MISCELLANEOUS RIGHTS AGREEMENT
THIS MISCELLANEOUS RIGHTS AGREEMENT, dated as of __________, 1997, is
entered into by and among Pan Pacific Retail Properties, Inc., a Maryland
corporation (the "Company"), Xxxxxx X. Xxxx, an individual ("Xxxxxx Xxxx") and
Pan Pacific Development (U.S.) Inc., a Delaware corporation ("PPD").
RECITALS
WHEREAS, in connection with the initial public offering of shares of
the Company's common stock, par value $.01 per share (the "Common Stock"), PPD
will transfer to the Company and will cause certain subsidiaries to transfer to
the Company, their respective real property and other interests in certain
shopping center properties and other assets (collectively, the "Transfers") and
PPD will also contribute $___________ in cash to the Company (the "PPD
Contribution");
WHEREAS, PPD or its subsidiaries, as applicable, will receive shares
of Common Stock in exchange for the Transfers of such real property and the PPD
Contribution;
WHEREAS, the Company and PPD intend that PPD shall have the right to
designate, for nomination and the filling of vacancies on the Board of
Directors, certain directors in accordance with the terms of this Agreement;
WHEREAS, PPD and its sole shareholder, Revenue Properties Company
Limited, a corporation organized under the laws of Ontario, Canada ("Revenue
Properties"), will enter into that certain Non-Competition Agreement (the "Non-
Competition Agreement") with the Company pursuant to which PPD and Revenue
Properties will agree to conduct all of their United States shopping center
development and ownership activities through the Company so long as PPD owns 15%
or more of the outstanding Common Stock of the Company;
WHEREAS, PPD is willing to make, and cause its subsidiaries to make,
the Transfers and the PPD Contribution and to enter into the Non-Competition
Agreement in consideration of receiving the registration rights and the
proportional purchase rights provided for in this Agreement and the right to
designate directors for nomination and the filling of vacancies on the Board of
Directors in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. In addition to the definitions set forth
above, the following terms, as used herein, have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Agreement, as it may be amended, supplemented
or restated from time to time.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York or Los Angeles, California are
authorized by law to close.
"Charter" means the Articles of Amendment and Restatement of the
Company as filed with the Secretary of State of the State of Maryland on
__________, 1997, as the same may be amended, modified or restated from time to
time.
"Commission" means the Securities and Exchange Commission.
"Convertible Securities" means any evidence of indebtedness, shares of
stock, options, warrants or other securities which are convertible into or
exchangeable or redeemable, with or without payment of additional consideration
of cash or property, for shares of Common Stock or rights to acquire shares of
Common Stock, either immediately or on a specified date or the happening of a
specified event.
"Demand Registration" means a Demand Registration as defined in
Section 2.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means any PPD Person who is the record or beneficial owner of
any Registrable Security or any assignee or transferee of such Registrable
Security unless such Registrable Security is acquired in a public distribution
pursuant to a registration statement under the Securities Act or pursuant to
transactions exempt from registration under the Securities Act where securities
sold in such transaction may be resold without subsequent registration under the
Securities Act.
"Immediate Family" of any individual means such individual's estate
and heirs, spouse, children (whether natural or adoptive or by marriage), and
any trust or estate, all the beneficiaries of which consist of such individual
or any of the foregoing.
"Initial Public Offering" means the offering of the Company's Common
Stock pursuant to the Form S-11 Registration Statement (No. 333-28715) filed by
the Company with the Commission under the Securities Act and declared effective
by the Commission on ______________________, 1997.
"Market Value" means, with respect to the Common Stock, the average of
the daily market price for the ten (10) consecutive trading days immediately
preceding the date of a written request for registration pursuant to Section
2.2(a). The market price for each such trading day shall be: (i) if the Common
Stock is listed or admitted to trading on any securities exchange or the NASDAQ-
National Market System, the closing price, regular way, on such day, or if no
such sale takes place on such day, the average of the closing bid and asked
prices on such day, in either case as reported in the principal consolidated
transaction reporting system, (ii) if the Common Stock is not listed or admitted
to trading on any securities exchange or the NASDAQ-National Market System, the
last reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the company, or (iii) if the Common
Stock is not listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System and no such last reported sale price or closing
bid and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source designated
by the Company, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than (10) days prior to the date in question) for which prices
have been so reported; PROVIDED THAT if there are no bid and asked prices
reported during the ten (10) days prior to the date in question, the Market
Value of the Common Stock shall be determined by the Company acting in good
faith on the basis of such quotations and other information as it considers, in
its reasonable judgment, appropriate.
"Ownership Limits" means, with respect to Persons, the percentages set
forth in the provisions of Article VIII of the Charter of the Company, or in
resolutions of the board of directors of the Company pursuant to the Charter,
restricting the ownership of Common Stock to specified percentages of the
outstanding Common Stock; in general, with respect to PPD and certain of its
Affiliates, 55% of the outstanding Common Stock; and with respect to the Tanz
Family, 24% of the outstanding Common Stock.
"Person" means an individual or a corporation, partnership, limited
liability company, association, trust, or any other entity or organization,
including a government or political subdivision or an agency or instrumentally
thereof.
"Piggy-Back Registration" means a Piggy-Back Registration as defined
in Section 2.3.
"PPD Persons" means (a) for purposes of Articles II and III of this
Agreement (i) PPD and its Affiliates, (ii) the Tanz Family and (iii) Revenue
Properties and (b) for purposes of Article IV of this Agreement, (i) PPD and its
Affiliates and (ii) Revenue Properties.
"Purchase Percentage" means at any time, with respect to any PPD
Person, the ratio (expressed as a decimal and rounded to the nearest thousandth
with five ten thousandths being rounded upwards) of (i) the number of shares of
Common Stock then owned directly or indirectly by such PPD Person over (ii) the
total number of shares of Common Stock then outstanding.
"Registrable Securities" means shares of Common Stock of the Company
at any time owned, either of record or beneficially, by any PPD Person and no
matter how acquired until
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(i) a registration statement covering such security has been declared effective
by the Commission and it has been disposed of pursuant to such effective
registration statement, (ii) it is sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or under which it may be sold pursuant to Rule
144(k) or (iii) it has been otherwise transferred in a transaction that would
constitute a sale thereof under the Securities Act, the Company has delivered a
new certificate or other evidence of ownership for it not bearing the Securities
Act restricted stock legend and it may be resold without subsequent registration
under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Tanz Family" means Xxxx Xxxx, Xxxxxx Xxxx and Xxxxxxx Xxxx and their
Affiliates and Immediate Family, and any successors thereto by descent or devise
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 SHELF REGISTRATION. Commencing on or after the third
anniversary of the date that the Common Stock is first offered to the public in
the Initial Public Offering, the Company shall prepare and file a "shelf"
registration statement with respect to shares of its Common Stock on an
appropriate form for an offering to be made on a continuous basis pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement") and shall
use its best efforts to cause the Shelf Registration Statement to be declared
effective on or as soon as practicable after such third anniversary, and to keep
such Shelf Registration Statement continuously effective for a period ending
when all shares of Common Stock covered by the Shelf Registration Statement have
been issued and resold. In the event that the Company fails to file, or if
filed fails to maintain the effectiveness of, a Shelf Registration Statement,
Holders of shares of Common Stock may make a written request for a Demand
Registration (as defined below) pursuant to Section 2.2 herein; PROVIDED,
FURTHER, that if and so long as a Shelf Registration Statement is on file and
effective, then the Company shall have no obligation to effect a Demand
Registration.
SECTION 2.2 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. Commencing on or after the third
anniversary of the date that the Common Stock is first offered to the public in
the Initial Public Offering, Holders of Registrable Securities may make a
written request for registration under the Securities Act of all or part of its
or their Registrable Securities (a "Demand Registration"); PROVIDED, that the
Company shall not be obligated to effect more than one Demand Registration in
any calendar year; and PROVIDED, FURTHER, that the number of shares of
Registrable Securities proposed to be sold by the Holders making such written
request shall have a Market Value of at least
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$5,000,000. Subject to the foregoing, the number of Demand Registrations which
may be made pursuant to this Section 2.2 shall be unlimited. Any such request
will specify the number of shares of Registrable Securities proposed to be sold
and will also specify the intended method of disposition thereof. Within 10
days after receipt of such request, the Company will give written notice of such
registration request to all other Holders of the Registrable Securities and
include in such registration all such Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 20
Business Days after the receipt by the applicable Holder of the Company's
notice. Each such request will also specify the number of shares of Registrable
Securities to be registered and the intended method of disposition thereof.
Unless the Holder or Holders of a majority of the Registrable Securities to be
registered in such Demand Registration shall consent in writing, no other party,
including the Company (but excluding another Holder of a Registrable Security),
shall be permitted to offer securities under any such Demand Registration.
(b) EFFECTIVE REGISTRATION. A registration will not count as a
Demand Registration until it has become effective.
(c) PRIORITY ON DEMAND REGISTRATIONS. If the Holders of a
majority of shares of the Registrable Securities to be registered in a Demand
Registration so elect by written notice to the Company, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of an underwritten offering. The Holders of a majority of the shares of the
Registrable Securities making such Demand Registration shall select the book-
running managing Underwriter in connection with such offering; PROVIDED that
such managing Underwriter must be reasonably satisfactory to the Company. The
Company may select any additional investment banks and managers to be used in
connection with the offering; provided that such additional investment bankers
and managers must be reasonably satisfactory to a majority of the Holders making
such Demand Registration. To the extent 10% or more of the Registrable
Securities so requested to be registered are excluded from the offering in
accordance with Section 2.4, the Holders of such Registrable Securities as a
group shall have the right to one additional Demand Registration under this
Section in such calendar year with respect to such Registrable Securities.
SECTION 2.3 PIGGY-BACK REGISTRATION. If the Company proposes to
file a registration statement under the Securities Act with respect to a common
stock offering by the Company for its own account or for the account of any of
its respective securityholders of any class of security (other than (i) any
registration statement filed in connection with a Demand Registration except as
set forth in Section 2.2 hereof or (ii) a registration statement on Form S-4 or
S-8 (or any substitute form that may be adopted by the Commission) or filed in
connection with an exchange offer or offering of securities solely to the
Company's existing securityholders), then the Company shall give written notice
of such proposed filing to the Holders of Registrable Securities as soon as
practicable (but in no event less than 10 days before the anticipated filing
date), and such notice shall offer such Holders the opportunity to register such
number of shares of Registrable Securities as each such Holder may request (a
"Piggy-Back Registration"). The Company shall use its best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company included therein.
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SECTION 2.4 REDUCTION OF OFFERING. Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of an offering
described in Section 2.2 or 2.3 deliver a written opinion to the Company and the
Holders of the Registrable Securities included in such offering that (i) the
size of the offering that the Holders, the Company and such other persons intend
to make or (ii) the kind of securities that the Holders, the Company and any
other persons or entities intend to include in such offering are such that the
success of the offering would be materially and adversely affected by inclusion
of the Registrable Securities requested to be included, then (A) if the size of
the offering is the basis of such Underwriter's opinion, the amount of
securities to be offered for the accounts of Holders shall be reduced pro rata
(according to the Registrable Securities proposed for registration) to the
extent necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing Underwriter or Underwriters;
PROVIDED that, in the case of a Piggy-Back Registration, if securities are being
offered for the account of other persons or entities as well as the Company,
then with respect to the Registrable securities intended to be offered by
Holders, the proportion by which the amount of such class of securities intended
to be offered by Holders is reduced shall not exceed the proportion by which the
amount of such class of securities intended to be offered by such other persons
or entities is reduced; and (B) if the combination of securities to be offered
is the basis of such Underwriter's opinion, (x) the Registrable Securities to be
included in such offering shall be reduced as described in clause (A) above
(subject to the proviso in clause (A)) or, (y) if the actions described in
clause (x) would, in the judgment of the managing Underwriter's be insufficient
to substantially eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering, such
Registrable Securities will be excluded from such offering.
SECTION 2.5 REGISTRATION PROCEDURES; FILINGS; INFORMATION.
Whenever Holders request that any Registrable Securities be registered pursuant
to Section 2.2 hereof, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as quickly as practicable, and in
connection with any such request:
(a) The Company will as expeditiously as possible prepare and
file with the Commission a registration statement on any form for which the
Company then qualifies or which counsel for the Company shall deem appropriate
and which form shall be available for the sale of the Registrable Securities to
be registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 270 days; PROVIDED
that if the Company shall furnish to the Holders making a request pursuant to
Section 2.2 a certificate signed by either its Chairman, Vice Chairman, Chief
Executive Officer or President stating that in his good faith judgment it would
be significantly disadvantageous to the Company or its shareholders for such a
registration statement to be filed as expeditiously as possible, the Company
shall have a period of not more than 180 days within which to file such
registration statement measured from the date of receipt of the request in
accordance with Section 2.2.
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish to each Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter furnish to such Selling
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Holder and Underwriter, if any, such number of conformed copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Selling Holder or
Underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(c) After the filing of the registration statement, the Company
will promptly notify each Selling Holder of Registrable Securities covered by
such registration statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the United States as any Selling Holder or managing
Underwriter or Underwriters, if any, reasonably (in light of such Selling
Holder's intended plan of distribution) requests and (ii) cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Selling Holder to consummate the
disposition of the Registrable Securities owned by such Selling Holder; PROVIDED
that the Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction.
(e) The Company will immediately notify each Selling Holder of
such Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment.
(f) The Company will enter into customary agreements (including
an underwriting agreement, if any, in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(g) The Company will make available for inspection by any
Selling Holder of such Registrable Securities, any Underwriter participating in
any disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records which the
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Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Selling Holder of such Registrable Securities agrees that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the company or its Affiliates unless and until
such is made generally available to the public. Each Selling Holder of such
Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling Holder or
Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
Holders of a majority of the Registrable Securities included in such offering or
the managing Underwriter or Underwriters therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder (or any successor rule or regulation
hereafter adopted by the Commission).
(j) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
The Company may require each Selling Holder of Registrable Securities
to promptly furnish in writing to the Company such information regarding the
distribution of the Registrable Securities as the Company may from time to time
reasonably request and such other information as may be legally required in
connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 2.5(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.5(e) hereof, and,
if so directed by the Company, such Selling Holder will deliver to the Company
all copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. Each Selling Holder of Registrable
Securities agrees that it will immediately notify the Company at any time when
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a prospectus relating to the registration of such Registrable securities is
required to be delivered under the Securities Act of the happening of an event
as a result of which information previously furnished by such Selling Holder to
the Company in writing for inclusion in such prospectus contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made. In the event the Company
shall give such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in Section 2.5(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 2.5(e)
hereof to the date when the Company shall make available to the Selling Holders
of Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 2.5(e)
hereof.
SECTION 2.6 REGISTRATION EXPENSES. In connection with any
registration statement required to be filed hereunder, the Company shall pay the
following Registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities, (vi) reasonable fees and disbursements of counsel for the Company
and customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 2.5(h) hereof),
(vii) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration, and (viii) reasonable fees and
expenses of one counsel (who shall be reasonably acceptable to the Company) for
the Selling Holders. The Company shall have no obligation to pay any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities, or any out-of-pocket expenses of the Holders (or the
agents who manage their accounts).
SECTION 2.7 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Selling Holder of Registrable Securities, its
officers, directors and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Company by such
Selling Holder or on such Selling Holder's behalf expressly for use therein.
The Company also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
underwriters within the meaning of Section 15 of the Securities Act or Section
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of the Exchange Act on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 2.7, provided
that the foregoing indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter of the Registrable Securities from
whom the person asserting any such losses, claims, damages or liabilities
purchased the Registrable Securities which are the subject thereof if such
person did not receive a copy of the prospectus (or the prospectus as
supplemented) at or prior to the confirmation of the sale of such Registrable
Securities to such person in any case where such delivery is required by the
Securities Act and the untrue statement or omission of a material fact contained
in such preliminary prospectus was corrected in the prospectus (or the
prospectus as supplemented).
SECTION 2.8 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
Each Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless the Company, its officers, directors and agents and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Selling Holder, but only with
respect to information relating to such Selling Holder furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company or its
officers, directors or agents or such controlling person shall have the rights
and duties given to such Selling Holder, by Section 2.7. Each Selling Holder
also agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act on substantially the same basis as that of the
indemnification of the Company provided in this Section 2.8.
SECTION 2.9 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 2.7 or 2.8, such person (an "Indemnified Party") shall promptly notify
the person against whom such indemnity may be sought (an "Indemnifying Party")
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by (i)
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in the case of Persons indemnified pursuant to Section 2.7, PPD if PPD was a
Selling Holder or if PPD was not a Selling Holder, by the Selling Holders which
owned a majority of the Registrable Securities sold under the applicable
registration statement and (ii) in the case of Persons indemnified pursuant to
Section 2.8, the Company. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Party shall have requested an Indemnifying Party
to reimburse the Indemnified Party for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
Business Days after receipt by such Indemnifying Party of the aforesaid request
and (ii) such Indemnifying Party shall not have reimbursed the Indemnified Party
in accordance with such request prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of with any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability
arising out of such proceeding.
SECTION 2.10 CONTRIBUTION. If the indemnification provided for in
Section 2.7 or 2.8 hereof is unavailable to an Indemnified Party or insufficient
in respect of any losses, claims, damages or liabilities referred to herein,
then each such Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages or liabilities (i) as between the
Company and the Selling Holders on the one hand and the Underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Holders on the one hand and the
Underwriters on the other from the offering of the securities, or if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Holders on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Holders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company
and the Selling Holders on the one hand and of the Underwriters on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and the
Selling Holders or by the Underwriters. The relative fault of the
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Company on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 2.10 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 2.10, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Selling Holder's obligations to contribute pursuant to
this Section 2.10 are several in proportion to the proceeds of the offering
received by such Selling Holder bears to the total proceeds of the offering
received by all the Selling Holders and not joint.
SECTION 2.11 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights provided for in this Article II.
SECTION 2.12 RULE 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
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SECTION 2.13 HOLDBACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company
agrees not to effect any sale or distribution of any securities similar to those
being registered in accordance with Section 2.2 or Section 2.3 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
during the 14 days prior to, and during the 90-day period beginning on, the
effective date of any registration statement (except as part of such
registration statement where the Holders of a majority of the Registrable
Securities to be included in such registration statement consent or as part of
registration statements filed as set forth in Section 2.3(ii)) or the
commencement of a public distribution of Registrable Securities, if and to the
extent requested in writing by the Company in the case of a non-underwritten
public offering or if and to the extent requested in writing by the managing
Underwriter or Underwriters in the case of an underwritten public offering.
(b) If the Company determines in its good faith judgment that
the filing of the Shelf Registration Statement under Section 2.1 or a Demand
Registration under Section 2.2 hereof or the use of any related prospectus would
require the disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential or the disclosure of which would
impede the Company's ability to consummate a significant transaction, and that
the Company is not otherwise required by applicable securities laws or
regulations to disclose, upon written notice of such determination by the
Company, the rights of the Holders to offer, sell or distribute any Registrable
Securities pursuant to the Shelf Registration Statement or a Demand Registration
or to require the Company to take action with respect to the registration or
sale of any Registrable Securities pursuant to the Shelf Registration Statement
or a Demand Registration shall be suspended until the date upon which the
Company notifies the Holders in writing that suspension of such rights for the
grounds set forth in this Section 2.13(b) is no longer necessary, and the
Company agrees to give such notice as promptly as practicable following the date
that such suspension of rights is no longer necessary.
(c) If all reports required to be filed by the Company pursuant
to the Exchange Act have not been filed by the required date without regard to
any extension, or if the consummation of any business combination by the Company
has occurred or is probable for purposes of Rule 3-05 or Article 11 of
Regulation S-X under the Act, upon written notice thereof by the Company to the
Holders, the rights of the Holders to offer, sell or distribute any Registrable
Securities pursuant to the Shelf Registration Statement or a Demand Registration
or to require the Company to take action with respect to the registration or
sale of any Registrable Securities pursuant to the Shelf Registration Statement
or a Demand Registration shall be suspended until the date on which the Company
has filed such reports or obtained and filed the financial information required
by Rule 3-05 or Article 11 of Regulation S-X to be included or incorporated by
reference, as applicable, in the Shelf Registration Statement, and the Company
shall notify the Holders as promptly as practicable when such suspension is no
longer required.
ARTICLE III
DIRECTOR DESIGNATION
SECTION 3.1 DESIGNATION OF DIRECTORS.
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(a) For so long as PPD Persons together beneficially own in the
aggregate shares of Common Stock equal to or exceeding 25% of the total
outstanding shares of Common Stock, then PPD will have the right to nominate for
election to the Board of Directors and for the filling of any vacancies on the
Board of Directors created by such nominees two members of such Board of
Directors.
(b) The Company agrees to nominate for election to the Board of
Directors of the Company or for the filling of any vacancies on the Board of
Directors created by such nominees the persons designated by the PPD Persons
pursuant to this Article III.
SECTION 3.2 MECHANICS OF DESIGNATION.
(a) In the absence of notice to the contrary from PPD, the
rights granted to PPD pursuant to this Article III (including pursuant to
Section 3.4) shall be exercised by PPD.
(b) The Company shall give PPD at least 60 days prior written
notice of the date of the proposed mailing of proxy materials for election of
directors of the Company. PPD shall within 10 days of receipt of such notice
from the Company give written notice (a "Section 3.2(b) Notice") to the Company
of the name of each person which PPD intends to nominate for election or
reelection to the Board of Directors and all information relating to each such
person that is required to be disclosed in solicitation of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected).
At the request of the Board of Directors, any person so nominated for election
as a director shall furnish to the Secretary of the Company that information
required to be set forth in the Section 3.2(b) Notice.
(c) The Company agrees that, upon notice from PPD, the Board of
Directors shall vote in favor of the removal from the Board of Directors of the
person or persons designated by PPD as directors and to elect to the unexpired
term of each director so removed another person designated by PPD. In addition,
the Company agrees that in the event of any vacancies on the Board of Directors
resulting from the death or resignation of any person designated by the PPD
Persons as directors, the other directors of the Company will vote in favor of
the person designated by PPD to fill such vacancy.
ARTICLE IV
PROPORTIONAL PURCHASE
SECTION 4.1 PROPORTIONAL PURCHASE RIGHTS. If from time to time the
Purchase Percentage of any PPD Person would be reduced as a result of any
issuance of Common Stock by the Company or could be reduced as a result of any
issuance of Convertible Securities (assuming, in the case of Convertible
Securities, the conversion, exchange, or exercise at such time of the all
Convertible Securities to be issued in such issuance) by the Company (in either
case, whether for cash, property or otherwise), the Company shall so notify the
PPD Persons then owning Common Stock, directly or indirectly, in writing not
less than 60 days prior to the proposed date of any such issuance and shall
offer to sell to each such PPD Person, and, if such
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offer is accepted in writing by such PPD Person (x) if such issuance is made
pursuant to an underwriting or private placement purchase agreement, the day
such agreement is executed (it being understood that the Company will give each
such PPD Person at least four Business Day's prior notice of such date of
execution) or (y) if such issuance is not made pursuant to such an agreement,
the fifth Business Day prior to the proposed date of such issuance, the Company
shall sell to each such PPD Person, that number of shares of Common Stock or the
number or amount of Convertible Securities to be issued which would result in
the Purchase Percentage of such PPD Person immediately after such issuance
equaling the Purchase Percentage of such PPD Person in effect immediately prior
to such issuance (assuming, in the case of Convertible Securities, the
conversion, exchange or exercise at such time of all Convertible Securities to
be issued in such issuance), or any lesser amount of Common Stock or Convertible
Securities to be issued in such issuance as may be designated by the PPD Person,
in either case at a price per share or other trading unit of such Common Stock
or Convertible Securities, as the case may be, to be received by the Company in
such issuance, less any underwriting discounts and commissions, and otherwise on
the same terms as may be applicable to such issuance; PROVIDED, HOWEVER, that
this Section 4.1 shall not be applicable to the issuance of shares of Common
Stock in the Initial Public Offering (but shall be applicable to any issuance of
the shares reserved for issuance pursuant to the over-allotment option in
connection with the Initial Public Offering).
SECTION 4.2 STOCK ISSUED PURSUANT TO EXERCISE OF RIGHTS.
Notwithstanding the provisions of Section 4.1 herein, any participation rights
provided for in this Article IV which arise as a result of the issuance by the
Company of any of its shares of Common Stock pursuant to benefit, option, stock
purchase, or other similar plans or arrangements, including pursuant to or upon
the exercise of options, rights, warrants, or other securities or agreements
(including those issued pursuant to the Company's benefit plans) shall be
deferred until such time as participation rights shall otherwise arise under
this Article IV, in which case notice shall be delivered as promptly as
practicable after shares are issued, and provided further that the Company shall
provide the PPD Persons within 20 days after the end of each calendar quarter
with a schedule of the exercises, if any, during such quarter, the number of
additional shares of Common Stock the PPD Persons are entitled to purchase
hereunder and the purchase price therefor; provided further that the PPD Persons
shall have 20 days after receipt of such schedule to purchase such additional
shares.
SECTION 4.3 OWNERSHIP LIMIT. Notwithstanding anything to the
contrary herein, a PPD Person shall not be permitted to purchase shares of
Common Stock or Convertible Securities (or exercise, convert, exchange or redeem
such Convertible Securities), or otherwise have any other rights, pursuant to
this Agreement if such purchase or other rights would be in violation of the
Ownership Limit or otherwise be prohibited under the Charter of the Company.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 REMEDIES. In addition to being entitled to exercise
all rights provided herein and granted by law, including recovery of damages,
the PPD Persons shall be entitled to specific performance of the rights under
this Agreement. The Company agrees that monetary
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damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
SECTION 5.2 AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of PPD. No failure or delay by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon any breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
SECTION 5.3 NOTICES. All notices and other communications in
connection with this Agreement shall be made in writing by hand delivery,
registered first-class mail, telex, facsimile, or air courier guaranteeing
overnight delivery:
(1) if to PPD or any PPD Person, initially c/o Pan Pacific
Development (U.S.) Inc., 0000-X X. Xxxxxxx Xxxxx, Xxxxx, Xxxxxxxxxx 00000
(Attention: Chief Executive Officer), and to Revenue Properties, 000 Xxxxx
Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxx X0X 0X0 or to such other address and to
such other Persons as PPD may hereafter specify in writing; and
(2) if to the Company, initially at 0000-X X. Xxxxxxx Xxxxx,
Xxxxx, Xxxxxxxxxx 00000 (Attention: President), or to such other address as the
Company may hereafter specify in writing.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; when
received if deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if faxed; and on the next business
day, if timely delivered to an air courier guaranteeing overnight delivery.
SECTION 5.4 SUCCESSORS AND ASSIGNS. Except as expressly provided
in this Agreement the rights and obligations of the PPD Persons under this
Agreement shall not be assignable by any PPD Person to any Person that is not a
PPD Person. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.
SECTION 5.5 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Each party shall
become bound by this Agreement immediately upon affixing its signature hereto.
SECTION 5.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
without regard to the choice of law provisions thereof.
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SECTION 5.7 SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 5.8 ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 5.9 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
PAN PACIFIC RETAIL PROPERTIES, INC.,
a Maryland corporation
____________________________ By:---------------------------------
XXXXXX X. XXXX Name:----------------------------
Title:---------------------------
PAN PACIFIC DEVELOPMENT (U.S.) INC.,
a Delaware corporation
By:---------------------------------
Name:----------------------------
Title:---------------------------
By:---------------------------------
Name:----------------------------
Title:---------------------------
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