxes, charges, fees, levies or other assessments.
"Tax Returns" shall mean any return, report or other document or
information required to be supplied to a taxing authority in connection with
Taxes.
"Termination Date" shall have the meaning set forth in Section 8.1.
"West Affiliated Group" shall have the meaning set forth in Section
4.7.
"West Alternative Proposals" shall have the meaning set forth in
Section 5.4(b).
"West Benefit Plans" shall have the meaning set forth in Section 4.13.
"West Board" shall mean the Board of Trustees of West.
"West Common Stock" shall mean the common shares of beneficial
interest, $.01 par value per share, of West.
"West Disclosure Schedule" shall mean the schedule of disclosures,
delivered by West to East prior to the execution of this Agreement, setting
forth those items the disclosure of which is necessary or appropriate in
relation to any or all of West's representations and warranties herein.
"West Financial Statements" shall have the meaning set forth in Section
4.4.
"West Investor Agreement" shall mean that certain Investor Agreement
dated as of October 20, 1995 between West and Security Capital Holdings S.A., as
amended.
"West Management Company" shall have the meaning set forth in the
Recitals.
"West Merging Entities" shall mean West, West Operating Partnership and
West Management Company.
"West Operating Partnership" shall have the meaning set forth in the
Recitals.
"West Organizational Documents" shall have the meaning set forth in
Section 4.1.
"West Permitted Changes" shall have the meaning set forth in Section
5.29b).
"West Pre-Termination Alternative Proposal Event" shall have the
meaning set forth in Section 8.3(f).
5
"West Properties" shall have the meaning set forth in Section 4.11.
"West Required Consents" shall have the meaning set forth in Section
4.3(b).
"West Required Statutory Approvals" shall have the meaning set forth in
Section 4.3(c).
"West Series A Preferred Stock" shall mean the Series A Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest, $.01 par value
per share, of West.
"West Series B Preferred Stock" shall mean the Series B Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest, $.01 par value
per share, of West.
"West Shareholders Approval" shall have the meaning set forth in the
Recitals.
"West Stock Options" shall mean options to purchase West Common Stock,
including dividend equivalent units, pursuant to West's 1996 Share Incentive
Plan and West's 1996 Trustees Plan.
"West Subsidiaries" shall mean the entities listed as West's
subsidiaries in the West Disclosure Schedule.
"West Voting Stock" shall mean the outstanding shares of West Common
Stock, West Series A Preferred Stock and West Series B Preferred Stock entitled
to vote on the transaction contemplated hereby, voting together as a single
class.
ARTICLE II.
THE MERGER
Section 2.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, West and East shall each take all actions necessary to cause (a)
West to be merged with and into East, which shall be the successor in such
Merger, on the terms and conditions set forth in articles of merger
substantially in the form of Exhibit A hereto (the "Articles of Merger"), (b)
West Operating Partnership to be merged into East Operating Partnership, which
shall be the successor in such Merger, on the terms and conditions set forth in
the articles of merger substantially in the form of Exhibit B hereto, and (c)
West Management Company to be merged into East Management Company, which shall
be the successor in such Merger, on the terms and conditions set forth in the
articles of merger substantially in the form of Exhibit C hereto.
Section 2.2 THE CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1, and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the closing of the
6
East/West Merger (the "East/West Closing") will take place as soon as
practicable after satisfaction or waiver of the conditions set forth in Section
7.1 (the "Closing Date") at 10:00 a.m., Jacksonville, Florida time at the
offices of Foley & Lardner, 200 North Laura Street, Jacksonville, Florida,
unless another date, time or place is agreed to in writing by the parties
hereto. The Closing of the Management Company Merger and the Operating
Partnership Merger will take place as soon as practical following satisfaction
or waiver of the conditions set forth in their respective articles of merger.
The closing of the East/West Merger shall not be conditioned upon the
simultaneous closing of either of the other mergers.
Section 2.3 EFFECTIVE TIME. On the Closing Date, the parties hereto
shall file the Articles of Merger for the East/West Merger executed in
accordance with the relevant provisions of the Florida Business Corporations Act
(the "FBCA") and Title 8 of the Corporations and Associations Article of the
Annotated Code of Maryland (the "Maryland REIT Law") and shall make all other
filings or recordings required under the FBCA and the Maryland REIT Law. The
East/West Merger shall become effective at such time as provided by applicable
law or such other time as specified in the Articles of Merger (the time when the
East/West Merger becomes effective being the "Effective Time").
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF EAST
East represents and warrants to West as follows:
Section 3.1 ORGANIZATION AND QUALIFICATION. Each of East and the East
Subsidiaries is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and each has the requisite power,
corporate or otherwise, and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted and as it
is proposed by it to be conducted. Each of East and the East Subsidiaries is
qualified to do business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing would not, alone or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of East and the East Subsidiaries, taken as a whole, or
prevent, hinder or materially delay the ability of East to consummate the
transactions contemplated by this Agreement. True, accurate and complete copies
of each of (a) the Second Amended and Restated Articles of Incorporation, as
amended, and Bylaws of East, (b) the Second Amended and Restated Agreement of
Limited Partnership of East Operating Partnership and (c) the Articles of
Incorporation and Bylaws of East Management Company (collectively, the "East
Organizational Documents"), as in effect on the date hereof, including all
amendments thereto, have heretofore been delivered to West.
7
Section 3.2 CAPITALIZATION.
(a) The authorized capital stock of East consists of 170,000,000
shares. As of the date of this Agreement, there are (i) 25,503,066 shares of
East Common Stock and 2,500,000 shares of East Class B Common Stock issued and
outstanding, (ii) no shares of East Common Stock or East Class B Common Stock
held by any East Subsidiary; (iii) 890,095 shares of East Common Stock reserved
for issuance upon exercise of authorized but unissued East Stock Options; (iv)
1,318,507 shares of East Common Stock issuable upon exercise of outstanding East
Stock Options; (v) 59,000 shares of East Common Stock issued and outstanding
(and included in the number stated in clause (i) above) subject to restrictions
under the East Restricted Stock Plan; and (vi) 161,177 shares of East Common
Stock reserved for issuance as employer matching contributions under East's
401(k) Savings Plan. As of the date of this Agreement, there are (i) 692,432
Original Limited Partnership and Class A Units of East Operating Partnership
outstanding, (ii) 400,927 Class 2 Units of East Operating Partnership
outstanding, (iii) 25,503,066 Class B Units of East Operating Partnership
outstanding and (iv) 1,600,000 8.125% Series A Cumulative Redeemable Preferred
Units of East Operating Partnership outstanding. Except as set forth above or on
the East Disclosure Schedule, no shares of capital stock or other equity
securities of East or East Operating Partnership are issued, reserved for
issuance, or outstanding. All of the issued and outstanding securities of East
and East Operating Partnership are, and all equity securities of East and East
Operating Partnership issued pursuant to this Agreement will be when so issued,
duly authorized, validly issued, fully paid, nonassessable, and free of
preemptive rights. All shares of East Common Stock issuable pursuant to this
Agreement will be, when so issued, registered under the Securities Act for such
issuance and registered under the Exchange Act, registered or exempt from
registration under any applicable state securities laws for such issuance, and
listed on the Exchange, subject to official notice of issuance.
(b) Except as set forth in Section 3.2(a), as contemplated by this
Agreement, or as set forth in the East Disclosure Schedule, as of the date
hereof there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating East or East Operating Partnership to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity interests or obligating East or East
Operating Partnership to grant, extend or enter into any such agreement or
commitment; provided, however, that the foregoing shall not apply to the
amendment by East of any incentive plan providing for grants of options or
restricted shares to directors and employees nor to any grant of options or
restricted shares thereunder. Except for the East Investor Agreement or as
contemplated by this Agreement or as set forth in the East Disclosure Schedule,
there are no voting trusts, proxies or other agreements or understandings to
which East or East Operating Partnership is a party or by which East or East
Operating Partnership is bound with respect to the voting of any of its
respective voting securities. There are no outstanding bonds, debentures, notes
or other indebtedness or other securities of East or East Operating Partnership
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of East or
limited
8
partners of East Operating Partnership may vote. Other than East Stock Options
or as set forth in the East Disclosure Schedule, there are no outstanding
contractual obligations, commitments, understandings or arrangements of East or
any East Subsidiary to repurchase, redeem or otherwise acquire or make any
payment in respect of or measured or determined based on the value or market
price of any shares of capital stock of East or any East Subsidiary. Except as
set forth in the East Disclosure Schedule, there are no agreements or
arrangements pursuant to which East is or could be required to register shares
of East Common Stock or other securities under the Securities Act, on behalf of
any person other than Shareholder.
(c) All of the outstanding shares of capital stock of the East
Subsidiaries have been validly issued and are fully paid and nonassessable and,
except as set forth in the East Disclosure Schedule, are owned by East free and
clear of all Liens. Except for shares of East Subsidiaries, East does not own,
directly or indirectly, any capital stock or other equity or ownership interest
in any entities. East owns good and marketable title to the stock of each East
Subsidiary owned by it and each East Subsidiary owns good and marketable title
to the securities of each other East Subsidiary owned by it, in each case free
and clear of all Liens.
(d) Except as contemplated by this Agreement or as set forth in the
East Disclosure Schedule, there are no outstanding subscriptions, options,
calls, contracts, commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement obligating East or the East
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of any East Subsidiary or obligating
East or any East Subsidiary to grant, extend or enter into any such agreement or
commitment. There are no voting trusts, proxies or other agreements or
understandings to which East or any East Subsidiary is a party or is bound with
respect to the voting of any shares of the East Subsidiaries.
Section 3.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) East has full power, corporate or otherwise, and authority to enter
into this Agreement and, subject to the East Shareholders Approval and East
Required Statutory Approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by East and the
consummation by the East Merging Entities of the transactions contemplated
hereby have been duly authorized by the East Board and the Board of Directors of
East Management Company and no other proceedings on the part of the East Merging
Entities are necessary to authorize the execution and delivery of this Agreement
by East and the consummation by the East Merging Entities of the transactions
contemplated hereby, except for obtaining of the East Shareholders Approval and
East Required Statutory Approvals. This Agreement has been duly and validly
executed and delivered by East, and, assuming the due authorization, execution
and delivery hereof by West, constitutes a valid and binding agreement of East
enforceable against East in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or (ii) general equitable principles.
9
(b) The execution and delivery of this Agreement by East do not, and
the consummation by the East Merging Entities of the transactions contemplated
hereby will not, violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
result in the acceleration of any obligations under or the performance required
by, or result in a right of termination or acceleration or any "put" right
under, or result in the creation of any Lien upon any of the properties or
assets of the East Merging Entities under any of the terms, conditions or
provisions of, (i) subject to obtaining the East Shareholders Approval and the
consent of the holder of East's Class B Common Stock, the East Organizational
Documents, (ii) subject to obtaining the East Shareholders Approval and East
Required Statutory Approvals, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to East or any East Subsidiary or any of their
respective properties, or (iii) subject to obtaining any consent or waiver set
forth in the East Disclosure Schedule (the "East Required Consents"), any loan
or credit agreement, note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which East or any East Subsidiary is now a party or
by which East or any East Subsidiary may be bound, excluding from the foregoing
clauses (ii) and (iii) such violations, conflicts, breaches, defaults,
terminations, accelerations, put rights, or creations of Liens that would not,
alone or in the aggregate, be reasonably expected to have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other), results of operations or prospects of East and the East Subsidiaries,
taken as a whole, or prevent, hinder or materially delay the ability of the East
Merging Entities to consummate the transactions contemplated by this Agreement.
(c) Except for (i) any filings by the parties hereto that may be
required by the HSR Act, (ii) the filing of the Registration Statement,
including the Proxy Statement and Prospectus, with the SEC pursuant to the
Securities Act and the Exchange Act, and the declaration of the effectiveness
thereof by the SEC and any filings that may be required with various state blue
sky authorities, (iii) the filing of the Articles of Merger with, and the
acceptance thereof for recording by, the appropriate state authorities and (iv)
any required filings with or approvals from applicable federal or state
environmental authorities (the filings and approvals referred to in clauses (i)
through (iv) are collectively referred to as the "East Required Statutory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by East
or the consummation by the East Merging Entities of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, alone or in the aggregate, be reasonably expected
to have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
East and the East Subsidiaries, taken as a whole or prevent, hinder or
materially delay the ability of the East Merging Entities to consummate the
transactions contemplated by this Agreement.
10
Section 3.4 DISCLOSURE AND FINANCIAL STATEMENTS. East has filed all
required reports, schedules, forms, registration statements and other documents
with the SEC since October 29, 1993 (collectively, and in each case including
all exhibits and schedules thereto and documents incorporated by reference
therein, the "East SEC Documents"). As of their respective dates, the East SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the East SEC
Documents, and none of the East SEC Documents (including any and all financial
statements included therein) as of such dates 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. The consolidated
financial statements of East included in the East SEC Documents (the "East SEC
Financial Statements") comply 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 (except, in the case of unaudited consolidated
quarterly statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of East
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal year-end audit
adjustments).
Section 3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1997 through the date hereof, except as set forth in the East Disclosure
Schedule or disclosed in any East SEC Documents there has not been (a) any
material adverse change or any event which would reasonably be expected to
result in a material adverse change, individually or in the aggregate, in the
business, operations, properties, assets, liabilities, condition (financial or
other), results of operations or prospects of East and the East Subsidiaries,
taken as a whole; provided, however, that a material adverse change shall not
include any (i) changes, effects, conditions, events or circumstances that
affect the real estate industry generally (including tax, legal and regulatory
changes) and do not affect East and the East Subsidiaries, taken as a whole, in
a materially more adverse manner than the real estate industry generally or (ii)
changes arising from the consummation of the Merger or the announcement of the
execution of this Agreement; or (b) any event which, if it had taken place after
the date hereof, would not have been permitted by Section 5.1 without the prior
consent of West.
Section 3.6 REGISTRATION STATEMENT AND PROXY STATEMENT AND PROSPECTUS.
None of the information supplied or to be supplied by East for inclusion or
incorporation by reference in (a) the Registration Statement or (b) the Proxy
Statement and Prospectus will, in the case of the Proxy Statement and Prospectus
or any amendments thereof or supplements thereto, at the time of the mailing of
the Proxy Statement and Prospectus and any amendments thereof or supplements
thereto, and at the time of the meetings of the shareholders of East and West to
be held in connection with the transactions contemplated by this Agreement or,
in the case of the Registration Statement, as amended or supplemented, at the
time it becomes effective and at the
11
time of such meetings, 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
were made, not misleading, except that no representation is made by East with
respect to information supplied by West for inclusion or incorporation therein.
The Registration Statement and Proxy Statement and Prospectus will comply as to
form in all material respects with all applicable laws, including the provisions
of the Securities Act and Exchange Act and the rules and regulations promulgated
thereunder.
Section 3.7 TAXES. Except as set forth in the East Disclosure
Schedule:
(a) Each of East and the East Subsidiaries has timely filed, or shall
timely file, with the appropriate governmental authorities all Tax Returns
required to be filed by it (either separately or as a member of any affiliated
group within the meaning of Section 1504 of the Code or any similar group
defined under a similar provision of state, local or foreign law (an "East
Affiliated Group")) for all periods ending on or prior to the Closing Date,
except to the extent of any Tax Returns for which an extension of time for
filing has been properly filed. Each such return and filing is complete and
correct in all material respects. All Taxes shown on a Tax Return as owed by
East or the East Subsidiaries have been paid. No material issues have been
raised in any examination by any taxing authority with respect to the businesses
and operations of East or the East Subsidiaries which (i) reasonably could be
expected to result in an adjustment to the liability for Taxes for such period
examined or (ii), by application of similar principles, reasonably could be
expected to result in an adjustment to the liability for Taxes for any other
period not so examined. All Taxes which East or the East Subsidiaries are
required by law to withhold or collect, including Taxes required to have been
withheld in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party and sales, gross
receipts and use taxes, have been duly withheld or collected and, to the extent
required, have been paid over to the proper governmental authorities or are held
in separate bank accounts for such purpose. There are no Liens for Taxes upon
the assets of East or the East Subsidiaries except for statutory Liens for Taxes
not yet due.
(b) None of East, the East Subsidiaries or the East Affiliated Group
has filed for an extension of a statute of limitations with respect to any Tax
and no governmental authorities have requested an extension of the statute of
limitations with respect to any Tax. The Tax Returns of East, the East
Subsidiaries and the East Affiliated Group are not being and have not been
examined or audited by any taxing authority for any past year or periods. None
of East, the East Subsidiaries or the East Affiliated Group is a party to any
pending action or any formal or informal proceeding by any taxing authority for
a deficiency, assessment or collection of Taxes, and no claim for any
deficiency, assessment or collection of Taxes has been asserted, or, to the
knowledge of East, threatened against it, including claims by any taxing
authority in a jurisdiction where East and the East Subsidiaries do not file tax
returns that any of them is or may be subject to taxation in that jurisdiction.
(c) Each of East and the East Subsidiaries has properly accrued on its
respective financial statements all Taxes due for which East or the East
Subsidiaries may be liable, whether
12
or not shown on any Tax Return as being due (including by reason of being a
member of an East Affiliated Group or as a transferee of the assets of, or
successor to, any corporation, person, association, partnership, joint venture
or other entity). East and the East Subsidiaries have established (and until the
Closing Date shall continue to establish and maintain) on its books and records
reserves that are adequate for the payment of all Taxes not yet due and payable.
(d) Neither East nor the East Subsidiaries (i) has filed a consent
under Section 341(f) of the Code concerning collapsible corporations, or (ii) is
a party to any Tax allocation or sharing agreement.
(e) The East Affiliated Group of which East and any East Subsidiary is
or was a member has duly and timely filed all Tax Returns that it was required
to file for each taxable period during which East and any such East Subsidiary
was a member of the group. All such Tax Returns were complete and correct in all
material respects and all Taxes owed by the East Affiliated Group, whether or
not shown on any Tax Return, have been paid for each taxable period during which
East and any East Subsidiary was a member of the group.
(f) East does not have any liability for the Taxes of any person other
than East and the East Subsidiaries and the East Subsidiaries do not have any
liability for the Taxes of any person other than East and the East Subsidiaries
(A) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), (B) as a transferee or successor, (C) by contract,
or (D) otherwise.
(g) Neither East nor the East Subsidiaries has made any payments, is
obligated to make any payments, or is a party to an agreement that could
obligate it to make any payments that will not be deductible under Section 280G
of the Code. East and the East Subsidiaries have disclosed to the IRS all
positions taken on its federal income tax returns which could give rise to a
substantial understatement of tax under Section 6662 of the Code.
(h) For all taxable years commencing with the taxable year ended
December 31, 1993 through the taxable year ended December 31, 1997, East has
been organized in conformity with the qualifications as a REIT (within the
meaning of the Code) and has satisfied all requirements to qualify as a REIT for
such years. East has operated, and intends to continue to operate, in such a
manner as to qualify as a REIT for the tax year ending December 31, 1998, and
has not taken or omitted to take any action which would reasonably be expected
to result in a challenge to its status as a REIT, and no such challenge is
pending or, to East's knowledge, threatened. Each East Subsidiary that is a
partnership, joint venture or limited liability company has been treated during
and since its formation and continues to be treated for federal income tax
purposes as (i) a partnership, (ii) a qualified REIT subsidiary under the Code
or (iii) an entity that may be disregarded as an entity separate from its owner
under Treasury Regulation [Section] 301.7701-3. Each East Subsidiary that is
both (i) a corporation for federal income tax purposes and (ii) with respect to
which all of the outstanding capital stock is owned solely by East (or solely by
an East
13
Subsidiary that is a corporation wholly owned by East) is a "qualified REIT
subsidiary" as defined in Section 856(i) of the Code.
Section 3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Neither East nor any
East Subsidiary had, at December 31, 1997, and neither has incurred since that
date, any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature (other than ordinary and recurring operating expenses
consistent with past practices) except (a) liabilities, obligations or
contingencies which are accrued or reserved against in the East SEC Financial
Statements or reflected in the notes thereto, (b) as incurred in connection with
the transactions contemplated by this Agreement, and (c) any liabilities,
obligations or contingencies which (i) would not, alone or in the aggregate, be
reasonably expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of East and the East Subsidiaries, taken as a whole, or
prevent, hinder or materially delay the ability of East to consummate the
transactions contemplated by this Agreement or (ii) have been discharged or paid
in full prior to the date hereof.
Section 3.9 LITIGATION. Except as disclosed in the East SEC Documents
or the East Disclosure Schedule, there are no claims, suits, actions or
proceedings pending or, to East's knowledge, threatened, against, relating to or
affecting East or any East Subsidiary or any of their respective properties or
assets before or by any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that would reasonably be
expected to have, alone or in the aggregate with all such claims, actions or
proceedings, a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
East and the East Subsidiaries, taken as a whole, or to prevent, hinder or
materially delay the ability of East to consummate the transactions contemplated
by this Agreement. Neither East nor any East Subsidiary is subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of East and the East Subsidiaries, taken as a whole or prevent, hinder
or materially delay the ability of, East to consummate the transactions
contemplated by this Agreement.
Section 3.10 NO VIOLATION OF LAW. Neither East nor any East Subsidiary
is in violation of or has been given notice or been charged with any violation
of any law, statute, order, rule, regulation, ordinance or judgment (including
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, alone or in the
aggregate, would not reasonably be expected to have a material adverse effect on
the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of East and the East Subsidiaries, taken as a
whole, or prevent, hinder or materially delay the ability of, East to consummate
the transactions contemplated by this Agreement. No investigation or review of
East or any East Subsidiary by any governmental or regulatory body or authority
is pending or, to the knowledge of East, threatened, nor has any
14
governmental or regulatory body or authority indicated to East or any East
Subsidiary an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, would not, alone or in
the aggregate, reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of East and the East Subsidiaries, taken as a
whole, or prevent, hinder or materially delay the ability of, East to consummate
the transactions contemplated by this Agreement. Each of East and the East
Subsidiaries has all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals necessary
to conduct its business as presently conducted and as proposed by East or any
East Subsidiary to be conducted, except for permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not reasonably be expected to
have a material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of East and
the East Subsidiaries, taken as a whole, or prevent, hinder or materially delay
the ability of, East to consummate the transactions contemplated by this
Agreement.
Section 3.11 EAST PROPERTIES. Except as disclosed in the East SEC
Documents or the East Disclosure Schedule, each of East and the East
Subsidiaries (i) has good and marketable title to all the properties and assets
reflected in the latest audited balance sheet included in the East SEC Documents
as being owned by East or one of the East Subsidiaries or acquired after the
date thereof which are, alone or in the aggregate, material to East's business
on a consolidated basis (except properties sold or otherwise disposed of since
the date thereof in the ordinary course of business), free and clear of (A) all
Liens except (1) statutory Liens securing payments not yet due and (2) such
imperfections or irregularities of title or other Liens (other than real
property mortgages or deeds of trust) as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise materially
impair the business operations presently conducted at such properties, and (B)
all real property mortgages and deeds of trust, and (ii) is the lessee of all
leasehold estates reflected in the latest audited financial statements included
in the East SEC Documents or acquired after the date thereof which are, alone or
in the aggregate, material to its business on a consolidated basis and is in
possession of the properties purported to be leased thereunder, and each such
lease is valid without default thereunder by the lessee or, to East's knowledge,
the lessor.
Section 3.12 LABOR MATTERS. Neither East nor any East Subsidiary is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is East
or any East Subsidiary the subject of any proceeding asserting that it or any
subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment nor
is there any strike, work stoppage or other labor dispute involving East or any
East Subsidiary pending, or, to East's knowledge, threatened, any of which
would, alone or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of East and the East
Subsidiaries, taken as a whole or prevent, hinder or materially delay the
ability of, East to consummate the transactions contemplated by this Agreement.
15
Section 3.13 EMPLOYEE BENEFIT PLANS. Each employee benefit plan
maintained by East or any East Subsidiary that provides retirement, pension,
health care, long-term disability income, workers compensation, life insurance
and any other postretirement benefits that, as of the date hereof, covers any
director, officer or employee of East or the East Subsidiaries (collectively,
the "East Benefit Plans") complies and has been administered in form and in
operation in all material respects with all requirements of law to the extent
applicable and no notice has been issued by any governmental authority
questioning or challenging such compliance. Neither the execution or delivery of
this Agreement nor the consummation of the transactions contemplated hereby
constitutes or will constitute an event under any East Benefit Plan that may
result in any payment by East or any East Subsidiary, any restriction or
limitation upon the assets of any East Benefit Plan, any acceleration of payment
or vesting, increase in benefits or compensation, or forgiveness of any loan
from or other commitment to East or any East Subsidiary.
Section 3.14 INTELLECTUAL PROPERTY. East and the East Subsidiaries own,
free of Liens, or have a valid license to use, all of the Intellectual Property
used in the conduct of the businesses of East and the East Subsidiaries. None of
such Intellectual Property has been or is the subject of any pending, or to the
knowledge of East, threatened adverse claim, litigation or claim of infringement
based on the use thereof by East or any East Subsidiary or a third party.
Neither East nor any East Subsidiary has received any notice contesting East's
or the East Subsidiaries' right to use any of such Intellectual Property and, to
the knowledge of East, neither East nor any East Subsidiary has infringed upon
or misappropriated any intellectual property rights of third parties. The
consummation of the Merger will not result in the loss of any rights by East or
any East Subsidiaries of any of its or their rights in such Intellectual
Property.
Section 3.15 EAST MATERIAL CONTRACTS. Except as disclosed in the East
SEC Documents filed prior to the date hereof, neither East nor any East
Subsidiary: is a party to or bound by (a) any "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC), or (b) any
non-competition agreement or any other agreement or obligation that purports to
limit in any respect the manner in which, or the localities in which, all or any
substantial portion of the business of East or the East Subsidiaries would be
conducted.
Section 3.16 ENVIRONMENTAL MATTERS. Except as set forth in the East
Disclosure Schedule and the East SEC Documents, East has no knowledge of (a) any
violation of Environmental Laws relating to any property of East or any East
Subsidiary, (b) the release or potential release of Hazardous Materials on or
from any such property, (c) underground storage tanks located on any property,
or (d) asbestos in or on any such property which would, alone or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or otherwise),
results of operations or prospects of East and the East Subsidiaries, taken as a
whole, or prevent, hinder or materially delay the ability of East to consummate
the transactions contemplated by this Agreement. Except as set forth in the East
Disclosure Schedule, neither East nor any East Subsidiary, nor to East's
knowledge, any tenant of such property, has manufactured, introduced, released
or discharged from or onto any such property any Hazardous Materials or any
toxic wastes, substances or
16
materials (including asbestos) in violation of any Environmental Laws, and
neither East nor any East Subsidiary, nor to East's knowledge, any tenant of
such property, has used any such property or any part thereof for the
generation, treatment, storage, handling or disposal of any Hazardous Materials,
in violation of any Environmental Laws which would, alone or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or otherwise), results of
operations or prospects of East and the East Subsidiaries, taken as a whole, or
prevent, hinder or materially delay the ability of East to consummate the
transactions contemplated by this Agreement.
Section 3.17 INSURANCE. East or the East Subsidiaries maintain
insurance coverage for East and the East Subsidiaries and their respective
properties and assets of the types and in amounts typical of similar companies
engaged in the respective businesses in which East and the East Subsidiaries are
engaged. All such insurance policies (a) are in full force and effect, and with
respect to all policies neither of East nor any East Subsidiary is delinquent in
the payment of any premiums thereon, and no notice of cancellation or
termination has been received with respect to any such policy, and (b) are
sufficient for compliance with all requirements of law and of all agreements to
which East or the East Subsidiaries are a party or otherwise bound and are
valid, outstanding, collectable, and enforceable policies and will remain in
full force and effect through their respective policy periods, except, in the
case of either clause (a) or (b), in such manner as would not, alone or in the
aggregate, be reasonably expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of East and the East Subsidiaries, taken as a
whole, or prevent, hinder or materially delay the ability of the East Merging
Entities to consummate the transactions contemplated by this Agreement. Neither
East nor any East Subsidiary has received written notice within the last 12
months from any insurance company or board of fire underwriters of any defects
or inadequacies that would materially adversely affect the insurability of, or
cause any material increase in the premiums for, insurance covering, either East
or any East Subsidiary or any of their respective properties or assets that have
not been cured or repaired to the satisfaction of the party issuing the notice.
Section 3.18 BROKERS AND FINDERS. East has not employed any broker,
finder, other intermediary, or financial advisor in connection with the
transactions contemplated by this Agreement which would be entitled to any
brokerage, finder's or similar fee or commission, or financial advisory fee, in
connection with this Agreement or the transactions contemplated hereby, other
than Prudential Securities Incorporated, the fees and expenses of which will be
paid by East.
Section 3.19 INVESTMENT COMPANY ACT. Neither East nor any of the East
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, nor an "investment adviser" within the meaning
of the Investment Advisers Act of 1940, as amended.
Section 3.20 HSR ACTI. For purposes of determining compliance with the
HSR Act, East confirms that except for the business of East Management Company,
the conduct of its
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businesses consists solely of investing in, owning, operating and developing
real estate for the benefit of its shareholders.
Section 3.21 STATE ANTITAKEOVER LAWS NOT APPLICABLE. Neither Sections
607.0901 or 607.0902 of the FBCA applies to this Agreement or the Merger or the
other transactions contemplated hereby. Other than Sections 607.0901 or 607.0902
of the FBCA, no state takeover statute or similar statute or regulation of the
State of Florida (and, to the knowledge of East, of any other state or
jurisdiction) applies or purports to apply to this Agreement or the Merger or
other transactions contemplated hereby.
Section 3.22 REQUIRED EAST VOTE. The East Shareholders Approval, being
the affirmative vote of a majority of the outstanding shares of East Common
Stock entitled to vote, is the only vote of the holders of any class or series
of the securities of the East Merging Entities necessary to approve this
Agreement, the Merger and the other transactions contemplated hereby.
Section 3.23 BOARD RECOMMENDATION. The East Board, at a meeting duly
called and held, has by a unanimous vote of those directors present and
participating (who constituted 69% of the directors then in office, with two
directors absent and the two Shareholder representatives abstaining), including
the unanimous vote of the "Independent Directors" (as defined in East's Bylaws),
(i) determined and declared that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and fair to and in the
best interests of East and the shareholders of East, and (ii) resolved to
recommend that the holders of East Common Stock approve this Agreement and the
transactions contemplated herein, including the Merger.
Section 3.24 OPINION OF FINANCIAL ADVISOR. A special committee of the
East Board composed exclusively of "Independent Directors" (as defined in East's
Bylaws) has received the opinion of Prudential Securities Incorporated, dated
the date of this Agreement, to the effect that the Merger Consideration is fair,
from a financial point of view, to the holders of East Common Stock other than
the Shareholder.
Section 3.25 DISCLOSURE. No representation or warranty contained in
this Article III, as qualified by the East Disclosure Schedule, or in any
Schedule or Exhibit hereto or any closing certificate furnished or to be
furnished by East to West pursuant to this Agreement or in connection with the
Merger contains any untrue statement of a material fact, or, to the knowledge of
East, omits to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which they were made, not
misleading.
Section 3.26 DEFINITION OF EAST'S KNOWLEDGE. All references in this
Agreement to "East's knowledge" or words of similar import shall refer only to
the actual knowledge of those persons identified in the East Disclosure Schedule
and shall not be construed to refer to the knowledge of any other officer, agent
or employee of East or any affiliate thereof. There shall be no personal
liability on the part of any of the persons identified in the East Disclosure
Schedule arising out of any representations or warranties made herein. Without
limiting the
18
foregoing, in no event shall the knowledge of Shareholder or any of its agents,
officers or employees be attributed to East.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF WEST
West represents and warrants to East as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION. Each of West and the West
Subsidiaries is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite power, corporate
or otherwise, and authority to own, lease and operate its assets and properties
and to carry on its business as it is now being conducted and as it is proposed
by it to be conducted. Each of West and the West Subsidiaries is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing would, alone or in the aggregate, not reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of West and the West Subsidiaries, taken as a whole, or prevent,
hinder or materially delay the ability of West to consummate the transactions
contemplated by this Agreement. True, accurate and complete copies of each of
(a) the Second Amended and Restated Declaration of Trust of West, as amended and
supplemented (the "Declaration of Trust"), and Amended and Restated Bylaws of
West, (b) the Agreement of Limited Partnership of West Operating Partnership and
(c) the Articles of Incorporation and Bylaws of West Management Company
(collectively, the "West Organizational Documents") as in effect on the date
hereof, including all amendments thereto, have heretofore been delivered to
East.
Section 4.2 CAPITALIZATION.
(a) The authorized capital of West consists of 150,000,000 shares of
beneficial interest. As of the date of this Agreement, except as set forth in
the West Disclosure Schedule, there are (i) 64,060,619 shares of West Common
Stock, 1,130,276 shares of West Series A Preferred Stock, and 2,000,000 shares
of West Series B Preferred Stock issued and outstanding, (ii) no shares of West
Common Stock, West Series A Preferred Stock, or West Series B Preferred Stock
that have been acquired by West or by any West Subsidiary; (iii) 2,821,308
shares of West Common Stock reserved for issuance upon exercise of authorized
but unissued West Stock Options; (iv) 2,428,692 shares of West Common Stock
issuable upon exercise of outstanding West Stock Options and (v) 8,055 shares of
West Common Stock reserved for issuance under West's Deferred Plan for Trustees.
As of the date of this Agreement there are 1,640,849 units of limited
partnership interest in the West Operating Partnership outstanding. The
authorized capital of West Management Company is 100,000 shares of voting common
stock, par value $0.01 per share, and 1,900,000 shares of non-voting common
stock, par value
19
$0.01 per share. As of the date of this Agreement, there are 33,892 shares of
voting common stock and 643,958 shares of non-voting common stock of West
Management Company outstanding. Except as set forth above or in the West
Disclosure Schedule, no shares of capital stock or other equity securities of
the West Merging Entities are issued, reserved for issuance, or outstanding. All
of the issued and outstanding securities of the West Merging Entities are duly
authorized, validly issued, fully paid, and, except as set forth on the West
Disclosure Schedule, nonassessable and free of preemptive rights.
(b) Except as set forth in Section 4.2(a), or as contemplated by this
Agreement, or as set forth in the West Disclosure Schedule, as of the date
hereof there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating a West Merging Entity to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests or obligating a West Merging Entity to grant,
extend or enter into any such agreement or commitment. Except for the West
Investor Agreement or as contemplated by this Agreement or as set forth in the
West Disclosure Schedule, there are no voting trusts, proxies or other
agreements or understandings to which a West Merging Entity is a party or by
which a West Merging Entity is bound with respect to the voting securities of a
West Merging Entity. Except for the West Voting Stock and as set forth in the
West Disclosure Schedule, there are no outstanding bonds, debentures, notes or
other indebtedness or other securities of a West Merging Entity having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which shareholders or limited partners, as
applicable, of a West Merging Entity may vote. Other than the West Stock
Options, except as set forth in the West Disclosure Schedule, there are no
outstanding contractual obligations, commitments, understandings or arrangements
of West or any West Subsidiary to repurchase, redeem or otherwise acquire or
make any payment in respect of or measured or determined based on the value or
market price of any shares of capital stock of West or any West Subsidiary.
Except as set forth in the West Disclosure Schedule, there are no agreements or
arrangements pursuant to which West is or could be required to register shares
of West Common Stock or other securities under the Securities Act on behalf of
any person.
(c) All of the outstanding shares of capital stock of the West
Subsidiaries have been validly issued and are fully paid and nonassessable, and
are owned, except as set forth in the West Disclosure Schedule, by West free and
clear of all Liens. Except for shares of the West Subsidiaries or as set forth
in the West Disclosure Schedule, West does not own, directly or indirectly, any
capital stock or other equity or ownership interest in any entities. West owns
good and marketable title to the stock of each of the West Subsidiaries owned by
it and each West Subsidiary owns good and marketable title to the securities of
each other West Subsidiary owned by it, in each case free and clear of all
Liens.
(d) Except as set forth in the West Disclosure Schedule, there are no
outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security,
20
instrument or other agreement obligating West or the West Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the West Subsidiaries or obligating West or the West Subsidiaries to grant,
extend or enter into any such agreement or commitment. There are no voting
trusts, proxies or other agreements or understandings to which West or the West
Subsidiaries is a party or is bound with respect to the voting of any shares of
the West Subsidiaries.
Section 4.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) West has full power, trust or otherwise, and authority to enter
into this Agreement and, subject to the West Shareholders Approval and West
Required Statutory Approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by West and the
consummation by the West Merging Entities of the transactions contemplated
hereby have been duly authorized by the West Board and the Board of Directors of
West Management Company and no other proceedings on the part of the West Merging
Entities are necessary to authorize the execution and delivery of this Agreement
by West and the consummation by the West Merging Entities of the transactions
contemplated hereby, except for the obtaining of the West Shareholders Approval
and the West Required Statutory Approvals. This Agreement has been duly and
validly executed and delivered by West, and, assuming the due authorization,
execution and delivery hereof by East, constitutes a valid and binding agreement
of West enforceable against West in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or (ii) general equitable principles.
(b) The execution and delivery of this Agreement by West do not, and
the consummation by the West Merging Entities of the transactions contemplated
hereby will not, violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
result in the acceleration of any obligations under or the performance required
by, or result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the properties or assets of West under any of
the terms, conditions or provisions of, (i) subject to obtaining the West
Shareholders Approval, the West Organizational Documents, (ii) subject to
obtaining the West Required Statutory Approvals and West Shareholders Approval,
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to West or any West Subsidiary or any of their respective properties
or (iii) subject to obtaining any consent or waiver set forth in the West
Disclosure Schedule (the"West Required Consents"), any loan or credit agreement,
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which West or any West Subsidiary is now a party or by which West or any
West Subsidiary may be bound, excluding from the foregoing clauses (ii) and
(iii) such violations, conflicts, breaches, defaults, terminations,
accelerations, put rights, or creations of Liens that would not, alone or in the
aggregate, be reasonably expected to have a material adverse effect on the
business,
21
operations, properties, assets, condition (financial or other), results of
operations or prospects of West and the West Subsidiaries, taken as a whole, or
prevent, hinder or materially delay the ability of the West Merging Entities to
consummate the transactions contemplated by this Agreement.
(c) Except for (i) any filings by the parties hereto that may be
required by the HSR Act, (ii) the filing of the Articles of Merger with, and the
acceptance thereof for recording by, the appropriate state authorities, and
(iii) any required filings with or approvals from applicable federal or state
environmental authorities (the filings and approvals referred to in clauses (i)
through (iii) are collectively referred to as the "West Required Statutory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by West
or the consummation by the West Merging Entities of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, alone or in the aggregate, be reasonably expected
to have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
West and the West Subsidiaries, taken as a whole, or prevent, hinder or
materially delay the ability of the West Merging Entities to consummate the
transactions contemplated by this Agreement.
Section 4.4 DISCLOSURE AND FINANCIAL STATEMENTS. The consolidated
financial statements of West for the period from April 27, 1995 to December 31,
1995 and the two years ended December 31, 1997 and for the six months ended June
30, 1998 (the "West Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of West and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year- end audit adjustments).
Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1997 through the date hereof, and except as set forth in the West Disclosure
Schedule, there has not been (a) any material adverse change or any event which
would reasonably be expected to result in a material adverse change,
individually or in the aggregate, in the business, operations, properties,
assets, liabilities, condition (financial or other), results of operations or
prospects of West and the West Subsidiaries, taken as a whole, provided,
however, that a material adverse change shall not include any (i) changes,
effects, conditions, events or circumstances that affect the real estate
industry generally (including tax, legal and regulatory changes) and do not
affect West and the West Subsidiaries, taken as a whole, in a materially more
adverse manner than the real estate industry generally or (ii) changes arising
from the consummation of the Merger or the announcement of the execution of this
Agreement; or (b) any event which, if it had taken place after the date hereof,
would not have been permitted by Section 5.2 without the prior consent of East.
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Section 4.6 REGISTRATION STATEMENT AND PROXY STATEMENT AND PROSPECTUS.
None of the information supplied or to be supplied by West for inclusion or
incorporation by reference in (a) the Registration Statement or (b) the Proxy
Statement and Prospectus will, in the case of the Proxy Statement and Prospectus
or any amendments thereof or supplements thereto, at the time of the mailing of
the Proxy Statement and Prospectus and any amendments thereof or supplements
thereto, and at the time of the meetings of the shareholders of East and West to
be held in connection with the transactions contemplated by this Agreement or,
in the case of the Registration Statement, as amended or supplemented, at the
time it becomes effective and at the time of such meetings, 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 were made, not misleading, except that no
representation is made by West with respect to information supplied by East for
inclusion or incorporation therein. The Proxy Statement (insofar as it relates
to the solicitation of proxies by West) will comply as to form in all material
respects with all applicable laws, including the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder.
Section 4.7 TAXES. Except as set forth in the West Disclosure
Schedule:
(a) Each of West and the West Subsidiaries has timely filed, or shall
timely file, with the appropriate governmental authorities all Tax Returns
required to be filed by it (either separately or as a member of any affiliated
group within the meaning of Section 1504 of the Code or any similar group
defined under a similar provision of state, local or foreign law (a "West
Affiliated Group")) for all periods ending on or prior to the Closing, except to
the extent of any Tax Returns for which an extension of time for filing has been
properly filed. Each such return and filing is complete and correct in all
material respects. All Taxes shown on a Tax Return as owed by West or the West
Subsidiaries have been paid. No material issues have been raised in any
examination by any taxing authority with respect to the businesses and
operations of West or the West Subsidiaries which (i) reasonably could be
expected to result in an adjustment to the liability for Taxes such period
examined, or (ii) by application of similar principles, reasonably could be
expected to result in an adjustment to the liability for Taxes for any period
not so examined. All Taxes which West or any West Subsidiary is required by law
to withhold or collect, including Taxes required to have been withheld in
connection with amount paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party and sales, gross receipts and use
taxes, have been duly withheld or collected and, to the extent required, have
been paid over to the proper governmental authorities or are held in separate
bank accounts for such purpose. There are no Liens for Taxes upon the Assets of
West or the West Subsidiaries except for statutory Liens for Taxes not yet due.
(b) None of West, the West Subsidiaries or the West Affiliated Group
has filed for an extension of a statute of limitations with respect to any Tax
and no governmental authorities have requested an extension of the statute of
limitations with respect to any Tax. The Tax Returns of West, the West
Subsidiaries and the West Affiliated Group are not being and have not been
examined or audited by any taxing authority for any past year or periods. None
of
23
West, the West Subsidiaries or the West Affiliated Group is a party to any
pending action or any formal or informal proceeding by any taxing authority for
a deficiency, assessment or collection of Taxes, and no claim for any
deficiency, assessment or collection of Taxes has been asserted, or, to the
knowledge of West, threatened against it, including claims by any taxing
authority in a jurisdiction where West and the West Subsidiaries do not file tax
returns that any of them is or may be subject to taxation in that jurisdiction.
(c) Each of West and the West Subsidiaries has properly accrued on its
respective financial statements all Taxes due for which West or the West
Subsidiaries may be liable, whether or not shown on any Tax Return as being due
(including by reason of being a member of a West Affiliated Group or as a
transferee of the assets of, or successor to, any corporation, person,
association, partnership, joint venture or other entity). West and the West
Subsidiaries have established (and until the Closing Date shall continue to
establish and maintain) on its books and records reserves that are adequate for
the payment of all Taxes not yet due and payable.
(d) Neither West nor the West Subsidiaries (i) has filed a consent
under Section 341(f) of the Code concerning collapsible corporations, or (ii) is
a party to any Tax allocation or sharing agreement.
(e) The West Affiliated Group of which West and any West Subsidiary is
or was a member has duly and timely filed all Tax Returns that it was required
to file for each taxable period during which West and any such West Subsidiary
was a member of the group. All such Tax Returns were complete and correct in all
material respects and all Taxes owed by the West Affiliated Group, whether or
not shown on any Tax Return, have been paid for each taxable period during which
West and any West Subsidiary was a member of the group.
(f) Except as set forth in the West Disclosure Schedule, West does not
have any liability for the Taxes of any person other than West and the West
Subsidiaries and the West Subsidiaries do not have any liability for the Taxes
of any person other than West and the West Subsidiaries (A) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), (B) as a transferee or successor, (C) by contract, or (D) otherwise.
(g) Neither West nor the West Subsidiaries has made any payments, is
obligated to make any payments, or is a party to an agreement that could
obligate it to make any payments that will not be deductible under Section 280G
of the Code. West and the West Subsidiaries have disclosed to the IRS all
positions taken on its federal income tax returns which could give rise to a
substantial understatement of tax under Section 6662 of the Code.
(h) For all taxable years commencing with the taxable year ended
December 31, 1995 through the taxable year ended December 31, 1997, West has
been organized in conformity with the qualifications as a REIT (within the
meaning of the Code) and has satisfied all requirements to qualify as a REIT for
such years. West has operated, and intends to continue to operate, in such a
manner as to qualify as a REIT for the tax period ending on the Closing Date,
and has
24
not taken or omitted to take any action which would reasonably be expected to
result in a challenge to its status as a REIT, and no such challenge is pending
or, to West's knowledge, threatened. Each West Subsidiary that is a partnership,
joint venture or limited liability company has been treated during and since its
formation and continues to be treated for federal income tax purposes as (i) a
partnership, (ii) a qualified REIT subsidiary under the Code or (iii) an entity
that may be disregarded as an entity separate from its owner under Treasury
Regulation [Section] 301.7701-3. Each West Subsidiary that is both (i) a
corporation for federal income tax purposes and (ii) with respect to which all
of the outstanding capital stock is owned solely by West (or solely by a West
Subsidiary that is a corporation wholly owned by West) is a "qualified REIT
subsidiary" as defined in Section 856(i) of the Code.
Section 4.8 ABSENCE OF UNDISCLOSED LIABILITIES. Neither West nor any
West Subsidiary had, at December 31, 1997, and neither has incurred since that
date, any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature (other than ordinary and recurring operating expenses
consistent with past practices), except (a) liabilities, obligations or
contingencies which are accrued or reserved against in the West Financial
Statements or reflected in the notes thereto, (b) as incurred in connection with
the transactions contemplated by this Agreement, and (c) for any liabilities,
obligations or contingencies which (i) would not be, alone or in the aggregate,
reasonably expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of West and the West Subsidiaries, taken as a whole or
prevent, hinder or materially delay the ability of West to consummate the
transactions contemplated by this Agreement, or (ii) have been discharged or
paid in full prior to the date hereof.
Section 4.9 LITIGATION. Except as disclosed in the West Disclosure
Schedule, there are no claims, suits, actions or proceedings pending or, to
West's knowledge, threatened, against, relating to or affecting West or any West
Subsidiary or any of their respective properties or assets before or by any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that would reasonably be expected to have, alone or
in the aggregate with all such claims, actions or proceedings, a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) results of operations or prospects of West or the West
Subsidiaries, taken as a whole, or to prevent, hinder or materially delay the
ability of West to consummate the transactions contemplated by this Agreement.
Neither West nor any West Subsidiary is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would have
a material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of West and
the West Subsidiaries, taken as a whole or prevent, hinder or materially delay
the ability of West to consummate the transactions contemplated by this
Agreement.
Section 4.10 NO VIOLATION OF LAW. Neither West nor any West Subsidiary
is in violation of or has been given notice or been charged with any violation
of any law, statute, order, rule, regulation, ordinance or judgment (including
any applicable environmental law,
25
ordinance or regulation) of any governmental or regulatory body or authority,
except for violations which, alone or in the aggregate, would not reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of West and the West Subsidiaries, taken as a whole or prevent, hinder
or materially delay the ability of West to consummate the transactions
contemplated by this Agreement. No investigation or review of West or any West
Subsidiary by any governmental or regulatory body or authority is pending or, to
the knowledge of West, threatened, nor has any governmental or regulatory body
or authority indicated to West or any West Subsidiary an intention to conduct
the same, other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, would not, alone or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of West and the West Subsidiaries, taken as a whole or prevent, hinder
or materially delay the ability of West to consummate the transactions
contemplated by this Agreement. Each of West and the West Subsidiaries have all
permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct its
business as presently conducted and as proposed by West or any West Subsidiary
to be conducted, except for permits, licenses, franchises, variances,
exemptions, orders, authorizations, consents and approvals the absence of which,
alone or in the aggregate, would not reasonably be expected to have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of West and the West
Subsidiaries, taken as a whole or prevent, hinder or materially delay the
ability of West to consummate the transactions contemplated by this Agreement.
Section 4.11 WEST PROPERTIES. Except as disclosed in the West
Disclosure Schedule, each of West and the West Subsidiaries (i) has good and
marketable title to all the properties and assets reflected in the latest
audited balance sheet included in the West Financial Statements as being owned
by West or one of the West Subsidiaries or acquired after the date thereof
("West Properties") which are, alone or in the aggregate, material to West's
business on a consolidated basis (except properties sold or otherwise disposed
of since the date thereof in the ordinary course of business), free and clear of
(A) all Liens except (1) statutory Liens securing payments not yet due and (2)
such imperfections or irregularities of title or other Liens (other than real
property mortgages or deeds of trust) as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise materially
impair the business operations presently conducted at such properties, and (B)
all real property mortgages and deeds of trust, and (ii) is the lessee of all
leasehold estates reflected in the latest audited West Financial Statements or
acquired after the date thereof which are, alone or in the aggregate, material
to its business on a consolidated basis and is in possession of the properties
purported to be leased thereunder, and each such lease is valid without default
thereunder by the lessee or, to West's knowledge, the lessor.
Section 4.12 LABOR MATTERS. Neither West nor any West Subsidiary is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is West
or any West Subsidiary the subject of any
26
proceeding asserting that it or any subsidiary has committed an unfair labor
practice or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment nor is there any strike, work stoppage or
other labor dispute involving West or any West Subsidiary pending, or, to West's
knowledge, threatened, any of which would, alone or in the aggregate, reasonably
be expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of West and the West Subsidiaries, taken as a whole or prevent, hinder
or materially delay the ability of West to consummate the transactions
contemplated by this Agreement.
Section 4.13 EMPLOYEE BENEFIT PLANS. Each employee benefit plan
maintained by West or any West Subsidiary that provides retirement, pension,
health care, long-term disability income, workers compensation, life insurance
and any other postretirement benefits that, as of the date hereof, covers any
director, trustee, officer or employee of West or the West Subsidiaries
(collectively, "West Benefit Plans") complies and has been administered in form
and in operation in all material respects with all applicable requirements of
law and no notice has been issued by any governmental authority questioning or
challenging such compliance. Neither the execution or delivery of this Agreement
nor the consummation of the transactions contemplated hereby constitutes or will
constitute an event under any West Benefit Plan that may result in any payment
by West or any West Subsidiary, any restriction or limitation upon the assets of
any West Benefit Plan, any acceleration of payment or vesting, increase in
benefits or compensation, or forgiveness of any loan or other commitment to West
or any West Subsidiary.
Section 4.14 INTELLECTUAL PROPERTY. West and the West Subsidiaries own,
free of Liens, or have a valid license to use, all of the Intellectual Property
used in the conduct of the businesses of West and the West Subsidiaries. None of
such Intellectual Property has been or is the subject of any pending, or to the
knowledge of West, threatened adverse claim, litigation or claim of infringement
based on the use thereof by West or any West Subsidiary or a third party.
Neither West nor any West Subsidiary has received any notice contesting West's
or the West Subsidiaries' right to use any of such Intellectual Property, and,
to the knowledge of West, neither West nor any West Subsidiary has infringed
upon or misappropriated any intellectual property rights of third parties. The
consummation of the Merger will not result in the loss by West or any West
Subsidiaries of any of its or their rights in such Intellectual Property.
Section 4.15 WEST MATERIAL CONTRACTS. Except as disclosed in the West
Disclosure Schedule, neither West nor any West Subsidiary is a party to or bound
by (a) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC), or (b) any non-competition agreement or any other
agreement or obligation that purports to limit in any respect the manner in
which, or the localities in which, all or any substantial portion of the
business of West or the West Subsidiaries would be conducted.
Section 4.16 ENVIRONMENTAL MATTERS. Except as set forth in the West
Disclosure Schedule, West has no knowledge of (a) any violation of Environmental
Laws relating to any property of West or any West Subsidiary, (b) the release or
potential release of Hazardous Materials on or from any such property, (c)
underground storage tanks located on any property,
27
or (d) asbestos in or on any such property which would, alone or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or otherwise),
results of operations or prospects of East and the East Subsidiaries, taken as a
whole, or prevent, hinder or materially delay the ability of East to consummate
the transactions contemplated by this Agreement. Except as set forth in West
Disclosure Schedule, neither West nor any West Subsidiary, nor to West's
knowledge, any tenant of such property, has manufactured, introduced, released
or discharged from or onto any such property any Hazardous Materials or any
toxic wastes, substances or materials (including asbestos) in violation of any
Environmental Laws, and neither West nor any West Subsidiary, nor to West's
knowledge, any tenant of such property, has used any such property or any part
thereof for the generation, treatment, storage, handling or disposal of any
Hazardous Materials, in violation of any Environmental Laws which would, alone
or in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, properties, assets, condition (financial or
otherwise), results of operations or prospects of West and the West
Subsidiaries, taken as a whole, or prevent, hinder or materially delay the
ability of West to consummate the transactions contemplated by this Agreement.
Section 4.17 INSURANCE. West or the West Subsidiaries maintain
insurance coverage for West and the West Subsidiaries and their respective
properties and assets of the types and in amounts typical of similar companies
engaged in the respective businesses in which West and the West Subsidiaries are
engaged. All such insurance policies (a) are in full force and effect, and with
respect to all policies neither West nor any West Subsidiary is delinquent in
the payment of any premiums thereon, and no notice of cancellation or
termination has been received with respect to any such policy, and (b) are
sufficient for compliance with all requirements of law and of all agreements to
which West or the West Subsidiaries are a party or otherwise bound and are
valid, outstanding, collectable, and enforceable policies and will remain in
full force and effect through the Closing Date, except, in the case of either
clause (a) or (b), in such manner as would not, alone or in the aggregate, be
reasonably expected to have a material adverse effect on the business,
operations properties, assets, condition (financial or other), results of
operations or prospects of West and West Subsidiaries, taken as a whole or
prevent, hinder or materially delay the ability of the West Merging Entities to
consummate the transactions contemplated by this Agreement. Neither West nor any
West Subsidiary has received written notice within the last 12 months from any
insurance company or board of fire underwriters of any defects or inadequacies
that would materially adversely affect the insurability of, or cause any
material increase in the premiums for insurance covering, either West or any
West Subsidiary or any of their respective properties or assets that have not
been cured or repaired to the satisfaction of the party issuing the notice.
Section 4.18 BROKERS AND FINDERS. West has not employed any broker,
finder, other intermediary, or financial advisor in connection with the
transactions contemplated by this Agreement that would be entitled to any
brokerage, finder's or similar fee or commission, or financial advisory fee, in
connection with this Agreement or the transactions contemplated hereby, other
than Goldman, Sachs & Co., whose fees and expenses will be paid by West.
28
Section 4.19 INVESTMENT COMPANY ACT. None of West nor any of the West
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, nor an "investment adviser" within the meaning
of the Investment Advisers Act of 1940, as amended.
Section 4.20 HSR ACT. For purposes of determining compliance with the
HSR Act, West confirms that, except for the business of West Management Company,
the conduct of its businesses consists solely of investing in, owning, operating
and developing real estate for the benefit of its shareholders.
Section 4.21 STATE ANTITAKEOVER LAWS NOT APPLICABLE. By virtue of
provisions in West's Declaration of Trust, Bylaws or resolutions of the West
Board validly adopted under Section 3-603(e)(1) or Section 3-702(b) of the
Corporations and Associations Article of the Annotated Code of Maryland
("MGCL"), neither Section 3-602 of the MGCL nor Subtitle 7 of the MGCL (Sections
3-701 through 3-709 of the MGCL) applies to this Agreement or the Merger or the
other transactions contemplated hereby. Other than Section 3-602 and Subtitle 7
of the MGCL, no state takeover statute or similar statute or regulation of the
State of Maryland (and, to the knowledge of West, of any other state or
jurisdiction) applies or purports to apply to this Agreement or the Merger or
other transactions contemplated hereby.
Section 4.22 REQUIRED WEST VOTE. The West Shareholders Approval, being
the affirmative vote of outstanding shares of West Voting Stock that are
entitled to cast a majority of the votes on the matter of the holders of any
class or series of the securities of the West Merging Entities necessary to
approve this Agreement, the East/West Merger and the other transactions
contemplated hereby.
Section 4.23 BOARD RECOMMENDATION. The West Board, at a meeting duly
called and held, has by a unanimous vote of those trustees present (who
constituted 100% of the trustees then in office), (i) determined and declared
that this Agreement and the transactions contemplated hereby, including the
East/West Merger, are advisable and fair to and in the best interests of West
and the shareholders of West and (ii) resolved to recommend that the holders of
West Voting Stock approve this Agreement and the transactions contemplated
herein, including the East/West Merger.
Section 4.24 OPINION OF FINANCIAL ADVISOR. A special committee of the
West Board has received the opinion of Goldman, Sachs & Co., dated the date of
this Agreement, to the effect that the Merger Consideration in the East/West
Merger is fair, from a financial point of view, to the holders of West Common
Stock other than the Shareholder.
Section 4.25 DISCLOSURE. No representation or warranty contained in
this Article IV, as qualified by the West Disclosure Schedule, or in any
Schedule or Exhibit hereto or any closing certificate furnished or to be
furnished by West to East pursuant to this Agreement or in connection with the
Merger contains any untrue statement of a material fact, or, to the
29
knowledge of West, omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
Section 4.26 DEFINITION OF WEST'S KNOWLEDGE. All references in this
Agreement to "West's knowledge" or words of similar import shall refer only to
the actual knowledge of those persons identified in the West Disclosure Schedule
and shall not be construed to refer to the knowledge of any other officer, agent
or employee of West or any affiliate thereof. There shall be no personal
liability on the part of any of the persons identified in the West Disclosure
Schedule arising out of any representations or warranties made herein. Without
limiting the foregoing, in no event shall the knowledge of Shareholder or any of
its agents, officers or employees be attributed to West.
ARTICLE V.
CONDUCT OF BUSINESSES PENDING THE CLOSING
Section 5.1 CONDUCT OF BUSINESS BY EAST. From the date of this
Agreement to the Effective Time (except as otherwise specifically required by
the terms of this Agreement), East shall, and shall cause the East Subsidiaries
to, act and carry on their respective businesses in the usual, regular and
ordinary course of business consistent with past practice and, to the extent
consistent therewith, use their reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, lessors, lessees, and others having business dealings with them, to
the end that their goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time. Without limiting the generality of the
foregoing, from the date of this Agreement to the Effective Time, East shall
not, and shall not permit any of the East Subsidiaries to, without the prior
consent of the West:
(a) (i) except as contemplated by Section 5.3, or as disclosed in the
East Disclosure Schedule with respect to dividends by East Management Company,
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any of its capital stock, other than dividends and distributions by
a direct or indirect wholly owned East Subsidiary to its parent and the
declaration and payment by East of regular quarterly cash dividends on East
Common Stock in an amount not in excess of $.44 per share and regular quarterly
cash dividends on East Class B Common Stock in an amount not exceeding $.54 per
share, and the payment by East Operating Partnership of (A) regular quarterly
distributions on its units of partnership interest in an amount not exceeding
$.44 per unit to holders of limited partnership interest other than 8.125%
Series A Cumulative Redeemable Preferred Units of East Operating Partnership,
(B) regular quarterly distributions to the holders of 8.125% Series A Cumulative
Redeemable Preferred Units of East Operating Partnership in accordance with
their terms and (C) quarterly distributions to East, as general partner, in
accordance with the terms of the East Organizational Documents, in each case
with usual record and payment dates for such dividends or distributions in
accordance with East's past dividend practices, (ii) split, combine or
reclassify any of its
30
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
(iii) purchase, redeem or otherwise acquire any shares of capital stock of East
or any East Subsidiary or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities, in each case other
than in accordance with East's Long-Term Omnibus Plan or as set forth in the
East Disclosure Schedule;
(b) authorize for issuance, issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock or the capital stock of any East
Subsidiary, any other voting securities or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, voting securities
or convertible securities or any other securities or equity equivalents
(including without limitation stock appreciation rights), or contractual
obligation valued or measured by the value or market price of East Common Stock
(other than (y) the issuance of East Common Stock upon the exercise of East
Stock Options outstanding on the date of this Agreement and in accordance with
their present terms or pursuant to East's 401(k) Savings Plan and in accordance
with its terms or (z) with respect to anticipated issuances set forth in the
East Disclosure Schedule, such issuances being referred to herein as "East
Permitted Changes");
(c) amend its articles or certificate of incorporation, bylaws or other
comparable charter or organizational documents, except as contemplated by this
Agreement or as required to allow for the consummation of the Merger;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association, or other business organization or division thereof except for
acquisitions involving single asset entities where such acquisitions are
permitted by Section 5.1(g);
(e) sell, lease, mortgage or otherwise encumber or subject to any Lien
or otherwise dispose of any of its properties or assets that are material, alone
or in the aggregate, to East and the East Subsidiaries, taken as a whole, except
sales, leases, mortgages, or other encumbrances or Liens of properties or assets
in the ordinary course of business consistent with past practice;
(f) except in connection with financing for the acquisition and
development of properties as permitted in Section 5.1(g), (i) incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities of East or any East Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business consistent
with past practice, or (ii) make any loans, advances or capital contributions
to, or investments in, any other person, other than to East or any direct or
indirect wholly owned East Subsidiary;
31
(g) acquire or agree to acquire any assets that are material, alone or
in the aggregate, to East and the East Subsidiaries, taken as a whole, or make
or agree to make any capital expenditures except in either case in the ordinary
course of business consistent with past practice or in connection with the
acquisition or development of properties referred to in the East Disclosure
Schedule; pay, discharge or satisfy any claims (including claims of
shareholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction, of (i) liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as in
effect on the date hereof, and (ii) liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated audited financial
statements (or the notes thereof) of East included in the East SEC Documents, or
waive, release, grant, or transfer any rights of material value or modify or
change in any material respect any existing license, lease, contract or other
document, other than in the ordinary course of business consistent with past
practice;
(h) adopt or amend in any material respect (except as may be required
by law or as contemplated by this Agreement) any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any employee, director or former
director or employee; increase the compensation or fringe benefits of any
director, employee or former director or employee, other than increases for
current employees in the ordinary course of business consistent with past
practice; pay any benefit not required by any existing plan, arrangement or
agreement, grant any new or modified severance or termination arrangement or
increase or accelerate any benefits payable under any severance or termination
pay policies in effect on the date hereof, other than any such increase or
acceleration provided for under the East Benefit Plans as in effect on the date
of this Agreement;
(i) change any material accounting principle used by it, except for
such changes as may be required to be implemented following the date of this
Agreement pursuant to generally accepted accounting principles or rules and
regulations of the SEC promulgated following the date hereof;
(j) take any action that would, or is reasonably likely to, result in
any of its representations and warranties in this Agreement becoming untrue, or
in any of the conditions to the Merger set forth in Article VII not being
satisfied;
(k) except in the ordinary course of business and consistent with past
practice, make any tax election or settle or compromise any federal, state,
local or foreign income tax liability; or
(l) authorize any of, or commit or agree to take any of, the foregoing
actions.
Section 5.2 CONDUCT OF BUSINESS BY WEST. From the date of this
Agreement to the Effective Time (except as otherwise specifically required by
the terms of this Agreement), West shall, and shall cause the West Subsidiaries
to, act and carry on their respective businesses in
32
the usual, regular and ordinary course of business consistent with past practice
and, to the extent consistent therewith, use their reasonable best efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, lessors, lessees, and others having
business dealings with them, to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect at the Effective Time.
Without limiting the generality of the foregoing, from the date of this
Agreement to the Effective Time, West shall not, and shall not permit any of
West Subsidiaries to, without the prior consent of East:
(a) (i) except as contemplated by Section 5.3, declare, set aside or
pay any dividends on, or make any other distributions in respect of, any of its
capital stock, other than dividends and distributions by a direct or indirect
wholly owned West Subsidiary to its parent and the declaration and payment by
West of regular quarterly cash dividends on West Common Stock in an amount not
in excess of $.1925 per share and regular quarterly cash dividends on West
Series A Preferred Stock and West Series B Preferred Stock in amounts not
exceeding $.1795 and $.1925, respectively, per share, in each case with usual
record and payment dates for such dividends or distributions in accordance with
West's past dividend practices, (ii) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
(iii) purchase, redeem or otherwise acquire any shares of capital stock of West
or any West Subsidiary or any other securities thereof or any rights, warrants,
or options to acquire any such shares or other securities in each case other
than as set forth in the West Disclosure Schedule or pursuant to the terms of
the West Share Incentive Plan;
(b) except as set forth in the West Disclosure Schedule, authorize for
issuance, issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock or the capital stock of any West Subsidiary, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible securities
or any other securities or equity equivalents (including without limitation
stock appreciation rights), or contractual obligation valued or measured by the
value or market price of West Common Stock (other than the issuance of West
Common Stock upon the exercise of West Stock Options outstanding on the date of
this Agreement and in accordance with their present terms or pursuant to West's
401(k) Savings Plan and in accordance with its terms, such issuances being
referred to herein as "West Permitted Changes");
(c) amend its Declaration of Trust or bylaws, except as contemplated by
this Agreement or as required to allow for the consummation of the Merger;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association, or other business organization or division thereof;
33
(e) except as set forth in the West Disclosure Schedule, sell, lease,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets that are material, alone or in the aggregate, to
West and the West Subsidiaries, taken as a whole, except sales, leases,
mortgages, or other encumbrances or Liens of properties or assets in the
ordinary course of business consistent with past practice;
(f) except as permitted in Section 5.2(g) or as set forth in the West
Disclosure Schedule and except in connection with financing for the acquisition
and development of properties set forth in the West Disclosure Schedule (i)
incur any indebtedness for borrowed money or guarantee any such indebtedness of
another person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of West or any West Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business consistent
with past practice, or (ii) make any loans, advances or capital contributions
to, or investments in, any other person, other than to West or any direct or
indirect wholly owned West Subsidiary;
(g) acquire or agree to acquire any assets that are material, alone or
in the aggregate, to West and the West Subsidiaries, taken as a whole, or make
or agree to make any capital expenditures, in either case except in the ordinary
course of business consistent with past practice or in connection with the
acquisition or development of properties referred to in the Disclosure Schedule;
pay, discharge or satisfy any claims (including claims of shareholders),
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or satisfaction, of
(i) liabilities or obligations in the ordinary course of business consistent
with past practice or in accordance with their terms as in effect on the date
hereof, and (ii) liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated audited financial statements (or the notes
thereof) of West or waive, release, grant, or transfer any rights of material
value or modify or change in any material respect any existing license, lease,
contract or other document, other than in the ordinary course of business
consistent with past practice;
(h) adopt or amend in any material respect (except as may be required
by law or as contemplated by this Agreement) any bonus, profit sharing,
compensation, share option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any employee, director, trustee, or
former director, trustee, or employee; increase the compensation or fringe
benefits of any director, trustee, employee or former director, trustee or
employee, other than increases for current employees in the ordinary course of
business consistent with past practice; pay any benefit not required by any
existing plan, arrangement or agreement, grant any new or modified severance or
termination arrangement or increase or accelerate any benefits payable under any
severance or termination pay policies in effect on the date hereof, other than
any such increase or acceleration provided for under the West Benefit Plans as
in effect on the date of this Agreement;
34
(i) change any material accounting principle used by it, except for
such changes as may be required to be implemented following the date of this
Agreement pursuant to generally accepted accounting principles promulgated
following the date hereof;
(j) take any action that would, or is reasonably likely to, result in
any of its representations and warranties in this Agreement becoming untrue, or
in any of the conditions to the Merger set forth in Article VII not being
satisfied;
(k) except in the ordinary course of business and consistent with past
practice, make any tax election or settle or compromise any federal, state,
local or foreign income tax liability; or
(l) authorize any of, or commit or agree to take any of, the foregoing
actions.
Section 5.3 COORDINATION OF DIVIDENDS. West and East shall coordinate
with each other regarding the payment of dividends with respect to West Voting
Stock and East Common Stock after the date hereof, it being the intention of the
parties that (a) West shall pay whatever preclosing dividends shall be necessary
to avoid jeopardizing its status as a "real estate investment trust" under the
Code, (b) the shareholders of East and West shall be treated fairly in order to
avoid any "windfall" preclosing dividends, and (c) except as may be necessary to
accomplish the foregoing, holders of West Voting Stock and East Common Stock
shall not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their shares of West Voting Stock or East
Common Stock or any shares of East Common Stock that any such holder receives in
exchange for shares of West Voting Stock in the Merger.
Section 5.4 NO SOLICITATION.
(a) Neither East nor any of the East Subsidiaries shall, nor shall East
or any of the East Subsidiaries authorize or permit any of its or their
officers, directors, agents, representatives, advisors or subsidiaries to,
directly or indirectly (a) solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate the submission
of inquiries, proposals or offers from any person relating to any acquisition or
purchase of a substantial amount of assets of East or any of the East
Subsidiaries (other than in the ordinary course of business) or of over 9.8% of
any class of equity securities of East or any of the East Subsidiaries or any
tender offer (including a self tender offer) or exchange offer that if
consummated would result in any person beneficially owning 9.8% or more of any
class of equity securities of East or any of the East Subsidiaries, or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving East
or any of the East Subsidiaries, other than the transactions contemplated by
this Agreement, or any other transaction the consummation of which would or
could reasonably be expected to impede, interfere with, prevent or materially
delay the Merger (collectively, "East Alternative Proposals") or agree to or
endorse any East Alternative Proposal, or (b) enter into or participate in any
discussions or negotiations regarding any of the foregoing,
35
or furnish to any other person any information with respect to its business,
properties or assets or any of the foregoing, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; provided,
however, that the foregoing shall not prohibit East from (i) furnishing
information concerning East and its businesses, properties or assets (pursuant
to an appropriate confidentiality agreement customary under the circumstances)
to a third party who has made an unsolicited East Alternative Proposal, (ii)
engaging in discussions or negotiations with a third party who has made an
unsolicited East Alternative Proposal, (iii) following receipt of an unsolicited
East Alternative Proposal, taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or otherwise making
disclosure to its shareholders, (iv) following receipt of an unsolicited East
Alternative Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 6.5, and/or (v) engaging in discussions or
negotiations with Shareholder or its controlling affiliates regarding an
unsolicited East Alterative Proposal from a third party, but in each case
referred to in the foregoing clauses (i) through (iv) (not in the case of the
foregoing clause (v)) only if and to the extent that the East Board shall have
concluded in good faith, after consulting with and considering the advice of
outside counsel, that such action is required by the East Board in the exercise
of its legal duties to the shareholders of East under applicable law; provided,
further, that the Board of Directors of East shall not take any of the foregoing
actions referred to in clauses (i) through (iv) (but not clause (v)) until after
giving at least one business day's advance notice to West with respect to any of
the actions specified in the foregoing clauses (i) through (iv) that it shall
take. In addition, if the East Board receives an unsolicited East Alternative
Proposal, then East shall promptly inform West in writing of the material terms
of such proposal and the identity of the person (or group) making it. East will
immediately cease and cause to be terminated all existing activities,
discussions or negotiations, if any, with any parties (other than Shareholder)
conducted heretofore with respect to any of the foregoing. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
this Section 5.4(a) by any director or executive officer of East or any of its
subsidiaries or by any investment banker, financial adviser, attorney,
accountant, or other representative of East or any of its subsidiaries shall be
deemed to be a breach of this Section by East.
(b) Neither West nor any of the West Subsidiaries shall, nor shall West
or any of the West Subsidiaries authorize or permit any of its or their
officers, trustees, directors, agents, representatives, advisors or subsidiaries
to, directly or indirectly (a) solicit, initiate or encourage (including by way
of furnishing information), or take any other action to facilitate the
submission of inquiries, proposals or offers from any person relating to any
acquisition or purchase of a substantial amount of assets of West or any of the
West Subsidiaries (other than in the ordinary course of business) or of over
9.8% of any class of equity securities of West or any of the West Subsidiaries
or any tender offer (including a self tender offer) or exchange offer that if
consummated would result in any person beneficially owning 9.8% or more of any
class of equity securities of West or any of the West Subsidiaries, or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving West
or any of the West Subsidiaries, other than the transactions contemplated by
this Agreement, or any other transaction the consummation of which would or
36
could reasonably be expected to impede, interfere with, prevent or materially
delay the Merger (collectively, "West Alternative Proposals") or agree to or
endorse any West Alternative Proposal, or (b) enter into or participate in any
discussions or negotiations regarding any of the foregoing, or furnish to any
other person any information with respect to its business, properties or assets
or any of the foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that the foregoing
shall not prohibit West from (i) furnishing information concerning West and its
businesses, properties or assets (pursuant to an appropriate confidentiality
agreement customary under the circumstances) to a third party who has made an
unsolicited West Alternative Proposal, (ii) engaging in discussions or
negotiations with a third party who has made an unsolicited West Alternative
Proposal, (iii) following receipt of an unsolicited West Alternative Proposal,
taking and disclosing to its shareholders a position contemplated by Rule 14e-
2(a) under the Exchange Act or otherwise making disclosure to its shareholders,
(iv) following receipt of an unsolicited West Alternative Proposal, failing to
make or withdrawing or modifying its recommendation referred to in Section 6.5,
and/or (v) engaging in discussions or negotiations with Shareholder or its
controlling affiliates regarding an unsolicited West Alterative Proposal from a
third party, but in each case referred to in the foregoing clauses (i) through
(iv) (not in the case of the foregoing clause (v)) only if and to the extent
that the West Board shall have concluded in good faith, after consulting with
and considering the advice of outside counsel, that such action is required by
the West Board in the exercise of its legal duties to the shareholders of West
under applicable law; provided, further, that the West Board shall not take any
of the foregoing actions referred to in clauses (i) through (iv) (but not clause
(v)) until after giving at least one business day's advance notice to East with
respect to any of the actions specified in the foregoing clauses (i) through
(iv) that it shall take. In addition, if the Board of Trustees of West receives
an unsolicited West Alternative Proposal, then West shall promptly inform East
in writing of the material terms of such proposal and the identity of the person
(or group) making it. West will immediately cease and cause to be terminated
existing activities, discussions or negotiations, if any, with any parties
(other than Shareholder) conducted heretofore with respect to any of the
foregoing. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in this Section 5.4(b) by any trustee or executive
officer of West or any of its subsidiaries or by any investment banker,
financial adviser, attorney, accountant, or other representative of West or any
of its subsidiaries shall be deemed to be a breach of this Section by West.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.1 ACCESS TO INFORMATION. Each of the parties shall afford to
the other party and its respective accountants, counsel, financial advisors and
other representatives (the "Representatives") full access during normal business
hours throughout the period prior to the Closing to all properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns)
of such party, as appropriate, and, during such period, each shall furnish
37
promptly to the other (a) a copy of each report, schedule and other document
filed or received pursuant to the requirements of federal or state securities
laws or filed with the SEC in connection with the transactions contemplated by
this Agreement, and (b) such other information concerning its business,
properties and personnel as shall be reasonably requested; provided that no
investigation pursuant to this Section 6.1 shall affect any representation or
warranty made herein or the respective conditions to the obligations of the
parties hereto to consummate the transactions contemplated hereby. Each party
shall promptly advise each other party in writing of any change or the
occurrence of any event after the date of this Agreement having, or which,
insofar as can reasonably be foreseen, in the future may have, a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of such party or its
subsidiaries taken as a whole.
Section 6.2 REGISTRATION STATEMENTS AND PROXY STATEMENT AND PROSPECTUS.
East shall file with the SEC as soon as is reasonably practicable after the date
hereof the Proxy Statement and Prospectus, shall use all reasonable efforts to
have the Registration Statement declared effective by the SEC as promptly as
practicable, and shall take any action required to be taken under applicable
state blue sky or securities laws in connection with the Merger. West and East
shall promptly furnish to each other all information, and take such other
actions as may reasonably be requested in connection with any action by either
of them in connection with this Section and shall cooperate with one another and
use their respective reasonable best efforts to facilitate the expeditious
consummation of the transactions contemplated by this Agreement.
Section 6.3 LETTERS OF ACCOUNTANTS.
(a) East shall use its reasonable best efforts to cause to be delivered
to West two letters of KPMG Peat Marwick LLP, East's independent public
accountants, one dated a date within two business days before the date on which
the Registration Statement shall become effective and one dated a date within
two business days before the Closing Date, each addressed to West, in form and
substance reasonably satisfactory to West and customary in scope and substance
for comfort letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
(b) West shall use its reasonable best efforts to cause to be delivered
to East two letters of Price Waterhouse LLP, West's independent public
accountants, one dated a date within two business days before the date on which
the Registration Statement shall become effective and one dated a date within
two business days before the Closing Date, each addressed to East, in form and
substance reasonably satisfactory to East and customary in scope and substance
for comfort letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
Section 6.4 LEGAL OPINIONS.
(a) East shall use its reasonable best efforts to cause to be delivered
to West at the East/West Closing an opinion of Foley & Lardner, counsel to East,
with respect to the East
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Merging Entities, as to due organization and existence, authorized
capitalization, due authorization, consents (to such firm's knowledge),
violations of law (to such firm's knowledge), litigation (to such firm's
knowledge), the valid issuance of East Common Stock pursuant to this
transaction, enforceability, and such other matters as counsel to West may
reasonably request. (It being understood that the delivery of such opinion shall
not be deemed a condition to the East/West Closing).
(b) West shall use its reasonable best efforts to cause to be delivered
to East at the East/West Closing an opinion of Mayer, Brown & Platt, counsel for
West, with respect to West and the West Subsidiaries, as to due organization and
existence, authorized capitalization, due authorization, consents (to such
firm's knowledge), violations of law (to such firm's knowledge), litigation (to
such firm's knowledge), enforceability and such other matters as counsel to East
may reasonably request. (It being understood that the delivery of such opinion
shall not be deemed a condition to the East/West Closing).
Section 6.5 SHAREHOLDERS APPROVAL. As soon as practicable following the
date upon which the Registration Statement is declared effective by the SEC,
West shall use its reasonable best efforts to obtain the West Shareholders
Approval, and East shall use its reasonable best efforts to obtain the East
Shareholders Approval, including the requisite shareholder approval of the
amendments to East's Articles of Incorporation necessary to consummate the
Merger. The West Board and East Board shall recommend to their respective
shareholders the approval of this Agreement and the Merger and the other
transactions contemplated hereby; provided, however, that (a) prior to the
meeting of shareholders of East, the East Board may withdraw, modify or amend
such recommendation to the extent permitted by the first proviso to Section
5.4(a) and subject to compliance with Section 5.4(a), and (b) prior to the
meeting of shareholders of West, the West Board may withdraw, modify or amend
such recommendation to the extent permitted by the first proviso to Section
5.4(b) and subject to compliance with Section 5.4(b).
Section 6.6 AFFILIATE AGREEMENTS. West shall use its reasonable best
efforts to cause each principal executive officer, each Trustee, and each other
person who is an "affiliate," as that term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act (including Shareholder), of West to deliver to
East on or prior to the Closing Date a written agreement (an "Affiliate
Agreement") to the effect that such person will not offer to sell, sell or
otherwise dispose of any East Common Stock issued in the Merger, except, in each
case, pursuant to an effective registration statement or in compliance with Rule
145, as amended from time to time, or in a transaction which, in the opinion of
legal counsel satisfactory to East, is exempt from the registration requirements
of the Securities Act.
Section 6.7 EXCHANGE. East shall use its reasonable best efforts to
effect, at or before the Closing Date, authorization for listing on the
Exchange, upon official notice of issuance, the East Common Stock (i) to be
issued in the Merger and (ii) which will be issuable upon conversion of East
Series B Preferred Stock (including East Series B Stock issuable upon conversion
of East Series A Preferred Stock) or redemption of units of limited partnership
interest of East Operating Partnership issued pursuant to the Merger.
39
Section 6.8 EXPENSES. Except as provided in Section 8.3, whether or not
the Merger is consummated, all fees and expenses (including financial advisory
and other professional services fees) incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except that those fees and expenses incurred in connection with
filing, printing and distributing the Proxy Statement and Prospectus shall be
shared ratably by West and East in proportion to the number of copies of the
Proxy Statement and Prospectus mailed by each.
Section 6.9 AGREEMENT TO COOPERATE. Subject to the terms and conditions
herein provided, the parties hereto shall cooperate and use its respective
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations, and under contracts giving rise to the East Required
Consents or West Required Consents, to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable best
efforts to identify and obtain all necessary or appropriate waivers, consents
and approvals, to effect all necessary registrations, filings and submissions
(including, but not limited to, the East Required Statutory Approvals, West
Required Statutory Approvals, any filings under federal and state securities
laws and the HSR Act) and to lift any injunction or other legal bar to the
transactions contemplated hereby (and, in such case, to proceed with such
transactions as expeditiously as possible), subject, however, to obtaining the
East Shareholders Approval and West Shareholders Approval. In addition, each of
West and East agrees to use all reasonable efforts to cause each of the
East/West Merger and the Management Company Merger to qualify as a
reorganization within the meaning of Section 368 of the Code, to cause the
Operating Partnership Merger to qualify under Section 721 of the Code, to
maintain the status of East as a "real estate investment trust" under the Code,
and to obtain the tax opinions contemplated in Sections 7.1(e) and 7.1(f).
Section 6.10 COORDINATION OF EMPLOYEE BENEFIT PLANS. West shall use its
reasonable best efforts to take such actions as may be reasonably requested by
East to facilitate decisions and subsequent actions by East to terminate or
transition any of West's Benefit Plans, stock option plans and similar matters,
including without limitation appropriate amendment of the West stock option
plans. East shall use its reasonable best efforts to take such actions as may be
necessary to modify East's stock option plan to permit the West senior
executives identified on the West Disclosure Schedule to retain their stock
options following termination of their employment upon consummation of the
East/West Merger.
Section 6.11 WEST NOMINEES TO EAST BOARD OF DIRECTORS. East shall use
its reasonable best efforts to cause three members of the West Board of
Directors designated by West in the West Disclosure Schedule to be added as
additional members of the East Board of Directors immediately following the
East/West Closing.
Section 6.12 PUBLIC STATEMENTS. The parties shall consult with each
other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement prior to review and
approval by the other parties, except that prior review and
40
approval shall not be required if, in the reasonable judgment of the party
seeking to issue such release or public statement, prior review and approval
would prevent the timely dissemination of such release or announcement in
violation of any applicable law, rule or regulation or any policy of the
Exchange.
Section 6.13 CORRECTIONS TO THE PROXY STATEMENT AND PROSPECTUS AND
REGISTRATION STATEMENT. Prior to the date of the East Shareholders Approval and
West Shareholders Approval, each of West and East shall correct promptly any
information provided by it to be used specifically in the Proxy Statement and
Prospectus and Registration Statement or relating to it and incorporated by
reference into the Proxy Statement and Prospectus and Registration Statement
that shall have become false or misleading in any material respect and shall
take all steps necessary to file with the SEC and have declared effective or
cleared by the SEC any amendment or supplement to the Proxy Statement and
Prospectus or the Registration Statement so as to correct the same and to cause
the Proxy Statement and Prospectus as so corrected to be disseminated to the
shareholders of East and West, in each case to the extent required by applicable
law.
Section 6.14 UPDATED SCHEDULES. Each party shall deliver to the other
party at least two days prior to the Closing Date updated schedules to this
Agreement reflecting any changes in such party's scheduled items occurring from
the date hereof to the Closing Date. No information provided to a party pursuant
to this Section 6.11 shall be deemed to cure any breach of any representation,
warranty or covenant made in this Agreement.
Section 6.15 STANDSTILL AGREEMENTS; CONFIDENTIALITY AGREEMENTS. During
the period from the date of this Agreement through the Effective Time, each of
West and East shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its subsidiaries
is a party. During such period, each of West and East shall enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreement, including by obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
federal or state court having jurisdiction.
Section 6.16 INDEMNIFICATION.
(a) East agrees that all rights to indemnification and exculpation from
liabilities or acts or omissions occurring at or prior to the Effective Time now
existing in favor of the current or former trustees, directors or officers of
West and the West Subsidiaries as provided in their respective declaration of
trust or articles of incorporation or bylaws (or comparable organizational
documents) and any indemnification agreements or arrangements of West and the
West Subsidiaries shall survive the Merger, shall be assumed and performed by
East, and shall continue in full force and effect in accordance with their terms
with respect to matters arising before the Effective Time. East shall pay any
expenses of any indemnified person under this Section 6.16 in advance of the
final disposition of any action, proceeding or claim relating to any such act or
omission to the fullest extent permitted under the FBCA upon receipt from the
41
applicable indemnified person to whom advances are to be advanced of any
undertaking to repay such advances required under the FBCA. In addition, from
and after the Effective Time, trustees or officers of West who become directors
or officers of East will be entitled to the same indemnity rights and
protections as are afforded to other directors and officers of East.
(b) In the event that East or any of its successors or assigns (i)
consolidates with or merges into any other person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, proper provision will be made so that
the successors and assigns of East will assume the obligations set forth in this
Section.
(c) The provisions of this Section 6.16 are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by contract or otherwise. The provisions of this Section 6.16 shall
survive the Merger and are in addition to any other rights to which an
indemnified party may be entitled. To the maximum extent permitted by law, all
rights of indemnification for the benefit of any indemnified party shall be
mandatory rather than permissive.
ARTICLE VII.
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS FOR EAST/WEST
MERGER. The respective obligations of each party to effect the East/West Merger
shall be subject to the fulfillment or waiver at or prior to the East/West
Closing of the following conditions:
(a) The other party shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the East/West Closing and the representations and warranties of the other party
shall be true and correct in all material respects on and as of (i) the date
made and (ii) the East/West Closing Date with the same effect as if made on that
date; provided, however, that if any representation and warranty is already
qualified in any respect by materiality or as to material adverse effect, the
materiality qualification immediately before this proviso shall not apply; and
the other party shall have delivered a certificate of its chief executive
officer or a co-chairman to that effect;
(b) Each of the West Shareholders Approval and the East Shareholders
Approval (including the requisite approval by East's shareholders of the
amendment to the East Articles of Incorporation set forth in the East/West
Articles of Merger) shall have been obtained;
(c) The Registration Statement shall have become effective in
accordance with the Securities Act, and no stop order suspending such
effectiveness shall have been issued and
42
remain in effect and no proceeding for that purpose shall have been initiated or
threatened by the Commission;
(d) The shares of East Common Stock issuable in the East/West Merger or
upon redemption of units of limited partnership interest in East Operating
Partnership issued in connection with the East/West Merger or upon conversion of
the East Preferred stock issued in the East/West Merger shall have been approved
for listing on the Exchange, subject to notice of issuance;
(e) Each of West, East and Shareholder shall have received a favorable
opinion (in form and substance reasonably satisfactory to West, East and
Shareholder, respectively) from Mayer, Brown & Platt to the effect that for
United States federal income tax purposes (i) the East/West Merger will qualify
as a reorganization within the meaning of Section 368 of the Code and that each
of West and East will be a party to such reorganization within the meaning of
Section 368(b) of the Code, (ii) no gain or loss will be recognized by holders
of West Common Stock, West Series A Preferred Stock or West Series B Preferred
Stock except to the extent of cash received pursuant to the Merger or pursuant
to the exercise of dissenters' rights, and (iii) no gain or loss will be
recognized by East or West pursuant to the Merger. In providing the foregoing
opinions, counsel may rely upon (i) customary factual representations made by
West and East and (ii) the tax opinion of Foley & Lardner as described in
Section 7.1(f) below regarding the status of East as a "real estate investment
trust" under the Code.
(f) Each of West, East and Shareholder shall have received a favorable
opinion (in form and substance reasonably satisfactory to West, East and
Shareholder, respectively) from Foley & Lardner (who may rely upon customary
factual representations made by West and East) to the effect that the
consummation of the Merger and the performance of this Agreement will not
jeopardize the status of East as a "real estate investment trust" under the
Code;
(g) No preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the East/West
Merger shall have been issued and remain in effect (each party agreeing to use
its reasonable best efforts to have any such injunction, order or decree
lifted);
(h) Each of the East Required Statutory Approvals described in Section
0(i) and (ii) and the West Required Statutory Approvals described in Section
0(i) and (ii) shall have been obtained and be in effect at the Closing;
(i) Each of the East Required Consents which have been specifically
identified as a mandatory precondition to closing of the East/West Merger in the
East Disclosure Schedule and the West Required Consents which have been
specifically identified as a mandatory precondition to closing of the East/West
Merger in the West Disclosure Schedule, shall have been obtained and be in
effect at the Closing;
43
(j) The holders of more than 10% of the issued and outstanding West
Voting Stock shall not have duly perfected a demand for dissenter's rights in
accordance with the MGCL; and
(k) Each party shall have received any additional documents that such
party may reasonably require for the proper consummation of the East/West
Merger.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of West and East:
(a) by mutual written consent of West and East;
(b) by West or East, if the Merger shall not have been consummated on
or before March 31, 1999 (the "Termination Date") (other than by reason of a
breach by the party seeking to terminate this Agreement of its obligations
hereunder);
(c) by West or East, if an injunction, order or decree described in
Section 7.1(g) shall be in effect and shall have become final and nonappealable,
provided that the party seeking to terminate this Agreement has used its
reasonable best efforts to have such injunction, order, or decree lifted;
(d) unilaterally by West or East (i) if the other party (A) fails to
perform any covenant or agreement in this Agreement in any material respect, and
does not cure the failure in all material respects within 15 business days after
the terminating party delivers written notice of the alleged failure or (B)
fails to fulfill or complete a condition to the obligations of the terminating
party (which condition is not waived) by reason of a breach by the non-
terminating party of its obligations hereunder or (ii) if any condition to the
obligations of the terminating party is not satisfied (other than by reason of a
breach by that party of its obligations hereunder), and it reasonably appears
that the condition cannot be satisfied prior to the Termination Date;
(e) by West, if (1) East shall have exercised a right specified in the
first proviso to Section 5.4(a) with respect to an East Alternative Proposal and
shall, directly or through Representatives, continue discussions with any third
party concerning such East Alternative Proposal for more than 15 business days
after the date of receipt of such East Alternative Proposal; or (2) (A) an East
Alternative Proposal that is publicly disclosed shall have been commenced,
publicly proposed or communicated to East which contains a proposal as to price
(without regard to whether such proposal specifies a specific price or a range
of potential prices) and (B) East shall not have rejected such proposal within
15 business days of its receipt or, if sooner, the date its existence first
becomes publicly disclosed;
44
(f) by East, if East validly exercises, pursuant to Section 5.4(a), the
right specified in clause (iv) of the first proviso to Section 5.4(a);
(g) by East, if (1) West shall have exercised a right specified in the
first proviso to Section 5.4(b) with respect to a West Alternative Proposal and
shall, directly or through Representatives, continue discussions with any third
party concerning such West Alternative Proposal for more than 15 business days
after the date of receipt of such West Alternative Proposal; or (2) (A) a West
Alternative Proposal that is publicly disclosed shall have been commenced,
publicly proposed or communicated to West which contains a proposal as to price
(without regard to whether such proposal specifies a specific price or a range
of potential prices) and (B) West shall not have rejected such proposal within
15 business days of its receipt or, if sooner, the date its existence first
becomes publicly disclosed; or
(h) by West, if West validly exercises, pursuant to Section 5.4(b), the
right specified in clause (iv) of the first proviso to Section 5.4(b);
provided, however, that any termination of this Agreement pursuant to this
Section 8.1 shall require the approval of the Special Committee of the Board of
the terminating party.
Section 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement, as provided in Section 8.1, this Agreement shall forthwith become,
void and there shall be no further obligation on the part of any party hereto or
their respective officers or directors or trustees (except as set forth in this
Section 8.2 and in Sections 6.8 and 8.3). Nothing in this Section 8.2 shall
relieve any party from liability for any breach of this Agreement.
Section 8.3 PAYMENT UPON CERTAIN TERMINATIONS.
(a) In the event that this Agreement is terminated by East pursuant to
Section 8.1(f), then, concurrently with any such termination, East shall pay
West, in accordance with Section 8.4, a fee equal to $20 million by wire
transfer of same day funds.
(b) In the event that (A) a East Pre-Termination Alternative Proposal
Event (as defined below) shall occur and thereafter this Agreement is terminated
by West pursuant to Section 8.1(e) and (B) prior to the date that is 12 months
after the date of such termination East enters into any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any East Alternative Proposal, then East shall promptly, but in no event later
than two business days after the date such agreement is entered into, pay West,
in accordance with Section 8.4, a fee equal to $20 million by wire transfer of
same day funds.
(c) for purposes of Section 8.3(b), an "East Pre-Termination
Alternative Proposal Event" shall be deemed to occur if an East Alternative
Proposal shall have been made known to East or has been made directly to its
shareholders generally or any person shall have publicly announced an intention
(whether or not conditional) to make an East Alternative Proposal. East
acknowledges that the agreements contained in Section 8.3(a) and (b) are an
integral part of the
45
transactions contemplated by this Agreement, and that the amounts to be paid
pursuant to Section 8.3(a) and (b) constitute liquidated damages and not a
penalty.
(d) In the event that this Agreement is terminated by West pursuant to
Section 8.1(h), then, concurrently with any such termination, West shall pay
East, in accordance with Section 8.4, a fee equal to $20 million by wire
transfer of same day funds.
(e) In the event that (A) a West Pre-Termination Alternative Proposal
Event (as defined below) shall occur and thereafter this Agreement is terminated
by East pursuant to Section 8.1(g) and (B) prior to the date that is 12 months
after the date of such termination West enters into any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any West Alternative Proposal, then West shall promptly, but in no event later
than two business days after the date such agreement is entered into, pay East,
in accordance with Section 8.4, a fee equal to $20 million by wire transfer of
same day funds.
(f) For purposes of Section 8.3(e), a "West Pre-Termination Alternative
Proposal Event" shall be deemed to occur if a West Alternative Proposal shall
have been made known to West or has been made directly to its shareholders
generally or any person shall have publicly announced an intention (whether or
not conditional) to make a West Alternative Proposal. West acknowledges that the
agreements contained in Section 8.3(d) and (b) are an integral part of the
transactions contemplated by this Agreement, and that the amounts to be paid
pursuant to Section 8.3(d) and (b) constitute liquidated damages and not a
penalty.
Section 8.4 PAYMENT OF TERMINATION AMOUNT.
(a) In the event that West or East (for purposes of this Section, the
"Paying Party") is obligated to pay an amount pursuant to Section 8.3 (the
"Section 8.3 Amount"), the Paying Party shall pay to the other party hereto (for
purposes of this Section, the "Receiving Party"), from the applicable Section
8.3 Amount deposited into escrow in accordance with the next sentence, an amount
equal to the lesser of (m) the Section 8.3 Amount or (n) the sum of (1) the
maximum amount that can be paid to the Receiving Party without causing the
Receiving Party to fail to meet the requirements of Sections 856(c)(2) and (3)
of the Code determined as if the payment of such amount did not constitute
income described in Sections 856(c)(2)(A)-(H) or 856(c)(3)(A)-(I) of the Code
("Qualifying Income"), as determined by the Receiving Party's certified public
accountants, plus (2) in the event the Receiving Party receives either (X) a
letter from the Receiving Party's counsel indicating that the Receiving Party
has received a ruling from the U.S. Internal Revenue Service ("IRS") described
in Section 8.4(b)(ii) or (Y) an opinion from the Receiving Party's counsel as
described in Section 8.4(b)(ii), an amount equal to the Section 8.3 Amount less
the amount payable under clause (1) above. To secure the Paying Party's
obligation to pay these amounts, the Paying Party shall deposit into escrow an
amount in cash equal to the Section 8.3 Amount with an escrow agent selected by
the Receiving Party and on such terms (subject to Section 8.4(b)) as shall be
agreed upon by the Receiving Party and the escrow agent. The payment of deposit
into escrow of the Section 8.3 Amount pursuant to this
46
Section 8.4(a) shall be made on the date payment is due under Section 8.3 by
wire transfer of same day funds.
(b) The escrow agreement shall provide that the Section 8.3 Amount in
escrow or any portion thereof shall not be released to the Receiving Party
unless the escrow agent receives any one or combination of the following: (i) a
letter from the Receiving Party's certified public accountants indicating the
maximum amount that can be paid by the escrow agent to the Receiving Party
without causing the Receiving Party to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code determined as if the payment of such amount did
not constitute Qualifying Income or a subsequent letter from the Receiving
Party's accountants revising that amount, in which case the escrow agent shall
release such amount to the Receiving Party, or (ii) a letter from the Receiving
Party's counsel indicating that the Receiving Party received a ruling from the
IRS holding that the receipt by the Receiving Party of the Section 8.3 Amount
would either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code (or alternatively,
the Receiving Party's legal counsel has rendered a legal opinion to the effect
that the receipt by the Receiving Party of the Section 8.3 Amount would either
constitute Qualifying Income or would be excluded from gross income within the
meaning of Section 856(c)(2) and (3) of the Code), in which case the escrow
agent shall release the remainder of the Section 8.3 Amount to the Receiving
Party. West agrees to amend this Section 8.4 at the request of the Receiving
Party in order to (x) maximize the portion of the Section 8.3 Amount that may be
distributed to the Receiving Party hereunder without causing the Receiving Party
to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code, (y)
improve the Receiving Party's chances of securing a favorable ruling described
in this Section 8.4(b) or (z) assist the Receiving Party in obtaining a
favorable legal opinion from its counsel as described in this Section 8.4(b);
provided that the Receiving Party's legal counsel has rendered a legal opinion
to the Receiving Party to the effect that such amendment would not cause the
Receiving Party to fail to meet the requirements of Section 856(c)(2) or (3) of
the Code. The escrow agreement shall also provide that any portion of the
Section 8.3 Amount held in escrow for five years shall be released by the escrow
agent to the Paying Party. The Paying Party shall not be a party to such escrow
agreement and shall not bear any cost of or have liability resulting from the
escrow agreement.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, in the event that the Receiving Party is required to file suit to
seek all or a portion of an amount pursuant to Section 8.3, it shall be entitled
to all expenses, including attorneys' fees and expenses, which it has incurred
in enforcing its rights hereunder, provided that payment of such expenses shall
be subject to the limitations of Section 8.4(a) (determined as if such expenses
were included in the Section 8.3 Amount).
Section 8.5 AMENDMENT AND WAIVER. This Agreement may not be amended
except by an instrument in writing signed on behalf of both of the parties
hereto and in compliance with applicable law; provided, that, (a) this Agreement
may not be amended in any material respect following the West Shareholders
Approval or East Shareholders Approval; (b) at any time prior to the Closing,
the parties hereto may (i) extend the time for the performance of any of the
47
obligations or other acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with any of the agreements
or conditions contained herein (any agreement on the part of a party hereto to
any such extension or waiver being valid if set forth in an instrument in
writing signed on behalf of such party); and (c) the approval of each of the
Special Committees shall be required for an amendment or modification of this
Agreement and the approval of the Special Committee of the Board of the
extending or waiving party shall be required for any extension by East or West
of the time of the performance of any obligations or other acts of West or East
and any waiver of any of West's or East's obligations under this Agreement.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, sent via
a recognized overnight courier with delivery confirmed in writing or sent via
facsimile with confirmed receipt to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) If to West, to:
Pacific Retail Trust
8140 Walnut Hill Lane
Dallas, Texas 75231
Attention: Dennis H. Alberts
Fax: (214) 696-9512
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
Attention: Edward J. Schneidman
Fax: (312) 701-7711
48
and to:
Munger, Tolles & Olson LLP
355 South Grand Avenue, 35th Floor
Los Angeles, CA 90071-1560
Attention: R. Gregory Morgan
Fax: (213) 687-3702
(b) If to East, to:
Regency Realty Corporation
121 West Forsyth Street, Suite 200
Jacksonville, FL 32202
Attention: Martin E. Stein, Jr.
Fax: (904) 634-3428
with a copy to:
Foley & Lardner
200 Laura Street
Jacksonville, FL 32202
Attention: Linda Y. Kelso
Fax: (904) 359-8700
and to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Cornelius T. Finnegan, III
Fax: (212) 728-8111
Section 9.3 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 9.4 MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof and
thereof; (b) shall not be assigned by operation of law or otherwise; and (c)
shall be governed in all respects, including validity, interpretation and
effect, by the laws
49
of the State of Florida (without giving effect to the provisions thereof
relating to conflicts of law).
Section 9.5 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.6 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto. Except as provided in
Section 6.16, nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 9.7 LIMITATION OF LIABILITY. Any obligation or liability
whatsoever of East or West which may arise at any time under this Agreement or
any obligation or liability which may be incurred by it pursuant to any other
instrument, transaction or undertaking contemplated hereby shall be satisfied,
if at all, only out of East's or West's assets respectively. No such obligation
or liability shall be personally binding upon, nor shall resort for the
enforcement thereof be had to, the property of any of its shareholders,
trustees, officers, employees or agents, regardless of whether such obligation
or liability is in the nature of contract, tort or otherwise.
Section 9.8 NO PRESUMPTION AGAINST DRAFTER. Each of the parties hereto
have jointly participated in the negotiation and drafting of this Agreement. In
the event of an ambiguity or a question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by each of the parties hereto
and no presumptions or burdens of proof shall arise favoring any party by virtue
of the authorship of any of the provisions of this Agreement.
* * * * *
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
PACIFIC RETAIL TRUST
By: /s/ Dennis H. Alberts
Print name: Dennis H. Alberts
Its: President and
Chief Executive Officer
REGENCY REALTY CORPORATION
By: /s/ Martin E. Stein, Jr.
Print name: Martin E. Stein, Jr.
Its: Chairman and
Chief Executive Officer
EXHIBIT 8.2
AMENDMENT NO. 3 TO STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO. 3 TO STOCKHOLDERS AGREEMENT (the "Amendment"), dated
as of September 23, 1998, is made by and among Regency Realty Corporation, a
Florida corporation (the "Company"), Security Capital U.S. Realty, a Luxembourg
corporation, and Security Capital Holdings S.A., a Luxembourg corporation
(together with Security Capital U.S. Realty and others specified in the
Stockholders Agreement, "Investor").
BACKGROUND:
WHEREAS, the Company, Investor and The Regency Group, Inc. entered into
a Stockholders Agreement, dated as of July 10, 1996, as amended by Amendment
No.1 to Stockholders Agreement dated as of February 10, 1997 and by Amendment
No. 2 to Stockholders Agreement dated as of December 4, 1997 (as amended, the
"Stockholders Agreement"); and
WHEREAS, simultaneously with the execution hereof, the Company and
Pacific Retail Trust, a Maryland real estate investment trust ("West"), have
entered into that certain Agreement and Plan of Merger of even date herewith
(the "Merger Agreement") pursuant to which, among other things and subject to
the terms and conditions set forth in the Merger Agreement, West will merge with
and into the Company at the Effective Time (as defined in the Merger Agreement);
and
WHEREAS, the parties wish to amend the Stockholders Agreement in
connection with the Merger, and such amendment is a condition to the Merger and
has been agreed to by West; and
WHEREAS, pursuant to the Merger Agreement, at the meeting of the
Company's stockholders at which the Merger is considered (the "Stockholders
Meeting"), the Company stockholders will also be asked to amend the Company's
Articles of Incorporation to be substantially in the form attached as Exhibit C
to the Articles of Merger and Plan of Merger, which is attached as Exhibit A to
the Merger Agreement, merging West with and into the Company (the "Amended
Charter") and the Company's stockholders will also be asked to approve the
Stockholders Agreement as amended hereby to be effective from and after the
consummation of the transactions contemplated by the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Agreement.
2. Investments in Shopping Center Properties and Purchases of
Interests in Shopping Center Companies.
Section 1.20 is hereby restated in its entirety as
follows:
"Geographic Region" shall mean the United States of
America.
3. Investor Nominees to the Board.
Section 2.1(a) of the Stockholders Agreement is hereby amended
by deleting the first sentence thereof and replacing it with the following
sentence:
From and after the Effective Time (as defined in the Merger
Agreement) until the next annual or special meeting of
stockholders of the Company at, or the next taking of action
by written consent of stockholders of the Company with respect
to, which any Directors are to be elected, Investor shall have
the right (but not the obligation) to have on the Board three
Directors (such Directors, the "Investor Nominees"), and the
Company shall cause such Investor Nominees to become members
of the Board.
Section 2.1(a) of the Stockholders Agreement is hereby further
amended by deleting the word "two" each time it appears in such section and
replacing it with the word "three".
4. Voting Rights. Section 4.1 of the Stockholders is hereby
amended by deleting the last two sentences thereof and replacing them in their
entirety as follows:
With regard to (i) any amendment to the Company Charter or the
By-laws of the Company which would reasonably be expected to
materially adversely affect Investor, and (ii) any
Extraordinary Transaction submitted to a vote of the
stockholders of the Company, Investor will vote all shares of
Company Common Stock owned by it that represent ownership of
in excess of 49% of the outstanding shares of Company Common
Stock, in one of the following two manners, at its option: (x)
in accordance with the recommendation of the Board, or (y)
proportionately in accordance with the votes of the other
holders of Company Common Stock. With regard to any
Extraordinary Transaction submitted to a vote of the
stockholders of the Company which requires the affirmative
vote of holders of two-thirds of the shares of Company Common
Stock, Investor will vote all shares of Company Common Stock
owned by it that represent ownership of in excess of 32% of
the outstanding shares of Company Common Stock, in one of the
following two manners, at its option: (x) in accordance with
the recommendation of the Board, or (y) proportionately in
accordance with the votes of the other holders of Company
Common Stock.
-2-
5. Participation Rights.
(a) Investor hereby waives any Participation Right it might
have under Section 4.2 of the Stockholders Agreement to acquire Company Common
Stock as a result of the Merger and the transactions contemplated under the
Merger Agreement.
(b) Section 4.2 of the Stockholders Agreement is hereby
further amended by deleting the reference to "37.5%" in such section and
replacing it with "49%".
6. Standstill Period; Ownership Limit.
(a) Section 5.1(x) is hereby deleted.
(b) The Company hereby waives the applicability of the
restrictions set forth in Section 5.2 of the Stockholders Agreement to the
Merger, the Merger Agreement and the transactions contemplated thereby or hereby
and agrees that such restrictions shall not be violated by the Merger, the
Merger Agreement or the transactions contemplated thereby or hereby.
(c) Section 5.2(a)(iii) is hereby restated in its entirety as
follows:
(iii) purchase or otherwise acquire shares of Company
Common Stock (or options, rights or warrants or other
commitments to purchase and securities convertible
into (or exchangeable or redeemable for) shares of
Company Common Stock) as a result of which, after
giving effect to such purchase or acquisition,
Investor will own more than 60% of the outstanding
shares of Company Common Stock, on a fully diluted
basis; provided, however, that if at any time after
the Effective Time (as defined in the Merger
Agreement) Investor's ownership of Company Common
Stock on a fully diluted basis shall have been below
45% for a continuous period of 180 days, then from
and after such time the foregoing reference in this
clause (iii) to "60% of the outstanding shares of
Company Common Stock, on a fully diluted basis,"
shall be reduced to "49% of the shares of Company
Common Stock, on a fully diluted basis".
(d) Section 5.8 of the Stockholders Agreement is hereby
amended by deleting the reference in the first sentence thereof to "45% of the
outstanding shares of Company Common Stock" and replacing it with "60% of the
outstanding shares of Company Common Stock, or if the limitation in Section
5.2(a)(iii) of this Agreement shall have been reduced from 60% to 49%, 49% of
the outstanding shares of Company Common Stock".
7. Termination Dates. Section 1.18 of the Stockholders
Agreement is hereby amended by deleting all references therein to "15%" and
replacing them with "10%." Section 1.45 of the Stockholders Agreement is hereby
amended by deleting all references therein to "20%" and replacing them with
"15%." Accordingly, all references in the Stockholders Agreement to the "15%
Termination Date" are hereby deleted and replaced with references to the "10%
-3-
Termination Date" and all references in the Stockholders Agreement to the "20%
Termination Date" are hereby deleted and replaced with references to the "15%
Termination Date".
8. Application of Section 5.14 of Company Charter. Section 2
of Amendment No. 2 to the Stockholders Agreement (as referenced in the
definition of the Stockholders Agreement) is no longer applicable and is hereby
deleted.
9. Certain Tax Matters.
(a) Section 6.1(a)(ii)(B) and Section 6.1(b) of the
Stockholders Agreement are hereby amended by deleting each reference to "30%" in
each such section and replacing it with "22%".
(b) Section 6.1 of the Stockholders Agreement and Schedule
6.1(c) to the Stockholders Agreement are hereby amended by deleting each
reference therein to "Section 1296", "Section 1296(a)" and "Section 1296(c)" of
the Code and replacing each such reference with "Section 1297", "Section
1297(a)" and "Section 1297(c)" of the Code, respectively, and by deleting each
reference to "Section 1297", "Section 1297(a)" and "Section 1297(c)" of the Code
and replacing each such reference with "Section 1298", "Section 1298(a)" and
"Section 1298(c)" of the Code, respectively.
10. Restriction on Property Portfolio. Investor hereby waives
the applicability of the limitations with respect to shopping centers greater
than 350,000 square feet set forth in Section 6.1(a)(C) of the Stockholders
Agreement to the extent the limitations in such Section are exceeded as a result
of the Merger, the Merger Agreement or the transactions contemplated thereby.
11. Condition Precedent. The effectiveness of this Amendment
is subject to the consummation of the Merger and the approval and adoption of
the Amended Charter by the Company stockholders at the Stockholders Meeting,
except that Section 6(b) of this Amendment shall be effective upon execution
hereof. The Company shall not agree or consent to any amendment to the Merger
Agreement, nor grant any waiver thereunder, without in each case the express
written consent of Investor. The Company shall not in any event consummate the
Merger or otherwise effect the transactions contemplated by the Merger Agreement
without each of this Amendment and the Amended Charter simultaneously becoming
effective.
12. No Effect on Consistent Terms. All terms of the
Stockholders Agreement not inconsistent with this Amendment shall remain in
place and in full force and effect and shall be unaffected by this Amendment,
and shall continue to apply (i) to the Stockholders Agreement as amended hereby
and (ii) to this Amendment. From and after the date hereof, each reference to
the Stockholders Agreement in any other instrument or document shall be deemed a
reference to the Stockholders Agreement as amended by Amendment No. 1, Amendment
No. 2 and as amended hereby, unless the context otherwise requires.
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13. Headings. The headings contained in this Amendment are
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Amendment.
14. Counterparts. This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other party.
-5-
IN WITNESS WHEREOF, this Amendment has been signed by or on behalf of
each of the parties hereto as of the day first above written.
REGENCY REALTY CORPORATION
By:
-----------------------------------
Name:
Title:
SECURITY CAPITAL HOLDINGS S.A.
By:
-----------------------------------
Name:
Title:
SECURITY CAPITAL U.S. REALTY
By:
-----------------------------------
Name:
Title:
-6-
EXHIBIT A
AMENDMENT TO ARTICLES OF INCORPORATION
OF
REGENCY REALTY CORPORATION
This corporation was incorporated on July 8, 1993 effective July 9,
1993 under the name Regency Realty Corporation. Pursuant to Sections 607.1001,
607.1003, 607.1004 and 607.1006 of the Florida Business Corporation Act,
amendments to Section 5.1(y) and Section 5.14 of the Articles of Incorporation
of Regency Realty Corporation were approved by the Board of Directors at a
meeting held on September 23, 1998, and adopted by the shareholders of the
corporation on [ ], 1998.
Section 5.1 (y) is hereby amended in its entirety as follows:
(y) "Special Shareholder Limit" for a Special Shareholder
shall initially mean 60% of the outstanding shares of Common Stock, on a fully
diluted basis, of the Corporation; provided, however, that if at any time after
the effective date of this Amendment a Special Stockholder's ownership of Common
Stock, on a fully diluted basis, of the Corporation shall have been below 45%
for a continuous period of 180 days, then the definition of "Special Shareholder
Limit" shall mean 49% of the outstanding shares of Common Stock, on a fully
diluted basis, of the Corporation. After any adjustment pursuant to Section 5.8,
the definition of "Special Shareholder Limit" shall mean the percentage of the
outstanding Common Stock as so adjusted, and the definition of "Special
Shareholder Limit" shall also be appropriately and equitably adjusted in the
event of a repurchase of shares of Common Stock of the Corporation or other
reduction in the number of outstanding shares of Common Stock of the
Corporation. Notwithstanding the foregoing, if any Person and its Affiliates
(taken as a whole), other than the Special Shareholder, shall directly or
indirectly own in the aggregate more than 45% of the outstanding shares of
Common Stock, on a fully diluted basis, of the Corporation, the definition of
"Special Shareholder Limit" shall be revised in accordance with Section 5.8 of
the Stockholders Agreement. Notwithstanding the foregoing provisions of this
definition, if, as the result of any Special Shareholder's ownership (taking
into account for this purpose constructive ownership under Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code) of shares of Capital
Stock, any Person who is an individual within the meaning of Section 542(a)(2)
of the Code (taking into account the ownership attribution rules under Section
544 of the Code, as modified by Section 856(h) of the Code) and who is the
Beneficial Owner of any interest in a Special Shareholder would be considered to
Beneficially Own more than 9.8% of the outstanding shares of Capital Stock, then
unless such individual reduces his or her interest in the Special Shareholder so
that such Person no longer Beneficially Owns more than 9.8% of the outstanding
shares of Capital Stock, the Special Shareholder Limit shall be reduced to such
percentage as would result in such Person not being considered to Beneficially
Own more than 9.8% of the outstanding Shares of Capital Stock. Notwithstanding
anything contained herein to the contrary, in no event shall the Special
Shareholder Limit be reduced below the Ownership Limit. At the request of the
Special Shareholders, the Secretary of the Corporation shall maintain and, upon
request, make available to each Special Shareholder a schedule which sets forth
the then current Special Shareholder Limits for each Special Shareholder.
Section 5.14 is hereby amended in its entirety as follows:
Section 5.14 Certain Transfers to Non-U.S. Persons Void.
(a) At any time that Non-U.S. Persons (including Special Shareholders
who will at all times be presumed to be Non-U.S. Persons) own directly or
indirectly 50% or more of the fair market value of the issued and outstanding
shares of Capital Stock of the Corporation, any Transfer of shares of Capital
Stock of the Corporation by any Person (other than a Special Shareholder) to any
Non-U.S. Person (other than a Special Shareholder) on or after the effective
date of this Amendment shall be void ab initio to the fullest extent permitted
under applicable law and the intended transferee shall be deemed never to have
had an interest therein.
(b) At any time that Non-U.S. Persons (including Special Shareholders
who will at all times be presumed to be Non-U.S. Persons) own directly or
indirectly less than 50% of the fair market value of the issued and outstanding
shares of Capital Stock of the Corporation, any Transfer of shares of Capital
Stock of the Corporation by any Person (other than a Special Shareholder) to any
Person on or after the effective date of this Amendment shall be void ab initio
to the fullest extent permitted under applicable law and the intended transferee
shall be deemed never to have had an interest therein if such Transfer
(i) occurs prior to the 10% Termination Date and results in the
fair market value of the shares of Capital Stock of the
Corporation owned directly or indirectly by Non-U.S. Persons
(other than Special Shareholders) comprising 4.9 percent
(4.9%) or more of the fair market value of the issued and
outstanding shares of Capital Stock of the Corporation; or
(ii) results in the fair market value of the shares of Capital
Stock of the Corporation owned directly or indirectly by
Non-U.S. Persons (including Special Shareholders who will at
all times be presumed to be Non-U.S. Persons) comprising fifty
percent (50%) or more of the fair market value of the issued
and outstanding shares of Capital Stock the Corporation.
(c) If any of the foregoing provisions is determined to be void or
invalid by virtue of any legal decision, statute, rule or regulation, then the
shares of Capital Stock of the Corporation held or purported to Directors or
otherwise:e shall, automatically and without the necessity of any action by the
Board of
(i) be prohibited from being voted;
(ii) not be entitled to dividends with respect thereto;
-2-
(iii) be considered held in trust by the transferee for the benefit
of the Corporation and shall be subject to the provisions of
Section 5.3(c) as if such shares of Capital Stock were the
subject of a Transfer that violates Section 5.2; and
(iv) not be considered outstanding for the purpose of determining a
quorum at any meeting of shareholders.
(d) The Special Shareholders may, in their sole discretion, with prior
notice to the Board of Directors, waive, alter or revise in writing all or any
portion of the Transfer restrictions set forth in this Section 5.14 from and
after the date on which such notice is given, on such terms and conditions as
they in their sole discretion determine.
IN WITNESS WHEREOF, the undersigned Chairman of this corporation has
executed these Articles of Amendment this day of , 1998.
-------------------------------
Martin E. Stein, Jr., Chairman and CEO
-3-
EXHIBIT 8.3
SHAREHOLDER VOTING AGREEMENT
THIS SHAREHOLDER VOTING AGREEMENT, dated as of September 23, 1998, is
entered into by and among Regency Realty Corporation, a Florida corporation
("East"), Pacific Retail Trust, a Maryland real estate investment trust
("West"), Security Capital U.S. Realty, a Luxembourg corporation ("U.S.
Realty"), and its wholly-owned subsidiary, Security Capital Holdings, S.A., a
Luxembourg corporation ("SCH," and together with U.S. Realty, "Shareholder").
WHEREAS, as of the date hereof SCH beneficially owns 11,720,216 shares
of common stock, $0.01 par value per share ("East Common Stock"), of East (all
such shares and any shares of East Common Stock that hereafter become
beneficially owned by the SCH prior to the termination of this Agreement being
referred to herein as the "East Shares" and collectively with the West Shares,
the "Shares"), representing 45.96% of the issued and outstanding shares of East
Common Stock as of the date hereof;
WHEREAS, as of the date hereof SCH beneficially owns 46,985,458.985
shares of $0.01 par value per share ("West Common Stock"), of West (all such
shares and any shares of West Common Stock that hereafter become beneficially
owned by the SCH prior to the termination of this Agreement being referred to
herein as the "West Shares"), representing 69.93% of the issued and outstanding
shares of West Common Stock as of the date hereof;
WHEREAS, concurrently herewith, West and East are entering into an
Agreement and Plan of Merger (as such Agreement may hereafter be amended from
time to time, the "Merger Agreement"), pursuant to which, upon the terms and
subject to the conditions thereof, West will merge with and into East (the
"Merger"); and
WHEREAS, as a condition to the willingness of East and West to enter
into the Merger Agreement, each of East and West has requested that Shareholder
agree, and, in order induce East and West to enter into the Merger Agreement,
Shareholder has agreed, to the matters addressed herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations warranties, covenants and agreements set forth herein and in the
Merger Agreement, the parties hereto, intending to be legally bound, hereby
agree as follows:
1
ARTICLE I
Section 1.01. Voting of Shares; Further Assurances. Subject to the
terms and conditions of this Agreement, SCH will vote all of the East Shares and
West Shares, as the case may be, that it owns of record on the respective record
dates for voting at the Special Meetings (or will execute written consents with
respect to such Shares) (i) in favor of the adoption of the Merger Agreement and
approval of the Merger and the other transactions contemplated by the Merger
Agreement, (ii) against any East Alternative Proposal or West Alternative
Proposal (each as defined in the Merger Agreement), (iii) in favor of the
amendment of the Articles of Incorporation of East substantially in the form
attached hereto as Exhibit A (iv) in favor of the amendments to East's Long Term
Omnibus Plan increasing the shares available for award thereunder as
contemplated by the Merger Agreement, by such additional number as shares as may
be determined by the East Compensation Committee and making any other changes
necessary to permit East to assume West Options on the terms set forth in the
Merger Agreement and (v) in favor of any other matter necessary to the
consummation of the Merger and the other transactions contemplated by the Merger
Agreement and considered and voted upon at a Special Meeting (or as to which
written consents are solicited). SCH will cause any East Shares and West Shares,
as the case may be, owned by it beneficially, but not of record, on the
respective record dates for voting at the Special Meetings (or will cause
written consents to be executed with respect to such Shares) to be voted in
accordance with the foregoing. Shareholder acknowledges receipt and review of a
copy of the Merger Agreement prior to the execution thereof and hereof.
Section 1.02. No Solicitation. Subject to the terms and conditions of
this Agreement, prior to the Effective Time (as defined in the Merger
Agreement), (a) Shareholder shall not, and shall not permit any of its officers,
directors, employees, subsidiaries, agents or representatives (including,
without limitation, any investment banker, attorney or accountant retained by
it) to directly or indirectly, (i) initiate, solicit, or encourage, any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to East's or West's shareholders) with
respect to an East Alternative Proposal or a West Alternative Proposal or (ii)
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an East
Alternative Proposal or a West Alternative Proposal, or otherwise facilitate any
effort or attempt to make or implement an East Alternative Proposal or a West
Alternative Proposal; and (b) Shareholder will notify East and West 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, it, and East or West, as the case may be, will
notify Shareholder 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, it; provided, however,
that the foregoing shall not prevent any discussions or other communications
between or among Shareholder, West, and East.
2
Section 1.03. Termination of Certain Restrictions in Certain Events. If
the West Board validly exercises any of its rights under clauses (i) through
(iv) of the first proviso to Section 5.4(b) of the Merger Agreement, Shareholder
shall be relieved of the prohibition set forth in clause (a)(ii) of Section 1.02
of this Agreement with respect to, but only with respect to, the particular West
Alternative Proposal and third party making it that gives rise to the West Board
exercising such rights and only for so long as the West Board continues to
exercise such rights. If the East Board validly exercises any of its rights
under the clauses (i) through (iv) of the first proviso to Section 5.4(a) of the
Merger Agreement, Shareholder shall be relieved of the prohibition set forth in
clause (a)(ii) of Section 1.02 of this Agreement with respect to, but only with
respect to, the particular East Alternative Proposal and third party making it
that gives rise to the East Board exercising such rights and only for so long as
the East Board continues to exercise such rights.
Section 1.04. Termination of Certain Agreements. As of the Effective
Time (as defined in the Merger Agreement), that certain Investor Agreement dated
as of October 20, 1995 between SCH and West shall terminate automatically,
without any action being required by SCH or West. Neither SCH nor West shall
thereafter have any further obligation under the Investor Agreement.
Section 1.05. Conduct of Business of West Management. Shareholder
hereby covenants that it shall cause West Management Company to act and carry on
its business in the usual, regular and ordinary course of business consistent
with past practice and with Section 5.2 of the Merger Agreement.
ARTICLE II
Section 2.01. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
If to East, to:
Regency Realty Corporation
121 West Forsyth Street, Suite 200
Jacksonville, FL 32202
Attention: Martin E. Stein, Jr.
Fax: (904) 634-3428
3
with a copy to:
Foley & Lardner
2000 Laura Street
Jacksonville, Florida 32205
Attention: Linda Kelso
Fax: (904) 359-8700
If to West, to:
Pacific Retail Trust
8140 Walnut Lane
Dallas, Texas 75231
Attention: Dennis H. Alberts
Fax: (214) 696-9512
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Edward J. Schneidman
Fax: (312) 701-7711
If to Shareholder, to:
Security Capital U.S. Realty
69, Route d' Esch
L-1470 Luxembourg
Attention: Ariel Amir
and with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6540
Attention: Adam O. Emmerich
Fax: (212) 403-2234
Section 2.02. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 2.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all
4
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforce, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
Section 2.04. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
Section 2.05. Certain Events. SCH agrees that this Agreement and the
obligations hereunder shall attach to each of SCH's Shares and shall be binding
upon any person to which legal or beneficial ownership (as such term is applied
under Rule 13d-3 of the Exchange Act) of such Shares shall pass, whether by
operation of law or otherwise. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under this
Agreement of the transferor.
Section 2.06. Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
Section 2.07. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 2.08. Specific Performance. The parties hereto agree that
irreparable damages would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 2.09. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida without giving
effect to principles of conflicts of laws.
Section 2.10. Counterparts. This Agreement may be executed by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but both of which, taken together, shall
constitute one and the same agreement.
Section 2.11. Termination. This Agreement shall terminate automatically
and immediately upon the earlier of (a) termination of the Merger Agreement in
accordance
5
with the terms of Article 8 thereof and (b) the consummation of the Merger.
Section 2.12. Definitions. Any capitalized term used in this Agreement
that is not otherwise defined herein has the meaning given to it in the Merger
Agreement.
Section 2.13. Limitation of Liability. Any obligation or liability
whatsoever of East or West which may arise at any time under this Agreement or
any obligation or liability which may be incurred by it pursuant to any other
instrument, transaction or undertaking contemplated hereby shall be satisfied,
if at all, only out of East's or West's assets respectively. No such obligation
or liability shall be personally binding upon, nor shall resort for the
enforcement thereof be had to, the property of any of its shareholders,
trustees, officers, employees or agents, regardless of whether such obligation
or liability is in the nature of contract, tort or otherwise.
6
Section 2.14. No Presumption Against Drafter. Each of the parties
hereto have jointly participated in the negotiation and drafting of this
Agreement. In the event of an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by each of the parties hereto and no presumptions or burdens of proof shall
arise favoring any party by virtue of the authorship of any of the provisions of
this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective, duly authorized officers, as of the date first
above written.
REGENCY REALTY CORPORATION
By:_________________________
Name:
Title:
PACIFIC RETAIL TRUST
By: _________________________
Name:
Title:
SECURITY CAPITAL HOLDINGS S.A.
By: _________________________
Name:
Title:
SECURITY CAPITAL U.S. REALTY
By: _________________________
Name:
Title:
7
EXHIBIT 8.4
TRANSFER RESTRICTION AGREEMENT
THIS TRANSFER RESTRICTION AGREEMENT, dated as of September 23, 1998, is
entered into by and between Pacific Retail Trust, a Maryland real estate
investment trust ("West"), and Security Capital Holdings S.A., a Luxembourg
corporation ("Shareholder").
WHEREAS, as of the date hereof Shareholder beneficially owns 11,720,216
shares of common stock, $0.01 par value per share ("East Common Stock"), of
Regency Realty Corporation, a Florida corporation ("East") (all such shares and
any shares of East Common Stock that hereafter become beneficially owned by
Shareholder prior to the termination of this Agreement being referred to herein
as the "East Shares"), representing 45.96% of the issued and outstanding shares
of East Common Stock as of the date hereof;
WHEREAS, concurrently herewith, West and East are entering into an
Agreement and Plan of Merger (as such Agreement may hereafter be amended from
time to time, the "Merger Agreement"), pursuant to which, upon the terms and
subject to the conditions thereof, West will merge with and into East (the
"Merger"); and
WHEREAS, as a condition to the willingness of West to enter into the
Merger Agreement, West has requested that Shareholder agree, and, in order
induce West to enter into the Merger Agreement, Shareholder has agreed, to the
matters addressed herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations warranties, covenants and agreements set forth herein and in the
Merger Agreement, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. TRANSFER OF SHARES. Subject to the terms and conditions of
this Agreement, until the earlier of (i) the termination of the Merger Agreement
or (ii) the close of business on the date of the later to occur of the special
meetings of shareholders of East and West called to consider and vote upon the
Merger (including any adjournments thereof, the "Special Meetings") and except
as otherwise provided herein, Shareholder will not, and will cause any record
holder of East Shares not to, (a) sell or otherwise dispose of any of the East
Shares (provided that the foregoing shall not preclude a pledge of East Shares
as security with respect to a bona fide loan from a financial institution), (b)
deposit any of the East Shares into a voting trust or enter into a voting
agreement or arrangement (other than this Agreement) with respect to any of the
East Shares or grant any proxy with respect thereto, or (c) enter into any
contract, option or other arrangement or undertaking with respect to the direct
or indirect sale, assignment, transfer or other disposition of any of the East
Shares.
SECTION 2. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally,
1
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like changes of address) or sent by
electronic transmission to the telecopier number specified below:
If to West, to:
Pacific Retail Trust
8140 Walnut Hill Lane
Dallas, Texas 75231
Attention: Dennis H. Alberts
Fax: (214) 696-9512
With a copy to:
Munger, Tolles & Olson LLP
355 South Grand Avenue, 35th Floor
Los Angeles, California 90071
Attention: R. Gregory Morgan
Fax: (213) 687-3702
and to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Edward J. Schneidman
Fax: (312) 701-7711
If to Shareholder, to:
Security Capital Holdings S.A.
69, Route d'Esch
L-1470 Luxembourg
Attention: Ariel Amir
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich
Fax: (212) 403-2234
2
SECTION 3. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 4. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforce, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
SECTION 6. CERTAIN EVENTS. Shareholder agrees that this Agreement and
the obligations hereunder shall attach to each of Shareholder's East Shares and
shall be binding upon any person to which legal or beneficial ownership (as such
term is applied under Rule 13d-3 of the Exchange Act) of such East Shares shall
pass, whether by operation of law or otherwise. Notwithstanding any transfer of
East Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement of the transferor.
SECTION 7. ASSIGNMENT; AMENDMENT. This Agreement shall not be assigned
by operation of law or otherwise. This Agreement may not be amended except in
writing signed by each of the parties hereto and without the prior written
consent of East.
SECTION 8. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 9. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damages would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida, without giving
effect to principles of conflicts of laws.
3
SECTION 11. COUNTERPARTS. This Agreement may be executed by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but both of which, taken together, shall
constitute one and the same agreement.
SECTION 12. TERMINATION. This Agreement shall terminate automatically
and immediately upon the earlier of (a) termination of the Merger Agreement in
accordance with the terms of Article 8 thereof and (b) the consummation of the
Merger.
SECTION 13. DEFINITIONS. Any capitalized terms used in this Agreement
that are not otherwise defined herein has the meaning given to it in the Merger
Agreement.
SECTION 14. LIMITATION OF LIABILITY. Any obligation or liability
whatsoever of West which may arise at any time under this Agreement or any
obligation or liability which may be incurred by it pursuant to any other
instrument, transaction or undertaking contemplated hereby shall be satisfied,
if at all, only out of West's assets. No such obligation or liability shall be
personally binding upon, nor shall resort for the enforcement thereof be had to,
the property of any of its shareholders, trustees, officers, employees or
agents, regardless of whether such obligation or liability is in the nature of
contract, tort or otherwise.
SECTION 15. NO PRESUMPTION AGAINST DRAFTER. Each of the parties hereto
have jointly participated in the negotiation and drafting of this Agreement. In
the event of an ambiguity or a question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by each of the parties hereto
and no presumptions or burdens of proof shall arise favoring any party by virtue
of the authorship of any of the provisions of this Agreement.
4
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective, duly authorized officers, as of the date first
above written.
PACIFIC RETAIL TRUST
By:
Dennis H. Alberts
President and Chief Executive Officer
SECURITY CAPITAL HOLDINGS S.A.
By:
-----------------------------
5
EXHIBIT 8.5
TRANSFER RESTRICTION AGREEMENT
THIS TRANSFER RESTRICTION AGREEMENT, dated as of September 23, 1998, is
entered into by and among Security Capital Holdings, S.A., a Luxembourg
corporation ("SCH"), and Regency Realty Corporation, a Florida corporation
("Regency").
WHEREAS, as of the date hereof SCH owns beneficially 46,985,458.985
shares of beneficial interest, $0.01 par value per share ("PRT Common Stock"),
of Pacific Retail Trust, a Maryland real estate investment trust ("PRT"), (all
such shares and any shares of PRT Common Stock that hereafter become
beneficially owned by SCH prior to the termination of this Agreement being
referred to herein as the "PRT Shares");
WHEREAS, PRT and Regency are entering into an Agreement and Plan of
Merger of even date herewith (as such Agreement may hereafter be amended from
time to time, the "Merger Agreement"), pursuant to which, upon the terms and
subject to the conditions thereof, PRT will merge with and into Regency (the
"Merger");
WHEREAS, concurrently herewith, Regency, PRT, SCH and Security Capital
U.S. Realty, a Luxembourg corporation and the parent of SCH, are entering into a
Voting Agreement (the "Voting Agreement"), pursuant to which, among other
things, SCH has agreed to vote its PRT Shares in favor of the Merger;
WHEREAS, as a condition of Regency's willingness to enter into the
Merger Agreement, Regency has requested that SCH agree, and in order to induce
Regency to enter into the Merger Agreement, SCH has agreed, to the matters
addressed herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. TRANSFER OF PRT SHARES. Subject to the terms and conditions
of this Agreement, until the earlier of (i) the termination of the Merger
Agreement in accordance with its terms and (ii) the close of business on the
date of the later to occur of the special meetings of shareholders of PRT and
Regency called to consider and vote upon the Merger (including any adjournments
thereof) and except as otherwise provided herein, SCH will not (a) sell or
otherwise dispose of any of the PRT Shares (provided that the foregoing shall
not preclude a pledge of PRT Shares as security with respect to a bona fide loan
from a financial institution), (b) deposit any of the PRT Shares into a voting
trust or enter into a voting agreement or arrangement (other than the Voting
Agreement) with respect to any of the PRT Shares or grant any proxy with respect
thereto, or (c) enter into any contact, option or other arrangement or
undertaking with respect to the direct or indirect sale, assignment, transfer or
other disposition of any of the PRT Shares.
2. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damages would occur in the event any provision of this Agreement was
not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or in equity.
3. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida, without giving
effect to principles of conflict of laws.
4. COUNTERPARTS. This Agreement may be executed by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but both of which, taken together, shall
constitute one and the same agreement.
5. AMENDMENT. This Agreement shall not be amended without the
written consent of PRT and the parties hereto.
6. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
If to Regency, to:
Regency Realty Corporation
121 Forsyth Street, Suite 200
Jacksonville, Florida 32202
Attention: Martin E. Stein, Jr.
Fax: (904) 354-3448
and to:
Foley & Lardner
200 Laura Street
Jacksonville, Florida 32205
Attention: Linda Y. Kelso
Fax: (904) 359-8700
If to SCH, to
c/o Security Capital Holdings, S.A.
69 Route d'Esch
L-1470 Luxembourg
Attention: Ariel Amir
and to:
-2-
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Attention: Adam O. Emmerich
Fax: (212)403-2234
7. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
8. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective, duly authorized officers, as of the date first
above written.
Regency Realty Corporation
By:
Name:
Title:
Security Capital Holdings, S.A.
By:
Name:
Title:
-3-