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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 5, 1998
PAN PACIFIC RETAIL PROPERTIES, INC.
-----------------------------------
(Exact Name of Registrant as Specified in its Charter)
Maryland 001-13243 33-0752457
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1631-B South Melrose Drive
Vista, California 92083
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (760) 727-1002
N.A.
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On October 9, 1998, Pan Pacific Retail Properties, Inc. (the
"Registrant") as "Managing Member" of Pan Pacific (Portland), LLC, a newly
formed limited liability company ("PPP"), and Portland Fixture Limited
Partnership, PFMGP, Inc., Byron P. Henry and Steven J. Oliva, collectively the
"Non-Managing Members", executed an Amended and Restated Limited Liability
Company Agreement of Pan Pacific (Portland), LLC. Upon consummation of certain
transactions contemplated by the Amended and Restated Limited Liability Company
Agreement of PPP and related agreements, the Registrant will own approximately
56%, subject to adjustment, of the limited liability company with the balance
owned by the Non-Managing Members.
Pursuant to the aforementioned agreements, on November 5, 1998, PPP
acquired Sunset Mall, a 112,746 square foot neighborhood shopping center located
in Portland, Oregon, by acquiring MIKZ Development, LLC ("MIKZ"), the entity
which owns Sunset Mall. MIKZ was acquired pursuant to a Contribution Agreement,
dated September 23, 1998, and related amendments. The purchase price, net of
associated debt of $7,576,000, was $4,442,000. PPP issued 198,597 LLC units in
exchange for all of the outstanding LLC units of MIKZ Development, LLC. As of
the closing, MIKZ Development LLC's name was changed to Pan Pacific (Sunset
Mall), LLC. The Sunset Mall property will continue to be operated as a shopping
center.
Pursuant to the aforementioned agreements, on November 9, 1998, PPP
acquired a 99% ownership interest in three shopping centers located in Oregon by
acquiring Smudik Development, LLC ("Smudik") the entity which owns the three
shopping centers. The 99% interest in Smudik was acquired pursuant to a
Contribution Agreement, dated September 23, 1998, and related amendments. The
purchase price, net of associated debt of $16,995,000, was $13,831,000. PPP
issued 634,019 LLC units in exchange for 99% of the outstanding LLC units of
Smudik. The remaining 1% interest in Smudik was acquired for cash by the
Registrant through a newly formed wholly-owned corporate subsidiary. The three
properties owned by Smudik are Sandy Marketplace, a 98,638 square foot
neighborhood shopping center located in Sandy, Oregon, Southgate Shopping
Center, a 50,862 square foot shopping center located in Milwaukie, Oregon and
Oregon City Shopping Center, a 238,711 community shopping center located in
Oregon City, Oregon. As of the closing, Smudik Development, LLC's name was
changed to Pan Pacific (Clackamas), LLC. The properties will continue to be
operated as shopping centers.
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
It is impracticable to provide the required financial
statements of the real estate assets acquired at this
time. The required financial statements of the real estate
assets acquired will be filed by amendment as soon as
practicable, but not later than January 19, 1999.
(b) Pro Forma Financial Information.
It is impracticable to provide the required pro forma
financial information of the real estate assets acquired
at this time. The required pro forma financial information
of the real estate assets acquired will be filed by
amendment as soon as practicable, but not later than
January 19, 1999.
(c) Exhibits.
The Exhibits to this report are listed on the Exhibit
Index set forth elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on November 10, 1998.
PAN PACIFIC RETAIL PROPERTIES, INC.
By:/s/ Stuart A. Tanz
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Stuart A. Tanz
President and Chief Executive Officer
By:/s/ David L. Adlard
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David L. Adlard
Executive Vice President and
Chief Financial Officer
By:/s/ Laurie A. Sneve
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Laurie A. Sneve, CPA
Vice President and Controller
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PAN PACIFIC RETAIL PROPERTIES, INC.
EXHIBIT INDEX
Number and Description of Exhibit
99.1 Amended and Restated Limited Liability Company Agreement of Pan Pacific
(Portland), LLC dated October 9, 1998 (previously filed as exhibit 99.1
to the Registrant's Form 8-K filed on October 23, 1998 and incorporated
herein by this reference).
99.2 Contribution Agreement (for MIKZ Development, LLC) dated September 23,
1998, with First Amendment to Contribution Agreement dated October 30,
1998 and Second Amendment to Contribution Agreement dated November 4,
1998.
99.3 Contribution Agreement (for Smudik Development, LLC) dated September 23,
1998, with First Amendment to Contribution Agreement dated October 30,
1998 and an Amendment to the Contribution Agreement dated November 9,
1998.
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CONTRIBUTION AGREEMENT
AND ESCROW INSTRUCTIONS
By and Between
PORTLAND FIXTURE LIMITED PARTNERSHIP,
an Oregon limited partnership,
and PFMGP, INC.,
an Oregon corporation,
as Contributors,
and
PAN PACIFIC (PORTLAND), LLC,
a Delaware limited liability company,
as the Company.
Dated for Reference Purposes As Of
September 23, 1998
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TABLE OF CONTENTS
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RECITALS.....................................................................................1
ARTICLE I
DEFINITIONS..........................................................................1
ARTICLE II
CONTRIBUTION OF UNITS................................................................6
2.1 Transfer of Units......................................................6
ARTICLE III
EXCHANGE CONSIDERATION...............................................................6
3.1 Exchange Units.........................................................6
ARTICLE IV
PROPERTY OWNED BY THE LLC............................................................7
4.1 Land...................................................................7
4.2 Improvements...........................................................7
4.3 Personal Property......................................................7
4.4 Contracts..............................................................7
ARTICLE V
INSPECTION...........................................................................8
5.1 Due Diligence Review...................................................8
5.2 Right to Terminate.....................................................8
5.3 Access & Inquiries.....................................................8
5.4 New Agreements.........................................................9
5.5 Conduct of Inspections.................................................9
ARTICLE VI
TITLE TO PROPERTY...................................................................10
6.1 Title.................................................................10
6.2 Title Insurance.......................................................10
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ARTICLE VII
CLOSING.............................................................................11
7.1 Time and Place........................................................11
7.2 Deliveries By Contributors............................................12
7.3 Deliveries By the Company.............................................13
7.4 Additional Deliveries By the Company and Contributors.................13
7.5 Other Instruments.....................................................13
7.6 Prorations and Apportionments.........................................14
7.7 Costs and Expenses....................................................15
7.8 Insurance; Utilities..................................................15
7.9 Close of Escrow.......................................................16
7.10 Notification; Closing Statements......................................16
7.11 Default and Remedies..................................................16
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY......................................................................17
8.1 Company Status........................................................17
8.2 Power and Authority...................................................17
8.3 Enforceability........................................................17
8.4 No Commissions........................................................17
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF THE CONTRIBUTORS.................................................................18
9.1 Company Status........................................................18
9.2 Power and Authority...................................................18
9.3 Enforceability........................................................18
9.4 Capitalization........................................................19
9.5 Subsidiaries..........................................................19
9.6 No Violation..........................................................19
9.7 No Commissions........................................................19
9.8 Financial Statements..................................................20
9.9 Changes Since the Current Balance Sheet...............................20
9.10 Litigation............................................................20
9.11 Liabilities; Bank Accounts............................................21
9.12 Environmental Matters.................................................21
9.13 Real Property, Leases and Significant Personal Property...............21
9.14 Good Title, Adequacy and Condition....................................22
9.15 Compliance with Laws..................................................22
9.16 Employee Benefit Plans................................................22
9.17 Tax Returns and Examinations..........................................23
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9.18 Insurance.............................................................25
9.19 Licenses and Permits..................................................25
9.20 Contracts and Employment Matters......................................25
9.21 Governmental Contracts................................................25
9.22 Officers, Directors and Key Employees; Employment Agreements;
Compensation..........................................................26
9.23 Predecessor Status, etc...............................................26
9.24 Investment Representations............................................26
9.25 Condemnation..........................................................28
9.26 Notice of Failure to Comply...........................................28
9.27 Notice of Default.....................................................28
9.28 Special Assessments...................................................28
9.29 Default Under Leases..................................................28
9.30 Utilities.............................................................28
9.31 Condition of Systems..................................................28
9.32 Foreign Person Status.................................................29
9.33 ADA Compliance........................................................29
9.34 Survey and Specifications.............................................29
9.35 Misstatements or Omissions............................................29
9.36 Leases................................................................29
9.37 Broker Commissions....................................................29
9.38 Operation of Property.................................................30
9.39 Hypothecation.........................................................30
9.40 Confidential Information..............................................30
9.41 Possession............................................................30
ARTICLE X
CONDUCT OF BUSINESS PENDING THE CLOSING.............................................30
10.1 Conduct of Business by the LLC Pending the Closing....................30
10.2 Operation of the Property.............................................32
10.3 Parcel III Transfer...................................................33
ARTICLE XI
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES.....................................33
11.1 Further Assurances....................................................33
11.2 Confidentiality; Publicity............................................33
11.3 No Other Discussions..................................................33
11.4 Termination of Related Party Agreements...............................33
11.5 Damage or Destruction.................................................33
11.6 Condemnation..........................................................34
11.7 Restrictions on and Information Regarding Beneficial Ownership of LLC
Units; Publicly Traded Partnership Representation.....................35
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ARTICLE XII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY........................................36
12.1 Accuracy of Representations and Warranties and Compliance with
Obligations...........................................................36
12.2 No Material Adverse Change or Destruction of Property.................37
12.3 Corporate Documents...................................................37
12.4 Consents..............................................................37
12.5 No Adverse Litigation.................................................37
12.6 Due Diligence Review..................................................37
12.7 Opinion of Counsel....................................................37
12.8 Releases..............................................................38
12.9 Approval of Title.....................................................38
12.10 Approval of Other Matters.............................................39
12.11 No Insolvency.........................................................40
12.12 Tenant Estoppels......................................................40
12.13 Concurrent Closings...................................................40
12.14 Waiver................................................................41
12.15 Lease Payments and Rents..............................................41
12.16 DownREIT Consummation.................................................41
12.17 Environmental Indemnity...............................................41
12.18 Termination...........................................................41
ARTICLE XIII
CONDITIONS TO THE
OBLIGATIONS OF CONTRIBUTORS.........................................................41
13.1 Accuracy of Representations and Warranties and Compliance with
Obligations...........................................................41
13.2 Concurrent Closings...................................................42
13.3 DownREIT Consummation.................................................42
13.4 No Change in Company Structure........................................42
13.5 No Material Adverse Change............................................42
13.6 No Litigation.........................................................42
13.7 Legal Opinion.........................................................42
13.9 Termination...........................................................42
ARTICLE XIV
INDEMNIFICATION.....................................................................43
14.1 Agreement by Contributors to Indemnify................................43
14.2 Survival of Representations and Warranties............................43
ARTICLE XV
TERMINATION, AMENDMENT AND WAIVER...................................................44
15.1 Termination...........................................................44
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15.2 Effect of Termination.................................................44
ARTICLE XVI
GENERAL PROVISIONS..................................................................44
16.1 Notices...............................................................44
16.2 Brokers and Finders...................................................45
16.3 Successors and Assigns................................................46
16.4 Amendments............................................................46
16.5 Interpretation........................................................46
16.6 Governing Law.........................................................46
16.7 Merger of Prior Agreements............................................46
16.8 Attorneys' Fees and Costs.............................................46
16.9 Time of Essence.......................................................46
16.10 Confidentiality.......................................................46
16.11 No Waiver.............................................................47
16.12 Further Acts..........................................................47
16.13 Exhibits..............................................................47
16.14 Counterparts..........................................................47
16.15 No Intent To Benefit Third Parties....................................47
16.16 Performance Due On Day Other Than Business Day........................47
16.17 Survival of Obligations...............................................47
16.18 Audit Responsibilities................................................47
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CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "AGREEMENT") is entered into as of
September 23, 1998 (the "EFFECTIVE DATE"), by and among (i) PAN PACIFIC
(PORTLAND), LLC, a Delaware limited liability company, and its assignees (the
"COMPANY") and (ii) PORTLAND FIXTURE LIMITED PARTNERSHIP, an Oregon limited
partnership, and PFMGP, INC., an Oregon corporation (individually, a
"CONTRIBUTOR" and collectively, "CONTRIBUTORS"). Certain other capitalized terms
used herein are defined in Article I and throughout this Agreement.
RECITALS
A. Contributors are the owners of all of the outstanding ownership
interests in Mikz Development, L.L.C., an Oregon limited liability company (the
"LLC"), which in turn owns certain assets, including, without limitation, the
Property (as hereafter defined), which consists of a shopping center project
more particularly described in EXHIBIT A.
B. The Company desires to acquire all the outstanding ownership
interests in the LLC, and Contributors desire to contribute such outstanding
ownership interests to the Company, on the terms and conditions set forth
herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, Contributors and the Company hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms and references shall have the meanings indicated below
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined and to verbs of any tense):
1.1 "ADDITIONAL RENTS" means amounts tenants may be obligated to pay as
additional rent, including certain percentage rent, certain escalations in base
rent, and certain pass-throughs of operating and similar expenses.
1.2 "AFFILIATE" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof.
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1.3 "BILL OF SALE" means a bill of sale as defined in Section 4.3.
1.4 "BUILT-IN GAIN" shall mean the excess of the gross fair market value
of the Property over the Property's adjusted tax basis for federal income tax
purposes, as determined as of the Closing Date, as reduced from time to time in
accordance with applicable provisions of the Code and Treasury Regulations.
1.5 "BUSINESS DAY" means any day other than a Saturday, Sunday or a
Holiday.
1.6 "BUSINESS" means the LLC's practice of owning and operating the
Property (as hereinafter defined), and all matters attendant thereto.
1.7 "STANDARD POLICY" means a standard coverage owner's policy of title
insurance.
1.8 "CODE" means the Internal Revenue Code of 1986, as amended.
1.9 "COMPANY OPERATING AGREEMENT" shall mean the Amended and Restated
Limited Liability Company Agreement of Pan Pacific (Portland), LLC, as amended.
1.10 "CONTRACTS" shall have the meaning set forth in Section 4.4.
1.11 "DOCUMENTS" means the transfer documents attached as Exhibits to
this Agreement.
1.12 "ENVIRONMENTAL LAWS" shall mean any and all presently existing
federal, state and local laws (whether under common law, statute, rule,
regulation or otherwise), requirements under permits issued with respect
thereto, and other requirements of any federal, state or local governmental
agency, court, board, bureau or other authority having jurisdiction with respect
to or relating to the environment, to any Hazardous Substance or to any activity
involving Hazardous Substances, and shall include, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9601, et seq.), the Federal Resource Conservation and Recovery Act (42
U.S.C. Section 6901, et seq.) and all amendments thereto in effect as of the
Closing Date.
1.13 "ESCROW HOLDER" means the Company where escrow shall be established,
whose address for this transaction shall be:
Transnation Title Insurance Company
111 S.W. Fifth Avenue, Suite 2200
Portland Oregon 97204
Attn: Theresa Kilmer, Vice President and
Senior Escrow Officer/Special Projects
Telephone No: (503) 222-9931
Facsimile No: (503) 274-7972
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1.14 "ESCROW PERIOD" means the period from and after the Effective Date
through the Closing Date or any earlier termination of this Agreement.
1.15 "EXTENDED POLICY" means an extended coverage owner's policy of title
insurance.
1.16 "FF&E" means furniture, fixtures, equipment, machinery, appliances,
fittings, and other removable articles of personal property of every kind and
nature that are owned by Contributor and used in the operation of the Property,
including, without limitation, (i) furnishings, furniture, and equipment, (ii)
art work and other decorative items, (iii) built-in appliances, and (iv) office
furniture and equipment.
1.17 "GENERAL INTANGIBLES" means the Offsite Rights, the Permits, the
Repair Warranties, and other intangible personal property rights of whatever
nature (other than the rights evidenced by the Contracts) owned by Contributors
and used in the operation and maintenance of the Property.
1.18 "GOVERNMENTAL AUTHORITY" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.19 "HAZARDOUS MATERIALS" shall mean and include any chemical, compound,
material, mixture, waste or substance that is now or hereafter defined or listed
in, or otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous
waste," "infectious waste," "toxic substance," "toxic pollutant" or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, or toxicity including any petroleum, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixture of
natural gas and such synthetic gas). "Hazardous Materials" shall include,
without limitation, any hazardous or toxic substance, material or waste or any
chemical, compound or mixture which is (i) asbestos, (ii) motor oil, gasoline,
petroleum or any petroleum by-product, (iii) designated as a "hazardous
substance" pursuant to Section 1317 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1251 et seq.), (iv) defined as a "hazardous waste" pursuant
to Section 6903 of the Federal Resource Conservation and Recovery Act, (42
U.S.C. Section 6901 et seq., (v) defined as "hazardous substances" pursuant to
Section 9601 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq.), or (vi) listed in the United
States Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances (40 CFR part 302); or in
any and all amendments thereto in effect as of the Closing Date; or such
chemicals, compounds, mixtures, substances, materials or wastes otherwise
regulated under any applicable local, state or federal Environmental Laws.
1.20 "HOLIDAY" means any day on which banking institutions in the State
of Oregon are authorized or obligated by law or executive order to close.
1.21 "IMPROVEMENTS" shall have the meaning set forth in Section 4.2.
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1.22 "INFORMATION" means all documents, reports, studies, and other
information or materials (including, without limitation, the Records) delivered
or disclosed to the Company by Contributors or their agents.
1.23 "INSPECTION PERIOD" means the period from and after the Effective
Date and ending at 5:00 p.m., Pacific Time, on the later of (i) September 28,
1998, or (ii) such later date as may be required under the provisions of Section
12.11.
1.24 "INVENTORY" means the stock of supplies and other consumables of
every kind and nature that are owned by a Contributor and used exclusively in
the operation and maintenance of the Property in the ordinary course of
business.
1.25 "KNOWLEDGE" attributable to Contributors in Article IX shall mean
the actual knowledge of each or any of David P. Zimel or Jack W. Baron.
1.26 "LAND" shall have the meaning set forth in Section 4.1.
1.27 "LEASE" means any lease, sublease, license, or other agreement for
the occupancy, possession, or use of any space within the Property (including,
without limitation, any rooms or other accommodations for guests or other
transient occupants and any storage space, containers, or other facilities).
1.28 "LIEN" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or charge).
1.29 "MATERIAL ADVERSE CHANGE (OR EFFECT)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, business or prospects of the LLC which change (or
effect) individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations, operations,
business or prospects.
1.30 "NON-FOREIGN AFFIDAVIT" shall mean a certificate regarding
Contributor's non-foreign status in the form commonly used in transactions of
this nature, along with any necessary analogous state form or forms.
1.31 "OFFSITE RIGHTS" means any lease, license, or other agreement (other
than a recorded easement) providing for the use of another's real property in
conjunction with the operation of the Property (as, by way of illustration and
not limitation, use for vehicular parking and/or access).
1.32 "OWNER'S TITLE POLICY" means a Standard or Extended Policy, in an
amount reasonably satisfactory to the Company.
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1.33 "PERMIT" means any permit, certificate, license, or other form of
authorization or approval issued by a governmental agency or authority and
legally required for the proper operation and use of the Property (including,
without limitation, any certificates of occupancy with respect to the
Improvements, elevator permits, conditional use permits, and zoning variances)
to the extent held and assignable by a Contributor or otherwise transferable
with the Property.
1.34 "PERMITTED EXCEPTIONS" shall have the meaning set forth in Section
6.1.
1.35 "PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
1.36 "PERSONAL PROPERTY" shall have the meaning set forth in Section 4.3.
1.37 "PLANS AND SPECIFICATIONS" shall have the meaning set forth in
Section 12.10(a)(v).
1.38 "PPRP" means Pan Pacific Retail Properties, Inc., a Maryland
corporation and the managing member of the Company.
1.39 "PROPERTY" shall have the meaning set forth in Article IV.
1.40 "PRORATIONS" shall have the meaning set forth in Section 7.6(a).
1.41 "PTR" means a current preliminary title report concerning the Real
Property issued by the Title Company.
1.42 "REAL PROPERTY" shall have the meaning set forth in Section 4.1.
1.43 "RECORDS" means all books, records, correspondence, and other files
that have been received or generated and maintained in the course of operating
the Property that are in a Contributor's possession or control.
1.44 "REIT" means real estate investment trust.
1.45 "REPAIR WARRANTIES" means any written guaranties, warranties, or
other obligations of any contractor, manufacturer, or vendor for the repair or
maintenance of any of the Improvements or FF&E, to the extent assignable by a
Contributor.
1.46 "REVENUES" shall have the meaning set forth in Section 7.6(a).
1.47 "SERVICE CONTRACT" means any contract or other arrangement, written
or oral, for the continuing provision of services relating to the improvement,
maintenance, repair, protection, or operation of the Property.
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1.48 "SHOPPING CENTER" means the Property attributable to each separate
shopping center identified in EXHIBIT A attached hereto.
1.49 "TAX" or "TAXES" means any federal, state, local or foreign net or
gross income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax, governmental fee or like assessment or charge of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not, and including any obligation to indemnify or otherwise assume
or succeed to the Tax liability of any other person.
1.50 "TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
exhibit or other attachment thereto, and including any amendment thereof.
1.51 "TENANT" means the tenant and occupant of, and another holder of a
possessory right in, all or any portion of the Property pursuant to a Lease.
1.52 "TENANT ESTOPPEL CERTIFICATES" means estoppel certificates to be
executed and delivered by each Tenant to the Company as provided by Section
12.12.
1.53 "TENANT NOTICES" means notices to the Tenants in the form of EXHIBIT
C.
1.54 "TITLE COMPANY" means Transnation Title Insurance Company.
1.55 "UNIT" means the representative measurement of ownership interest in
the LLC, whether or not so denominated in the operating agreement or other
charter documents of the LLC.
ARTICLE II
CONTRIBUTION OF UNITS
2.1 TRANSFER OF UNITS. Upon the Closing, in accordance with the terms
and conditions hereof, Contributors shall transfer, convey and assign to the
Company all of the issued and outstanding Units in the LLC.
ARTICLE III
EXCHANGE CONSIDERATION
3.1 EXCHANGE UNITS. The aggregate consideration to be transferred to
Contributors in exchange for the Units shall be transferred to Contributors via
the issuance to Contributors of units of non-managing member interest in the
Company (the "EXCHANGE UNITS") in proportion to Contributors' relative
entitlement to distributions under the LLC's operating agreement in effect
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immediately prior to the Closing. The parties intend that this exchange shall be
treated as a contribution under Code Section 721(a). The aggregate number of
Exchange Units, rounded to the nearest whole Exchange Unit, issuable to the
Contributors shall be derived by dividing (a) Four Million Four Hundred
Sixty-Nine Thousand Nine Hundred Twenty Dollars ($4,469,920) (the "BASE PRICE"),
as adjusted for variations in the LLC's equity in the Property through the
Closing Date and any costs, prorations or adjustments payable by or to the
Contributors under the provisions of Article VII or Sections 11.5 or 11.6 below
and known as of Closing, by (b) Twenty-One Dollars and Twelve and One Half Cents
($21.125). It is the intention of the parties that all costs, prorations or
adjustments payable by or to the Contributors and known as of Closing shall
operate to increase or reduce, as applicable, the number of Exchange Units
issuable to the Contributors, and that all such costs, prorations or adjustments
not known as of Closing shall be handled in cash or other mutually agreeable
medium.
ARTICLE IV
PROPERTY OWNED BY THE LLC
Contributors hereby agree that upon the conveyance of the Units to the
Company, the Company, by virtue of its 100% ownership interest in the LLC, shall
derivatively hold all of the LLC's right, title, and interest in the following
(collectively, the "PROPERTY"):
4.1 LAND - that certain land described in EXHIBIT A, and all appurtenant
rights, privileges, and easements thereto owned by a Contributor (collectively,
the "LAND"). The Land and the Improvements are collectively referred to as the
"REAL PROPERTY").
4.2 IMPROVEMENTS - all buildings, structures, fixtures, and other
improvements located on the Land (collectively, the "IMPROVEMENTS").
4.3 PERSONAL PROPERTY - all personal property, if any, owned by the LLC
and used, or owned by a Contributor and used exclusively, in the operation,
maintenance, and management of the Real Property as of the Closing Date,
including, without limitation, the FF&E, the Inventory, the Records, and the
General Intangibles (collectively, the "PERSONAL PROPERTY"). To the extent that
any Personal Property is owned by a Contributor rather than the LLC, such
Personal Property shall be conveyed from such Contributor to the Company
pursuant to a Bill of Sale (the "BILL OF SALE") substantially in the form of
EXHIBIT B. The parties acknowledge and agree that Personal Property shall not
include the LLC's cash or cash equivalents as of the Closing, which may be
distributed to the Contributors in any manner not constituting a violation of
any Contracts to which the LLC is a party.
4.4 CONTRACTS - all contracts and agreements (oral or written) in effect
on the Closing Date pertaining to the Property, if any, including, without
limitation, the Leases and the Service Contracts (collectively, the
"CONTRACTS").
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ARTICLE V
INSPECTION
5.1 DUE DILIGENCE REVIEW. The Company, at its sole cost and expense,
shall have the right to a Due Diligence Review in accordance with the following
terms and conditions. A "DUE DILIGENCE REVIEW" means (a) an inspection,
examination and evaluation of the Information, (b) the conduct of physical
tests, inspections and other investigations on the Property and all portions
thereof leased by tenants ("INSPECTION STUDIES"), all in order that the Company
may determine, in its sole and absolute judgment and discretion, whether the
Property is acceptable to the Company and that the Company's ownership of the
Property is consistent with PPRP's continuing ability to qualify for taxation as
a REIT, and (c) an inspection, examination and evaluation of such other
documents and information as may be necessary or appropriate, also in its sole
and absolute judgment and discretion, to satisfy the Company as to the integrity
and affairs of the LLC.
5.2 RIGHT TO TERMINATE. Notwithstanding anything to the contrary in this
Agreement, the Company may terminate this Agreement by giving notice of
termination to Contributor on or before the termination of the Inspection
Period. If the Company does not give the notice of termination, this Agreement
shall continue in full force and effect, subject, however, to the Company's
other termination rights hereunder. Contributor acknowledges that the Company
may, but is not obligated to, expend time, money, and other resources in
connection with the Due Diligence Review of the Property and the LLC, and that,
notwithstanding the fact that this Agreement may terminate pursuant to this
Section 5.2 and other applicable provisions of this Agreement, such time, money,
and other resources that may be expended constitute adequate consideration for
Contributors' execution of and entry into this Agreement.
5.3 ACCESS & INQUIRIES.
(a) The Company and its representatives, agents and contractors
shall have reasonable access to the Property, including all areas leased to
Tenants, for the purpose of causing a survey of the Land and Improvements to be
performed by a licensed surveyor, and conducting architectural, engineering,
geotechnical, and environmental inspections and tests (including intrusive
inspection and sampling), feasibility studies, and any other inspections,
studies, or tests reasonably required by the Company; provided, however, that
the Company shall not undertake any intrusive inspection or sampling without
first obtaining the written consent of Contributors, which consent shall not be
withheld unreasonably. The Company shall keep the Property free and clear of any
Liens as a result of any entry on the Property pursuant to this Section 5.3(a).
(b) During the pendency of this Agreement, Contributors shall make
available to the Company, and the Company and its representatives, agents and
contractors shall have a continuing right of reasonable access to and the right
to examine and make copies of, all books and records; construction plans;
correspondence; documents; contracts; agreements; Leases, as well as Lease files
with histories; and other materials relating to the Property and the LLC in any
Contributor's possession or control, including, without limitation, the right to
conduct a "walk-
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through" of the Property prior to the Closing upon appropriate notice to Tenants
and subject to the rights of all Tenants under their Leases.
(c) In the course of its Due Diligence Review, the Company may
make inquiries to third parties including, without limitation, Tenants, lenders,
contractors, property managers, parties to the Information and Contracts, and
municipal, local, and other government officials and representatives, and each
Contributor consents to such inquiries.
5.4 NEW AGREEMENTS. During the period from the Effective Date until the
Closing Date, and as a condition to the Company's obligations to purchase the
Property, Contributors shall comply with the following:
(a) During the period from the Effective Date until the Closing
Date, and as a condition to the Company's obligations to purchase the Property,
no Contributor, without the prior written consent of the Company, such consent
not to be unreasonably withheld or delayed, shall (i) amend or terminate any
Lease, tenancy, license or other right of occupancy or use for any portion of
the Property or any assignment or sublet thereunder, (ii) consent to the
assignment of any Leases or subleasing of any of the Property, or (iii) enter
into any new Lease of the Property or any portion thereof. In the event a
Contributor elects to seek the Company's approval of any such matters, then such
Contributor shall so notify the Company, and if the Company fails to notify
Contributor, within ten (10) Business Days after the Company's receipt of such
notice, of any objection the Company has hereunder to any action described
therein, then the Company shall be deemed to have consented to such action.
(b) No Contributor shall, without the prior written consent of the
Company in each instance (such consent not to be unreasonably withheld), enter
into any commitment, contract, option or other agreement of any kind with
respect to the repair, maintenance or operation of the Property, unless such
contracts, etc., have terms that expire prior to Closing.
5.5 CONDUCT OF INSPECTIONS.
(a) Any entry by the Company onto the Property shall be subject
to, and conducted in accordance with, all applicable laws, statutes, rules and
regulations and the terms of any Leases so as to avoid any material interference
with the operations and occupancy of the Property and to avoid any material
disturbance of any of the Tenants or the possessory rights of any of the
Tenants. The Company shall promptly restore the Property to its previous
condition before any such inspections, studies, or tests were performed.
(b) The Company or its agents may undertake borings or other
disturbances of the soil with Contributors' prior written approval (not to be
unreasonably withheld), provided that the soil borings and other disturbances
shall be sealed and closed using materials and techniques that conform with all
applicable laws, statutes, rules and regulations and industry and governmental
standards, and the soil shall be recompacted to the condition immediately before
any such borings were undertaken.
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(c) Notwithstanding any general liability or other insurance that
may be maintained by the Company, the Company hereby agrees to indemnify, defend
and hold harmless Contributors and their respective partners, shareholders,
directors, officers, employees, and agents and all Tenants from and against any
claims, losses or damages (including attorneys' fees and costs) arising from or
in connection with the due diligence and inspection activities conducted on the
Property by the Company and or its agents, including, without limitation, any
damages to the Property or any property of any Tenant arising from or relating
to any inspections, studies or tests performed by the Company or its agents. The
foregoing indemnification obligation of the Company shall survive any
termination of this Agreement or the delivery of the Deed and the transfer of
title to the Property. If this Agreement is terminated, the Company shall
deliver to Contributors, upon Contributors' payment of the Company's costs
therefor, the results and copies of any and all surveys, reports, tests or
studies made by or for the Company with respect to the Property. The foregoing
indemnity shall not apply to any claims, losses or damages (including attorneys'
fees and costs) that occur as a result of a pre-existing condition being
discovered by the Company in its Due Diligence Review.
ARTICLE VI
TITLE TO PROPERTY
6.1 TITLE. At the Closing, the LLC shall hold title to the Real
Property. The Owner's Title Policy shall show title as subject to no exceptions
other than the following (collectively, the "PERMITTED EXCEPTIONS"):
(a) The lien for real estate taxes and assessments not yet
delinquent;
(b) Interests of Tenants pursuant to the Leases; and
(c) Such other exceptions as may be approved in writing by the
Company pursuant to Section 12.9 hereof.
6.2 TITLE INSURANCE. The Company's obligation to accept the contribution
of the Units in exchange for the Exchange Units shall be subject to the
Company's satisfaction with the Owner's Title Policy. In addition, the Owner's
Title Policy shall contain such endorsements thereto as the Company may request;
provided, however, that if any such endorsements are required to change an
exception to title to which the Company has objected, and which Contributors
have agreed to cure, into a Permitted Exception, then the cost of such
endorsement shall be paid by Contributors. Furthermore, to the extent that there
are any costs or fees associated with the continuation of the Owner's Title
Policy following the Closing, Contributors shall bear such costs and fees. To
the extent that the title insurance policy existing immediately prior to the
Closing will not continue following Closing to the Company or the LLC's benefit,
the Company's obligation to consummate this transaction shall be subject to the
irrevocable commitment of the Title Company to issue the Owner's Title Policy
upon payment of its normal premium on the Closing Date.
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ARTICLE VII
CLOSING
7.1 TIME AND PLACE.
(a) Subject to the terms and conditions of this Agreement, the
closing of the contribution of the Units to the Company and the issuance of the
Exchange Units to Contributors (the "CLOSING") shall take place on September 30,
1998 in Portland, Oregon, unless the parties hereto agree in writing to an
earlier or later date or different location (the "CLOSING DATE").
(b) If either party has complied with the terms and conditions of
this Agreement before the scheduled Closing Date and the other party is not in a
position to close by the scheduled Closing Date (other than for reasons beyond
such party's control), the defaulting party shall be deemed to be in material
breach of this Agreement. The party who has fully complied may terminate this
Agreement and, whether or not this Agreement is terminated, the Company's
remedies shall be limited to specific performance or the amount of the Company's
out of pocket expenses incurred in the pursuit of the transactions contemplated
hereby, and Contributors' remedies shall be limited to the provisions for
liquidated damages set forth in Section 7.1(c) hereof.
[this space intentionally left blank]
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(c) THE PARTIES ACKNOWLEDGE THAT CONTRIBUTORS' ACTUAL DAMAGES IN
THE EVENT OF A DEFAULT BY THE COMPANY WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR SIGNATURES ON THIS
AGREEMENT, THE PARTIES EXPRESSLY AGREE AND ACKNOWLEDGE THAT ONE HUNDRED THOUSAND
DOLLARS ($100,000) HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF CONTRIBUTORS' DAMAGES. THE PARTIES FURTHER ACKNOWLEDGE
THAT SUCH AMOUNT HAS BEEN AGREED UPON AS CONTRIBUTORS' EXCLUSIVE REMEDY AGAINST
THE COMPANY IN THE EVENT OF A DEFAULT ON THE PART OF THE COMPANY, OTHER THAN THE
ADDITIONAL AND SEPARATE OBLIGATIONS OF THE COMPANY UNDER SECTIONS 5.3, 5.5,
16.2(b), AND 16.10 HEREOF, WHICH OBLIGATIONS SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT. IN ADDITION, THE COMPANY SHALL PAY ALL TITLE AND ESCROW
CANCELLATION CHARGES IN THE EVENT OF A DEFAULT BY THE COMPANY.
<TABLE>
<S> <C>
"Contributors" "Company"
PORTLAND FIXTURE LIMITED PAN PACIFIC (PORTLAND), LLC,
PARTNERSHIP, AN OREGON LIMITED A DELAWARE LIMITED LIABILITY COMPANY
PARTNERSHIP
BY: PAN PACIFIC RETAIL PROPERTIES, INC.
BY: PFMGP, INC. ITS: MANAGING MEMBER
ITS: GENERAL PARTNER
BY: ______________________________
BY: ___________________________ Stuart A. Tanz
ITS: ___________________________ President and Chief Executive Officer
PFMGP, INC., AN OREGON CORPORATION
BY: ___________________________
ITS: ___________________________
</TABLE>
7.2 DELIVERIES BY CONTRIBUTORS. On or before the Closing Date,
Contributors shall deliver or cause to be delivered to Escrow Holder the
following:
(a) such instruments of transfer of title as are necessary to
transfer to the Company good and marketable title to the Units;
(b) the Bill of Sale, duly executed by Contributors, by which
Contributors shall transfer to the LLC title to all Personal Property then owned
by Contributors; and
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(c) any other documents, or instruments called for hereunder to be
paid, executed, or delivered by Contributors that have not previously been
delivered by Contributors to Escrow Holder; and
(d) such articles of incorporation, agreements or certificates of
partnership, resolutions, authorizations, bylaws, certifications or other
corporate, partnership or trust documents or agreements or other reasonable
proof of authority relating to Contributors as the Company or Escrow Holder
shall reasonably require in connection with this transaction.
Each Contributor agrees to execute and deliver to the Company from time to time
such further and particular assignments, consents, or other instruments in
writing as the Company may request as appropriate or desirable to confirm its
title in and to the Units. At or prior to the Closing, the Company may, in its
sole and absolute discretion, instruct Contributors to transfer the Units to a
direct or indirect wholly-owned subsidiary of the Company.
7.3 DELIVERIES BY THE COMPANY. On or before the Closing Date, the
Company shall deliver or cause to be delivered to Escrow Holder the following:
(a) certificates representing the Exchange Units issued in the
names of each of the Contributors;
(b) immediately available funds sufficient to pay both the
Company's and the Contributors' portion of the closing costs, and any other
amounts payable by the Company in order to permit Escrow Holder to close the
Escrow; and
(c) any other cash, documents or instruments called for hereunder
to be paid, executed or delivered by the Company or that are required for the
Closing hereunder that have not been previously delivered by the Company to
Escrow Holder.
7.4 ADDITIONAL DELIVERIES BY THE COMPANY AND CONTRIBUTORS. On or before
the Closing Date, Contributors also shall deliver or cause to be delivered to
Escrow Holder, and the Company also shall deliver or cause to be delivered to
Escrow Holder, the following documents:
(a) notices to the Tenants (the "TENANT NOTICES") substantially in
the form of EXHIBIT C, duly executed by Contributors; and
(b) a closing statement prepared by Escrow Holder and approved by
the Company and approved by Contributors.
7.5 OTHER INSTRUMENTS. Contributors shall deliver all Tenant Notices to
Tenants concurrently with the Closing, and shall provide copies of same for the
Company's review not later than two (2) days prior to the Closing Date.
Contributors and the Company each shall deposit any other documents or
instruments that may be reasonably required by the other party and/or Escrow
Holder, or that are otherwise required to close the Escrow and consummate the
contribution of the Units in accordance with the terms hereof.
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7.6 PRORATIONS AND APPORTIONMENTS.
(a) All revenues from the Property and all expenses of the
Property shall be prorated and apportioned as of 12:01 a.m., Pacific time, on
the Closing Date (the "PRORATIONS"). Taxes shall be prorated as of the Closing
Date, based on a 365-day year. Contributors shall be charged and credited for
such Prorations up to the Closing Date and the Company shall be charged and
credited (or, at Contributors' option, paid by check for unused security or
other deposits) for all of the same on and after the Closing Date. Prior to the
Closing, the Company and Contributors shall review and approve the Prorations.
If the actual amounts to be prorated are not then known, or if any additional
expenses are incurred or income received after the date the Prorations are made,
the Prorations shall be made on the basis of the best evidence then available.
When actual figures are later received, a cash settlement will be made between
Contributors and the Company. To the extent possible, Contributors shall have
all metered utilities read by the applicable utility provider as of the Closing
Date. As to each utility which is so read, Contributors shall have the
responsibility to pay at Closing each bill therefore, and the Company shall be
responsible for all subsequent charges for such utilities. To the extent such
utilities may not be read as of the Closing, such utility bills shall be
prorated when the last bill incurred by Contributors is received. No Prorations
shall be made for rents, license payments, receivables or accounts ("REVENUES")
delinquent as of the Closing Date, and no credit shall be given to Contributors
for any Revenues delinquent as of the Closing Date. As used in the immediately
preceding sentence, the term "delinquent" shall mean, with respect to any
Revenue, that the Revenue in question accrued at any time prior to the
then-current calendar month. Nevertheless, if the Company collects any Revenues
that were delinquent on or before the Closing, such Revenues shall be attributed
first to the current Revenues and then to the portion that was delinquent on or
before the Closing and the Company shall promptly remit to Contributors the
portion of such Revenues collected, if any, attributable to the period of time
prior to the Closing Date; provided, however, that Contributors shall not be
entitled to commence any legal proceeding or alternative proceedings seeking to
compel any Tenant to pay delinquent rents or amounts claimed to be owing by
Contributors to the extent that such proceeding could have the effect of
evicting such Tenant or otherwise interfering with the Tenant's use and
enjoyment of its lease with the LLC. The parties further agree that Contributors
shall have a period of nine (9) months from the Closing Date to resolve any rent
delinquencies existing as of the Closing Date.
(b) Tenants may be obligated to pay Additional Rents. Contributors
shall estimate a "true-up" of Additional Rents as of the Closing Date, and
Additional Rents shall be prorated as of the Closing on the basis of such
estimated true-up. Contributors and the Company shall re-prorate such Additional
Rents (including any portions thereof that may be required to be refunded to
Tenants) at the time that such estimated true-ups are actually adjusted and/or
reconciled. Any amounts that may be due from Contributors as a result of such
re-prorations shall be paid by Contributors to the Company promptly after
written request therefor is delivered to Contributors by the Company (together
with evidence reasonably satisfactory to Contributors of the amounts due the
Tenants). Any amounts that may be due to Contributors as a result of such
re-prorations shall be paid by the Company to Contributors promptly following
such re-prorations. The Company shall be responsible for reimbursing to Tenants,
and may collect from Tenants, as applicable, all Additional Rents required
pursuant to such reconciliation; Contributors shall not be entitled to
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commence any legal proceeding or alternative proceedings seeking to compel any
Tenant to pay delinquent rents or amounts claimed to be owing to Contributors to
the extent that such proceeding could have the effect of evicting such Tenant or
otherwise interfering with the Tenant's use and enjoyment of its lease with the
LLC. The parties further agree that Contributors shall have a period of nine (9)
months from the Closing Date to resolve any rent delinquencies existing as of
the Closing Date.
(c) Contributors shall be responsible for the payment of all
leasing commissions earned prior to the Effective Date, and the Company shall be
responsible for the payment of any leasing commissions earned from and after the
Effective Date, regardless of when any such leasing commissions become due,
provided that such commissions have been disclosed to and approved by the
Company prior to expiration of the Inspection Period. Each party to this
Agreement shall indemnify the other party against and hold the other party
harmless (using counsel reasonably satisfactory to such other party) from and
against any and all damages, liabilities, costs, expenses and losses (including,
but not limited to attorneys' fees and costs) arising out of any action for the
collection of leasing commissions that are such party's responsibility pursuant
to this subsection.
(d) The Company shall be responsible for the costs of any tenant
improvements to be made pursuant to leases entered into by the LLC between the
Effective Date and the Closing Date provided that the Company has given its
prior written consent to such leases.
(e) The provisions of this Section shall survive the Closing.
7.7 COSTS AND EXPENSES. The Company and Contributors shall bear equally
the cost of any city and/or county transfer taxes, if any, applicable to the
change in controlling ownership of the Property to the Company, and the cost, if
any, to record any related or corrective instruments. If the Company elects to
obtain endorsements for the Owner's Title Policy, in addition to those necessary
to cure title objections as provided for in Section 6.2, the Company shall pay
all the premiums for such additional endorsements. To the extent that a new
Owner's Title Policy will be required for coverage to the Company or the LLC's
benefit following the Closing, Contributors shall pay for that portion of the
premium for the Owner's Title Policy in the amount attributable to Standard
coverage, and the Company shall pay the portion attributable to Extended
coverage. The Company shall also pay any applicable special sales, gross
receipts or transaction taxes imposed on the Company in connection with the
acquisition of the Units and the attendant derivative ownership of the Property.
Furthermore, as noted above, to the extent that there are any costs or fees
associated with the continuation of the Owner's Title Policy following the
Closing, Contributors shall bear such costs and fees. Costs and charges of the
Escrow shall be borne equally by Contributors and the Company. Any loan
assumption fees or similar charges payable to any lender to the LLC in order to
consummate the transactions contemplated hereby will be borne equally by
Contributors and the Company. All other taxes, costs, and charges for the
transfer of the Units shall be paid by Contributors and/or the Company, as the
case may be, in accordance with the usual customs and practices in the
county(ies) in which the Real Property is located.
7.8 INSURANCE; UTILITIES. The parties acknowledge and agree that the
Company shall be responsible for causing the LLC to maintain or obtain insurance
as of the Closing Date and
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thereafter. Any deposits for utilities made by Contributors shall be refunded to
Contributors and the Company shall arrange for any required replacements
therefor and the Company shall be responsible for obtaining its own utilities as
of the Closing Date and thereafter.
7.9 CLOSE OF ESCROW. Provided that (i) Escrow Holder has received the
documents and funds described in Sections 7.2, 7.3, and 7.4 hereof; (ii) Escrow
Holder has not received prior written notice from either party to the effect
that an agreement of either party made hereunder has not been performed or to
the effect that any condition set forth herein has not been satisfied or waived;
(iii) the Company has not elected to terminate its rights and obligations
hereunder pursuant to Article VII; and (iv) the Title Company has issued or is
unconditionally prepared and committed to issue the Owner's Title Policy to the
Company, Escrow Holder is authorized and instructed on the Closing Date to:
(a) deliver the Exchange Units to Contributors in the manner
specified by Contributors in separate instructions to Escrow Holder, the
aggregate number of which will be calculated in accordance with the provisions
of Section 3.1 above;
(b) deliver the Units and all associated transfer documentation to
the Company;
(c) deliver Contributors' Bill of Sale to the Company;
(d) deliver Contributors' Non-Foreign Affidavit to the Company;
and
(e) deliver all of the executed Tenant Notices to the Tenants.
7.10 NOTIFICATION; CLOSING STATEMENTS. If Escrow Holder cannot comply
with the instructions herein (or as may be provided later), Escrow Holder shall
notify the parties without delay. Immediately after the Closing, Escrow Holder
shall deliver to the Company and Contributors, respectively, at their addresses
listed in Section 16.1 hereof, a true, correct and complete copy of the
Contributors' and the Company's Closing Statements, in forms customarily
prepared by Escrow Holder, as well as all other instruments and documents to be
delivered to the Company and Contributors.
7.11 DEFAULT AND REMEDIES.
(a) If prior to or at Closing, Contributors shall have failed to
perform in any material respects any of the covenants and/or agreements
contained herein which are to be performed by Contributors, or if any warranty
or representation made by Contributors herein is not true and correct in all
material respects, the Company may seek specific performance of this Agreement
or, may bring suit for damages (i) in the case where the Closing does not occur,
then in an amount equal to the Company's out of pocket expenses incurred in the
pursuit of the transactions contemplated hereby, or (ii) in the case where the
Closing has occurred, then in the amounts permitted under Article XIV. Any such
suit for specific performance or damages must be filed within the earlier of (i)
ninety (90) days from and after the date the Company has actual knowledge of any
material misrepresentation or failure of warranty and (ii) one (1) year
following Contributors' breach or shall
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be deemed waived for all purposes. Notwithstanding the foregoing, absent
independent arrangements between Contributors and the Company, no party shall be
entitled to seek redress against the other party following the Closing for
breaches of representations, warranties or covenants that occurred prior to or
at Closing if such breach(es) or the facts underlying such breach(es) were known
at the time of Closing by the party seeking redress thereafter.
(b) If prior to or at Closing, the Company shall have failed to
perform in any material respect any of the covenants and/or agreements contained
herein which are to be performed by the Company or if any warranty or
representation made by the Company herein is not true and correct in all
material respects, then Contributors shall be entitled, after providing the
Company with written notice thereof and the same remaining uncured for at least
five (5) days thereafter, to exercise the remedies set forth in Section 7.1(c),
which shall be Contributors' sole and exclusive remedies in such event.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
As a material inducement to the Contributors to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company makes the
following representations and warranties:
8.1 COMPANY STATUS. The Company is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware.
8.2 POWER AND AUTHORITY. The Company has the power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The Company has taken all
action necessary to authorize the execution and delivery of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby.
8.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, and the
documents delivered to Contributors at the Closing will be duly executed by the
Company and enforceable against the Company in accordance with their terms, in
each case except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
8.4 NO COMMISSIONS. Other than pursuant to ongoing contracts or
arrangements with employees or consultants of the Company or any of its
subsidiaries, the Company has not incurred any obligation for any finder's or
broker's or agent's fees or commissions or similar compensation
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in connection with the transactions contemplated hereby, other than such
compensation as may be due and payable to its officers or employees.
8.5 CAPITALIZATION. Immediately prior to the Closing, all of the
outstanding membership units of the Company will be held by Pan Pacific Retail
Properties, Inc.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF THE CONTRIBUTORS
As a material inducement to the Company to enter into this Agreement and
to consummate the transactions contemplated hereby, each Contributor severally
and not jointly warrants and represents to the Company that each of the
following statements is true and correct as of the Effective Date and shall
continue to be true and correct on the Closing Date and on the date on which the
Exchange Units are delivered:
9.1 COMPANY STATUS.
(a) The LLC is a limited liability company validly existing under
the laws of the State of Oregon and has the requisite power and authority to own
or lease its properties and to carry on the Business as now being conducted. The
LLC is duly authorized and qualified, under all applicable laws, regulations,
ordinances and orders of public authorities, to carry on the Business in the
places and in the manner as now conducted, except as disclosed on Schedule 9.1,
where the failure to be so authorized or qualified would not have a Material
Adverse Effect on the Business or on the operations, properties, assets or
condition (financial or otherwise) of the LLC.
(b) Contributor is a limited partnership or corporation, as
applicable, validly existing under the laws of the State of Oregon and has the
requisite power and authority to own or lease its properties and to carry on its
affairs as now being conducted.
9.2 POWER AND AUTHORITY. Contributor has the power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Contributor has taken all
action necessary to authorize the execution and delivery of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby, and no vote or consent of Contributor's
constituent shareholders, owners, partners or members is required with respect
thereto.
9.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by Contributor, and constitutes the legal, valid and binding obligation of
Contributor, enforceable against Contributor in accordance with its terms, and
the documents delivered to the Company at the Closing will be duly executed by
Contributor and enforceable against Contributor in accordance with their terms,
in each case except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally
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and general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
9.4 CAPITALIZATION. Contributors are the record and beneficial owners of
all of the outstanding Units of the LLC, which constitute all outstanding
ownership or equity interests in the LLC. Contributor owns the Units held by
Contributor free and clear of all Liens, restrictions and claims of any kind.
All of the Units (a) have been duly authorized and validly issued and are fully
paid and non-assessable, (b) were issued in compliance with all applicable state
and federal securities laws, (c) were not issued in violation of any preemptive
rights or rights of first refusal, (d) no preemptive rights or rights of first
refusal exist, and no such rights arise by virtue of or in connection with the
transactions contemplated hereby. There are no outstanding or authorized rights,
options, warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind that
could require the LLC to issue or sell, or require Contributor to sell or
transfer, any Units of the LLC's ownership interests (or securities convertible
into or exchangeable for Units of ownership interest). There are no outstanding
appreciation, "phantom stock", profit participation or other similar rights with
respect to the LLC. There are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the Units of the LLC.
Except as set forth on Schedule 9.4, (i) the LLC is not obligated to redeem or
otherwise acquire any of its Units, and (ii) there has been no transaction or
action taken with respect to the equity ownership of the LLC in contemplation of
the transactions described in this Agreement.
9.5 SUBSIDIARIES. Except as set forth on Schedule 9.5, the LLC does not
presently own of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock, or any other equity
interest in any corporation, association or business entity, nor is the LLC,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
9.6 NO VIOLATION. The execution and consummation of this Agreement will
not (i) contravene any provision of the articles of organization, operating
agreement or other applicable charter document of the LLC (the "CHARTER
DOCUMENTS"), (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against the LLC or Contributor, or the assets of the LLC,
(iii) conflict with, result in any breach of, or constitute a default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against Contributor or the LLC, (iv) result in or require the
creation or imposition of any Lien upon or with respect to any of the assets of
the LLC, or (v) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person other than lenders holding duly recorded deeds of
trust against the Property.
9.7 NO COMMISSIONS. Contributor and the LLC have not incurred any
obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
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9.8 FINANCIAL STATEMENTS. Contributors have delivered to the Company the
financial statements of the LLC, including the notes thereto, (collectively, the
"FINANCIAL STATEMENTS"), a copy of which is attached hereto as Schedule 9.8. The
balance sheet dated as of July 31, 1998 of the LLC included in the Financial
Statements is referred to herein as the "CURRENT BALANCE SHEET." The Financial
Statements have been certified by an officer of the managing member of the LLC,
have been prepared in accordance with generally accepted accounting principles
("GAAP"), and fairly present the financial position of the LLC at each of the
balance sheet dates and the results of operations for the periods covered
thereby. The books and records of the LLC fully and fairly reflect all
transactions, properties, assets and liabilities of the LLC. There are no
material special or non-recurring items of income or expense during the periods
covered by the Financial Statements, and the Current Balance Sheet does not
reflect any writeup or revaluation increasing the book value of any assets,
except as specifically disclosed in the notes thereto. The Financial Statements
reflect all adjustments necessary for a fair presentation of the financial
information contained therein.
9.9 CHANGES SINCE THE CURRENT BALANCE SHEET. Except as specifically set
forth in Schedule 9.9, since the date of the Current Balance Sheet, the LLC has
not (i) issued any ownership interests or other securities; (ii) made any
distribution (other than in cash or cash equivalents) of or with respect to its
ownership interests or other securities or purchased or redeemed any of its
securities; (iii) paid any bonus to or increased the rate of compensation of any
of its officers or salaried employees, or amended any other terms of employment
of such persons; (iv) sold, leased or transferred any of its properties or
assets other than in the ordinary course of business consistent with past
practice; (v) made or obligated itself to make capital expenditures other than
in the ordinary course of business consistent with past practice; (vi) made any
payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice; (vii) incurred any obligations or
liabilities (including any indebtedness) or entered into any transaction or
series of transactions involving in excess of $5,000 in the aggregate other than
in the ordinary course of business consistent with past practice, except for
this Agreement and the transactions contemplated hereby; (viii) waived,
canceled, compromised or released any rights having a value in excess of $5,000
in the aggregate; (ix) made or adopted any change in its accounting practice or
policies; (x) made any adjustment to its books and records other than in respect
of the conduct of its business activities in the ordinary course consistent with
past practice; (xi) entered into any transaction with any Affiliate other than
intercompany transactions in the ordinary course of business consistent with
past practice; (xii) entered into any employment agreement; (xiii) terminated,
amended or modified agreements in the aggregate involving an amount in excess of
$5,000; (xiv) imposed any security interest or other Lien on any of its Assets;
(xv) delayed paying any account payable which is due and payable except to the
extent being contested in good faith; (xvi) made or pledged any charitable
contribution; (xvii) entered into any other transaction or was subject to any
event which had or may have a Material Adverse Effect on the LLC or the
Business; (xviii) engaged in any transaction other than in the ordinary course
of the Business; (xix) suffered or incurred any work interruptions, labor
grievances, or claims filed, or any similar event which has or would have a
Material Adverse Effect on the LLC or the Business; or (xx) agreed to do or
authorized any of the foregoing.
9.10 LITIGATION. Except as set forth in Schedule 9.10, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation pending, threatened, anticipated or
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contemplated against, by or affecting the LLC, the Business, or the assets of
the LLC, or which questions the validity or enforceability of this Agreement or
the transactions contemplated hereby, and there is no basis for any of the
foregoing. There are no outstanding orders, decrees or stipulations issued by
any Governmental Authority in any proceeding to which Contributor or the LLC is
or was a party which have not been complied with in full or which continue to
impose any material obligations on Contributor, the LLC or the assets of the
LLC.
9.11 LIABILITIES; BANK ACCOUNTS. Schedule 9.11 sets forth all liabilities
or obligations, whether accrued, absolute, contingent or otherwise, of the LLC,
including (i) liabilities and obligations reflected on the Current Balance Sheet
and not paid or discharged, (ii) liabilities and obligations exceeding $5,000,
incurred in the ordinary course of business consistent with past practice since
the date of the Current Balance Sheet, and (iii) liabilities incurred in the
ordinary course of business prior to the date of the Current Balance Sheet
which, in accordance with GAAP consistently applied, were not required to be
recorded thereon (the liabilities and obligations referenced in (i), (ii) and
(iii) above are referred to as the "DESIGNATED LIABILITIES"). None of the
Designated Liabilities relates to any breach of contract, breach of warranty,
tort, infringement, or violation of law, and none arose out of any action, suit,
claim, governmental investigation, or arbitration proceeding. Schedule 9.11 also
sets forth the outstanding principal amount of and outstanding interest on (as
of the date set forth in the Schedule) all indebtedness for borrowed money and
capitalized lease obligations (including the outstanding principal amount and
accrued but unpaid interest and the name of the lender) owed to a bank or any
other Person by the LLC. Schedule 9.11 also lists the account numbers and names
of each bank, broker or other depository institution at which the LLC maintains
a depository account, and the names of all persons authorized to withdraw funds
from each such account.
9.12 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 9.12, no
Governmental Authority has notified the LLC or Contributor of the need to take
corrective action regarding elimination or control of Hazardous Materials on or
about the Property. Except as set forth on Schedule 9.12, and except in
accordance with applicable laws, neither Contributor or the LLC nor, to the best
of Contributor's knowledge, any other tenant, occupant or user of the Property
has used, generated, manufactured, installed, released, discharged, stored or
disposed of any Hazardous Materials on, under, in or about the Property, or
transported any Hazardous Materials to or from the Property, and there are no
Hazardous Materials or underground storage tanks located on, under, in or about
the Property.
9.13 REAL PROPERTY, LEASES AND SIGNIFICANT PERSONAL PROPERTY. Schedule
9.13 sets forth all real and personal property included (or that will be
included) on the Current Balance Sheet, all other real and personal property of
the LLC acquired since the Current Balance Sheet Date, and all leases for real
and personal property to which the LLC is a party, including, in each case, an
indication as to which real and personal property is currently owned, or was
formerly owned, by the Contributors or the LLC or their Affiliates. True,
complete and correct copies of all such Leases have been provided to the
Company. Except as set forth in Schedule 9.13, (i) to Contributor's knowledge
all of the machinery and equipment and all other tangible assets of the LLC are
in good working order and condition, ordinary wear and tear excepted and have
been maintained in accordance with all applicable specifications and warranties;
(ii) all Leases set forth in Schedule
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9.13, are in full force and effect and constitute valid and binding agreements
of the LLC and constitute valid and binding agreements of the other parties
thereto in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity; and (iii) all fixed assets used
by the LLC are either owned by the LLC or leased under a valid agreement. To the
best of Contributor's knowledge, other than the Property, there are no items,
tangible or intangible, real or personal, owned by the Contributor or any
affiliate of Contributor as of now or at any time heretofore and used in
conjunction with the Business, the Property or any portion thereof, other than
items used by Contributor in the course of its management of various properties,
including the Real Property, under certain management agreements.
9.14 GOOD TITLE, ADEQUACY AND CONDITION.
(a) Except as set forth in Schedule 9.14 or as provided for in
Section 6.1, the LLC has, and at Closing will have, good and marketable title to
the assets of the Business (the "ASSETS") with full power to sell, transfer and
assign the same, free and clear of any Lien.
(b) The Assets constitute, in the aggregate, all of the assets and
properties necessary for the conduct of the Business in the manner in which and
to the extent to which such business is currently being conducted and include,
without limitation, all tangible and intangible assets owned by the LLC, and all
Contracts, cash and accounts receivable, and licenses and permits of the LLC.
9.15 COMPLIANCE WITH LAWS. To the best of Contributor's knowledge, the
LLC is not in violation of any law or regulation (including, without limitation,
those pertaining to zoning, land use, subdivision, building, safety, fire and
health) or any order of any court or federal, state, local or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the LLC, and, except to the extent set forth on Schedule 9.15,
there are no claims, actions, suits or proceedings pending or, to the knowledge
of the LLC, threatened, against or affecting the LLC or the Business, at law or
in equity, or before or by any federal, state, local or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over any of them, and no notice of any such claim, action, suit or
proceeding, whether pending or threatened, has been received. The LLC has
conducted and is conducting the Business in compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing.
9.16 EMPLOYEE BENEFIT PLANS. Except as set forth on Schedule 9.16, the
LLC has no employee benefit plans or arrangements, including but not limited to
employee profit sharing plans, as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), multiemployer
plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(1) of ERISA, deferred compensation plans, stock/unit option
plans, bonus plans, stock/unit purchase plans, hospitalization, disability and
other insurance plans,
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severance or termination pay plans and policies, whether or not described in
Section 3(3) of ERISA, in which employees, their spouses or dependents, of the
LLC participate.
9.17 TAX RETURNS AND EXAMINATIONS.
(a) Contributor and the LLC have timely filed with the appropriate
taxing authorities all returns (including, without limitation, information
returns and other material information) in respect of Taxes required to be filed
through the date hereof and will timely file any such returns required to be
filed on or prior to the Closing Date. The returns and other information filed
(or to be filed) are complete and accurate in all material respects.
(b) All Taxes of Contributor and the LLC, in respect of periods
beginning before the Closing Date, have been timely paid, or will be timely
paid, prior to the Closing Date, and neither Contributor nor the LLC has any
material liability for Taxes in excess of the amounts so paid. All Taxes that
Contributor or the LLC has been required to collect or withhold have been duly
collected or withheld and, to the extent required when due, have been or will be
(prior to the Closing Date) duly paid to the proper taxing authority.
(c) Neither the federal income tax returns of Contributor nor
those of the LLC have been examined (except examinations which have been
completed and which resulted in no material adverse impact to the LLC) or are
currently under examination by the Internal Revenue Service, and no material
deficiencies for Taxes of Contributor or the LLC have been claimed, proposed or
assessed by any taxing or other Governmental Authority. There are no pending or,
to the best knowledge of Contributor, threatened audits, investigations or
claims for or relating to any material additional liability to Contributor or
the LLC in respect of Taxes, and there are no matters under discussion with any
Governmental Authorities with respect to Taxes that in the reasonable judgment
of Contributor, the LLC, or the counsel of either, is likely to result in a
material additional liability to Contributor or the LLC for Taxes. No audits of
the LLC's or Contributor's federal, state, and local returns for Taxes by the
relevant taxing authorities have occurred, except audits which have been
completed and which resulted in no material adverse impact to the LLC. Neither
Contributor nor the LLC has been notified that any taxing authority intends to
audit a return for any period. No extension of a statute of limitations relating
to Taxes is in effect with respect to the LLC or Contributor.
(d) There are no liens for Taxes (other than for current Taxes not
yet due and payable) on the Real Property.
(e) The Real Property does not, directly or indirectly, secure any
debt the interest on which is tax-exempt under Section 103(a) of the Code.
(f) The Real Property is not required to be treated as being owned
by any other person pursuant to the so-called safe harbor lease provisions of
former Section 168(f)(8) of the Code.
(g) The Property is not "tax exempt use property" within the
meaning of Section 168(h) of the Code.
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(h) Delivery of Tax Information.
(i) In connection with the issuance of Exchange Units to
Contributors, Contributors shall deliver to the Company at or prior to Closing
Date at Contributors' sole cost and expense the following information prepared
as of the date of this Agreement.
(A) depreciation and amortization schedules for the
assets constituting the Real Property, as kept for both book and tax purposes,
showing original basis and accumulated depreciation or amortization;
(B) basis information (computed for both book and tax
purposes, if different) for all non-depreciable, non-amortizable assets that are
components of the Real Property;
(C) the adjusted basis of the LLC and each Contributor
in any portion of the Real Property contributed to the LLC or such Contributor;
and
(D) calculations of the estimated amounts of gain to
be realized and recognized by each Contributor (if any) as a result of the
transactions involving the Real Property in accordance with this Agreement and
showing the method by which such amounts are calculated.
(ii) The amount of Built-in Gain as of the date of this
Agreement is set forth on Schedule 9.17.
(iii) The Company is relying on the information provided or to
be provided to it under the Agreement as to the adjusted tax basis of the
Property and the relevant depreciation schedules thereto in determining the
amount of Built-in Gain on a going forward basis.
(i) Cooperation on Tax Matters. Contributor shall provide
reasonable assistance to the Company and the LLC to enable the Company and the
LLC to prepare their Tax Returns. Contributor shall deliver to the Company
copies of its final federal, state and local tax returns (including information
returns), including associated Schedules K-1, for the tax year in which the
Closing occurs, including any amendments thereto, and notify the Company, in
writing, of any audits of such return, or of any audits for other tax years that
could affect the amounts shown on the returns for the tax year in which the
Closing occurs. Copies of such returns shall be provided to the Company in draft
form at least ten (10) days before they are filed, and in final form upon
filing. Contributor shall also provide to the Company, promptly upon receipt,
any notice that it receives from any of its direct or indirect members that such
member(s) intends to prepare its tax returns in a manner inconsistent with the
returns filed by Contributor. Contributor understands and agrees that the tax
returns filed by Contributor will be substantially consistent with the
information provided to the Company pursuant to this Agreement. The provisions
of this Section shall survive the Closing.
(j) LLC Disregarded. The LLC is presently disregarded as an entity
for federal and applicable state income tax purposes, and at all times prior
hereto has been (i) so disregarded, or (ii) taxed as a partnership.
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9.18 INSURANCE. The LLC and the Business are covered by valid,
outstanding and enforceable policies of insurance issued to the LLC by reputable
insurers covering its properties, Assets and the Business against risks of the
nature normally insured against by corporations in the same or similar lines of
business and in coverage amounts typically and reasonably carried by such
corporations (the "INSURANCE POLICIES"). The Insurance Policies are in full
force and effect, and all premiums due thereon have been paid. The LLC has
complied with the provisions of the Insurance Policies. The LLC has not failed
to give, in a timely manner, any notice required under any of the Insurance
Policies to preserve its rights thereunder.
9.19 LICENSES AND PERMITS. Except as set forth on Schedule 9.19, the LLC
possesses all licenses and required governmental or official approvals, permits
or authorizations (collectively, the "PERMITS") for its Business and operations.
All Permits are valid and in full force and effect, the LLC is in compliance in
all material respects with their requirements, and no proceeding is pending or
threatened to revoke or amend any of the Permits. None of the Permits is or will
be impaired or in any way affected by the execution and delivery of this
Agreement or the transactions contemplated hereby.
9.20 CONTRACTS AND EMPLOYMENT MATTERS. Schedule 9.20 lists all Contracts
of the LLC the subject matter of which involves an annual dollar value of
payments or services of at least Five Thousand Dollars ($5,000). All of the
Contracts (i) are valid and binding obligations of the parties, (ii) are not in
default nor will become in default solely upon notice or the passage of time
without curative action and (iii) will remain in full force and effect following
the Closing, without requiring the consent of the other parties thereto and
without causing a default, right to terminate or right to modify any terms under
any such Contracts. The LLC has delivered to the Company true, complete and
correct copies of all Contracts. There are no unpaid amounts due and owing by
the LLC under any such Contract, except for amounts for which the Company is to
receive full credit through proration at Closing. There are no other service or
maintenance contracts relating to the Property. None of the parties to the
Contracts has canceled or substantially reduced or, to the knowledge of
Contributor, is currently attempting or threatening to cancel any Contract or
substantially reduce utilization of the services provided by the LLC, and the
LLC has complied with all commitments and obligations pertaining to any
Contract, and is not in default under any such Contract, and no notice of
default has been received. The LLC has not been the subject of any election in
respect of union representation of employees and is not bound by or subject to
any arrangement with any labor union. No employees of the LLC are represented by
any labor union or covered by any collective bargaining agreement and no
campaign to establish such representation has ever occurred or is in progress.
There is no pending, or to the LLC's knowledge, threatened labor dispute
involving the LLC and any group of employees, nor has the LLC experienced any
labor interruptions over the past three years and the LLC considers its
relationship with employees to be good, except as set forth on Schedule 9.20.
9.21 GOVERNMENTAL CONTRACTS. Except as set forth in Schedule 9.21, the
LLC is not now a party to any governmental contracts subject to price
redetermination or renegotiation or which would require the consent or approval
of any Governmental Authority for the consummation of the transactions
contemplated by this Agreement, whether or not such consent or approval would be
required prior to the Closing Date.
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9.22 OFFICERS, DIRECTORS AND KEY EMPLOYEES; EMPLOYMENT AGREEMENTS;
COMPENSATION. Schedule 9.22 sets forth an accurate list showing all officers,
directors and key employees of the LLC, listing all employment agreements with
such officers, directors and key employees (and any other employees having an
employment agreement with the LLC) and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons. Schedule 9.22 also lists any increase in
compensation or any special bonus payable to any officer, director, key employee
or other employee of the LLC.
9.23 PREDECESSOR STATUS, ETC. Schedule 9.23 sets forth all names of all
predecessor entities, if any, for the past five years of the LLC, including the
names of any entities from whom the LLC previously acquired material assets.
Except as disclosed in Schedule 9.23, the LLC has not been a subsidiary or
division of another corporation or a part of an acquisition which was later
rescinded.
9.24 INVESTMENT REPRESENTATIONS. Each Contributor hereby acknowledges its
understanding that the Exchange Units to be acquired pursuant to this Agreement
are intended to be exempt from registration under the Securities Act of 1933, as
amended and the rules and regulations in effect thereunder (the "SECURITIES
ACT"). In furtherance thereof, each Contributor represents and warrants to the
Company as follows:
(a) Contributor is acquiring the Exchange Units solely for its own
account for the purpose of investment and not as a nominee or agent for any
other person and not with a view to, or with any intention of, a distribution or
resale thereof, in whole or in part, in violation of the Securities Act or state
securities or "blue sky" laws. Contributor agrees and acknowledges that, except
for the exercise of its redemption rights pursuant to Section 8.6 of the Company
Operating Agreement, it will not, directly or indirectly, offer, sell, transfer,
assign, pledge, hypothecate or otherwise dispose of any of the Exchange Units it
is issued pursuant to this Agreement in the absence of an effective registration
statement under the Securities Act and qualification or other compliance under
applicable "blue sky" or state securities laws unless Contributor delivers to
the Company an opinion of a lawyer experienced in securities matters and
reasonably satisfactory to the Company, to the effect that the proposed sale,
transfer, assignment, pledge, hypothecation or other disposition may be affected
without registration under the Securities Act and under applicable "blue sky" or
state securities laws. Contributor understands that the Company is under no
obligation to register the sale or other transfer of the Exchange Units.
(b) Contributor is knowledgeable, sophisticated and experienced in
business and financial matters and fully understands the limitations on the
transfer of restricted securities imposed by the Federal securities laws and as
described herein. Contributor is able to bear the economic risk of holding the
Exchange Units for an indefinite period and is able to afford the complete loss
of its investment in the Exchange Units; Contributor has received and reviewed
all information and documents about or pertaining to the Company and the
issuance of the Exchange Units as Contributor deems necessary or desirable, and
has been given the opportunity to obtain any additional information or documents
and to ask questions and receive answers about such information and documents,
the Company, the business and prospects of the Company and the
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Exchange Units which Contributor deems necessary or desirable to evaluate the
merits and risks related to its investments in the Exchange Units; and
Contributor understands and has taken cognizance of all risk factors related to
the purchase of the Exchange Units.
(c) Contributor is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
(d) Each certificate representing the Exchange Units shall bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
UNLESS THE COMPANY HAS BEEN FURNISHED WITH AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE SECURITIES
EVIDENCED BY THIS CERTIFICATE MAY BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF ONLY
IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE COMPANY'S OPERATING AGREEMENT, AS IT MAY BE AMENDED AND
RESTATED FROM TIME TO TIME (A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY'S MANAGING MEMBERS AT ITS PRINCIPAL EXECUTIVE
OFFICES."
(e) In making the investment in the Exchange Units, Contributor
has and will rely solely upon the advice of its personal tax advisers with
respect to the federal and/or state tax aspects of an investment in the Exchange
Units and neither the Company nor its managing member, nor any officer, director
or other person representing the Company, its managing member, or any of its
affiliates, has made any representation regarding the tax consequences of the
investments in the Exchange Units. The Company shall have no responsibility for
any adverse tax consequences imposed on the Contributor.
(f) Contributor (i) has no intention to dissolve, either presently
or upon the transfer of its interest in the Units, (ii) will hold the Exchange
Units, and (iii) presently engages in activities other than those related to,
and holds assets other than, the Units, and following transfer of its interest
in the Units, will engage in activities other than those related to, and hold
assets other than, the Exchange Units.
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9.25 CONDEMNATION. There is no condemnation or eminent domain proceeding
affecting the Property or any portion thereof currently pending nor, to
Contributor's knowledge, is any such proceeding threatened.
9.26 NOTICE OF FAILURE TO COMPLY. Neither the LLC nor Contributor has
received any notice of any failure of the LLC or Contributor to comply with any
applicable governmental requirements in respect of the use, occupation and
construction of the Property, including but not limited to environmental,
zoning, platting and other land use requirements which have not been heretofore
corrected to the satisfaction of the appropriate governmental authority, and
neither the LLC nor Contributor has received any notice of or has any knowledge
of any violations or investigations relating to any such governmental
requirement.
9.27 NOTICE OF DEFAULT. Neither the LLC nor Contributor has received any
notice of any default or breach by the LLC or Contributor under any covenants,
conditions, restrictions, rights-of-way, or easements which may effect the LLC
or Contributor in respect to the Property or may effect the Property or any
portion thereof, and no such default or breach now exists.
9.28 SPECIAL ASSESSMENTS. To the best of Contributor's knowledge, except
as set forth on the PTR, no special or general assessments have been levied, or
to Contributor's knowledge are any such assessments threatened against all or
any part of the Property.
9.29 DEFAULT UNDER LEASES. Other than as set forth on Schedule 9.29, to
the best of Contributor's knowledge, there has been no default or any claim of
default, and no event has occurred which with notice or lapse of time or both
would constitute a default, under any Lease, and to Contributor's knowledge no
Tenant has asserted or has any defense, set off, or claim with regard to his
tenancy pursuant to the lease, any law or otherwise.
9.30 UTILITIES. To the best of Contributor's knowledge, all water, sewer,
gas, electric, telephone and drainage facilities and all other utilities
required by law or by the normal use and operation of the Property are and at
the time of Closing will be installed to the property lines of the Real
Property, are and at the time of Closing will be connected and operating
pursuant to valid permits, and are and at the time of Closing will be adequate
to service the Property and to permit full compliance with all requirements of
law and normal usage of the Property by Contributor and its licensees and
invitees. All public utilities required for the operation of the Property either
enter the Property through adjoining public streets, or if they pass through
adjoining private land do so in accordance with valid public easements or
private easements which will inure to the benefit of the Company at Closing and
thereafter.
9.31 CONDITION OF SYSTEMS. To the best of Contributor's knowledge, the
heating, ventilation, air conditioning, mechanical, electrical and other systems
and equipment forming a part of or used in connection with the Property are
operative and in good working condition, normal wear and tear excepted, and in
compliance with all applicable laws, ordinances, regulations and requirements.
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9.32 FOREIGN PERSON STATUS. Contributor is not a foreign person as
defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended,
and no withholding is required under applicable state law in connection with the
transactions contemplated herein.
9.33 ADA COMPLIANCE. Neither the LLC nor Contributor has received any
notice or complaint from any Governmental Authority or any other Person that the
Property does not comply with all applicable requirements of the Equal
Opportunity for Individuals Act (ADA), 42 U.S.C. 12101 and the regulations
promulgated and set forth at 28 CFR 36.401 et seq.
9.34 SURVEY AND SPECIFICATIONS. To the best of Contributor's knowledge,
the survey, mechanical and structural plans and specifications, soils reports,
certificates of occupancy, warranties, operating statements, income and expense
reports and all other books and records relating to or affecting the Property,
and all other contracts or documents delivered to the Company pursuant to this
Agreement or in connection with the execution hereof are and at the time of
Closing will be true and correct copies, are and at the time of Closing will be
in full force and effect and contain no inaccuracies or misstatements of fact,
and all such documents in Contributor's possession or control relating to or
affecting the Property have been or will be delivered to the Company pursuant to
this Agreement.
9.35 MISSTATEMENTS OR OMISSIONS. To the best of Contributor's knowledge,
no representation, warranty or statement of Contributor in this Agreement or in
any certificate, exhibit or schedule furnished or to be furnished to the Company
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements or facts
contained therein misleading. To the best of Contributor's knowledge, all such
representations, warranties or statements of Contributor are based upon current,
accurate and complete information as of the time of their making and there has
been no adverse material change in such information subsequent thereto.
9.36 LEASES. The copies of the Leases delivered to the Company are true
and correct copies of all such Leases and are in full force and effect and there
are no other agreements, written or oral, with respect to the tenancies. There
are no unpaid amounts due and owing by Contributor or the LLC under any such
Lease, except for amounts for which the Company is to receive full credit
through proration at Closing. No Tenant under any of the Leases has prepaid any
rent or other charges for more than the current month. No Tenant under any of
the Leases has any right or option to purchase the Property or any portion
thereof or interest therein, and there are no outstanding agreements of sale
with respect to the Property or any portion thereof or any interest therein.
Except as provided in the Leases, no Tenant has the right to renew or extend any
of the Leases or has any options or rights of first refusal with respect to
leasing of other space, and no Tenant has the right to free rent, rebate,
allowance, concession, security or other deposit.
9.37 BROKER COMMISSIONS. Except as disclosed in writing to the Company,
there are no commissions, finder's fees or other compensation owing or which may
become owing to any broker or any other person or entity with respect to any
Lease or occupancy agreement including, without
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limitation, any such compensation with respect to any future renewals,
extensions or expansions thereof.
9.38 OPERATION OF PROPERTY. Except as set forth on Schedule 9.38, to the
best of Contributor's knowledge, the LLC has obtained all licenses, permits,
approvals, easements and rights of way required from all governmental
authorities having jurisdiction over the Property or from private parties for
the normal use and operation of the Property and to ensure free and unimpeded
vehicular and pedestrian ingress to and egress from the Property as required to
permit the normal intended usage of the Property by the tenants thereof, their
invitees and customers. Contributor and the LLC have materially complied with
all such licenses and permits and have not received any notice that any such
licenses or permits will not be renewed upon expiration, or of any material
conditions which will be imposed in order to receive any such renewal.
Contributor knows of no facts nor has Contributor failed to disclose to the
Company any fact which would prevent the Company from using and operating the
Property after Closing in the manner in which the Property has been used, leased
and operated prior to the date hereof.
9.39 HYPOTHECATION. Neither the LLC nor Contributor has committed nor
obligated itself in any manner whatsoever to sell the Property to any party
other than the Company. Neither the LLC nor Contributor has hypothecated or
assigned any rents or income from the Property in any manner, other than
pursuant to any existing mortgage financing secured by the Property as of the
Effective Date.
9.40 CONFIDENTIAL INFORMATION. Contributor shall hold as confidential all
information concerning the Company or the transaction contemplated hereby
disclosed to Contributor in connection with said transaction; and Contributor
shall not, prior to Closing, release any such information to third parties
without the Company's prior written consent, except pursuant to a court order
requiring such release or as otherwise may be required by law.
9.41 POSSESSION. As of the Closing, possession of the Property shall be
vested fully in the LLC, subject to the rights of Tenants.
ARTICLE X
CONDUCT OF BUSINESS PENDING THE CLOSING
10.1 CONDUCT OF BUSINESS BY THE LLC PENDING THE CLOSING. Contributors
covenant and agree that, except as otherwise expressly required or permitted by
the terms of this Agreement, between the Effective Date and the Closing, the
business of the LLC shall be conducted only in, and the LLC shall not take any
action except in, the ordinary course of business consistent with past practice.
The LLC and Contributors shall use its or their reasonable best efforts to
preserve intact the LLC's business organizations, to keep available the services
of its current officers, employees and consultants, and to preserve its present
relationships with customers, suppliers and other Persons with which it has
business relations. By way of amplification and not limitation, the LLC shall
not, except as expressly required or permitted by the terms of this Agreement
between the date of this
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Agreement and the Closing, directly or indirectly, do or propose or agree to do
any of the following without the prior written consent of the Company:
(a) amend or otherwise change its Charter Documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any of its assets,
tangible or intangible, except in the ordinary course of business consistent
with past practice; or any Units of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any Units or other
equity interests in the LLC;
(c) declare, set aside, make or pay any distribution, payable in
any property other than cash or cash equivalents, with respect to any of its
Units or other securities;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its Units or other securities;
(e) sell, lease or transfer any of its properties or assets (other
than in the ordinary course of business consistent with past practice), or
acquire (including, without limitation, for cash or Units, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof or
any assets; or make any investment either by purchase of stock or securities,
contributions of capital or property transfer, or purchase any property or
assets of any other Person (except in the ordinary course of business consistent
with past practice); make or obligate itself to make capital expenditures; other
than in the ordinary course of business consistent with past practice, incur any
obligations or liabilities including, without limitation, any indebtedness for
borrowed money, issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
Person, or make any loans or advances, modify, terminate, amend or enter into
any Contract other than as expressly required or permitted herein or in the
ordinary course of business consistent with past practice, or impose any
security interest or other Lien on any of its assets other than in the ordinary
course of business consistent with past practice;
(f) pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits which any collective bargaining,
bonus, profit sharing trust, compensation, stock option, restricted stock
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(g) take any action with respect to accounting policies or
procedures other than in the ordinary course of business and in a manner
consistent with past practices;
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(h) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in the Financial Statements, as
appropriate, or liabilities incurred after the date thereof in the ordinary
course of business and consistent with past practice or delay paying any amount
payable beyond forty-five (45) days following the date on which it is due,
except to the extent being contested in good faith;
(i) enter into any transaction or agreement with a Contributor or
an Affiliate thereof except for such transactions or agreements expressly
permitted herein;
(j) make or pledge any charitable contributions; or
(k) agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any representation or
warranty in Article IX untrue or incorrect in any respect.
10.2 OPERATION OF THE PROPERTY. Between the Effective Date and the
Closing, neither the LLC nor any Contributor shall accept any payment of rent
(except as a security deposit) or other charges from any tenant of the Property
applicable to a period exceeding one (1) month in advance, nor apply any
security deposit to rent due from any tenant of the Property without in each
case obtaining the Company's prior written consent thereto (which consent shall
not be unreasonably withheld or delayed by the Company). In addition to the
foregoing, the LLC and Contributors: (i) shall manage, maintain, operate, and
service the Property consistent with standards in the industry for the first
class operation of similar projects of comparable quality in the same area as
the Property is located, maintaining present services; (ii) shall keep the
Property and every portion thereof in reasonably good working order and repair;
(iii) shall maintain a sufficient inventory of supplies, materials, equipment
and other personal property for the proper management, maintenance, operation
and servicing of the Property; and (iv) shall not, except with the Company's
prior written consent (which consent shall not be unreasonably withheld or
delayed by the Company), approve, consent to, or otherwise permit any material
change in the operations of the Property during the Escrow Period, including,
without limitation:
(a) any material alterations to the Improvements except as may be
necessary in order to perform ordinary, scheduled maintenance;
(b) cancellation of or material reduction in the amount or scope
of coverage under any insurance currently maintained with respect to the
Property;
(c) cancellation or surrender of any existing Permit; and
(d) any other material variation from a Contributor's ordinary
course of business in connection with the Property.
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10.3 PARCEL III TRANSFER. On or before the Closing Date, Portland Fixture
Limited Partnership will convey (or cause Portland Fixture Company) its fee
interest in and to Parcel III of the Real Property, as identified on EXHIBIT A
hereto, in a manner sufficient to permit the Title Company to issue the Owner's
Title Policy in the manner contemplated by this Agreement and otherwise in a
manner reasonably acceptable to the Company.
ARTICLE XI
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
11.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby and to
satisfy the conditions set forth in Articles XII and XIII. Contributors shall
cause the LLC to comply with all of the covenants of the LLC under this
Agreement. Without limiting the foregoing, Contributors shall cooperate with the
Company to the extent necessary to alter or amend the Charter documents of the
LLC effective at the Closing to the extent necessary or appropriate to
accomplish the transactions contemplated hereby.
11.2 CONFIDENTIALITY; PUBLICITY. Contributors and the LLC shall not
disclose the terms of this transaction to any third party nor make any public
announcement related to this Agreement or the transactions contemplated hereby
without the prior written approval of the Company.
11.3 NO OTHER DISCUSSIONS. Contributors, the LLC and their respective
Affiliates, employees, agents and representatives will not (i) initiate,
encourage the initiation by others of, entertain or participate in discussions
or negotiations with third parties or respond to solicitations by third persons
relating to any merger, sale or other disposition of any substantial part of the
assets, the Business or the properties of the LLC (whether by merger,
consolidation, sale of stock, sale of assets, or otherwise), or (ii) enter into
any agreement or commitment (whether or not binding) with respect to any of the
foregoing transactions. Contributors will immediately notify the Company if any
third party attempts to initiate any solicitation, discussion or negotiation
with respect to any of the foregoing transactions.
11.4 TERMINATION OF RELATED PARTY AGREEMENTS. All existing agreements
between the LLC and Contributors or their Affiliates, other than those set forth
in Schedule 11.4, shall have been canceled prior to the Closing.
11.5 DAMAGE OR DESTRUCTION.
(a) Before the Closing, risk of loss with regard to the Property
shall be borne by Contributors. If, before the Closing, the Improvements or the
Personal Property are destroyed or materially damaged, the Company's rights and
obligations with respect to the Property shall be as follows:
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(i) if with respect to any Shopping Center the destruction
or damage involves a diminution in value equal to or less than One Hundred
Thousand and No/100ths Dollars ($100,000.00) or if the Property contains more
than one Shopping Center, with respect to the Property a diminution in value
equal to or less than Two Hundred Thousand and No/100ths Dollars ($200,000.00)
(each, a "DIMINUTION THRESHOLD"), the Company shall be obligated to proceed to
close the transaction (subject to satisfaction of the other provisions hereof)
and, if, but only if, Escrow actually closes, the Company shall receive a credit
against the Base Price equal to the lesser of (A) the cost to repair the damage
or destruction and (B) the amount of the deductible under the LLC's casualty
insurance policy; or
(ii) if the destruction or damage involves a diminution in
value of more than the Diminution Threshold, the Company shall have the option
(which must be exercised by the Company within fifteen (15) calendar days after
the Company's receipt of written notice from Contributors advising of such
destruction or damage), to terminate this Agreement as to that portion of the
Property attributable to the affected Shopping Center and proceed with the
Closing as to the remainder of the Property, or to terminate this Agreement as
to all of the Property. If the Company elects to proceed with Closing, the
Company shall receive a credit against the Base Price equal to the lesser of (A)
the cost to repair the damage or destruction and (B) the amount of the
deductible under the LLC's casualty insurance policy.
(b) If the Company and Contributors cannot agree as to the
diminution in value, then such diminution in value shall be determined by
subtracting from the Base Price the fair market value of the Property after the
damage, as determined by an M.A.I. appraiser appointed by two (2) other M.A.I.
appraisers nominated one (1) each by Contributors and the Company. The expense
of the appraiser shall be borne equally by the Company and Contributors.
(c) If the Company is obligated or elects to proceed to close the
transaction under either subsection (a)(i) or (a)(ii) above, all casualty
insurance proceeds from the LLC's casualty insurance policy shall, to the extent
applicable, be assigned by Contributors to the LLC at the Closing and forwarded
to the Company immediately upon receipt thereof by Contributor.
(d) If the Company elects to terminate this Agreement under
subsection (a)(ii) above, this Agreement shall become null and void and of no
further force or effect as to all unperformed rights and obligations of the
parties and, except as provided in Sections 5.3, 5.5, 16.2(b) and 16.10 hereof,
neither the Company nor Contributors shall have any further rights, duties,
liabilities or obligations to the other by reason thereof, other than those
rights and obligations that, by their terms, survive termination of this
Agreement. In the event of such termination, the costs of the Escrow Holder
shall be borne equally by the Company and Contributors. Also, each party shall
bear its own costs incurred hereunder.
11.6 CONDEMNATION.
(a) If, before the Closing, all of the Property shall be taken by
condemnation or eminent domain, this Agreement shall become null and void and of
no further force or effect as to all unperformed rights and obligations of the
parties and, except as provided in Sections 5.3, 5.5,
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16.2 and 16.10 hereof, neither the Company nor Contributors shall have any
further rights, duties, liabilities or obligations to the other by reason
hereof, other than those rights and obligations that, by their terms, survive
the termination of this Agreement. In the event of such termination, the costs
of the Escrow Holder shall be borne equally by the Company and Contributors.
Also, each party shall bear its own costs incurred hereunder.
(b) If, before the Closing, (i) less than all of the Property
shall be taken by condemnation or eminent domain, (ii) there is any taking of
land lying in the bed of any street, road, highway or avenue, open or proposed,
in front of or adjoining all or any part of the Land, or (iii) there is any
change of grade of such street, road, highway or avenue, provided such taken or
change of grade involves a diminution in value of more than the Diminution
Threshold, then the Company, at the Company's option, may terminate this
Agreement as to that portion of the Property attributable to the affected
Shopping Center and proceed with the Closing as to the remainder of the
Property, or to terminate this Agreement as to all of the Property. If the
Company elects to terminate this Agreement under this subsection (b), this
Agreement shall become null and void and of no further force or effect and,
except as provided in Sections 5.3, 5.5, 16.2 and 16.10 hereof, neither the
Company nor Contributors shall have any further rights, duties, liabilities or
obligations to the other by reason hereof, other than those rights and
obligations that, by their terms, survive the termination of this Agreement. In
the event of such termination, the costs of the Title Company and Escrow Holder
shall be borne equally by the Company and Contributors. Also, each party shall
bear its own costs incurred hereunder.
(c) If the Company and Contributors cannot agree as to the
diminution in value, then such diminution in value shall be determined by
subtracting from the Base Price the fair market value of the Property after the
taking, as determined by an M.A.I. appraiser appointed by two (2) other M.A.I.
appraisers nominated one (1) each by Contributors and the Company. The expense
of the appraiser shall be borne equally by the Company and Contributors.
(d) If this Agreement is not terminated in accordance with the
foregoing, or if such taking involves a diminution in value equal to or less
than the Diminution Threshold, the Company shall accept title to the Property
subject to such taking. In such event, the Company shall receive a credit
against the Base Price in the amount of the diminution in value and the award
for such taking shall be paid ratably to Contributors.
11.7 RESTRICTIONS ON AND INFORMATION REGARDING BENEFICIAL OWNERSHIP OF
LLC UNITS; PUBLICLY TRADED PARTNERSHIP REPRESENTATION.
(a) Notwithstanding anything to the contrary contained in this
Agreement or the Company Operating Agreement, without the consent of the
Company, which consent may be given or withheld in the Company's sole and
absolute discretion, in no event shall the Contributor or any transferees or
prospective transferees of such persons own or transfer Exchange Units such that
the number of such holders (or such prospective holders) of Exchange Units
would, in the aggregate, exceed thirty-five (35) (including as holders any
person (a "BENEFICIAL OWNER") owning an interest in a partnership, a limited
liability company, a grantor trust, or an S corporation (a "FLOW-THROUGH
ENTITY"), that would own, directly or through other Flow-Through Entities, an
interest in the
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Company where substantially all the value of the Beneficial Owner's interest in
the Flow-Through Entity would be attributable to the Flow-Through Entity's
interest (direct or indirect) in the Company (a "SPECIAL PURPOSE FLOW-THROUGH
ENTITY"), and treating Contributor as a Special Purpose Flow- Through Entity for
purposes of this paragraph).
(b) From the date of this Agreement until the Closing, and then so
long as any recipient of Exchange Units (each, a "HOLDER" and collectively, the
"UNIT HOLDERS") who is not a natural person holds any Exchange Units, such Unit
Holder shall notify the Company in writing promptly upon any change in the
identity or number of its direct or indirect Partners (as defined below) as
identified pursuant to this Agreement, and shall provide such information as the
Company may reasonably request with respect to any such change. Each Unit Holder
shall use its best efforts to secure the compliance of any Flow-Through Entities
that hold direct or indirect interests in such Unit Holder with the requirements
of this Section as if such requirements applied directly to such entities. For
purposes of this Agreement, the term "Partners" means, collectively, with
respect to an entity, the holders of all beneficial or other direct or indirect
ownership interests in such entity, including, without limitation, all partners,
members, and beneficiaries and, to the extent any such partner, member, or
beneficiary is not a natural person, the holders of all beneficial other direct
or indirect ownership interests in such partner, member, or beneficiary. Each
Unit Holder acknowledges that the provisions of this Section are imposed to aid
the Company in avoiding taxation as a "publicly traded partnership" for federal
income tax purposes, agrees that monetary damages may be insufficient to remedy
the potential harm caused by any breach of the provisions of this Section, and
agrees that injunctive relief, including specific performance or other equitable
remedy would be an appropriate remedy. The provisions of this Section shall
survive the Closing.
(c) The Contributor represents and warrants to the Company that it
is not and has never been a "publicly traded partnership" (as such term is
defined in Section 469(k)(2) or Section 7704(b) of the Code).
ARTICLE XII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by the Company;
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Contributors and the LLC
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made at
and as of that time except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. Contributors and the LLC shall have performed and
complied with all of their obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date, including these
obligations set forth in Article VII herein. Contributors and the LLC shall have
delivered to the
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Company a certificate, dated as of the Closing Date, duly signed, certifying
that such representations and warranties are true and correct and that all such
obligations have been performed and complied with.
12.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change of the LLC or the Business, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the service, or products of the LLC or the Business, and (iii)
none of the Assets shall have been damaged by fire, flood, casualty, riot or
other cause (regardless of insurance coverage for such damage), and there shall
have been delivered to the Company a certificate to that effect, dated as of the
Closing Date and signed by Contributors. In addition, as of the Closing Date,
there shall have been no material adverse change in the condition of the
Property or any material portion thereof.
12.3 CORPORATE DOCUMENTS. Contributors shall have delivered to the
Company (i) copies of Charter Documents of the LLC, certified by the Secretary
of the LLC (or the functional equivalent of such position) as being true,
correct and complete, (ii) written resignations of the LLC's managers and, if
applicable, officers, and (iii) to the extent available, a certificate of good
standing for the LLC or functionally equivalent document issued by the Secretary
of State of the State of Oregon as of a date not more than ten (10) days prior
to the Closing Date.
12.4 CONSENTS. The LLC and Contributors shall have received consents to
the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of the LLC and Contributors from any
person from whom such consent or waiver is required under any Contract to which
a Contributor, the LLC or the Assets are bound, or who, as a result of the
transactions contemplated hereby, would have such rights to terminate or modify
such contracts, either by the terms thereof or as a matter of law. Other than as
may be contemplated in Section 7.7, the costs of obtaining such consents shall
be borne by the Company. Such consents shall include, without limitation, the
consent of any lender to the LLC (or to a Contributor or any Affiliate thereof
to the extent that such lender has or would have a Lien or other interest in the
Property).
12.5 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of the Company,
makes it inadvisable to proceed with the transactions contemplated hereby.
12.6 DUE DILIGENCE REVIEW. The Company shall have completed its due
diligence review of the Property, the LLC, the Assets and the Business pursuant
to Section 5.1, and shall be satisfied with the results of such review and
assessment.
12.7 OPINION OF COUNSEL. The Company shall have received an opinion or
opinions dated as of the Closing Date, from counsel to Contributors in form and
substance acceptable to the Company.
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12.8 RELEASES. At the Closing, Contributors and such of their Affiliates
as may be designated by the Company shall deliver to the Company a release in
such form as is reasonably satisfactory to the Company, releasing all claims
against the Company and the LLC up to and through the Closing Date, other than
with respect to obligations of the Company under this Agreement.
12.9 APPROVAL OF TITLE.
(a) The Company shall have reviewed and approved, within the time
period and in the manner provided below, the PTR, including copies of all
documents referred to in the PTR (other than encumbrances to be discharged by
Contributors on or before Closing).
(b) Contributors shall cause the PTR and all supporting materials,
including copies of all documents referred to in the PTR to be delivered to the
Company by 4:00 p.m., Pacific time, on or before the third (3rd) Business Day
after the Effective Date (the "TITLE DELIVERY DATE"). On or before the seventh
(7th) Business Day from and after delivery to the Company of the PTR and all
supporting materials, the Company shall notify Contributors and Escrow Holder in
writing which exceptions to title shown in the PTR, if any, will not be accepted
by the Company (collectively, the "DISAPPROVED TITLE MATTERS"); all other
matters and exceptions to title shown in the PTR shall be deemed approved by the
Company. If the Company fails to notify Contributors and Escrow Holder within
the required time period of any Disapproved Title Matters, the Company shall be
deemed to have disapproved the condition to the Real Property as to such title
and survey matters. If the Company notifies Contributors of any Disapproved
Title Matters, Contributors shall have until 5:00 p.m., Pacific time, on the
second (2nd) Business Day after Contributors' receipt of such notice to notify
the Company and Escrow Holder in writing that:
(i) Contributors shall use their reasonable efforts to
either (A) cause any Disapproved Title Matters to be removed by the Closing, or
(B) obtain, at Contributors' expense, an endorsement or other curative effect
acceptable to the Company in the Company's sole and absolute discretion; or
(ii) Contributors elect not to cause any such Disapproved
Title Matters to be removed.
(c) If Contributors give the Company and Escrow Holder notice
under subsection (b)(ii) above, the Company shall have until 5:00 p.m., Pacific
time, on the third (3rd) Business Day after the Company's receipt of such notice
to notify Contributors and Escrow Holder that (i) the Company revokes its
disapproval of such exceptions(s) and will proceed with the purchase without any
reduction in the Purchase Price and take title to the Property subject to such
exception(s), or (ii) the Company will terminate this Agreement, in which case
the terms and provisions of Section 12.17. The foregoing procedure shall also be
applicable to any new matters which are disclosed in any updates, supplements or
amendment to the PTR or Survey.
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12.10 APPROVAL OF OTHER MATTERS.
(a) By 5:00 p.m., Pacific time, on or before the third (3rd)
Business Day after the Effective Date, Contributors will deliver to the Company,
or allow the Company reasonable access to, at the Property, at Contributors'
place of business, or at such other location as Contributors may reasonably
indicate, during reasonable times agreed upon in advance by the Company and
Contributors, the following, expressly subject to such items being in the
possession of or reasonably available to Contributors or their manager for the
Property:
(i) a current rent roll and copies of all Leases disclosed
thereon, together with all amendments thereto;
(ii) copies of all Contracts;
(iii) a schedule of all Personal Property;
(iv) copies of the most recent property tax bills for the
Property;
(v) operating statements for the LLC's fiscal years 1995,
1996 and 1997 and for each calendar month thereafter;
(vi) plans and specifications (as-builts, if available) for
construction of the Improvements (the "PLANS AND SPECIFICATIONS");
(vii) copies of certificate(s) of occupancy, and any
governmental licenses and permits regarding the Property;
(viii) financial statements for the Tenants;
(ix) a schedule of filed litigation regarding or affecting,
directly or indirectly, the Property;
(x) an aged receivables report current as of the Effective
Date;
(xi) copies of environmental reports, studies and assessments
within Contributors' possession or control covering the Property;
(xii) copies of all CC&R's affecting the Property;
(xiii) copies of all soil reports and analyses within
Contributors' possession or control pertaining to the soils, seismological,
geological and drainable conditions of the Property;
(xiv) copies of construction and equipment warranties within
Contributors' possession;
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<PAGE> 46
(xv) 1998 year-to-date operating statements for the Property;
and
(xvi) all other material, non-proprietary materials, reports
and information relevant to the Property.
(b) On or before the expiration of the Inspection Period, the
Company shall notify Contributors and Escrow Holder in writing if the Company
objects to any of the matters referred to above or to the Company's own
inspection of the Property described in Section 5.1 hereof.
12.11 NO INSOLVENCY. Neither the LLC nor Contributors nor any of their
Affiliates (i) shall be in receivership or dissolution, (ii) shall have made an
assignment for the benefit of creditors or admitted in writing its inability to
pay its debts as they mature, or (iii) shall be been adjudicated a bankrupt or
filed a petition in voluntary bankruptcy or a petition or answer seeking
reorganization or an arrangement with creditors under the Federal bankruptcy law
or any other similar law or statute of the United States or any jurisdiction and
no such petition shall have been filed against the Company or any of its general
partner(s), if any.
12.12 TENANT ESTOPPELS. The Company shall have received a Tenant Estoppel
Certificate for all Tenants whose leaseable square footage under their
respective Leases is greater than 5,000 square feet, and from seventy-five
percent (75%) of all remaining Tenants, which Tenant Estoppel Certificates shall
be in substantially the same form as EXHIBIT D attached hereto, or in such other
form as is acceptable to the Company in the reasonable exercise of its
discretion; and otherwise as to each such Tenant Estoppel Certificate in such
content as is acceptable to the Company. Contributors shall use their best
efforts to obtain such Tenant Estoppel Certificates on or before September 25,
1998. The Company will give reasonable consideration to accepting estoppel
certificates executed in connection with the contemplated transaction between
Contributors and Burnham Pacific Properties which was not consummated; provided,
however, that even if the Company finds some or all of such previously executed
estoppels acceptable as to form and content, the Company will not accept same in
satisfaction of the requirements of this Section 12.12 unless in each instance
such estoppel certificates are re-certified to the Company and brought current
to the date of such re-certification. The Company shall have five (5) Business
Days from receipt of such Tenant Estoppel Certificates to advise Contributors in
writing of its approval or disapproval of same, which approval will not be
withheld unreasonably. If necessary, at the Company's election the Closing Date
shall be extended so as to allow such five (5) day inspection period. In the
event the Company disapproves of any of such Tenant Estoppel Certificates, the
Company may terminate this Agreement as provided in Section 12.18 below. In the
event Contributors are unable through diligent efforts to obtain any of the
Tenant Estoppel Certificates, the Company may, but will not be obligated to,
accept in lieu thereof an estoppel certificate from Contributors (a
"CONTRIBUTORS' ESTOPPEL") in such form and content as required by the Company in
the reasonable exercise of its discretion.
12.13 CONCURRENT CLOSINGS. The Company, Contributors and their respective
Affiliates, concurrently with the Closing, shall have closed and consummated the
transactions contemplated pursuant to those certain agreements (the "RELATED
PURCHASE AGREEMENTS") entitled Purchase and Sale Agreement and Escrow
Instructions and Contribution Agreement and Escrow Instructions, and
40
<PAGE> 47
entered into by and between the Company, PPRP, certain Contributors and
affiliates thereof and certain other parties, respectively, of even date
herewith.
12.14 WAIVER. At any time or times on or before the Closing, at the
Company's election, the Company may waive any of the foregoing conditions by
written notice to Contributors. Other than the Company's closing the transaction
contemplated by this Agreement which shall waive all such unfulfilled
conditions, no waiver shall be effective unless made in writing specific as to
the conditions or matters so waived.
12.15 LEASE PAYMENTS AND RENTS. Contributors shall have paid fully, or the
Company shall receive a credit in the form of Indemnifiable Damages, for any and
all rent concessions, leasing commissions and tenant improvement costs, and all
other amounts payable by Contributors as provided in this Agreement with respect
to such Lease and the premises leased thereunder.
12.16 DOWNREIT CONSUMMATION. PPRP and Contributors shall have entered into
the Company Operating Agreement in form and substance acceptable to the Company
and Contributors.
12.17 ENVIRONMENTAL INDEMNITY. Contributors shall have delivered to the
Company a separate Environment Indemnity with respect to the Property in form
and substance acceptable to the Company and Contributors (the "SUNSET
INDEMNITY").
12.18 TERMINATION. If any of the foregoing conditions are neither
fulfilled, nor waived as provided above, the Company, at its election by written
notice to Contributors, may terminate this Agreement and be released from all
obligations under this Agreement (other than those described in this Section
12.18 and Sections 5.3, 5.5, 16.2 and 16.10 hereof). In the event of such
termination by the Company, all documents deposited in Escrow by the Company or
Contributors shall be returned to the depositing party, the costs of the Title
Company and Escrow Holder shall be borne equally by the Company and
Contributors, and, except as otherwise set forth in this Article XII, each party
hereto shall bear its own costs incurred herewith. If any non-fulfilled
conditions also constitute a breach by Contributors of their obligations under
this Agreement, then the Company may proceed also under Section 7.14(a) above.
ARTICLE XIII
CONDITIONS TO THE
OBLIGATIONS OF CONTRIBUTORS
The obligations of Contributors to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by Contributors:
13.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
41
<PAGE> 48
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. The Company shall have performed and complied in all material respects
with all of its obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. The Company shall have delivered
to Contributors a certificate, dated as of the Closing Date, and signed by an
executive officer thereof, certifying that such representations and warranties
are true and correct, and that all such obligations have been performed and
complied with, in all material respects.
13.2 CONCURRENT CLOSINGS. The Company, Contributors and their respective
Affiliates, concurrently with the Closing, shall have closed and consummated the
transactions contemplated pursuant to the Related Purchase Agreements.
13.3 DOWNREIT CONSUMMATION. PPRP and Contributors shall have entered into
the Company Operating Agreement in form and substance acceptable to the Company
and Contributors.
13.4 NO CHANGE IN COMPANY STRUCTURE. There shall have been no change in
the Company's entity structure or ownership (other than to the extent
contemplated in Section 13.3 above or in the Company Operating Agreement
referred to therein).
13.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, financial condition or results of operations of
PPRP. For purposes of the foregoing sentence, the parties acknowledge that
variations in the share price of PPRP capital stock on the New York Stock
Exchange shall not be considered in making such determination.
13.6 NO LITIGATION. Neither PPRP nor the Company shall be involved in any
pending or threatened litigation regarding or affecting, directly or indirectly,
the Property.
13.7 LEGAL OPINION. Contributors shall have received a legal opinion from
counsel to the Company in form and substance acceptable to Contributors.
13.8 CARVE-OUT INDEMNITIES. The Company will have (a) secured from any
lenders to the LLC on debt surviving the Closing the release of each Contributor
and Affiliates thereof from any personal guarantee of such continuing debt or
any carve-out indemnity delivered by such Contributor or Affiliate to the extent
that such indemnity would be applicable to LLC activities from and after the
Closing, or (b) agreed to indemnify Contributors and their Affiliates for such
liabilities.
13.9 TERMINATION. If any of the foregoing conditions are neither
fulfilled nor waived by Contributors, Contributors shall have the option to
terminate this Agreement by delivering to the Company and Escrow Holder written
notice of such termination; provided, however, that Contributors may not
terminate this Agreement under this Section 13.9 unless the Company fails to
cause any non-fulfilled condition(s) to be satisfied within three (3) days after
written notice thereof from Contributors. If any non-fulfilled condition(s) also
constitute a breach by the Company of its obligations under this Agreement,
Contributors shall have the right to proceed under Section 7.11(b) above. If
Contributors elect to terminate this Agreement, thereafter this Agreement shall
be null and void and of no further force or effect and, except as provided in
this Section 13.9 and
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<PAGE> 49
Sections 5.3, 5.5, 16.2 and 16.10 hereof, neither party shall have any further
rights or obligations hereunder, other than those rights and obligations that,
by their terms survive the termination of this Agreement. In the event of such
termination by Contributors, all documents deposited in Escrow by the Company or
Contributors shall be returned to the depositing party, the costs of the Title
Company and Escrow Holder shall be borne equally by the Company and Contributors
and each party hereto shall bear its own costs incurred herewith.
ARTICLE XIV
INDEMNIFICATION
14.1 AGREEMENT BY CONTRIBUTORS TO INDEMNIFY. Contributors agree to
severally and not jointly indemnify and hold the Company and its Affiliates, and
the officers, directors, employees and agents of each thereof (collectively, the
"INDEMNIFIED PARTY") harmless from and against the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including, without
limitation, related counsel and paralegal fees and expenses) incurred or
suffered by the Indemnified Party (collectively, "INDEMNIFIABLE DAMAGES")
resulting from or arising out of (i) any breach of a representation or warranty
made by such Contributor in or pursuant to this Agreement, (ii) any breach of
the covenants or agreements made by the such Contributors in this Agreement,
(iii) any inaccuracy in any certificate delivered by such Contributors or the
LLC pursuant to this Agreement, or (iv) any liabilities of the LLC other than
the Designated Liabilities. The Parties hereto acknowledge and agree that with
respect to a breach of the representations contained in Section 9.12
(Environmental Matters), "Indemnifiable Damages" shall specifically include,
without limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, restoration or other response work
required by any federal, state, or local governmental agency or political
subdivision because of Hazardous Material present as a result of any action or
inaction on the part of Contributor or the LLC, their agents, employees,
contractors, invitees or tenants in any improvements on the Property or the soil
or ground water on, under or adjacent to the Property; provided, however, that
nothing herein shall be deemed to entitle the Company to recoverable damages
with respect to amounts previously, concurrently or subsequently recovered by
the Company under the Sunset Indemnity.
14.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the LLC and Contributors in this
Agreement or pursuant hereto shall survive for a period of one (1) year
following the Closing of the transactions contemplated hereby. Notwithstanding
the foregoing, absent independent arrangements between Contributors and the
Company, the Company shall not be entitled to seek redress against a Contributor
following the Closing for breaches of representations and warranties that
occurred prior to or at Closing if such breach(es) or the facts underlying such
breach(es) were known at the time of Closing by the Company.
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<PAGE> 50
ARTICLE XV
TERMINATION, AMENDMENT AND WAIVER
15.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of all of the parties hereto at any
time prior to the Closing; or
(b) by the Company in the event of a material breach by
Contributors of any provision of this Agreement.
15.2 EFFECT OF TERMINATION. Except as provided in Article X and for the
provisions of Section 7.2, in the event of termination of this Agreement
pursuant to Section 12.1, this Agreement shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE XVI
GENERAL PROVISIONS
16.1 NOTICES. Any communication, notice or demand of any kind whatsoever
that either party may be required or may desire to give to or serve upon the
other shall be in writing, addressed to the parties at the addresses set forth
below, and delivered by personal service, by Federal Express or other reputable
overnight delivery service, or by facsimile transmission:
If to Contributors: Portland Fixture Limited Partnership
PFMGP, Inc.
c/o Mercury Development
7180 S.W. Fir Loop, Suite 100
Tigard, OR 97223
Attn: David P. Zimel, President
Telephone No.: (503) 968-1850
Facsimile No.: (503) 968-2542
With a copy to: Miller, Nash, Wiener, Hager & Carlsen LLP
111 S.W. Fifth Avenue
Portland, OR 97204-3699
Attn: Harvey C. Barragar, Esq.
Telephone No.: (503) 224-5858
44
<PAGE> 51
Facsimile No.: (503) 224-0155
If to the Company: Pan Pacific (Portland), LLC
c/o Pan Pacific Retail Properties, Inc.
1631-B South Melrose Drive
Vista, California 92083
Attention: Stuart A. Tanz,
President and Chief Executive
Officer
Telephone No.: (619) 727-1002
Facsimile No.: (619) 727-1430
With a copy to: Hale Lane Peek Dennison Howard and Anderson
100 West Liberty Street, Tenth Floor
Reno, Nevada 89501
Attention: William C. Davis, Jr., Esq.
Telephone No.: (702) 327-3000
Facsimile No.: (702) 786-6179
Any such notice shall be deemed delivered as follows: (a) if
personally delivered, the date of delivery to the address of the person to
receive such notice; (b) if sent by Federal Express or other reputable overnight
courier service, the date of delivery to the address of the person to receive
such notice; or (c) if sent by facsimile transmission, on the Business Day
transmitted to the person to receive such notice if sent by 5:00 p.m., Pacific
time, on such Business Day, and the next Business Day if sent after 5:00 p.m.,
Pacific time, or on a day other than a Business Day. Any notice sent by
facsimile transmission must be confirmed by sending by Federal Express or other
reputable overnight delivery service a copy of the notice sent by facsimile
transmission. Any party may change its address for notice by written notice
given to the other at least five (5) calendar days before the effective date of
such change in the manner provided in this Section 16.1.
16.2 BROKERS AND FINDERS. In the event of a claim for broker's fees,
finder's fees, commissions or other similar compensation in connection herewith:
(i) the Company, if such claim is based upon any agreement alleged to have been
made by the Company, shall indemnify, defend (using counsel reasonably
satisfactory to Contributors) and hold Contributors harmless from and against
any and all damages, liabilities, costs, expenses and losses (including, without
limitation, attorneys' fees and costs) that Contributors sustain or incur by
reason of such claim; and (ii) Contributors, if such claim is based upon any
agreement alleged to have been made by Contributor, shall severally and not
jointly indemnify, defend (using counsel reasonably satisfactory to the Company)
and hold the Company harmless from and against any and all damages, liabilities,
costs, expenses and losses (including, without limitation, attorneys' fees and
costs) that the Company sustains or incurs by reason of such claim. The
provisions of this subsection shall survive the termination of this Agreement or
the Closing.
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<PAGE> 52
16.3 SUCCESSORS AND ASSIGNS. Neither Contributors nor the Company may
assign their rights hereunder without the prior written consent of the other
party, which consent may be withheld in such party's sole and absolute
discretion; and any attempted or purported assignment in contravention of the
terms and provisions of this Section 16.3 shall be null and void. This Agreement
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, administrators and permitted successors and assigns.
16.4 AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by both parties.
16.5 INTERPRETATION. Words used in the singular shall include the plural,
and vice-versa, and any gender shall be deemed to include the other. The
captions and headings of the Articles and Sections of this Agreement are for
convenience of reference only, and shall not be deemed to define or limit the
provisions hereof. Further, each party hereby acknowledges that such party and
its counsel, after negotiation and consultation, have reviewed and revised this
Agreement. As such, the terms of this Agreement shall be fairly construed and
the usual rule of construction, to the effect that any ambiguities herein should
be resolved against the drafting party, shall not be employed in the
interpretation of this Agreement or any amendments, modifications or exhibits
hereto or thereto.
16.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.
16.7 MERGER OF PRIOR AGREEMENTS. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous oral or written representations,
warranties, statements, documents, understandings and agreements with respect
thereto.
16.8 ATTORNEYS' FEES AND COSTS. If either the Company or Contributors
bring any suit or other proceeding with respect to the subject mater or the
enforcement of this Agreement, the prevailing party (as determined by the court,
agency or other authority before which such suit or proceeding is commenced), in
addition to such other relief as may be awarded, shall be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation actually
incurred. The foregoing includes, without limitation, attorneys' fees, expenses
and costs of investigation incurred in appellate proceedings, costs incurred in
establishing the right to indemnification, or in any action or participation in,
or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the
Bankruptcy Code, 11 United States Code Section 101 et seq., or any successor
statutes.
16.9 TIME OF ESSENCE. Time is of the essence of this Agreement.
16.10 CONFIDENTIALITY. The Company and Contributors agree that, to the
extent reasonably practical, they shall keep the contents of this Agreement and
the contents of any environmental report prepared by or for the Company in
connection with this Agreement confidential and that no publicity or press
release to the general public or otherwise with respect to this transaction
shall be made by either party without the prior written consent of the other
party (which consent may be
46
<PAGE> 53
given or denied in the other party's sole and absolute discretion), except that
the Company is hereby authorized to prepare and issue a press release to the
general public announcing its purchase of the Property at the Closing.
Otherwise, the confidentiality provisions of this Section 16.10 shall survive
the Closing.
16.11 NO WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party make the waiver.
16.12 FURTHER ACTS. Each party, at the request of the other, shall
execute, acknowledge (if appropriate) and deliver whatever additional documents,
and do such other additional acts, as may be reasonably required in order to
accomplish the intent and purposes of this Agreement.
16.13 EXHIBITS. Exhibits A through D, inclusive, are attached hereto and
incorporated herein by reference.
16.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which, when taken together, shall constitute one and the same instrument,
with the same effect as if all of the parties to this Agreement had executed the
same counterpart. Any signature page of any counterpart of this Agreement may be
detached and reattached to any other counterpart of this Agreement.
16.15 NO INTENT TO BENEFIT THIRD PARTIES. Contributors and the Company do
not intend by any provision of this Agreement to confer any right, remedy or
benefit upon any third party, and no third party shall be entitled to enforce,
or otherwise shall acquire any right, remedy or benefit by reason of, any
provision of this Agreement.
16.16 PERFORMANCE DUE ON DAY OTHER THAN BUSINESS DAY. If the time period
for the performance of any act called for under this Agreement expires on a
Saturday, Sunday or Holiday, the act in question may be performed on the next
succeeding Business Day.
16.17 SURVIVAL OF OBLIGATIONS. In addition to terms which by their express
provision are to survive the Closing, all other terms and provisions which by
their nature are to be performed or be applicable after the Closing shall
survive the Closing.
16.18 AUDIT RESPONSIBILITIES. From time to time, both before and after
Closing, the Company may be engaged in financing and other transactions which
will require that both the Company and the operation of the Property be audited
as to then current and past operations of the Property, including periods of
time during which Contributor owned the Property. As a material inducement for
the Company to enter into this Agreement, Contributors agree that upon written
request of the Company, each Contributor shall render its timely and cooperative
efforts, at no additional cost to such Contributor, to any such auditors in
delivering such responses to inquiries and information as is within the
knowledge or records of such Contributor with respect to the operations of the
Property or which is within the control or reasonable ability of such
Contributor to obtain,
47
<PAGE> 54
including, without limitation, operating statements and other financial
information relevant to the Property and its operations. In addition to the
foregoing, such Contributor shall sign and deliver to any such auditor, such
auditor's standard representation letter with respect to the foregoing matters,
revised by such Contributor only to the extent necessary to make same true and
correct as to the matters represented therein by such Contributor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
PAN PACIFIC (PORTLAND), LLC
BY: PAN PACIFIC RETAIL PROPERTIES, INC.
ITS: MANAGING MEMBER
BY: __________________________________________
Stuart A. Tanz,
President and Chief Executive Officer
"CONTRIBUTORS"
PORTLAND FIXTURE
LIMITED PARTNERSHIP
BY: PFMGP, INC.
ITS: GENERAL PARTNER
BY: __________________________________________
ITS: __________________________________________
PFMGP, INC.
BY: __________________________________________
ITS: __________________________________________
48
<PAGE> 55
ACCEPTANCE OF ESCROW INSTRUCTIONS
The undersigned, as Escrow Holder in connection with the contribution of
the Units and the transfer of beneficial ownership in the Property, hereby
acknowledges the terms and conditions of the escrow instructions set forth in
this Agreement and agrees to perform its obligations in connection therewith.
"ESCROW HOLDER"
By: _________________________________
Print Name: _________________________
Print Title: ________________________
49
<PAGE> 56
EXHIBIT A
LEGAL DESCRIPTION
<PAGE> 57
EXHIBIT B
FORM OF BILL OF SALE
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged,
_______________________________________________________________ ("TRANSFEROR"),
hereby transfers, assigns, grants, delivers and conveys to Mikz Development,
L.L.C., an Oregon limited liability company ("TRANSFEREE"), all of the personal
property owned by Transferor and located on, or used in connection with, the
real property located in the County of ___________, State of Oregon, described
in Exhibit A attached hereto and incorporated herein by this reference,
including, without limitation, those items described on Exhibit B attached
hereto and incorporated herein by this reference (collectively, the "PERSONAL
PROPERTY").
TO HAVE AND TO HOLD the Personal Property, together with, all and
singular, the rights and appurtenances thereto belonging to Transferee, its
successors and assigns.
Transferor hereby covenants that it will, at any time and from time to
time, following a written request therefor, execute and deliver to Transferee
and its successors and assigns, any additional or confirmatory instruments and
take such further acts as Transferee may reasonably request to evidence fully
the conveyance contained herein.
DATED: this _____ day of _______________, 1998.
_______________________________________________
_______________________________________________
BY: __________________________________________
Its: __________________________________________
"Transferor"
<PAGE> 58
EXHIBIT C
FORM OF TENANT NOTICES
_______________, 1998
VIA CERTIFIED MAIL --
RETURN RECEIPT REQUESTED
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
Re: Lease Dated _______________, 19__
Dear _______________:
This is to notify you that________________________________________________
("_________") has sold its interest in Mikz Development, L.L.C., the record
owner of the property commonly known as the ________________________________ and
located at ____________________________________________________________________.
Please direct all future rental and other payments and communications
under your lease to:
----------------------------------------------
----------------------------------------------
----------------------------------------------
"-------------"
----------------------------------
<PAGE> 59
EXHIBIT D
FORM OF TENANT ESTOPPEL CERTIFICATE
(Tenant Name)
TO: _____________________________________, a ____________ corporation
THIS IS TO CERTIFY THAT:
1. The undersigned is the tenant under that certain Lease dated
_______________, 19__ ("Lease") by and between as lessor ("Landlord") and
______________________________________________ as tenant ("Tenant"), covering
certain premises commonly known and designated as Space _____, _________________
__________________________________________________________("Premises").
2. The Lease has not been modified, changed, altered, assigned,
supplemented or amended in any, respect except as indicated below (if none,
state "none"). The Lease is valid and in full force and effect on the date
hereof. The Lease, as modified by the amendments or assignments listed below, if
any, represents the entire agreement between Landlord and Tenant with respect to
the Premises.
________________________________________________________________________________
________________________________________________________________________________
_____________________
3. Tenant is not entitled to, and has made no agreement with Landlord,
or its agents or employees, concerning free rent, partial rent, rebate of rent
payments, credit or offset or reduction in rent, or any other type of rental
concession including, without limitation, lease, support payments or lease
buy-outs, except as indicated below, (if none, state "none").
________________________________________________________________________________
________________________________________________________________________________
_____________________
4. The Lease term began on _______________, 19__, and the termination
date of the present term of the Lease, excluding unexercised renewals, is
_______________, 19__.
5. Tenant has paid rent for the Premises for the period up to and
including ____________, 19__. No such rent (not including security deposits) has
been paid more than one (1) month in advance of its due date, except as
indicated below, (if none, state "none"). The Tenant's security deposit is
$_______________.
1
<PAGE> 60
________________________________________________________________________________
________________________________________________________________________________
_____________________
6. No event has occurred and no condition exists which, with the giving
of notice or the lapse of time or both, will constitute a default by Tenant or,
to Tenant's best knowledge, by Landlord, under the Lease. To the best knowledge
of Tenant, Tenant has no existing defenses or offsets against the enforcement of
the lease by Landlord.
7. All required contributions by Landlord to Tenant on account of
Tenant's tenant improvements have been completed in accordance with the terms of
the Lease, except as indicated below (if none, state "none").
8. Except as set forth in the Lease, Tenant has no outstanding options,
rights of first refusal or rights of first offer to purchase the Premises or any
part thereof or all or any part of the real property of which the Premises are a
part.
9. No action, whether voluntary or otherwise, are pending against
Tenant under the bankruptcy laws of the United States or any state thereof.
10. Tenant has not sublet the Premises to any sublessee and has not
assigned any, of its rights under the Lease, except as indicated below (if none,
state "none"). No one except Tenant and its employees occupies the Premises.
________________________________________________________________________________
________________________________________________________________________________
_____________________
11. The address for notice to be sent to Tenant is as set forth in the
Lease. (If not, indicate correct address below.)
________________________________________________________________________________
________________________________________________________________________________
_____________________
12. The Premises have not been used by Tenant and Tenant does not plan
to use the Premises for any activities which, directly or indirectly, involve
the use, generation, treatment storage, transportation or disposal of any
petroleum product or any toxic or hazardous chemical material, substance,
pollutant or waste in violation of any applicable law.
13. Tenant has not received any written notice from any government
authority of violation of any federal, state, county or local statutes, laws,
rules or regulations of area governmental authorities relating to environmental,
health or safety matters and, to Tenant's actual knowledge, there are no writs,
injunctions, decrees, orders or judgments outstanding lawsuits, claims,
proceedings or investigations pending or threatened, relating to Tenant's use,
maintenance or operation of the Premises.
2
<PAGE> 61
14. The undersigned is authorized to execute this Tenant Estoppel
Certificate on behalf of Tenant.
Dated: _______________, 1998.
[NAME OF TENANT]
By: _____________________________________
Its: ____________________________________
3
<PAGE> 62
SCHEDULES
4
<PAGE> 63
AMENDMENT NO. 1
TO CONTRIBUTION AGREEMENT
(MIKZ DEVELOPMENT, L.L.C.)
This Amendment No. 1 to Contribution Agreement ("Amendment No. 1")
is entered into as of October 30, 1998 by and among (i) PAN PACIFIC (PORTLAND),
LLC, a Delaware limited liability company, and its assignees (the "Company") and
(ii) PORTLAND FIXTURE LIMITED PARTNERSHIP, an Oregon limited partnership, and
PFMGP, INC., an Oregon corporation (individually, a "Contributor" and
collectively, the "Contributors"), and amends the Contribution Agreement entered
into as of September 23, 1998 by and among the Company and the Contributors (the
"Contribution Agreement"). All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Contribution
Agreement.
WHEREAS, the Company and the Contributors have entered into the
Contribution Agreement, which provides, among other things, for the transfer
from the Contributors to the Company of all of the outstanding ownership
interests in Mikz Development, L.L.C., an Oregon limited liability company, in
exchange for units of non-managing member interest in the Company in accordance
with the terms and subject to the conditions of the Contribution Agreement; and
WHEREAS, the Company and the Contributors desire to amend the
Contribution Agreement to clarify an ambiguity in Section 11.7(a) thereof.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Restrictions on and Information Regarding Beneficial Ownership
of LLC Units; Publicly Traded Partnership Representation. Section 11.7(a) of the
Contribution Agreement is amended to read in its entirety as follows:
"Notwithstanding anything to the contrary contained in this
Agreement or the Company Operating Agreement, without the consent of the
Company, which consent may be given or withheld in the Company's sole and
absolute discretion, in no event shall the Contributors or any transferees or
prospective transferees of such persons own or transfer Exchange Units such that
the number of such holders (or such prospective holders) of Exchange Units
together with the number of holders of units of non-managing member interest in
the Company, if any, issued pursuant to the Related Purchase Agreements, would,
in the aggregate, exceed thirty-five (35) (including as holders any person (a
"BENEFICIAL OWNER") owning an interest in a partnership, a limited liability
company, a grantor trust, or an S corporation (a "FLOW-THROUGH ENTITY"), that
would own, directly or through other Flow-Through Entities, an interest in the
Company where substantially all the value of the Beneficial Owner's interest in
the Flow-Through Entity would be attributable to the Flow-Through Entity's
interest (direct
<PAGE> 64
or indirect) in the Company (a "SPECIAL PURPOSE FLOW-THROUGH ENTITY"), and
treating the Contributors as Special Purpose Flow-Through Entities for purposes
of this paragraph)."
2. Counterparts. This Amendment No. 1 may be executed in one or
more counterparts, each of which shall be deemed to constitute an original, but
all of which, when taken together, shall constitute one and the same instrument,
with the same effect as if all of the parties to this Amendment No. 1 had
executed the same counterpart. Any signature page of any counterpart of this
Amendment No. 1 may be detached and reattached to any other counterpart of this
Agreement.
3. Ratification. Except as modified hereby, all of the terms and
conditions of the Contribution Agreement are hereby ratified and confirmed.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 65
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 as of the day and year first above written.
"COMPANY"
PAN PACIFIC (PORTLAND), LLC,
a Delaware limited liability company
By: Pan Pacific Retail Properties, Inc.
Its: Managing Member
By: /s/ STUART A. TANZ
-------------------------------------------
Stuart A. Tanz
President and Chief Executive Officer
"CONTRIBUTORS"
PORTLAND FIXTURE LIMITED
PARTNERSHIP, an Oregon limited partnership
By: PFMGP, Inc.
Its: General Partner
By: /s/ DAVID P. ZIMEL
-----------------------------------------
Its: PRESIDENT
-----------------------------------------
PFMGP, INC., an Oregon corporation
By: /s/ DAVID P. ZIMEL
-----------------------------------------
Its: PRESIDENT
-----------------------------------------
3
<PAGE> 66
AMENDMENT NO. 2
TO CONTRIBUTION AGREEMENT
(MIKZ DEVELOPMENT, L.L.C.)
This Amendment is made effective as of November 4, 1998, by and among the
parties set forth below.
A. On September 23, 1998, (i) Pan Pacific (Portland), LLC, a Delaware
limited liability company (the "COMPANY") and (ii) Portland Fixture Limited
Partnership, an Oregon limited partnership and PFMGP, Inc., an Oregon
corporation (individually, a "CONTRIBUTOR" and collectively, "CONTRIBUTORS")
entered into a Contribution Agreement, as amended October 30, 1998 (the
"AGREEMENT"), regarding the acquisition by the Company from Contributors of 100%
of the ownership in Mikz Development, L.L.C., an Oregon limited liability
company (the "LLC"). Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Agreement.
B. The parties hereto wish to amend the Agreement in order to provide
for the changes set forth herein.
NOW THEREFORE, the parties agree as follows:
1. Additional Expenses. The parties hereby agree that the Agreement is
hereby amended to add the following sentence to Section 7.7: "Contributors shall
be responsible for payment of the fees and expenses of Latham & Watkins in
connection with services rendered in pursuit of the transactions contemplated
herein, which fees and expenses shall be represented by an invoice delivered to
Contributors on or before the Closing." The parties acknowledge and agree that
in accordance with Section 3.1 and 7.3(b) of the Agreement, such fees and
expenses shall be treated as a closing cost payable by Contributors, which cost
shall be paid by the Company and offset by a corresponding decrease in the
number of Exchange Units issuable to Contributors.
2. Adjustments to Exchange Consideration. The parties hereby further
agree that the aggregate dollar value of exchange consideration payable to
Contributors pursuant to Section 3.1 shall be increased by $102,751.
3. No Other Changes. Other than to the extent set forth herein, all
provisions of the Agreement shall remain in full force and effect and are
incorporated herein by reference.
4. Counterparts. This Amendment to Contribution Agreement may be signed
in counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
<PAGE> 67
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
<TABLE>
<S> <C>
"COMPANY" "CONTRIBUTORS"
PAN PACIFIC (PORTLAND), LLC PORTLAND FIXTURE
LIMITED PARTNERSHIP
BY: PAN PACIFIC RETAIL PROPERTIES, INC.
ITS: MANAGING MEMBER BY: PFMGP, INC.
ITS: GENERAL PARTNER
By: ____________________________________
David L. Adlard By: ___________________________________
Executive Vice President and Its: __________________________________
Chief Financial Officer
PFMGP, INC.
By: ___________________________________
Its: __________________________________
"ESCROW HOLDER"
By: ___________________________________
Print Name: ___________________________
Print Title: __________________________
</TABLE>
-2-
<PAGE> 1
CONTRIBUTION AGREEMENT
AND ESCROW INSTRUCTIONS
By and Between
PORTLAND FIXTURE LIMITED PARTNERSHIP,
an Oregon limited partnership,
INDEPENDENT MEMBER CORP.,
an Oregon corporation,
BYRON P. HENRY, an individual, and
STEVEN J. OLIVA, an individual
as Contributors,
and
PAN PACIFIC (PORTLAND), LLC
a Delaware limited liability company,
as the Company.
Dated for Reference Purposes As Of
September 23, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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RECITALS.....................................................................................1
ARTICLE I
DEFINITIONS..........................................................................1
ARTICLE II
CONTRIBUTION OF UNITS................................................................6
2.1 Transfer of Units......................................................6
ARTICLE III
EXCHANGE CONSIDERATION...............................................................6
3.1 Exchange Units.........................................................6
ARTICLE IV
PROPERTY OWNED BY THE LLC............................................................7
4.1 Land...................................................................7
4.2 Improvements...........................................................7
4.3 Personal Property......................................................7
4.4 Contracts..............................................................7
ARTICLE V
INSPECTION...........................................................................8
5.1 Due Diligence Review...................................................8
5.2 Right to Terminate.....................................................8
5.3 Access & Inquiries.....................................................8
5.4 New Agreements.........................................................9
5.5 Conduct of Inspections.................................................9
ARTICLE VI
TITLE TO PROPERTY...................................................................10
6.1 Title.................................................................10
6.2 Title Insurance.......................................................10
</TABLE>
i
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<TABLE>
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ARTICLE VII
CLOSING.............................................................................11
7.1 Time and Place........................................................11
7.2 Deliveries By Contributors............................................12
7.3 Deliveries By the Company.............................................13
7.4 Additional Deliveries By the Company and Contributors.................13
7.5 Other Instruments.....................................................14
7.6 Prorations and Apportionments.........................................14
7.7 Costs and Expenses....................................................15
7.8 Insurance; Utilities..................................................16
7.9 Close of Escrow.......................................................16
7.10 Notification; Closing Statements......................................16
7.11 Default and Remedies..................................................17
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY......................................................................17
8.1 Company Status........................................................17
8.2 Power and Authority...................................................17
8.3 Enforceability........................................................18
8.4 No Commissions........................................................18
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF THE CONTRIBUTORS.................................................................18
9.1 Company Status........................................................18
9.2 Power and Authority...................................................19
9.3 Enforceability........................................................19
9.4 Capitalization........................................................19
9.5 Subsidiaries..........................................................19
9.6 No Violation..........................................................20
9.7 No Commissions........................................................20
9.8 Financial Statements..................................................20
9.9 Changes Since the Current Balance Sheet...............................20
9.10 Litigation............................................................21
9.11 Liabilities; Bank Accounts............................................21
9.12 Environmental Matters.................................................21
9.13 Real Property, Leases and Significant Personal Property...............22
9.14 Good Title, Adequacy and Condition....................................22
9.15 Compliance with Laws..................................................22
9.16 Employee Benefit Plans................................................23
9.17 Tax Returns and Examinations..........................................23
</TABLE>
ii
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<TABLE>
<S> <C>
9.18 Insurance.............................................................25
9.19 Licenses and Permits..................................................25
9.20 Contracts and Employment Matters......................................25
9.21 Governmental Contracts................................................26
9.22 Officers, Directors and Key Employees; Employment Agreements;
Compensation..........................................................26
9.23 Predecessor Status, etc...............................................26
9.24 Investment Representations............................................26
9.25 Condemnation. .......................................................28
9.26 Notice of Failure to Comply. ........................................28
9.27 Notice of Default. ..................................................28
9.28 Special Assessments. ................................................28
9.29 Default Under Leases. ...............................................28
9.30 Utilities. ..........................................................28
9.31 Condition of Systems. ...............................................29
9.32 Foreign Person Status. ..............................................29
9.33 ADA Compliance. .....................................................29
9.34 Survey and Specifications. ..........................................29
9.35 Misstatements or Omissions. .........................................29
9.36 Leases. .............................................................29
9.37 Broker Commissions. .................................................30
9.38 Operation of Property. ..............................................30
9.39 Hypothecation. ......................................................30
9.40 Confidential Information. ...........................................30
9.41 Possession. .........................................................30
ARTICLE X
CONDUCT OF BUSINESS PENDING THE CLOSING.............................................31
10.1 Conduct of Business by the LLC Pending the Closing....................31
10.2 Operation of the Property.............................................32
ARTICLE XI
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES.....................................33
11.1 Further Assurances....................................................33
11.2 Confidentiality; Publicity............................................33
11.3 No Other Discussions..................................................33
11.4 Termination of Related Party Agreements...............................33
11.5 Damage or Destruction.................................................34
11.6 Condemnation..........................................................35
11.7 Restrictions on and Information Regarding Beneficial Ownership of LLC
Units; Publicly Traded Partnership Representation.....................36
</TABLE>
iii
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<TABLE>
<S> <C>
ARTICLE XII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY........................................37
12.1 Accuracy of Representations and Warranties and Compliance with
Obligations...........................................................37
12.2 No Material Adverse Change or Destruction of Property.................37
12.3 Corporate Documents...................................................37
12.4 Consents..............................................................37
12.5 No Adverse Litigation.................................................38
12.6 Due Diligence Review..................................................38
12.7 Opinion of Counsel....................................................38
12.8 Releases..............................................................38
12.9 Approval of Title.....................................................38
12.10 Approval of Other Matters.............................................39
12.11 No Insolvency.........................................................40
12.12 Tenant Estoppels......................................................40
12.13 Concurrent Closings...................................................41
12.14 Waiver................................................................41
12.15 Lease Payments and Rents..............................................41
12.16 DownREIT Consummation.................................................41
12.17 Termination...........................................................41
ARTICLE XIII
CONDITIONS TO THE
OBLIGATIONS OF CONTRIBUTORS.........................................................42
13.1 Accuracy of Representations and Warranties and Compliance with
Obligations...........................................................42
13.2 Concurrent Closings...................................................42
13.3 DownREIT Consummation.................................................42
13.4 No Change in Company Structure........................................42
13.5 No Material Adverse Change............................................42
13.6 No Litigation.........................................................42
13.7 Legal Opinion.........................................................42
13.9 Termination...........................................................43
ARTICLE XIV
INDEMNIFICATION.....................................................................43
14.1 Agreement by Contributors to Indemnify................................43
14.2 Survival of Representations and Warranties............................43
ARTICLE XV
TERMINATION, AMENDMENT AND WAIVER...................................................44
15.1 Termination...........................................................44
15.2 Effect of Termination.................................................44
</TABLE>
iv
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<TABLE>
<S> <C>
ARTICLE XVI
GENERAL PROVISIONS..................................................................44
16.1 Notices...............................................................44
16.2 Brokers and Finders...................................................45
16.3 Successors and Assigns................................................46
16.4 Amendments............................................................46
16.5 Interpretation........................................................46
16.6 Governing Law.........................................................46
16.7 Merger of Prior Agreements............................................46
16.8 Attorneys' Fees and Costs.............................................46
16.9 Time of Essence.......................................................47
16.10 Confidentiality.......................................................47
16.11 No Waiver.............................................................47
16.12 Further Acts..........................................................47
16.13 Exhibits..............................................................47
16.14 Counterparts..........................................................47
16.15 No Intent To Benefit Third Parties....................................47
16.16 Performance Due On Day Other Than Business Day........................47
16.17 Survival of Obligations...............................................47
16.18 Audit Responsibilities................................................48
</TABLE>
v
<PAGE> 7
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "AGREEMENT") is entered into as of
September 23, 1998 (the "EFFECTIVE DATE"), by and among (i) PAN PACIFIC
(PORTLAND), LLC, a Delaware limited liability company, and its assignees (the
"COMPANY") and (ii) PORTLAND FIXTURE LIMITED PARTNERSHIP, an Oregon limited
partnership, INDEPENDENT MEMBER CORP., an Oregon corporation, BYRON P. HENRY, an
individual, and STEVEN J. OLIVA, an individual (individually, a "CONTRIBUTOR"
and collectively, "CONTRIBUTORS"). Certain other capitalized terms used herein
are defined in Article I and throughout this Agreement.
RECITALS
A. Contributors are the owners of all of the outstanding ownership
interests in Smudik Development, L.L.C., an Oregon limited liability company
(the "LLC"), which in turn owns certain assets, including, without limitation,
the Property (as hereafter defined), which consists of certain shopping center
projects more particularly described in EXHIBIT A.
B. The Company desires to acquire all the outstanding ownership
interests in the LLC, and Contributors desire to contribute such outstanding
ownership interests to the Company, on the terms and conditions set forth
herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, Contributors and the Company hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms and references shall have the meanings indicated below
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined and to verbs of any tense):
1.1 "ADDITIONAL RENTS" means amounts tenants may be obligated to pay as
additional rent, including certain percentage rent, certain escalations in base
rent, and certain pass-throughs of operating and similar expenses.
1.2 "AFFILIATE" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof.
1
<PAGE> 8
1.3 "BILL OF SALE" means a bill of sale as defined in Section 4.3.
1.4 "BUILT-IN GAIN" shall mean the excess of the gross fair market value
of the Property over the Property's adjusted tax basis for federal income tax
purposes, as determined as of the Closing Date, as reduced from time to time in
accordance with applicable provisions of the Code and Treasury Regulations.
1.5 "BUSINESS DAY" means any day other than a Saturday, Sunday or a
Holiday.
1.6 "BUSINESS" means the LLC's practice of owning and operating the
Property (as hereinafter defined), and all matters attendant thereto.
1.7 "STANDARD POLICY" means a standard coverage owner's policy of title
insurance.
1.8 "CODE" means the Internal Revenue Code of 1986, as amended.
1.9 "COMPANY OPERATING AGREEMENT" shall mean the Amended and Restated
Limited Liability Company Agreement of Pan Pacific (Portland), LLC, as amended.
1.10 "CONTRACTS" shall have the meaning set forth in Section 4.4.
1.11 "DOCUMENTS" means the transfer documents attached as Exhibits to
this Agreement.
1.12 "ENVIRONMENTAL LAWS" shall mean any and all presently existing
federal, state and local laws (whether under common law, statute, rule,
regulation or otherwise), requirements under permits issued with respect
thereto, and other requirements of any federal, state or local governmental
agency, court, board, bureau or other authority having jurisdiction with respect
to or relating to the environment, to any Hazardous Substance or to any activity
involving Hazardous Substances, and shall include, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9601, et seq.), the Federal Resource Conservation and Recovery Act (42
U.S.C. Section 6901, et seq.) and all amendments thereto in effect as of the
Closing Date.
1.13 "ESCROW HOLDER" means the Company where escrow shall be established,
whose address for this transaction shall be:
Transnation Title Insurance Company
111 S.W. Fifth Avenue, Suite 2200
Portland Oregon 97204
Attn: Theresa Kilmer, Vice President and
Senior Escrow Officer/Special Projects
2
<PAGE> 9
Telephone No: (503) 222-9931
Facsimile No: (503) 274-7972
1.14 "ESCROW PERIOD" means the period from and after the Effective Date
through the Closing Date or any earlier termination of this Agreement.
1.15 "EXTENDED POLICY" means an extended coverage owner's policy of title
insurance.
1.16 "FF&E" means furniture, fixtures, equipment, machinery, appliances,
fittings, and other removable articles of personal property of every kind and
nature that are owned by Contributor and used in the operation of the Property,
including, without limitation, (i) furnishings, furniture, and equipment, (ii)
art work and other decorative items, (iii) built-in appliances, and (iv) office
furniture and equipment.
1.17 "GENERAL INTANGIBLES" means the Offsite Rights, the Permits, the
Repair Warranties, and other intangible personal property rights of whatever
nature (other than the rights evidenced by the Contracts) owned by Contributors
and used in the operation and maintenance of the Property.
1.18 "GOVERNMENTAL AUTHORITY" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.19 "HAZARDOUS MATERIALS" shall mean and include any chemical, compound,
material, mixture, waste or substance that is now or hereafter defined or listed
in, or otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous
waste," "infectious waste," "toxic substance," "toxic pollutant" or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, or toxicity including any petroleum, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixture of
natural gas and such synthetic gas). "Hazardous Materials" shall include,
without limitation, any hazardous or toxic substance, material or waste or any
chemical, compound or mixture which is (i) asbestos, (ii) motor oil, gasoline,
petroleum or any petroleum by-product, (iii) designated as a "hazardous
substance" pursuant to Section 1317 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1251 et seq.), (iv) defined as a "hazardous waste" pursuant
to Section 6903 of the Federal Resource Conservation and Recovery Act, (42
U.S.C. Section 6901 et seq., (v) defined as "hazardous substances" pursuant to
Section 9601 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq.), or (vi) listed in the United
States Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances (40 CFR part 302); or in
any and all amendments thereto in effect as of the Closing Date; or such
chemicals, compounds, mixtures, substances, materials or wastes otherwise
regulated under any applicable local, state or federal Environmental Laws.
1.20 "HOLIDAY" means any day on which banking institutions in the State
of Oregon are authorized or obligated by law or executive order to close.
1.21 "IMPROVEMENTS" shall have the meaning set forth in Section 4.2.
3
<PAGE> 10
1.22 "INFORMATION" means all documents, reports, studies, and other
information or materials (including, without limitation, the Records) delivered
or disclosed to the Company by Contributors or their agents.
1.23 "INSPECTION PERIOD" means the period from and after the Effective
Date and ending at 5:00 p.m., Pacific Time, on the later of (i) September 28,
1998, or (ii) such later date as may be required under the provisions of Section
12.11.
1.24 "INVENTORY" means the stock of supplies and other consumables of
every kind and nature that are owned by a Contributor and used exclusively in
the operation and maintenance of the Property in the ordinary course of
business.
1.25 "KNOWLEDGE" attributable to Contributors in Article IX shall mean
the actual knowledge of each or any of David P. Zimel or Jack W. Baron.
1.26 "LAND" shall have the meaning set forth in Section 4.1.
1.27 "LEASE" means any lease, sublease, license, or other agreement for
the occupancy, possession, or use of any space within the Property (including,
without limitation, any rooms or other accommodations for guests or other
transient occupants and any storage space, containers, or other facilities).
1.28 "LIEN" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or charge).
1.29 "MATERIAL ADVERSE CHANGE (OR EFFECT)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, business or prospects of the LLC which change (or
effect) individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations, operations,
business or prospects.
1.30 "NON-FOREIGN AFFIDAVIT" shall mean a certificate regarding
Contributor's non-foreign status in the form commonly used in transactions of
this nature, along with any necessary analogous state form or forms.
1.31 "OFFSITE RIGHTS" means any lease, license, or other agreement (other
than a recorded easement) providing for the use of another's real property in
conjunction with the operation of the Property (as, by way of illustration and
not limitation, use for vehicular parking and/or access).
1.32 "OWNER'S TITLE POLICY" means a Standard or Extended Policy, in an
amount reasonably satisfactory to the Company.
4
<PAGE> 11
1.33 "PERMIT" means any permit, certificate, license, or other form of
authorization or approval issued by a governmental agency or authority and
legally required for the proper operation and use of the Property (including,
without limitation, any certificates of occupancy with respect to the
Improvements, elevator permits, conditional use permits, and zoning variances)
to the extent held and assignable by a Contributor or otherwise transferable
with the Property.
1.34 "PERMITTED EXCEPTIONS" shall have the meaning set forth in Section
6.1.
1.35 "PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
1.36 "PERSONAL PROPERTY" shall have the meaning set forth in Section 4.3.
1.37 "PLANS AND SPECIFICATIONS" shall have the meaning set forth in
Section 12.10(a)(v).
1.38 "PPRP" means Pan Pacific Retail Properties, Inc., a Maryland
corporation and the managing member of the Company.
1.39 "PROPERTY" shall have the meaning set forth in Article IV.
1.40 "PRORATIONS" shall have the meaning set forth in Section 7.6(a).
1.41 "PTR" means a current preliminary title report concerning the Real
Property issued by the Title Company.
1.42 "REAL PROPERTY" shall have the meaning set forth in Section 4.1.
1.43 "RECORDS" means all books, records, correspondence, and other files
that have been received or generated and maintained in the course of operating
the Property that are in a Contributor's possession or control.
1.44 "REIT" means real estate investment trust.
1.45 "REPAIR WARRANTIES" means any written guaranties, warranties, or
other obligations of any contractor, manufacturer, or vendor for the repair or
maintenance of any of the Improvements or FF&E, to the extent assignable by a
Contributor.
1.46 "REVENUES" shall have the meaning set forth in Section 7.6(a).
1.47 "SERVICE CONTRACT" means any contract or other arrangement, written
or oral, for the continuing provision of services relating to the improvement,
maintenance, repair, protection, or operation of the Property.
5
<PAGE> 12
1.48 "SHOPPING CENTER" means the Property attributable to each separate
shopping center identified in EXHIBIT A attached hereto.
1.49 "TAX" or "TAXES" means any federal, state, local or foreign net or
gross income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax, governmental fee or like assessment or charge of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not, and including any obligation to indemnify or otherwise assume
or succeed to the Tax liability of any other person.
1.50 "TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
exhibit or other attachment thereto, and including any amendment thereof.
1.51 "TENANT" means the tenant and occupant of, and another holder of a
possessory right in, all or any portion of the Property pursuant to a Lease.
1.52 "TENANT ESTOPPEL CERTIFICATES" means estoppel certificates to be
executed and delivered by each Tenant to the Company as provided by Section
12.12.
1.53 "TENANT NOTICES" means notices to the Tenants in the form of EXHIBIT
C.
1.54 "TITLE COMPANY" means Transnation Title Insurance Company.
1.55 "UNIT" means the representative measurement of ownership interest in
the LLC, whether or not so denominated in the operating agreement or other
charter documents of the LLC.
ARTICLE II
CONTRIBUTION OF UNITS
2.1 TRANSFER OF UNITS. Upon the Closing, in accordance with the terms
and conditions hereof, Contributors shall transfer, convey and assign to the
Company all of the issued and outstanding Units in the LLC.
ARTICLE III
EXCHANGE CONSIDERATION
3.1 EXCHANGE UNITS. The aggregate consideration to be transferred to
Contributors in exchange for the Units shall be transferred to Contributors via
the issuance to Contributors of units of non-managing member interest in the
Company (the "EXCHANGE UNITS") in proportion to Contributors' relative
entitlement to distributions under the LLC's operating agreement in effect
6
<PAGE> 13
immediately prior to the Closing. The parties intend that this exchange shall be
treated as a contribution under Code Section 721(a). The aggregate number of
Exchange Units, rounded to the nearest whole Exchange Unit, issuable to the
Contributors shall be derived by dividing (a) Thirteen Million Nine Hundred
Eighty-Seven Thousand Eight Hundred Eighty-Nine Dollars ($13,987,889) (the "BASE
PRICE"), as adjusted for variations in the LLC's equity in the Property through
the Closing Date and any costs, prorations or adjustments payable by or to the
Contributors under the provisions of Article VII or Sections 11.5 or 11.6 below
and known as of Closing, by (b) Twenty-One Dollars and Twelve and One Half
cents ($21.125). It is the intention of the parties that all costs, prorations
or adjustments payable by or to the Contributors and known as of Closing shall
operate to increase or reduce, as applicable, the number of Exchange Units
issuable to the Contributors, and that all such costs, prorations or adjustments
not known as of Closing shall be handled in cash or other mutually agreeable
medium.
ARTICLE IV
PROPERTY OWNED BY THE LLC
Contributors hereby agree that upon the conveyance of the Units to the
Company, the Company, by virtue of its 100% ownership interest in the LLC, shall
derivatively hold all of the LLC's right, title, and interest in the following
(collectively, the "PROPERTY"):
4.1 LAND - that certain land described in EXHIBIT A, and all appurtenant
rights, privileges, and easements thereto owned by a Contributor (collectively,
the "LAND"). The Land and the Improvements are collectively referred to as the
"REAL PROPERTY").
4.2 IMPROVEMENTS - all buildings, structures, fixtures, and other
improvements located on the Land (collectively, the "IMPROVEMENTS").
4.3 PERSONAL PROPERTY - all personal property, if any, owned by the LLC
and used, or owned by a Contributor and used exclusively, in the operation,
maintenance, and management of the Real Property as of the Closing Date,
including, without limitation, the FF&E, the Inventory, the Records, and the
General Intangibles (collectively, the "PERSONAL PROPERTY"). To the extent that
any Personal Property is owned by a Contributor rather than the LLC, such
Personal Property shall be conveyed from such Contributor to the Company
pursuant to a Bill of Sale (the "BILL OF SALE") substantially in the form of
EXHIBIT B. The parties acknowledge and agree that Personal Property shall not
include the LLC's cash or cash equivalents as of the Closing, which may be
distributed to the Contributors in any manner not constituting a violation of
any Contracts to which the LLC is a party.
4.4 CONTRACTS - all contracts and agreements (oral or written) in effect
on the Closing Date pertaining to the Property, if any, including, without
limitation, the Leases and the Service Contracts (collectively, the
"CONTRACTS").
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ARTICLE V
INSPECTION
5.1 DUE DILIGENCE REVIEW. The Company, at its sole cost and expense,
shall have the right to a Due Diligence Review in accordance with the following
terms and conditions. A "DUE DILIGENCE REVIEW" means (a) an inspection,
examination and evaluation of the Information, (b) the conduct of physical
tests, inspections and other investigations on the Property and all portions
thereof leased by tenants ("INSPECTION STUDIES"), all in order that the Company
may determine, in its sole and absolute judgment and discretion, whether the
Property is acceptable to the Company and that the Company's ownership of the
Property is consistent with PPRP's continuing ability to qualify for taxation as
a REIT, and (c) an inspection, examination and evaluation of such other
documents and information as may be necessary or appropriate, also in its sole
and absolute judgment and discretion, to satisfy the Company as to the integrity
and affairs of the LLC.
5.2 RIGHT TO TERMINATE. Notwithstanding anything to the contrary in this
Agreement, the Company may terminate this Agreement by giving notice of
termination to Contributor on or before the termination of the Inspection
Period. If the Company does not give the notice of termination, this Agreement
shall continue in full force and effect, subject, however, to the Company's
other termination rights hereunder. Contributor acknowledges that the Company
may, but is not obligated to, expend time, money, and other resources in
connection with the Due Diligence Review of the Property and the LLC, and that,
notwithstanding the fact that this Agreement may terminate pursuant to this
Section 5.2 and other applicable provisions of this Agreement, such time, money,
and other resources that may be expended constitute adequate consideration for
Contributors' execution of and entry into this Agreement.
5.3 ACCESS & INQUIRIES.
(a) The Company and its representatives, agents and contractors
shall have reasonable access to the Property, including all areas leased to
Tenants, for the purpose of causing a survey of the Land and Improvements to be
performed by a licensed surveyor, and conducting architectural, engineering,
geotechnical, and environmental inspections and tests (including intrusive
inspection and sampling), feasibility studies, and any other inspections,
studies, or tests reasonably required by the Company; provided, however, that
the Company shall not undertake any intrusive inspection or sampling without
first obtaining the written consent of Contributors, which consent shall not be
withheld unreasonably. The Company shall keep the Property free and clear of any
Liens as a result of any entry on the Property pursuant to this Section 5.3(a).
(b) During the pendency of this Agreement, Contributors shall make
available to the Company, and the Company and its representatives, agents and
contractors shall have a continuing right of reasonable access to and the right
to examine and make copies of, all books and records; construction plans;
correspondence; documents; contracts; agreements; Leases, as well as Lease files
with histories; and other materials relating to the Property and the LLC in any
Contributor's possession or control, including, without limitation, the right to
conduct a "walk-
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through" of the Property prior to the Closing upon appropriate notice to Tenants
and subject to the rights of all Tenants under their Leases.
(c) In the course of its Due Diligence Review, the Company may
make inquiries to third parties including, without limitation, Tenants, lenders,
contractors, property managers, parties to the Information and Contracts, and
municipal, local, and other government officials and representatives, and each
Contributor consents to such inquiries.
5.4 NEW AGREEMENTS. During the period from the Effective Date until the
Closing Date, and as a condition to the Company's obligations to purchase the
Property, Contributors shall comply with the following:
(a) During the period from the Effective Date until the Closing
Date, and as a condition to the Company's obligations to purchase the Property,
no Contributor, without the prior written consent of the Company, such consent
not to be unreasonably withheld or delayed, shall (i) amend or terminate any
Lease, tenancy, license or other right of occupancy or use for any portion of
the Property or any assignment or sublet thereunder, (ii) consent to the
assignment of any Leases or subleasing of any of the Property, or (iii) enter
into any new Lease of the Property or any portion thereof. In the event a
Contributor elects to seek the Company's approval of any such matters, then such
Contributor shall so notify the Company, and if the Company fails to notify
Contributor, within ten (10) Business Days after the Company's receipt of such
notice, of any objection the Company has hereunder to any action described
therein, then the Company shall be deemed to have consented to such action.
(b) No Contributor shall, without the prior written consent of the
Company in each instance (such consent not to be unreasonably withheld), enter
into any commitment, contract, option or other agreement of any kind with
respect to the repair, maintenance or operation of the Property, unless such
contracts, etc., have terms that expire prior to Closing.
5.5 CONDUCT OF INSPECTIONS.
(a) Any entry by the Company onto the Property shall be subject
to, and conducted in accordance with, all applicable laws, statutes, rules and
regulations and the terms of any Leases so as to avoid any material interference
with the operations and occupancy of the Property and to avoid any material
disturbance of any of the Tenants or the possessory rights of any of the
Tenants. The Company shall promptly restore the Property to its previous
condition before any such inspections, studies, or tests were performed.
(b) The Company or its agents may undertake borings or other
disturbances of the soil with Contributors' prior written approval (not to be
unreasonably withheld), provided that the soil borings and other disturbances
shall be sealed and closed using materials and techniques that conform with all
applicable laws, statutes, rules and regulations and industry and governmental
standards, and the soil shall be recompacted to the condition immediately before
any such borings were undertaken.
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(c) Notwithstanding any general liability or other insurance that
may be maintained by the Company, the Company hereby agrees to indemnify, defend
and hold harmless Contributors and their respective partners, shareholders,
directors, officers, employees, and agents and all Tenants from and against any
claims, losses or damages (including attorneys' fees and costs) arising from or
in connection with the due diligence and inspection activities conducted on the
Property by the Company and or its agents, including, without limitation, any
damages to the Property or any property of any Tenant arising from or relating
to any inspections, studies or tests performed by the Company or its agents. The
foregoing indemnification obligation of the Company shall survive any
termination of this Agreement or the delivery of the Deed and the transfer of
title to the Property. If this Agreement is terminated, the Company shall
deliver to Contributors, upon Contributors' payment of the Company's costs
therefor, the results and copies of any and all surveys, reports, tests or
studies made by or for the Company with respect to the Property. The foregoing
indemnity shall not apply to any claims, losses or damages (including attorneys'
fees and costs) that occur as a result of a pre-existing condition being
discovered by the Company in its Due Diligence Review.
ARTICLE VI
TITLE TO PROPERTY
6.1 TITLE. At the Closing, the LLC shall hold title to the Real
Property. The Owner's Title Policy shall show title as subject to no exceptions
other than the following (collectively, the "PERMITTED EXCEPTIONS"):
(a) The lien for real estate taxes and assessments not yet
delinquent;
(b) Interests of Tenants pursuant to the Leases; and
(c) Such other exceptions as may be approved in writing by the
Company pursuant to Section 12.9 hereof.
6.2 TITLE INSURANCE. The Company's obligation to accept the contribution
of the Units in exchange for the Exchange Units shall be subject to the
Company's satisfaction with the Owner's Title Policy. In addition, the Owner's
Title Policy shall contain such endorsements thereto as the Company may request;
provided, however, that if any such endorsements are required to change an
exception to title to which the Company has objected, and which Contributors
have agreed to cure, into a Permitted Exception, then the cost of such
endorsement shall be paid by Contributors. Furthermore, to the extent that there
are any costs or fees associated with the continuation of the Owner's Title
Policy following the Closing, Contributors shall bear such costs and fees. To
the extent that the title insurance policy existing immediately prior to the
Closing will not continue following Closing to the Company or the LLC's benefit,
the Company's obligation to consummate this transaction shall be subject to the
irrevocable commitment of the Title Company to issue the Owner's Title Policy
upon payment of its normal premium on the Closing Date.
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ARTICLE VII
CLOSING
7.1 TIME AND PLACE.
(a) Subject to the terms and conditions of this Agreement, the
closing of the contribution of the Units to the Company and the issuance of the
Exchange Units to Contributors (the "CLOSING") shall take place on September 30,
1998 in Portland, Oregon, unless the parties hereto agree in writing to an
earlier or later date or different location (the "CLOSING DATE").
(b) If either party has complied with the terms and conditions of
this Agreement before the scheduled Closing Date and the other party is not in a
position to close by the scheduled Closing Date (other than for reasons beyond
such party's control), the defaulting party shall be deemed to be in material
breach of this Agreement. The party who has fully complied may terminate this
Agreement and, whether or not this Agreement is terminated, the Company's
remedies shall be limited to specific performance or the amount of the Company's
out of pocket expenses incurred in the pursuit of the transactions contemplated
hereby, and Contributors' remedies shall be limited to the provisions for
liquidated damages set forth in Section 7.1(c) hereof.
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(c) THE PARTIES ACKNOWLEDGE THAT CONTRIBUTORS' ACTUAL DAMAGES IN
THE EVENT OF A DEFAULT BY THE COMPANY WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR SIGNATURES ON THIS
AGREEMENT, THE PARTIES EXPRESSLY AGREE AND ACKNOWLEDGE THAT ONE HUNDRED THOUSAND
DOLLARS ($100,000) HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF CONTRIBUTORS' DAMAGES. THE PARTIES FURTHER ACKNOWLEDGE
THAT SUCH AMOUNT HAS BEEN AGREED UPON AS CONTRIBUTORS' EXCLUSIVE REMEDY AGAINST
THE COMPANY IN THE EVENT OF A DEFAULT ON THE PART OF THE COMPANY, OTHER THAN THE
ADDITIONAL AND SEPARATE OBLIGATIONS OF THE COMPANY UNDER SECTIONS 5.3, 5.5,
16.2(b), AND 16.10 HEREOF, WHICH OBLIGATIONS SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT. IN ADDITION, THE COMPANY SHALL PAY ALL TITLE AND ESCROW
CANCELLATION CHARGES IN THE EVENT OF A DEFAULT BY THE COMPANY.
"Contributors" "Company"
PORTLAND FIXTURE LIMITED PAN PACIFIC (PORTLAND), LLC,
PARTNERSHIP, AN OREGON LIMITED A DELAWARE LIMITED LIABILITY COMPANY
PARTNERSHIP
BY: PAN PACIFIC RETAIL PROPERTIES, INC.
BY: PFMGP, INC. ITS: MANAGING MEMBER
ITS: GENERAL PARTNER
BY: _____________________________________
BY: ___________________________ Stuart A. Tanz
ITS: ___________________________ President and Chief Executive Officer
INDEPENDENT MEMBER CORP.,
AN OREGON CORPORATION
BY: ___________________________
ITS: ___________________________
_________________________________
BYRON P. HENRY
_________________________________
STEVEN J. OLIVA
7.2 DELIVERIES BY CONTRIBUTORS. On or before the Closing Date,
Contributors shall deliver or cause to be delivered to Escrow Holder the
following:
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(a) such instruments of transfer of title as are necessary to
transfer to the Company good and marketable title to the Units;
(b) the Bill of Sale, duly executed by Contributors, by which
Contributors shall transfer to the LLC title to all Personal Property then owned
by Contributors; and
(c) any other documents, or instruments called for hereunder to be
paid, executed, or delivered by Contributors that have not previously been
delivered by Contributors to Escrow Holder; and
(d) such articles of incorporation, agreements or certificates of
partnership, resolutions, authorizations, bylaws, certifications or other
corporate, partnership or trust documents or agreements or other reasonable
proof of authority relating to Contributors as the Company or Escrow Holder
shall reasonably require in connection with this transaction.
Each Contributor agrees to execute and deliver to the Company from time to time
such further and particular assignments, consents, or other instruments in
writing as the Company may request as appropriate or desirable to confirm its
title in and to the Units. At or prior to the Closing, the Company may, in its
sole and absolute discretion, instruct Contributors to transfer the Units to a
direct or indirect wholly-owned subsidiary of the Company.
7.3 DELIVERIES BY THE COMPANY. On or before the Closing Date, the
Company shall deliver or cause to be delivered to Escrow Holder the following:
(a) certificates representing the Exchange Units issued in the
names of each of the Contributors;
(b) immediately available funds sufficient to pay both the
Company's and the Contributors' portion of the closing costs, and any other
amounts payable by the Company in order to permit Escrow Holder to close the
Escrow; and
(c) any other cash, documents or instruments called for hereunder
to be paid, executed or delivered by the Company or that are required for the
Closing hereunder that have not been previously delivered by the Company to
Escrow Holder.
7.4 ADDITIONAL DELIVERIES BY THE COMPANY AND CONTRIBUTORS. On or before
the Closing Date, Contributors also shall deliver or cause to be delivered to
Escrow Holder, and the Company also shall deliver or cause to be delivered to
Escrow Holder, the following documents:
(a) notices to the Tenants (the "TENANT NOTICES") substantially in
the form of EXHIBIT C, duly executed by Contributors; and
(b) a closing statement prepared by Escrow Holder and approved by
the Company and approved by Contributors.
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7.5 OTHER INSTRUMENTS. Contributors shall deliver all Tenant Notices to
Tenants concurrently with the Closing, and shall provide copies of same for the
Company's review not later than two (2) days prior to the Closing Date.
Contributors and the Company each shall deposit any other documents or
instruments that may be reasonably required by the other party and/or Escrow
Holder, or that are otherwise required to close the Escrow and consummate the
contribution of the Units in accordance with the terms hereof.
7.6 PRORATIONS AND APPORTIONMENTS.
(a) All revenues from the Property and all expenses of the
Property shall be prorated and apportioned as of 12:01 a.m., Pacific time, on
the Closing Date (the "PRORATIONS"). Taxes shall be prorated as of the Closing
Date, based on a 365-day year. Contributors shall be charged and credited for
such Prorations up to the Closing Date and the Company shall be charged and
credited (or, at Contributors' option, paid by check for unused security or
other deposits) for all of the same on and after the Closing Date. Prior to the
Closing, the Company and Contributors shall review and approve the Prorations.
If the actual amounts to be prorated are not then known, or if any additional
expenses are incurred or income received after the date the Prorations are made,
the Prorations shall be made on the basis of the best evidence then available.
When actual figures are later received, a cash settlement will be made between
Contributors and the Company. To the extent possible, Contributors shall have
all metered utilities read by the applicable utility provider as of the Closing
Date. As to each utility which is so read, Contributors shall have the
responsibility to pay at Closing each bill therefore, and the Company shall be
responsible for all subsequent charges for such utilities. To the extent such
utilities may not be read as of the Closing, such utility bills shall be
prorated when the last bill incurred by Contributors is received. No Prorations
shall be made for rents, license payments, receivables or accounts ("REVENUES")
delinquent as of the Closing Date, and no credit shall be given to Contributors
for any Revenues delinquent as of the Closing Date. As used in the immediately
preceding sentence, the term "delinquent" shall mean, with respect to any
Revenue, that the Revenue in question accrued at any time prior to the
then-current calendar month. Nevertheless, if the Company collects any Revenues
that were delinquent on or before the Closing, such Revenues shall be attributed
first to the current Revenues and then to the portion that was delinquent on or
before the Closing and the Company shall promptly remit to Contributors the
portion of such Revenues collected, if any, attributable to the period of time
prior to the Closing Date; provided, however, that Contributors shall not be
entitled to commence any legal proceeding or alternative proceedings seeking to
compel any Tenant to pay delinquent rents or amounts claimed to be owing by
Contributors to the extent that such proceeding could have the effect of
evicting such Tenant or otherwise interfering with the Tenant's use and
enjoyment of its lease with the LLC. The parties further agree that Contributors
shall have a period of nine (9) months from the Closing Date to resolve any rent
delinquencies existing as of the Closing Date.
(b) Tenants may be obligated to pay Additional Rents. Contributors
shall estimate a "true-up" of Additional Rents as of the Closing Date, and
Additional Rents shall be prorated as of the Closing on the basis of such
estimated true-up. Contributors and the Company shall re-prorate such Additional
Rents (including any portions thereof that may be required to be refunded to
Tenants) at the time that such estimated true-ups are actually adjusted and/or
reconciled. Any amounts that may be due from Contributors as a result of such
re-prorations shall be paid by
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Contributors to the Company promptly after written request therefor is delivered
to Contributors by the Company (together with evidence reasonably satisfactory
to Contributors of the amounts due the Tenants). Any amounts that may be due to
Contributors as a result of such re-prorations shall be paid by the Company to
Contributors promptly following such re-prorations. The Company shall be
responsible for reimbursing to Tenants, and may collect from Tenants, as
applicable, all Additional Rents required pursuant to such reconciliation;
Contributors shall not be entitled to commence any legal proceeding or
alternative proceedings seeking to compel any Tenant to pay delinquent rents or
amounts claimed to be owing to Contributors to the extent that such proceeding
could have the effect of evicting such Tenant or otherwise interfering with the
Tenant's use and enjoyment of its lease with the LLC. The parties further agree
that Contributors shall have a period of nine (9) months from the Closing Date
to resolve any rent delinquencies existing as of the Closing Date.
(c) Contributors shall be responsible for the payment of all
leasing commissions earned prior to the Effective Date, and the Company shall be
responsible for the payment of any leasing commissions earned from and after the
Effective Date, regardless of when any such leasing commissions become due,
provided that such commissions have been disclosed to and approved by the
Company prior to expiration of the Inspection Period. Each party to this
Agreement shall indemnify the other party against and hold the other party
harmless (using counsel reasonably satisfactory to such other party) from and
against any and all damages, liabilities, costs, expenses and losses (including,
but not limited to attorneys' fees and costs) arising out of any action for the
collection of leasing commissions that are such party's responsibility pursuant
to this subsection.
(d) The parties acknowledge and agree that Contributors will be
responsible for the costs of certain Improvements to be made to the Property
(principally the fabrication of a new structure at the Sandy Marketplace
Shopping Center), which costs are estimated at Two Hundred Seventy Thousand
Dollars ($270,000). To the extent that such costs have not been paid by the LLC
or the Contributors prior to the Closing and are to be a continuing obligation
of the LLC following the Closing, such unpaid amount shall be credited against
the Base Price in accordance with Section 3.1 above.
(e) The Company shall be responsible for the costs of any tenant
improvements to be made pursuant to leases entered into by the LLC between the
Effective Date and the Closing Date provided that the Company has given its
prior written consent to such leases.
(f) The provisions of this Section shall survive the Closing.
7.7 COSTS AND EXPENSES. The Company and Contributors shall bear equally
the cost of any city and/or county transfer taxes, if any, applicable to the
change in controlling ownership of the Property to the Company, and the cost, if
any, to record any related or corrective instruments. If the Company elects to
obtain endorsements for the Owner's Title Policy, in addition to those necessary
to cure title objections as provided for in Section 6.2, the Company shall pay
all the premiums for such additional endorsements. To the extent that a new
Owner's Title Policy will be required for coverage to the Company or the LLC's
benefit following the Closing, Contributors shall pay for that portion of the
premium for the Owner's Title Policy in the amount attributable to Standard
coverage,
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and the Company shall pay the portion attributable to Extended coverage. The
Company shall also pay any applicable special sales, gross receipts or
transaction taxes imposed on the Company in connection with the acquisition of
the Units and the attendant derivative ownership of the Property. Furthermore,
as noted above, to the extent that there are any costs or fees associated with
the continuation of the Owner's Title Policy following the Closing, Contributors
shall bear such costs and fees. Costs and charges of the Escrow shall be borne
equally by Contributors and the Company. Any loan assumption fees or similar
charges payable to any lender to the LLC in order to consummate the transactions
contemplated hereby will be borne equally by Contributors and the Company. All
other taxes, costs, and charges for the transfer of the Units shall be paid by
Contributors and/or the Company, as the case may be, in accordance with the
usual customs and practices in the county(ies) in which the Real Property is
located.
7.8 INSURANCE; UTILITIES. The parties acknowledge and agree that the
Company shall be responsible for causing the LLC to maintain or obtain insurance
as of the Closing Date and thereafter. Any deposits for utilities made by
Contributors shall be refunded to Contributors and the Company shall arrange for
any required replacements therefor and the Company shall be responsible for
obtaining its own utilities as of the Closing Date and thereafter.
7.9 CLOSE OF ESCROW. Provided that (i) Escrow Holder has received the
documents and funds described in Sections 7.2, 7.3, and 7.4 hereof; (ii) Escrow
Holder has not received prior written notice from either party to the effect
that an agreement of either party made hereunder has not been performed or to
the effect that any condition set forth herein has not been satisfied or waived;
(iii) the Company has not elected to terminate its rights and obligations
hereunder pursuant to Article VII; and (iv) the Title Company has issued or is
unconditionally prepared and committed to issue the Owner's Title Policy to the
Company, Escrow Holder is authorized and instructed on the Closing Date to:
(a) deliver the Exchange Units to Contributors in the manner
specified by Contributors in separate instructions to Escrow Holder, the
aggregate number of which will be calculated in accordance with the provisions
of Section 3.1 above;
(b) deliver the Units and all associated transfer documentation to
the Company;
(c) deliver Contributors' Bill of Sale to the Company;
(d) deliver Contributors' Non-Foreign Affidavit to the Company;
and
(e) deliver all of the executed Tenant Notices to the Tenants.
7.10 NOTIFICATION; CLOSING STATEMENTS. If Escrow Holder cannot comply
with the instructions herein (or as may be provided later), Escrow Holder shall
notify the parties without delay. Immediately after the Closing, Escrow Holder
shall deliver to the Company and Contributors, respectively, at their addresses
listed in Section 16.1 hereof, a true, correct and complete copy of the
Contributors' and the Company's Closing Statements, in forms customarily
prepared by Escrow
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Holder, as well as all other instruments and documents to be delivered to the
Company and Contributors.
7.11 DEFAULT AND REMEDIES.
(a) If prior to or at Closing, Contributors shall have failed to
perform in any material respects any of the covenants and/or agreements
contained herein which are to be performed by Contributors, or if any warranty
or representation made by Contributors herein is not true and correct in all
material respects, the Company may seek specific performance of this Agreement
or, may bring suit for damages (i) in the case where the Closing does not occur,
then in an amount equal to the Company's out of pocket expenses incurred in the
pursuit of the transactions contemplated hereby, or (ii) in the case where the
Closing has occurred, then in the amounts permitted under Article XIV. Any such
suit for specific performance or damages must be filed within the earlier of (i)
ninety (90) days from and after the date the Company has actual knowledge of any
material misrepresentation or failure of warranty and (ii) one (1) year
following Contributors' breach or shall be deemed waived for all purposes.
Notwithstanding the foregoing, absent independent arrangements between
Contributors and the Company, no party shall be entitled to seek redress against
the other party following the Closing for breaches of representations,
warranties or covenants that occurred prior to or at Closing if such breach(es)
or the facts underlying such breach(es) were known at the time of Closing by the
party seeking redress thereafter.
(b) If prior to or at Closing, the Company shall have failed to
perform in any material respect any of the covenants and/or agreements contained
herein which are to be performed by the Company or if any warranty or
representation made by the Company herein is not true and correct in all
material respects, then Contributors shall be entitled, after providing the
Company with written notice thereof and the same remaining uncured for at least
five (5) days thereafter, to exercise the remedies set forth in Section 7.1(c),
which shall be Contributors' sole and exclusive remedies in such event.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
As a material inducement to the Contributors to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company makes the
following representations and warranties:
8.1 COMPANY STATUS. The Company is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware.
8.2 POWER AND AUTHORITY. The Company has the power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The Company has taken all
action necessary to authorize the execution and
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delivery of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
8.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, and the
documents delivered to Contributors at the Closing will be duly executed by the
Company and enforceable against the Company in accordance with their terms, in
each case except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
8.4 NO COMMISSIONS. Other than pursuant to ongoing contracts or
arrangements with employees or consultants of the Company or any of its
subsidiaries, the Company has not incurred any obligation for any finder's or
broker's or agent's fees or commissions or similar compensation in connection
with the transactions contemplated hereby, other than such compensation as may
be due and payable to its officers or employees.
8.5 CAPITALIZATION. Immediately prior to the Closing, all of the
outstanding membership units of the Company will be held by Pan Pacific Retail
Properties, Inc.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
OF THE CONTRIBUTORS
As a material inducement to the Company to enter into this Agreement and
to consummate the transactions contemplated hereby, each Contributor severally
and not jointly warrants and represents to the Company that each of the
following statements is true and correct as of the Effective Date and shall
continue to be true and correct on the Closing Date and on the date on which the
Exchange Units are delivered:
9.1 COMPANY STATUS.
(a) The LLC is a limited liability company validly existing under
the laws of the State of Oregon and has the requisite power and authority to own
or lease its properties and to carry on the Business as now being conducted. The
LLC is duly authorized and qualified, under all applicable laws, regulations,
ordinances and orders of public authorities, to carry on the Business in the
places and in the manner as now conducted, except as disclosed on Schedule 9.1,
where the failure to be so authorized or qualified would not have a Material
Adverse Effect on the Business or on the operations, properties, assets or
condition (financial or otherwise) of the LLC.
(b) To the extent that Contributor is not a natural person,
Contributor is a limited partnership or corporation, as applicable, validly
existing under the laws of the State of Oregon and
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has the requisite power and authority to own or lease its properties and to
carry on its affairs as now being conducted.
9.2 POWER AND AUTHORITY. Contributor has the power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Contributor has taken all
action necessary to authorize the execution and delivery of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby, and, if Contributor is not a natural person,
no vote or consent of Contributor's constituent shareholders, owners, partners
or members is required with respect thereto.
9.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by Contributor, and constitutes the legal, valid and binding obligation of
Contributor, enforceable against Contributor in accordance with its terms, and
the documents delivered to the Company at the Closing will be duly executed by
Contributor and enforceable against Contributor in accordance with their terms,
in each case except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
9.4 CAPITALIZATION. Contributors are the record and beneficial owners of
all of the outstanding Units of the LLC, which constitute all outstanding
ownership or equity interests in the LLC. Contributor owns the Units held by
Contributor free and clear of all Liens, restrictions and claims of any kind.
All of the Units (a) have been duly authorized and validly issued and are fully
paid and non-assessable, (b) were issued in compliance with all applicable state
and federal securities laws, (c) were not issued in violation of any preemptive
rights or rights of first refusal, (d) no preemptive rights or rights of first
refusal exist, and no such rights arise by virtue of or in connection with the
transactions contemplated hereby. There are no outstanding or authorized rights,
options, warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind that
could require the LLC to issue or sell, or require Contributor to sell or
transfer, any Units of the LLC's ownership interests (or securities convertible
into or exchangeable for Units of ownership interest). There are no outstanding
appreciation, "phantom stock", profit participation or other similar rights with
respect to the LLC. There are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the Units of the LLC.
Except as set forth on Schedule 9.4, (i) the LLC is not obligated to redeem or
otherwise acquire any of its Units, and (ii) there has been no transaction or
action taken with respect to the equity ownership of the LLC in contemplation of
the transactions described in this Agreement.
9.5 SUBSIDIARIES. Except as set forth on Schedule 9.5, the LLC does not
presently own of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock, or any other equity
interest in any corporation, association or business entity, nor is the LLC,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
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9.6 NO VIOLATION. The execution and consummation of this Agreement will
not (i) contravene any provision of the articles of organization, operating
agreement or other applicable charter document of the LLC (the "CHARTER
DOCUMENTS"), (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against the LLC or Contributor, or the assets of the LLC,
(iii) conflict with, result in any breach of, or constitute a default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against Contributor or the LLC, (iv) result in or require the
creation or imposition of any Lien upon or with respect to any of the assets of
the LLC, or (v) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person other than lenders holding duly recorded deeds of
trust against the Property.
9.7 NO COMMISSIONS. Contributor and the LLC have not incurred any
obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
9.8 FINANCIAL STATEMENTS. Contributors have delivered to the Company the
financial statements of the LLC, including the notes thereto, (collectively, the
"FINANCIAL STATEMENTS"), a copy of which is attached hereto as Schedule 9.8. The
balance sheet dated as of July 31, 1998 of the LLC included in the Financial
Statements is referred to herein as the "CURRENT BALANCE SHEET." The Financial
Statements have been certified by an officer of the managing member of the LLC,
have been prepared in accordance with generally accepted accounting principles
("GAAP"), and fairly present the financial position of the LLC at each of the
balance sheet dates and the results of operations for the periods covered
thereby. The books and records of the LLC fully and fairly reflect all
transactions, properties, assets and liabilities of the LLC. There are no
material special or non-recurring items of income or expense during the periods
covered by the Financial Statements, and the Current Balance Sheet does not
reflect any writeup or revaluation increasing the book value of any assets,
except as specifically disclosed in the notes thereto. The Financial Statements
reflect all adjustments necessary for a fair presentation of the financial
information contained therein.
9.9 CHANGES SINCE THE CURRENT BALANCE SHEET. Except as specifically set
forth in Schedule 9.9, since the date of the Current Balance Sheet, the LLC has
not (i) issued any ownership interests or other securities; (ii) made any
distribution (other than in cash or cash equivalents) of or with respect to its
ownership interests or other securities or purchased or redeemed any of its
securities; (iii) paid any bonus to or increased the rate of compensation of any
of its officers or salaried employees, or amended any other terms of employment
of such persons; (iv) sold, leased or transferred any of its properties or
assets other than in the ordinary course of business consistent with past
practice; (v) made or obligated itself to make capital expenditures other than
in the ordinary course of business consistent with past practice; (vi) made any
payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice; (vii) incurred any obligations or
liabilities (including any indebtedness) or entered into any transaction or
series of transactions involving in excess of $5,000 in the aggregate other than
in the ordinary course of business consistent with past practice, except for
this Agreement and the transactions contemplated
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hereby; (viii) waived, canceled, compromised or released any rights having a
value in excess of $5,000 in the aggregate; (ix) made or adopted any change in
its accounting practice or policies; (x) made any adjustment to its books and
records other than in respect of the conduct of its business activities in the
ordinary course consistent with past practice; (xi) entered into any transaction
with any Affiliate other than intercompany transactions in the ordinary course
of business consistent with past practice; (xii) entered into any employment
agreement; (xiii) terminated, amended or modified agreements in the aggregate
involving an amount in excess of $5,000; (xiv) imposed any security interest or
other Lien on any of its Assets; (xv) delayed paying any account payable which
is due and payable except to the extent being contested in good faith; (xvi)
made or pledged any charitable contribution; (xvii) entered into any other
transaction or was subject to any event which had or may have a Material Adverse
Effect on the LLC or the Business; (xviii) engaged in any transaction other than
in the ordinary course of the Business; (xix) suffered or incurred any work
interruptions, labor grievances, or claims filed, or any similar event which has
or would have a Material Adverse Effect on the LLC or the Business; or (xx)
agreed to do or authorized any of the foregoing.
9.10 LITIGATION. Except as set forth in Schedule 9.10, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation pending, threatened, anticipated or contemplated against, by or
affecting the LLC, the Business, or the assets of the LLC, or which questions
the validity or enforceability of this Agreement or the transactions
contemplated hereby, and there is no basis for any of the foregoing. There are
no outstanding orders, decrees or stipulations issued by any Governmental
Authority in any proceeding to which Contributor or the LLC is or was a party
which have not been complied with in full or which continue to impose any
material obligations on Contributor, the LLC or the assets of the LLC.
9.11 LIABILITIES; BANK ACCOUNTS. Schedule 9.11 sets forth all liabilities
or obligations, whether accrued, absolute, contingent or otherwise, of the LLC,
including (i) liabilities and obligations reflected on the Current Balance Sheet
and not paid or discharged, (ii) liabilities and obligations exceeding $5,000,
incurred in the ordinary course of business consistent with past practice since
the date of the Current Balance Sheet, and (iii) liabilities incurred in the
ordinary course of business prior to the date of the Current Balance Sheet
which, in accordance with GAAP consistently applied, were not required to be
recorded thereon (the liabilities and obligations referenced in (i), (ii) and
(iii) above are referred to as the "DESIGNATED LIABILITIES"). None of the
Designated Liabilities relates to any breach of contract, breach of warranty,
tort, infringement, or violation of law, and none arose out of any action, suit,
claim, governmental investigation, or arbitration proceeding. Schedule 9.11 also
sets forth the outstanding principal amount of and outstanding interest on (as
of the date set forth in the Schedule) all indebtedness for borrowed money and
capitalized lease obligations (including the outstanding principal amount and
accrued but unpaid interest and the name of the lender) owed to a bank or any
other Person by the LLC. Schedule 9.11 also lists the account numbers and names
of each bank, broker or other depository institution at which the LLC maintains
a depository account, and the names of all persons authorized to withdraw funds
from each such account.
9.12 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 9.12, no
Governmental Authority has notified the LLC or Contributor of the need to take
corrective action regarding elimination or control of Hazardous Materials on or
about the Property. Except as set forth on
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Schedule 9.12, and except in accordance with applicable laws, neither
Contributor or the LLC nor, to the best of Contributor's knowledge, any other
tenant, occupant or user of the Property has used, generated, manufactured,
installed, released, discharged, stored or disposed of any Hazardous Materials
on, under, in or about the Property, or transported any Hazardous Materials to
or from the Property, and there are no Hazardous Materials or underground
storage tanks located on, under, in or about the Property.
9.13 REAL PROPERTY, LEASES AND SIGNIFICANT PERSONAL PROPERTY. Schedule
9.13 sets forth all real and personal property included (or that will be
included) on the Current Balance Sheet, all other real and personal property of
the LLC acquired since the Current Balance Sheet Date, and all leases for real
and personal property to which the LLC is a party, including, in each case, an
indication as to which real and personal property is currently owned, or was
formerly owned, by the Contributors or the LLC or their Affiliates. True,
complete and correct copies of all such Leases have been provided to the
Company. Except as set forth in Schedule 9.13, (i) to Contributor's knowledge
all of the machinery and equipment and all other tangible assets of the LLC are
in good working order and condition, ordinary wear and tear excepted and have
been maintained in accordance with all applicable specifications and warranties;
(ii) all Leases set forth in Schedule 9.13, are in full force and effect and
constitute valid and binding agreements of the LLC and constitute valid and
binding agreements of the other parties thereto in accordance with their
respective terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity;
and (iii) all fixed assets used by the LLC are either owned by the LLC or leased
under a valid agreement. To the best of Contributor's knowledge, other than the
Property, there are no items, tangible or intangible, real or personal, owned by
the Contributor or any affiliate of Contributor as of now or at any time
heretofore and used in conjunction with the Business, the Property or any
portion thereof, other than items used by Contributor in the course of its
management of various properties, including the Real Property, under certain
management agreements.
9.14 GOOD TITLE, ADEQUACY AND CONDITION.
(a) Except as set forth in Schedule 9.14 or as provided for in
Section 6.1, the LLC has, and at Closing will have, good and marketable title to
the assets of the Business (the "ASSETS") with full power to sell, transfer and
assign the same, free and clear of any Lien.
(b) The Assets constitute, in the aggregate, all of the assets and
properties necessary for the conduct of the Business in the manner in which and
to the extent to which such business is currently being conducted and include,
without limitation, all tangible and intangible assets owned by the LLC, and all
Contracts, cash and accounts receivable, and licenses and permits of the LLC.
9.15 COMPLIANCE WITH LAWS. To the best of Contributor's knowledge, the
LLC is not in violation of any law or regulation (including, without limitation,
those pertaining to zoning, land use, subdivision, building, safety, fire and
health) or any order of any court or federal, state, local or other
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governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over the LLC, and, except to the extent set forth on
Schedule 9.15, there are no claims, actions, suits or proceedings pending or, to
the knowledge of the LLC, threatened, against or affecting the LLC or the
Business, at law or in equity, or before or by any federal, state, local or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them, and no notice of any such
claim, action, suit or proceeding, whether pending or threatened, has been
received. The LLC has conducted and is conducting the Business in compliance
with the requirements, standards, criteria and conditions set forth in
applicable federal, state and local statutes, ordinances, orders, approvals,
variances, rules and regulations and is not in violation of any of the
foregoing.
9.16 EMPLOYEE BENEFIT PLANS. Except as set forth on Schedule 9.16, the
LLC has no employee benefit plans or arrangements, including but not limited to
employee profit sharing plans, as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), multiemployer
plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(1) of ERISA, deferred compensation plans, stock/unit option
plans, bonus plans, stock/unit purchase plans, hospitalization, disability and
other insurance plans, severance or termination pay plans and policies, whether
or not described in Section 3(3) of ERISA, in which employees, their spouses or
dependents, of the LLC participate.
9.17 TAX RETURNS AND EXAMINATIONS.
(a) Contributor and the LLC have timely filed with the appropriate
taxing authorities all returns (including, without limitation, information
returns and other material information) in respect of Taxes required to be filed
through the date hereof and will timely file any such returns required to be
filed on or prior to the Closing Date. The returns and other information filed
(or to be filed) are complete and accurate in all material respects.
(b) All Taxes of Contributor and the LLC, in respect of periods
beginning before the Closing Date, have been timely paid, or will be timely
paid, prior to the Closing Date, and neither Contributor nor the LLC has any
material liability for Taxes in excess of the amounts so paid. All Taxes that
Contributor or the LLC has been required to collect or withhold have been duly
collected or withheld and, to the extent required when due, have been or will be
(prior to the Closing Date) duly paid to the proper taxing authority.
(c) Neither the federal income tax returns of Contributor nor
those of the LLC have been examined (except examinations which have been
completed and which resulted in no material adverse impact to the LLC) or are
currently under examination by the Internal Revenue Service, and no material
deficiencies for Taxes of Contributor or the LLC have been claimed, proposed or
assessed by any taxing or other Governmental Authority. There are no pending or,
to the best knowledge of Contributor, threatened audits, investigations or
claims for or relating to any material additional liability to Contributor or
the LLC in respect of Taxes, and there are no matters under discussion with any
Governmental Authorities with respect to Taxes that in the reasonable judgment
of Contributor, the LLC, or the counsel of either, is likely to result in a
material additional liability to Contributor or the LLC for Taxes. No audits of
the LLC's or Contributor's federal, state,
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and local returns for Taxes by the relevant taxing authorities have occurred,
except audits which have been completed and which resulted in no material
adverse impact to the LLC. Neither Contributor nor the LLC has been notified
that any taxing authority intends to audit a return for any period. No extension
of a statute of limitations relating to Taxes is in effect with respect to the
LLC or Contributor.
(d) There are no liens for Taxes (other than for current Taxes not
yet due and payable) on the Real Property.
(e) The Real Property does not, directly or indirectly, secure any
debt the interest on which is tax-exempt under Section 103(a) of the Code.
(f) The Real Property is not required to be treated as being owned
by any other person pursuant to the so-called safe harbor lease provisions of
former Section 168(f)(8) of the Code.
(g) The Property is not "tax exempt use property" within the
meaning of Section 168(h) of the Code.
(h) Delivery of Tax Information.
(i) In connection with the issuance of Exchange Units to
Contributors, Contributors shall deliver to the Company at or prior to Closing
Date at Contributors' sole cost and expense the following information prepared
as of the date of this Agreement.
(A) depreciation and amortization schedules for the
assets constituting the Real Property, as kept for both book and tax purposes,
showing original basis and accumulated depreciation or amortization;
(B) basis information (computed for both book and tax
purposes, if different) for all non-depreciable, non-amortizable assets that are
components of the Real Property;
(C) the adjusted basis of the LLC and each Contributor
in any portion of the Real Property contributed to the LLC or such Contributor;
and
(D) calculations of the estimated amounts of gain to
be realized and recognized by each Contributor (if any) as a result of the
transactions involving the Real Property in accordance with this Agreement and
showing the method by which such amounts are calculated.
(ii) The amount of Built-in Gain as of the date of this
Agreement is set forth on Schedule 9.17.
(iii) The Company is relying on the information provided or to
be provided to it under the Agreement as to the adjusted tax basis of the
Property and the relevant depreciation schedules thereto in determining the
amount of Built-in Gain on a going forward basis.
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(i) Cooperation on Tax Matters. Contributor shall provide
reasonable assistance to the Company and the LLC to enable the Company and the
LLC to prepare their Tax Returns. Contributor shall deliver to the Company
copies of its final federal, state and local tax returns (including information
returns), including associated Schedules K-1, for the tax year in which the
Closing occurs, including any amendments thereto, and notify the Company, in
writing, of any audits of such return, or of any audits for other tax years that
could affect the amounts shown on the returns for the tax year in which the
Closing occurs. Copies of such returns shall be provided to the Company in draft
form at least ten (10) days before they are filed, and in final form upon
filing. Contributor shall also provide to the Company, promptly upon receipt,
any notice that it receives from any of its direct or indirect members that such
member(s) intends to prepare its tax returns in a manner inconsistent with the
returns filed by Contributor. Contributor understands and agrees that the tax
returns filed by Contributor will be substantially consistent with the
information provided to the Company pursuant to this Agreement. The provisions
of this Section shall survive the Closing.
(j) LLC Disregarded. The LLC is presently disregarded as an entity
for federal and applicable state income tax purposes, and at all times prior
hereto has been (i) so disregarded, or (ii) taxed as a partnership.
9.18 INSURANCE. The LLC and the Business are covered by valid,
outstanding and enforceable policies of insurance issued to the LLC by reputable
insurers covering its properties, Assets and the Business against risks of the
nature normally insured against by corporations in the same or similar lines of
business and in coverage amounts typically and reasonably carried by such
corporations (the "INSURANCE POLICIES"). The Insurance Policies are in full
force and effect, and all premiums due thereon have been paid. The LLC has
complied with the provisions of the Insurance Policies. The LLC has not failed
to give, in a timely manner, any notice required under any of the Insurance
Policies to preserve its rights thereunder.
9.19 LICENSES AND PERMITS. Except as set forth on Schedule 9.19, the LLC
possesses all licenses and required governmental or official approvals, permits
or authorizations (collectively, the "PERMITS") for its Business and operations.
All Permits are valid and in full force and effect, the LLC is in compliance in
all material respects with their requirements, and no proceeding is pending or
threatened to revoke or amend any of the Permits. None of the Permits is or will
be impaired or in any way affected by the execution and delivery of this
Agreement or the transactions contemplated hereby.
9.20 CONTRACTS AND EMPLOYMENT MATTERS. Schedule 9.20 lists all Contracts
of the LLC the subject matter of which involves an annual dollar value of
payments or services of at least Five Thousand Dollars ($5,000). All of the
Contracts (i) are valid and binding obligations of the parties, (ii) are not in
default nor will become in default solely upon notice or the passage of time
without curative action and (iii) will remain in full force and effect following
the Closing, without requiring the consent of the other parties thereto and
without causing a default, right to terminate or right to modify any terms under
any such Contracts. The LLC has delivered to the Company true, complete and
correct copies of all Contracts. There are no unpaid amounts due and owing by
the LLC under any such Contract, except for amounts for which the Company is to
receive full credit through proration at Closing. There are no other service or
maintenance contracts relating to the Property.
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None of the parties to the Contracts has canceled or substantially reduced or,
to the knowledge of Contributor, is currently attempting or threatening to
cancel any Contract or substantially reduce utilization of the services provided
by the LLC, and the LLC has complied with all commitments and obligations
pertaining to any Contract, and is not in default under any such Contract, and
no notice of default has been received. The LLC has not been the subject of any
election in respect of union representation of employees and is not bound by or
subject to any arrangement with any labor union. No employees of the LLC are
represented by any labor union or covered by any collective bargaining agreement
and no campaign to establish such representation has ever occurred or is in
progress. There is no pending, or to the LLC's knowledge, threatened labor
dispute involving the LLC and any group of employees, nor has the LLC
experienced any labor interruptions over the past three years and the LLC
considers its relationship with employees to be good, except as set forth on
Schedule 9.20.
9.21 GOVERNMENTAL CONTRACTS. Except as set forth in Schedule 9.21, the
LLC is not now a party to any governmental contracts subject to price
redetermination or renegotiation or which would require the consent or approval
of any Governmental Authority for the consummation of the transactions
contemplated by this Agreement, whether or not such consent or approval would be
required prior to the Closing Date.
9.22 OFFICERS, DIRECTORS AND KEY EMPLOYEES; EMPLOYMENT AGREEMENTS;
COMPENSATION. Schedule 9.22 sets forth an accurate list showing all officers,
directors and key employees of the LLC, listing all employment agreements with
such officers, directors and key employees (and any other employees having an
employment agreement with the LLC) and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons. Schedule 9.22 also lists any increase in
compensation or any special bonus payable to any officer, director, key employee
or other employee of the LLC.
9.23 PREDECESSOR STATUS, ETC. Schedule 9.23 sets forth all names of all
predecessor entities, if any, for the past five years of the LLC, including the
names of any entities from whom the LLC previously acquired material assets.
Except as disclosed in Schedule 9.23, the LLC has not been a subsidiary or
division of another corporation or a part of an acquisition which was later
rescinded.
9.24 INVESTMENT REPRESENTATIONS. Each Contributor hereby acknowledges its
understanding that the Exchange Units to be acquired pursuant to this Agreement
are intended to be exempt from registration under the Securities Act of 1933, as
amended and the rules and regulations in effect thereunder (the "SECURITIES
ACT"). In furtherance thereof, each Contributor represents and warrants to the
Company as follows:
(a) Contributor is acquiring the Exchange Units solely for its own
account for the purpose of investment and not as a nominee or agent for any
other person and not with a view to, or with any intention of, a distribution or
resale thereof, in whole or in part, in violation of the Securities Act or state
securities or "blue sky" laws. Contributor agrees and acknowledges that, except
for the exercise of its redemption rights pursuant to Section 8.6 of the Company
Operating Agreement, it will not, directly or indirectly, offer, sell, transfer,
assign, pledge, hypothecate or
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otherwise dispose of any of the Exchange Units it is issued pursuant to this
Agreement in the absence of an effective registration statement under the
Securities Act and qualification or other compliance under applicable "blue sky"
or state securities laws unless Contributor delivers to the Company an opinion
of a lawyer experienced in securities matters and reasonably satisfactory to the
Company, to the effect that the proposed sale, transfer, assignment, pledge,
hypothecation or other disposition may be affected without registration under
the Securities Act and under applicable "blue sky" or state securities laws.
Contributor understands that the Company is under no obligation to register the
sale or other transfer of the Exchange Units.
(b) Contributor is knowledgeable, sophisticated and experienced in
business and financial matters and fully understands the limitations on the
transfer of restricted securities imposed by the Federal securities laws and as
described herein. Contributor is able to bear the economic risk of holding the
Exchange Units for an indefinite period and is able to afford the complete loss
of its investment in the Exchange Units; Contributor has received and reviewed
all information and documents about or pertaining to the Company and the
issuance of the Exchange Units as Contributor deems necessary or desirable, and
has been given the opportunity to obtain any additional information or documents
and to ask questions and receive answers about such information and documents,
the Company, the business and prospects of the Company and the Exchange Units
which Contributor deems necessary or desirable to evaluate the merits and risks
related to its investments in the Exchange Units; and Contributor understands
and has taken cognizance of all risk factors related to the purchase of the
Exchange Units.
(c) Contributor is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
(d) Each certificate representing the Exchange Units shall bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
UNLESS THE COMPANY HAS BEEN FURNISHED WITH AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE SECURITIES
EVIDENCED BY THIS CERTIFICATE MAY BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF ONLY
IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE COMPANY'S OPERATING AGREEMENT, AS IT MAY BE AMENDED AND
RESTATED FROM TIME TO TIME (A COPY OF
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WHICH MAY BE OBTAINED FROM THE COMPANY'S MANAGING MEMBERS AT
ITS PRINCIPAL EXECUTIVE OFFICES."
(e) In making the investment in the Exchange Units, Contributor
has and will rely solely upon the advice of its personal tax advisers with
respect to the federal and/or state tax aspects of an investment in the Exchange
Units and neither the Company nor its managing member, nor any officer, director
or other person representing the Company, its managing member, or any of its
affiliates, has made any representation regarding the tax consequences of the
investments in the Exchange Units. The Company shall have no responsibility for
any adverse tax consequences imposed on the Contributor.
(f) To the extent that Contributor will receive Exchange Units,
Contributor (i) has no intention to dissolve, either presently or upon the
transfer of its interest in the Units, (ii) will hold the Exchange Units, and
(iii) presently engages in activities other than those related to, and holds
assets other than, the Units, and following transfer of its interest in the
Units, will engage in activities other than those related to, and hold assets
other than, the Exchange Units.
9.25 CONDEMNATION. There is no condemnation or eminent domain proceeding
affecting the Property or any portion thereof currently pending nor, to
Contributor's knowledge, is any such proceeding threatened.
9.26 NOTICE OF FAILURE TO COMPLY. Neither the LLC nor Contributor has
received any notice of any failure of the LLC or Contributor to comply with any
applicable governmental requirements in respect of the use, occupation and
construction of the Property, including but not limited to environmental,
zoning, platting and other land use requirements which have not been heretofore
corrected to the satisfaction of the appropriate governmental authority, and
neither the LLC nor Contributor has received any notice of or has any knowledge
of any violations or investigations relating to any such governmental
requirement.
9.27 NOTICE OF DEFAULT. Neither the LLC nor Contributor has received any
notice of any default or breach by the LLC or Contributor under any covenants,
conditions, restrictions, rights-of-way, or easements which may effect the LLC
or Contributor in respect to the Property or may effect the Property or any
portion thereof, and no such default or breach now exists.
9.28 SPECIAL ASSESSMENTS. To the best of Contributor's knowledge, except
as set forth on the PTR, no special or general assessments have been levied, or
to Contributor's knowledge are any such assessments threatened against all or
any part of the Property.
9.29 DEFAULT UNDER LEASES. Other than as set forth on Schedule 9.29, to
the best of Contributor's knowledge, there has been no default or any claim of
default, and no event has occurred which with notice or lapse of time or both
would constitute a default, under any Lease, and to Contributor's knowledge no
Tenant has asserted or has any defense, set off, or claim with regard to his
tenancy pursuant to the lease, any law or otherwise.
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9.30 UTILITIES. To the best of Contributor's knowledge, all water, sewer,
gas, electric, telephone and drainage facilities and all other utilities
required by law or by the normal use and operation of the Property are and at
the time of Closing will be installed to the property lines of the Real
Property, are and at the time of Closing will be connected and operating
pursuant to valid permits, and are and at the time of Closing will be adequate
to service the Property and to permit full compliance with all requirements of
law and normal usage of the Property by Contributor and its licensees and
invitees. All public utilities required for the operation of the Property either
enter the Property through adjoining public streets, or if they pass through
adjoining private land do so in accordance with valid public easements or
private easements which will inure to the benefit of the Company at Closing and
thereafter.
9.31 CONDITION OF SYSTEMS. To the best of Contributor's knowledge, the
heating, ventilation, air conditioning, mechanical, electrical and other systems
and equipment forming a part of or used in connection with the Property are
operative and in good working condition, normal wear and tear excepted, and in
compliance with all applicable laws, ordinances, regulations and requirements.
9.32 FOREIGN PERSON STATUS. Contributor is not a foreign person as
defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended,
and no withholding is required under applicable state law in connection with the
transactions contemplated herein.
9.33 ADA COMPLIANCE. Neither the LLC nor Contributor has received any
notice or complaint from any Governmental Authority or any other Person that the
Property does not comply with all applicable requirements of the Equal
Opportunity for Individuals Act (ADA), 42 U.S.C. 12101 and the regulations
promulgated and set forth at 28 CFR 36.401 et seq.
9.34 SURVEY AND SPECIFICATIONS. To the best of Contributor's knowledge,
the survey, mechanical and structural plans and specifications, soils reports,
certificates of occupancy, warranties, operating statements, income and expense
reports and all other books and records relating to or affecting the Property,
and all other contracts or documents delivered to the Company pursuant to this
Agreement or in connection with the execution hereof are and at the time of
Closing will be true and correct copies, are and at the time of Closing will be
in full force and effect and contain no inaccuracies or misstatements of fact,
and all such documents in Contributor's possession or control relating to or
affecting the Property have been or will be delivered to the Company pursuant to
this Agreement.
9.35 MISSTATEMENTS OR OMISSIONS. To the best of Contributor's knowledge,
no representation, warranty or statement of Contributor in this Agreement or in
any certificate, exhibit or schedule furnished or to be furnished to the Company
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements or facts
contained therein misleading. To the best of Contributor's knowledge, all such
representations, warranties or statements of Contributor are based upon current,
accurate and complete information as of the time of their making and there has
been no adverse material change in such information subsequent thereto.
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9.36 LEASES. The copies of the Leases delivered to the Company are true
and correct copies of all such Leases and are in full force and effect and there
are no other agreements, written or oral, with respect to the tenancies. There
are no unpaid amounts due and owing by Contributor or the LLC under any such
Lease, except for amounts for which the Company is to receive full credit
through proration at Closing. No Tenant under any of the Leases has prepaid any
rent or other charges for more than the current month. No Tenant under any of
the Leases has any right or option to purchase the Property or any portion
thereof or interest therein, and there are no outstanding agreements of sale
with respect to the Property or any portion thereof or any interest therein.
Except as provided in the Leases, no Tenant has the right to renew or extend any
of the Leases or has any options or rights of first refusal with respect to
leasing of other space, and no Tenant has the right to free rent, rebate,
allowance, concession, security or other deposit.
9.37 BROKER COMMISSIONS. Except as disclosed in writing to the Company,
there are no commissions, finder's fees or other compensation owing or which may
become owing to any broker or any other person or entity with respect to any
Lease or occupancy agreement including, without limitation, any such
compensation with respect to any future renewals, extensions or expansions
thereof.
9.38 OPERATION OF PROPERTY. Except as set forth on Schedule 9.38, to the
best of Contributor's knowledge, the LLC has obtained all licenses, permits,
approvals, easements and rights of way required from all governmental
authorities having jurisdiction over the Property or from private parties for
the normal use and operation of the Property and to ensure free and unimpeded
vehicular and pedestrian ingress to and egress from the Property as required to
permit the normal intended usage of the Property by the tenants thereof, their
invitees and customers. Contributor and the LLC have materially complied with
all such licenses and permits and have not received any notice that any such
licenses or permits will not be renewed upon expiration, or of any material
conditions which will be imposed in order to receive any such renewal.
Contributor knows of no facts nor has Contributor failed to disclose to the
Company any fact which would prevent the Company from using and operating the
Property after Closing in the manner in which the Property has been used, leased
and operated prior to the date hereof.
9.39 HYPOTHECATION. Neither the LLC nor Contributor has committed nor
obligated itself in any manner whatsoever to sell the Property to any party
other than the Company. Neither the LLC nor Contributor has hypothecated or
assigned any rents or income from the Property in any manner, other than
pursuant to any existing mortgage financing secured by the Property as of the
Effective Date.
9.40 CONFIDENTIAL INFORMATION. Contributor shall hold as confidential all
information concerning the Company or the transaction contemplated hereby
disclosed to Contributor in connection with said transaction; and Contributor
shall not, prior to Closing, release any such information to third parties
without the Company's prior written consent, except pursuant to a court order
requiring such release or as otherwise may be required by law.
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9.41 POSSESSION. As of the Closing, possession of the Property shall be
vested fully in the LLC, subject to the rights of Tenants.
ARTICLE X
CONDUCT OF BUSINESS PENDING THE CLOSING
10.1 CONDUCT OF BUSINESS BY THE LLC PENDING THE CLOSING. Contributors
covenant and agree that, except as otherwise expressly required or permitted by
the terms of this Agreement, between the Effective Date and the Closing, the
business of the LLC shall be conducted only in, and the LLC shall not take any
action except in, the ordinary course of business consistent with past practice.
The LLC and Contributors shall use its or their reasonable best efforts to
preserve intact the LLC's business organizations, to keep available the services
of its current officers, employees and consultants, and to preserve its present
relationships with customers, suppliers and other Persons with which it has
business relations. By way of amplification and not limitation, the LLC shall
not, except as expressly required or permitted by the terms of this Agreement
between the date of this Agreement and the Closing, directly or indirectly, do
or propose or agree to do any of the following without the prior written consent
of the Company:
(a) amend or otherwise change its Charter Documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any of its assets,
tangible or intangible, except in the ordinary course of business consistent
with past practice; or any Units of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any Units or other
equity interests in the LLC;
(c) declare, set aside, make or pay any distribution, payable in
any property other than cash or cash equivalents, with respect to any of its
Units or other securities;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its Units or other securities;
(e) sell, lease or transfer any of its properties or assets (other
than in the ordinary course of business consistent with past practice), or
acquire (including, without limitation, for cash or Units, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof or
any assets; or make any investment either by purchase of stock or securities,
contributions of capital or property transfer, or purchase any property or
assets of any other Person (except in the ordinary course of business consistent
with past practice); make or obligate itself to make capital expenditures; other
than in the ordinary course of business consistent with past practice, incur any
obligations or liabilities including, without limitation, any indebtedness for
borrowed money, issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
Person, or make any loans or advances, modify, terminate, amend or enter into
any Contract other than as expressly required or permitted herein or in the
ordinary course of business consistent with past
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practice, or impose any security interest or other Lien on any of its assets
other than in the ordinary course of business consistent with past practice;
(f) pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits which any collective bargaining,
bonus, profit sharing trust, compensation, stock option, restricted stock
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(g) take any action with respect to accounting policies or
procedures other than in the ordinary course of business and in a manner
consistent with past practices;
(h) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in the Financial Statements, as
appropriate, or liabilities incurred after the date thereof in the ordinary
course of business and consistent with past practice or delay paying any amount
payable beyond forty-five (45) days following the date on which it is due,
except to the extent being contested in good faith;
(i) enter into any transaction or agreement with a Contributor or
an Affiliate thereof except for such transactions or agreements expressly
permitted herein;
(j) make or pledge any charitable contributions; or
(k) agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any representation or
warranty in Article IX untrue or incorrect in any respect.
10.2 OPERATION OF THE PROPERTY. Between the Effective Date and the
Closing, neither the LLC nor any Contributor shall accept any payment of rent
(except as a security deposit) or other charges from any tenant of the Property
applicable to a period exceeding one (1) month in advance, nor apply any
security deposit to rent due from any tenant of the Property without in each
case obtaining the Company's prior written consent thereto (which consent shall
not be unreasonably withheld or delayed by the Company). In addition to the
foregoing, the LLC and Contributors: (i) shall manage, maintain, operate, and
service the Property consistent with standards in the industry for the first
class operation of similar projects of comparable quality in the same area as
the Property is located, maintaining present services; (ii) shall keep the
Property and every portion thereof in reasonably good working order and repair;
(iii) shall maintain a sufficient inventory of supplies, materials, equipment
and other personal property for the proper management, maintenance, operation
and servicing of the Property; and (iv) shall not, except with the Company's
prior written consent (which consent shall not be unreasonably withheld or
delayed by the Company), approve, consent
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to, or otherwise permit any material change in the operations of the Property
during the Escrow Period, including, without limitation:
(a) any material alterations to the Improvements except as may be
necessary in order to perform ordinary, scheduled maintenance;
(b) cancellation of or material reduction in the amount or scope
of coverage under any insurance currently maintained with respect to the
Property;
(c) cancellation or surrender of any existing Permit; and
(d) any other material variation from a Contributor's ordinary
course of business in connection with the Property.
ARTICLE XI
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
11.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby and to
satisfy the conditions set forth in Articles XII and XIII. Contributors shall
cause the LLC to comply with all of the covenants of the LLC under this
Agreement. Without limiting the foregoing, Contributors shall cooperate with the
Company to the extent necessary to alter or amend the Charter documents of the
LLC effective at the Closing to the extent necessary or appropriate to
accomplish the transactions contemplated hereby.
11.2 CONFIDENTIALITY; PUBLICITY. Contributors and the LLC shall not
disclose the terms of this transaction to any third party nor make any public
announcement related to this Agreement or the transactions contemplated hereby
without the prior written approval of the Company.
11.3 NO OTHER DISCUSSIONS. Contributors, the LLC and their respective
Affiliates, employees, agents and representatives will not (i) initiate,
encourage the initiation by others of, entertain or participate in discussions
or negotiations with third parties or respond to solicitations by third persons
relating to any merger, sale or other disposition of any substantial part of the
assets, the Business or the properties of the LLC (whether by merger,
consolidation, sale of stock, sale of assets, or otherwise), or (ii) enter into
any agreement or commitment (whether or not binding) with respect to any of the
foregoing transactions. Contributors will immediately notify the Company if any
third party attempts to initiate any solicitation, discussion or negotiation
with respect to any of the foregoing transactions.
11.4 TERMINATION OF RELATED PARTY AGREEMENTS. All existing agreements
between the LLC and Contributors or their Affiliates, other than those set forth
in Schedule 11.4, shall have been canceled prior to the Closing.
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11.5 DAMAGE OR DESTRUCTION.
(a) Before the Closing, risk of loss with regard to the Property
shall be borne by Contributors. If, before the Closing, the Improvements or the
Personal Property are destroyed or materially damaged, the Company's rights and
obligations with respect to the Property shall be as follows:
(i) if with respect to any Shopping Center the destruction
or damage involves a diminution in value equal to or less than One Hundred
Thousand and No/100ths Dollars ($100,000.00) or if the Property contains more
than one Shopping Center, with respect to the Property a diminution in value
equal to or less than Two Hundred Thousand and No/100ths Dollars ($200,000.00)
(each, a "DIMINUTION THRESHOLD"), the Company shall be obligated to proceed to
close the transaction (subject to satisfaction of the other provisions hereof)
and, if, but only if, Escrow actually closes, the Company shall receive a credit
against the Base Price equal to the lesser of (A) the cost to repair the damage
or destruction and (B) the amount of the deductible under the LLC's casualty
insurance policy; or
(ii) if the destruction or damage involves a diminution in
value of more than the Diminution Threshold, the Company shall have the option
(which must be exercised by the Company within fifteen (15) calendar days after
the Company's receipt of written notice from Contributors advising of such
destruction or damage), to terminate this Agreement as to that portion of the
Property attributable to the affected Shopping Center and proceed with the
Closing as to the remainder of the Property, or to terminate this Agreement as
to all of the Property. If the Company elects to proceed with Closing, the
Company shall receive a credit against the Base Price equal to the lesser of (A)
the cost to repair the damage or destruction and (B) the amount of the
deductible under the LLC's casualty insurance policy.
(b) If the Company and Contributors cannot agree as to the
diminution in value, then such diminution in value shall be determined by
subtracting from the Base Price the fair market value of the Property after the
damage, as determined by an M.A.I. appraiser appointed by two (2) other M.A.I.
appraisers nominated one (1) each by Contributors and the Company. The expense
of the appraiser shall be borne equally by the Company and Contributors.
(c) If the Company is obligated or elects to proceed to close the
transaction under either subsection (a)(i) or (a)(ii) above, all casualty
insurance proceeds from the LLC's casualty insurance policy shall, to the extent
applicable, be assigned by Contributors to the LLC at the Closing and forwarded
to the Company immediately upon receipt thereof by Contributor.
(d) If the Company elects to terminate this Agreement under
subsection (a)(ii) above, this Agreement shall become null and void and of no
further force or effect as to all unperformed rights and obligations of the
parties and, except as provided in Sections 5.3, 5.5, 16.2(b) and 16.10 hereof,
neither the Company nor Contributors shall have any further rights, duties,
liabilities or obligations to the other by reason thereof, other than those
rights and obligations that, by their terms, survive termination of this
Agreement. In the event of such termination, the costs
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of the Escrow Holder shall be borne equally by the Company and Contributors.
Also, each party shall bear its own costs incurred hereunder.
11.6 CONDEMNATION.
(a) If, before the Closing, all of the Property shall be taken by
condemnation or eminent domain, this Agreement shall become null and void and of
no further force or effect as to all unperformed rights and obligations of the
parties and, except as provided in Sections 5.3, 5.5, 16.2 and 16.10 hereof,
neither the Company nor Contributors shall have any further rights, duties,
liabilities or obligations to the other by reason hereof, other than those
rights and obligations that, by their terms, survive the termination of this
Agreement. In the event of such termination, the costs of the Escrow Holder
shall be borne equally by the Company and Contributors. Also, each party shall
bear its own costs incurred hereunder.
(b) If, before the Closing, (i) less than all of the Property
shall be taken by condemnation or eminent domain, (ii) there is any taking of
land lying in the bed of any street, road, highway or avenue, open or proposed,
in front of or adjoining all or any part of the Land, or (iii) there is any
change of grade of such street, road, highway or avenue, provided such taken or
change of grade involves a diminution in value of more than the Diminution
Threshold, then the Company, at the Company's option, may terminate this
Agreement as to that portion of the Property attributable to the affected
Shopping Center and proceed with the Closing as to the remainder of the
Property, or to terminate this Agreement as to all of the Property. If the
Company elects to terminate this Agreement under this subsection (b), this
Agreement shall become null and void and of no further force or effect and,
except as provided in Sections 5.3, 5.5, 16.2 and 16.10 hereof, neither the
Company nor Contributors shall have any further rights, duties, liabilities or
obligations to the other by reason hereof, other than those rights and
obligations that, by their terms, survive the termination of this Agreement. In
the event of such termination, the costs of the Title Company and Escrow Holder
shall be borne equally by the Company and Contributors. Also, each party shall
bear its own costs incurred hereunder.
(c) If the Company and Contributors cannot agree as to the
diminution in value, then such diminution in value shall be determined by
subtracting from the Base Price the fair market value of the Property after the
taking, as determined by an M.A.I. appraiser appointed by two (2) other M.A.I.
appraisers nominated one (1) each by Contributors and the Company. The expense
of the appraiser shall be borne equally by the Company and Contributors.
(d) If this Agreement is not terminated in accordance with the
foregoing, or if such taking involves a diminution in value equal to or less
than the Diminution Threshold, the Company shall accept title to the Property
subject to such taking. In such event, the Company shall receive a credit
against the Base Price in the amount of the diminution in value and the award
for such taking shall be paid ratably to Contributors.
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11.7 RESTRICTIONS ON AND INFORMATION REGARDING BENEFICIAL OWNERSHIP OF
LLC UNITS; PUBLICLY TRADED PARTNERSHIP REPRESENTATION.
(a) Notwithstanding anything to the contrary contained in this
Agreement or the Company Operating Agreement, without the consent of the
Company, which consent may be given or withheld in the Company's sole and
absolute discretion, in no event shall the Contributor or any transferees or
prospective transferees of such persons own or transfer Exchange Units such that
the number of such holders (or such prospective holders) of Exchange Units
would, in the aggregate, exceed thirty-five (35) (including as holders any
person (a "BENEFICIAL OWNER") owning an interest in a partnership, a limited
liability company, a grantor trust, or an S corporation (a "FLOW-THROUGH
ENTITY"), that would own, directly or through other Flow-Through Entities, an
interest in the Company where substantially all the value of the Beneficial
Owner's interest in the Flow-Through Entity would be attributable to the
Flow-Through Entity's interest (direct or indirect) in the Company (a "SPECIAL
PURPOSE FLOW-THROUGH ENTITY"), and treating Contributor as a Special Purpose
Flow- Through Entity for purposes of this paragraph).
(b) From the date of this Agreement until the Closing, and then so
long as any recipient of Exchange Units (each, a "HOLDER" and collectively, the
"UNIT HOLDERS") who is not a natural person holds any Exchange Units, such Unit
Holder shall notify the Company in writing promptly upon any change in the
identity or number of its direct or indirect Partners (as defined below) as
identified pursuant to this Agreement, and shall provide such information as the
Company may reasonably request with respect to any such change. Each Unit Holder
shall use its best efforts to secure the compliance of any Flow-Through Entities
that hold direct or indirect interests in such Unit Holder with the requirements
of this Section as if such requirements applied directly to such entities. For
purposes of this Agreement, the term "Partners" means, collectively, with
respect to an entity, the holders of all beneficial or other direct or indirect
ownership interests in such entity, including, without limitation, all partners,
members, and beneficiaries and, to the extent any such partner, member, or
beneficiary is not a natural person, the holders of all beneficial other direct
or indirect ownership interests in such partner, member, or beneficiary. Each
Unit Holder acknowledges that the provisions of this Section are imposed to aid
the Company in avoiding taxation as a "publicly traded partnership" for federal
income tax purposes, agrees that monetary damages may be insufficient to remedy
the potential harm caused by any breach of the provisions of this Section, and
agrees that injunctive relief, including specific performance or other equitable
remedy would be an appropriate remedy. The provisions of this Section shall
survive the Closing.
(c) The Contributor represents and warrants to the Company that it
is not and has never been a "publicly traded partnership" (as such term is
defined in Section 469(k)(2) or Section 7704(b) of the Code).
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ARTICLE XII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by the Company;
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Contributors and the LLC
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made at
and as of that time except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. Contributors and the LLC shall have performed and
complied with all of their obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date, including these
obligations set forth in Article VII herein. Contributors and the LLC shall have
delivered to the Company a certificate, dated as of the Closing Date, duly
signed, certifying that such representations and warranties are true and correct
and that all such obligations have been performed and complied with.
12.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change of the LLC or the Business, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the service, or products of the LLC or the Business, and (iii)
none of the Assets shall have been damaged by fire, flood, casualty, riot or
other cause (regardless of insurance coverage for such damage), and there shall
have been delivered to the Company a certificate to that effect, dated as of the
Closing Date and signed by Contributors. In addition, as of the Closing Date,
there shall have been no material adverse change in the condition of the
Property or any material portion thereof.
12.3 CORPORATE DOCUMENTS. Contributors shall have delivered to the
Company (i) copies of Charter Documents of the LLC, certified by the Secretary
of the LLC (or the functional equivalent of such position) as being true,
correct and complete, (ii) written resignations of the LLC's managers and, if
applicable, officers, and (iii) to the extent available, a certificate of good
standing for the LLC or functionally equivalent document issued by the Secretary
of State of the State of Oregon as of a date not more than ten (10) days prior
to the Closing Date.
12.4 CONSENTS. The LLC and Contributors shall have received consents to
the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of the LLC and Contributors from any
person from whom such consent or waiver is required under any Contract to which
a Contributor, the LLC or the Assets are bound, or who, as a result of the
transactions contemplated hereby, would have such rights to terminate or modify
such contracts, either by the terms thereof or as a matter of law. Other than as
may be contemplated in Section 7.7, the costs of obtaining such consents shall
be borne by the Company. Such consents shall include,
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without limitation, the consent of any lender to the LLC (or to a Contributor or
any Affiliate thereof to the extent that such lender has or would have a Lien or
other interest in the Property).
12.5 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of the Company,
makes it inadvisable to proceed with the transactions contemplated hereby.
12.6 DUE DILIGENCE REVIEW. The Company shall have completed its due
diligence review of the Property, the LLC, the Assets and the Business pursuant
to Section 5.1, and shall be satisfied with the results of such review and
assessment.
12.7 OPINION OF COUNSEL. The Company shall have received an opinion or
opinions dated as of the Closing Date, from counsel to Contributors in form and
substance acceptable to the Company.
12.8 RELEASES. At the Closing, Contributors and such of their Affiliates
as may be designated by the Company shall deliver to the Company a release in
such form as is reasonably satisfactory to the Company, releasing all claims
against the Company and the LLC up to and through the Closing Date, other than
with respect to obligations of the Company under this Agreement.
12.9 APPROVAL OF TITLE.
(a) The Company shall have reviewed and approved, within the time
period and in the manner provided below, the PTR, including copies of all
documents referred to in the PTR (other than encumbrances to be discharged by
Contributors on or before Closing).
(b) Contributors shall cause the PTR and all supporting materials,
including copies of all documents referred to in the PTR to be delivered to the
Company by 4:00 p.m., Pacific time, on or before the third (3rd) Business Day
after the Effective Date (the "TITLE DELIVERY DATE"). On or before the seventh
(7th) Business Day from and after delivery to the Company of the PTR and all
supporting materials, the Company shall notify Contributors and Escrow Holder in
writing which exceptions to title shown in the PTR, if any, will not be accepted
by the Company (collectively, the "DISAPPROVED TITLE MATTERS"); all other
matters and exceptions to title shown in the PTR shall be deemed approved by the
Company. If the Company fails to notify Contributors and Escrow Holder within
the required time period of any Disapproved Title Matters, the Company shall be
deemed to have disapproved the condition to the Real Property as to such title
and survey matters. If the Company notifies Contributors of any Disapproved
Title Matters, Contributors shall have until 5:00 p.m., Pacific time, on the
second (2nd) Business Day after Contributors' receipt of such notice to notify
the Company and Escrow Holder in writing that:
(i) Contributors shall use their reasonable efforts to
either (A) cause any Disapproved Title Matters to be removed by the Closing, or
(B) obtain, at Contributors' expense,
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an endorsement or other curative effect acceptable to the Company in the
Company's sole and absolute discretion; or
(ii) Contributors elect not to cause any such Disapproved
Title Matters to be removed.
(c) If Contributors give the Company and Escrow Holder notice
under subsection (b)(ii) above, the Company shall have until 5:00 p.m., Pacific
time, on the third (3rd) Business Day after the Company's receipt of such notice
to notify Contributors and Escrow Holder that (i) the Company revokes its
disapproval of such exceptions(s) and will proceed with the purchase without any
reduction in the Purchase Price and take title to the Property subject to such
exception(s), or (ii) the Company will terminate this Agreement, in which case
the terms and provisions of Section 12.17. The foregoing procedure shall also be
applicable to any new matters which are disclosed in any updates, supplements or
amendment to the PTR or Survey.
12.10 APPROVAL OF OTHER MATTERS.
(a) By 5:00 p.m., Pacific time, on or before the third (3rd)
Business Day after the Effective Date, Contributors will deliver to the Company,
or allow the Company reasonable access to, at the Property, at Contributors'
place of business, or at such other location as Contributors may reasonably
indicate, during reasonable times agreed upon in advance by the Company and
Contributors, the following, expressly subject to such items being in the
possession of or reasonably available to Contributors or their manager for the
Property:
(i) a current rent roll and copies of all Leases disclosed
thereon, together with all amendments thereto;
(ii) copies of all Contracts;
(iii) a schedule of all Personal Property;
(iv) copies of the most recent property tax bills for the
Property;
(v) operating statements for the LLC's fiscal years 1995,
1996 and 1997 and for each calendar month thereafter;
(vi) plans and specifications (as-builts, if available) for
construction of the Improvements (the "PLANS AND SPECIFICATIONS");
(vii) copies of certificate(s) of occupancy, and any
governmental licenses and permits regarding the Property;
(viii) financial statements for the Tenants;
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<PAGE> 46
(ix) a schedule of filed litigation regarding or affecting,
directly or indirectly, the Property;
(x) an aged receivables report current as of the Effective
Date;
(xi) copies of environmental reports, studies and assessments
within Contributors' possession or control covering the Property;
(xii) copies of all CC&R's affecting the Property;
(xiii) copies of all soil reports and analyses within
Contributors' possession or control pertaining to the soils, seismological,
geological and drainable conditions of the Property;
(xiv) copies of construction and equipment warranties within
Contributors' possession;
(xv) 1998 year-to-date operating statements for the Property;
and
(xvi) all other material, non-proprietary materials, reports
and information relevant to the Property.
(b) On or before the expiration of the Inspection Period, the
Company shall notify Contributors and Escrow Holder in writing if the Company
objects to any of the matters referred to above or to the Company's own
inspection of the Property described in Section 5.1 hereof.
12.11 NO INSOLVENCY. Neither the LLC nor Contributors nor any of their
Affiliates (i) shall be in receivership or dissolution, (ii) shall have made an
assignment for the benefit of creditors or admitted in writing its inability to
pay its debts as they mature, or (iii) shall be been adjudicated a bankrupt or
filed a petition in voluntary bankruptcy or a petition or answer seeking
reorganization or an arrangement with creditors under the Federal bankruptcy law
or any other similar law or statute of the United States or any jurisdiction and
no such petition shall have been filed against the Company or any of its general
partner(s), if any.
12.12 TENANT ESTOPPELS. The Company shall have received a Tenant Estoppel
Certificate for all Tenants whose leaseable square footage under their
respective Leases is greater than 5,000 square feet, and from seventy-five
percent (75%) of all remaining Tenants, which Tenant Estoppel Certificates shall
be in substantially the same form as EXHIBIT D attached hereto, or in such other
form as is acceptable to the Company in the reasonable exercise of its
discretion; and otherwise as to each such Tenant Estoppel Certificate in such
content as is acceptable to the Company. Contributors shall use their best
efforts to obtain such Tenant Estoppel Certificates on or before September 25,
1998. The Company will give reasonable consideration to accepting estoppel
certificates executed in connection with the contemplated transaction between
Contributors and Burnham Pacific Properties which was not consummated; provided,
however, that even if the Company finds some or all of such previously executed
estoppels acceptable as to form and content, the Company will not accept same in
satisfaction of the requirements of this Section 12.12 unless
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<PAGE> 47
in each instance such estoppel certificates are re-certified to the Company and
brought current to the date of such re-certification. The Company shall have
five (5) Business Days from receipt of such Tenant Estoppel Certificates to
advise Contributors in writing of its approval or disapproval of same, which
approval will not be withheld unreasonably. If necessary, at the Company's
election the Closing Date shall be extended so as to allow such five (5) day
inspection period. In the event the Company disapproves of any of such Tenant
Estoppel Certificates, the Company may terminate this Agreement as provided in
Section 12.18 below. In the event Contributors are unable through diligent
efforts to obtain any of the Tenant Estoppel Certificates, the Company may, but
will not be obligated to, accept in lieu thereof an estoppel certificate from
Contributors (a "CONTRIBUTORS' ESTOPPEL") in such form and content as required
by the Company in the reasonable exercise of its discretion.
12.13 CONCURRENT CLOSINGS. The Company, Contributors and their respective
Affiliates, concurrently with the Closing, shall have closed and consummated the
transactions contemplated pursuant to those certain agreements (the "RELATED
PURCHASE AGREEMENTS") entitled Purchase and Sale Agreement and Escrow
Instructions and Contribution Agreement and Escrow Instructions, and entered
into by and between the Company, PPRP, certain Contributors and affiliates
thereof, respectively, of even date herewith.
12.14 WAIVER. At any time or times on or before the Closing, at the
Company's election, the Company may waive any of the foregoing conditions by
written notice to Contributors. Other than the Company's closing the transaction
contemplated by this Agreement which shall waive all such unfulfilled
conditions, no waiver shall be effective unless made in writing specific as to
the conditions or matters so waived.
12.15 LEASE PAYMENTS AND RENTS. Contributors shall have paid fully, or the
Company shall receive a credit in the form of Indemnifiable Damages, for any and
all rent concessions, leasing commissions and tenant improvement costs, and all
other amounts payable by Contributors as provided in this Agreement with respect
to such Lease and the premises leased thereunder.
12.16 DOWNREIT CONSUMMATION. PPRP and Contributors shall have entered into
the Company Operating Agreement in form and substance acceptable to the Company
and Contributors.
12.17 TERMINATION. If any of the foregoing conditions are neither
fulfilled, nor waived as provided above, the Company, at its election by written
notice to Contributors, may terminate this Agreement and be released from all
obligations under this Agreement (other than those described in this Section
12.17 and Sections 5.3, 5.5, 16.2 and 16.10 hereof). In the event of such
termination by the Company, all documents deposited in Escrow by the Company or
Contributors shall be returned to the depositing party, the costs of the Title
Company and Escrow Holder shall be borne equally by the Company and
Contributors, and, except as otherwise set forth in this Article XII, each party
hereto shall bear its own costs incurred herewith. If any non-fulfilled
conditions also constitute a breach by Contributors of their obligations under
this Agreement, then the Company may proceed also under Section 7.14(a) above.
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<PAGE> 48
ARTICLE XIII
CONDITIONS TO THE
OBLIGATIONS OF CONTRIBUTORS
The obligations of Contributors to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by Contributors:
13.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. The Company shall have performed and complied in all material respects
with all of its obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. The Company shall have delivered
to Contributors a certificate, dated as of the Closing Date, and signed by an
executive officer thereof, certifying that such representations and warranties
are true and correct, and that all such obligations have been performed and
complied with, in all material respects.
13.2 CONCURRENT CLOSINGS. The Company, Contributors and their respective
Affiliates, concurrently with the Closing, shall have closed and consummated the
transactions contemplated pursuant to the Related Purchase Agreements.
13.3 DOWNREIT CONSUMMATION. PPRP and Contributors shall have entered into
the Company Operating Agreement in form and substance acceptable to the Company
and Contributors.
13.4 NO CHANGE IN COMPANY STRUCTURE. There shall have been no change in
the Company's entity structure or ownership (other than to the extent
contemplated in Section 13.3 above or in the Company Operating Agreement
referred to therein).
13.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, financial condition or results of operations of
PPRP. For purposes of the foregoing sentence, the parties acknowledge that
variations in the share price of PPRP capital stock on the New York Stock
Exchange shall not be considered in making such determination.
13.6 NO LITIGATION. Neither PPRP nor the Company shall be involved in any
pending or threatened litigation regarding or affecting, directly or indirectly,
the Property.
13.7 LEGAL OPINION. Contributors shall have received a legal opinion from
counsel to the Company in form and substance acceptable to the Company and
Contributors.
13.8 CARVE-OUT INDEMNITIES. The Company will have (a) secured from any
lenders to the LLC on debt surviving the Closing the release of each Contributor
and Affiliates thereof from
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<PAGE> 49
any personal guarantee of such continuing debt or any carve-out indemnity
delivered by such Contributor or Affiliate to the extent that such indemnity
would be applicable to LLC activities from and after the Closing, or (b) agreed
to indemnify Contributors and their Affiliates for such liabilities.
13.9 TERMINATION. If any of the foregoing conditions are neither
fulfilled nor waived by Contributors, Contributors shall have the option to
terminate this Agreement by delivering to the Company and Escrow Holder written
notice of such termination; provided, however, that Contributors may not
terminate this Agreement under this Section 13.9 unless the Company fails to
cause any non-fulfilled condition(s) to be satisfied within three (3) days after
written notice thereof from Contributors. If any non-fulfilled condition(s) also
constitute a breach by the Company of its obligations under this Agreement,
Contributors shall have the right to proceed under Section 7.11(b) above. If
Contributors elect to terminate this Agreement, thereafter this Agreement shall
be null and void and of no further force or effect and, except as provided in
this Section 13.9 and Sections 5.3, 5.5, 16.2 and 16.10 hereof, neither party
shall have any further rights or obligations hereunder, other than those rights
and obligations that, by their terms survive the termination of this Agreement.
In the event of such termination by Contributors, all documents deposited in
Escrow by the Company or Contributors shall be returned to the depositing party,
the costs of the Title Company and Escrow Holder shall be borne equally by the
Company and Contributors and each party hereto shall bear its own costs incurred
herewith.
ARTICLE XIV
INDEMNIFICATION
14.1 AGREEMENT BY CONTRIBUTORS TO INDEMNIFY. Contributors agree to
severally and not jointly indemnify and hold the Company and its Affiliates, and
the officers, directors, employees and agents of each thereof (collectively, the
"INDEMNIFIED PARTY") harmless from and against the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including, without
limitation, related counsel and paralegal fees and expenses) incurred or
suffered by the Indemnified Party (collectively, "INDEMNIFIABLE DAMAGES")
resulting from or arising out of (i) any breach of a representation or warranty
made by such Contributor in or pursuant to this Agreement, (ii) any breach of
the covenants or agreements made by the such Contributors in this Agreement,
(iii) any inaccuracy in any certificate delivered by such Contributors or the
LLC pursuant to this Agreement, or (iv) any liabilities of the LLC other than
the Designated Liabilities. The Parties hereto acknowledge and agree that with
respect to a breach of the representations contained in Section 9.12
(Environmental Matters), "Indemnifiable Damages" shall specifically include,
without limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, restoration or other response work
required by any federal, state, or local governmental agency or political
subdivision because of Hazardous Material present as a result of any action or
inaction on the part of Contributor or the LLC, their agents, employees,
contractors, invitees or tenants in any improvements on the Property or the soil
or ground water on, under or adjacent to the Property.
14.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the LLC and Contributors in this
Agreement or pursuant hereto shall survive for
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<PAGE> 50
a period of one (1) year following the Closing of the transactions contemplated
hereby. Notwithstanding the foregoing, absent independent arrangements between
Contributors and the Company, the Company shall not be entitled to seek redress
against a Contributor following the Closing for breaches of representations and
warranties that occurred prior to or at Closing if such breach(es) or the facts
underlying such breach(es) were known at the time of Closing by the Company.
ARTICLE XV
TERMINATION, AMENDMENT AND WAIVER
15.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of all of the parties hereto at any
time prior to the Closing; or
(b) by the Company in the event of a material breach by
Contributors of any provision of this Agreement.
15.2 EFFECT OF TERMINATION. Except as provided in Article X and for the
provisions of Section 7.2, in the event of termination of this Agreement
pursuant to Section 12.1, this Agreement shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE XVI
GENERAL PROVISIONS
16.1 NOTICES. Any communication, notice or demand of any kind whatsoever
that either party may be required or may desire to give to or serve upon the
other shall be in writing, addressed to the parties at the addresses set forth
below, and delivered by personal service, by Federal Express or other reputable
overnight delivery service, or by facsimile transmission:
If to Contributors: Portland Fixture Limited Partnership
Independent Member Corp.
Byron P. Henry
Steven J. Oliva
c/o Mercury Development
7180 S.W. Fir Loop, Suite 100
Tigard, OR 97223
Attn: David P. Zimel, President
Telephone No.: (503) 968-1850
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<PAGE> 51
Facsimile No.: (503) 968-2542
With a copy to: Miller, Nash, Wiener, Hager & Carlsen LLP
111 S.W. Fifth Avenue
Portland, OR 97204-3699
Attn: Harvey C. Barragar, Esq.
Telephone No.: (503) 224-5858
Facsimile No.: (503) 224-0155
If to the Company: Pan Pacific (Portland), LLC
c/o Pan Pacific Retail Properties, Inc.
1631-B South Melrose Drive
Vista, California 92083
Attention: Stuart A. Tanz,
President and Chief Executive
Officer
Telephone No.: (619) 727-1002
Facsimile No.: (619) 727-1430
With a copy to: Hale Lane Peek Dennison Howard and Anderson
100 West Liberty Street, Tenth Floor
Reno, Nevada 89501
Attention: William C. Davis, Jr., Esq.
Telephone No.: (702) 327-3000
Facsimile No.: (702) 786-6179
Any such notice shall be deemed delivered as follows: (a) if
personally delivered, the date of delivery to the address of the person to
receive such notice; (b) if sent by Federal Express or other reputable overnight
courier service, the date of delivery to the address of the person to receive
such notice; or (c) if sent by facsimile transmission, on the Business Day
transmitted to the person to receive such notice if sent by 5:00 p.m., Pacific
time, on such Business Day, and the next Business Day if sent after 5:00 p.m.,
Pacific time, or on a day other than a Business Day. Any notice sent by
facsimile transmission must be confirmed by sending by Federal Express or other
reputable overnight delivery service a copy of the notice sent by facsimile
transmission. Any party may change its address for notice by written notice
given to the other at least five (5) calendar days before the effective date of
such change in the manner provided in this Section 16.1.
16.2 BROKERS AND FINDERS. In the event of a claim for broker's fees,
finder's fees, commissions or other similar compensation in connection herewith:
(i) the Company, if such claim is based upon any agreement alleged to have been
made by the Company, shall indemnify, defend
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<PAGE> 52
(using counsel reasonably satisfactory to Contributors) and hold Contributors
harmless from and against any and all damages, liabilities, costs, expenses and
losses (including, without limitation, attorneys' fees and costs) that
Contributors sustain or incur by reason of such claim; and (ii) Contributors, if
such claim is based upon any agreement alleged to have been made by Contributor,
shall severally and not jointly indemnify, defend (using counsel reasonably
satisfactory to the Company) and hold the Company harmless from and against any
and all damages, liabilities, costs, expenses and losses (including, without
limitation, attorneys' fees and costs) that the Company sustains or incurs by
reason of such claim. The provisions of this subsection shall survive the
termination of this Agreement or the Closing.
16.3 SUCCESSORS AND ASSIGNS. Neither Contributors nor the Company may
assign their rights hereunder without the prior written consent of the other
party, which consent may be withheld in such party's sole and absolute
discretion; and any attempted or purported assignment in contravention of the
terms and provisions of this Section 16.3 shall be null and void. This Agreement
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, administrators and permitted successors and assigns.
16.4 AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by both parties.
16.5 INTERPRETATION. Words used in the singular shall include the plural,
and vice-versa, and any gender shall be deemed to include the other. The
captions and headings of the Articles and Sections of this Agreement are for
convenience of reference only, and shall not be deemed to define or limit the
provisions hereof. Further, each party hereby acknowledges that such party and
its counsel, after negotiation and consultation, have reviewed and revised this
Agreement. As such, the terms of this Agreement shall be fairly construed and
the usual rule of construction, to the effect that any ambiguities herein should
be resolved against the drafting party, shall not be employed in the
interpretation of this Agreement or any amendments, modifications or exhibits
hereto or thereto.
16.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.
16.7 MERGER OF PRIOR AGREEMENTS. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous oral or written representations,
warranties, statements, documents, understandings and agreements with respect
thereto.
16.8 ATTORNEYS' FEES AND COSTS. If either the Company or Contributors
bring any suit or other proceeding with respect to the subject mater or the
enforcement of this Agreement, the prevailing party (as determined by the court,
agency or other authority before which such suit or proceeding is commenced), in
addition to such other relief as may be awarded, shall be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation actually
incurred. The foregoing includes, without limitation, attorneys' fees, expenses
and costs of investigation incurred in appellate proceedings, costs incurred in
establishing the right to indemnification, or in any action
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<PAGE> 53
or participation in, or in connection with, any case or proceeding under Chapter
7, 11 or 13 of the Bankruptcy Code, 11 United States Code Section 101 et seq.,
or any successor statutes.
16.9 TIME OF ESSENCE. Time is of the essence of this Agreement.
16.10 CONFIDENTIALITY. The Company and Contributors agree that, to the
extent reasonably practical, they shall keep the contents of this Agreement and
the contents of any environmental report prepared by or for the Company in
connection with this Agreement confidential and that no publicity or press
release to the general public or otherwise with respect to this transaction
shall be made by either party without the prior written consent of the other
party (which consent may be given or denied in the other party's sole and
absolute discretion), except that the Company is hereby authorized to prepare
and issue a press release to the general public announcing its purchase of the
Property at the Closing. Otherwise, the confidentiality provisions of this
Section 15.10 shall survive the Closing.
16.11 NO WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party make the waiver.
16.12 FURTHER ACTS. Each party, at the request of the other, shall
execute, acknowledge (if appropriate) and deliver whatever additional documents,
and do such other additional acts, as may be reasonably required in order to
accomplish the intent and purposes of this Agreement.
16.13 EXHIBITS. Exhibits A through D, inclusive, are attached hereto and
incorporated herein by reference.
16.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which, when taken together, shall constitute one and the same instrument,
with the same effect as if all of the parties to this Agreement had executed the
same counterpart. Any signature page of any counterpart of this Agreement may be
detached and reattached to any other counterpart of this Agreement.
16.15 NO INTENT TO BENEFIT THIRD PARTIES. Contributors and the Company do
not intend by any provision of this Agreement to confer any right, remedy or
benefit upon any third party, and no third party shall be entitled to enforce,
or otherwise shall acquire any right, remedy or benefit by reason of, any
provision of this Agreement.
16.16 PERFORMANCE DUE ON DAY OTHER THAN BUSINESS DAY. If the time period
for the performance of any act called for under this Agreement expires on a
Saturday, Sunday or Holiday, the act in question may be performed on the next
succeeding Business Day.
16.17 SURVIVAL OF OBLIGATIONS. In addition to terms which by their express
provision are to survive the Closing, all other terms and provisions which by
their nature are to be performed or be applicable after the Closing shall
survive the Closing.
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<PAGE> 54
16.18 AUDIT RESPONSIBILITIES. From time to time, both before and after
Closing, the Company may be engaged in financing and other transactions which
will require that both the Company and the operation of the Property be audited
as to then current and past operations of the Property, including periods of
time during which Contributor owned the Property. As a material inducement for
the Company to enter into this Agreement, Contributors agree that upon written
request of the Company, each Contributor shall render its timely and cooperative
efforts, at no additional cost to such Contributor, to any such auditors in
delivering such responses to inquiries and information as is within the
knowledge or records of such Contributor with respect to the operations of the
Property or which is within the control or reasonable ability of such
Contributor to obtain, including, without limitation, operating statements and
other financial information relevant to the Property and its operations. In
addition to the foregoing, such Contributor shall sign and deliver to any such
auditor, such auditor's standard representation letter with respect to the
foregoing matters, revised by such Contributor only to the extent necessary to
make same true and correct as to the matters represented therein by such
Contributor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
PAN PACIFIC (PORTLAND), LLC
BY: PAN PACIFIC RETAIL PROPERTIES, INC.
ITS: MANAGING MEMBER
BY: ___________________________________________
STUART A. TANZ,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
"CONTRIBUTORS"
PORTLAND FIXTURE
LIMITED PARTNERSHIP
BY: PFMGP, INC.
ITS: GENERAL PARTNER
BY: ___________________________________________
ITS: __________________________________________
48
<PAGE> 55
INDEPENDENT MEMBER CORP.
BY: ___________________________________________
ITS: __________________________________________
_______________________________________________
BYRON P. HENRY
_______________________________________________
STEVEN J. OLIVA
ACCEPTANCE OF ESCROW INSTRUCTIONS
The undersigned, as Escrow Holder in connection with the contribution of
the Units and the transfer of beneficial ownership in the Property, hereby
acknowledges the terms and conditions of the escrow instructions set forth in
this Agreement and agrees to perform its obligations in connection therewith.
"ESCROW HOLDER"
By: ___________________________________________
Print Name: ___________________________________
Print Title: __________________________________
49
<PAGE> 56
EXHIBIT A
LEGAL DESCRIPTION
<PAGE> 57
EXHIBIT B
FORM OF BILL OF SALE
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged,___________________________________________________________
("TRANSFEROR"), hereby transfers, assigns, grants, delivers and conveys to
Smudik Development, L.L.C., an Oregon limited liability company ("TRANSFEREE"),
all of the personal property owned by Transferor and located on, or used in
connection with, the real property located in the County of ___________, State
of Oregon, described in Exhibit A attached hereto and incorporated herein by
this reference, including, without limitation, those items described on Exhibit
B attached hereto and incorporated herein by this reference (collectively, the
"PERSONAL PROPERTY").
TO HAVE AND TO HOLD the Personal Property, together with, all and
singular, the rights and appurtenances thereto belonging to Transferee, its
successors and assigns.
Transferor hereby covenants that it will, at any time and from time to
time, following a written request therefor, execute and deliver to Transferee
and its successors and assigns, any additional or confirmatory instruments and
take such further acts as Transferee may reasonably request to evidence fully
the conveyance contained herein.
DATED: this _____ day of _______________, 1998.
By: ___________________________________________
Its: __________________________________________
"Transferor"
<PAGE> 58
EXHIBIT C
FORM OF TENANT NOTICES
_______________, 1998
VIA CERTIFIED MAIL --
RETURN RECEIPT REQUESTED
- --------------------------------
- --------------------------------
- --------------------------------
- --------------------------------
Re: Lease Dated _______________, 19__
Dear _______________:
This is to notify you that________________________________________________
("_________") has sold its interest in Smudik Development, L.L.C., the record
owner of the property commonly known as the ________________________________ and
located at
__________________________________________________________________________.
Please direct all future rental and other payments and communications
under your lease to:
----------------------------------------------
----------------------------------------------
----------------------------------------------
"-------------"
---------------------------------
<PAGE> 59
EXHIBIT D
FORM OF TENANT ESTOPPEL CERTIFICATE
(Tenant Name)
TO: ________________________________________, a ____________ corporation
THIS IS TO CERTIFY THAT:
1. The undersigned is the tenant under that certain Lease dated
_______________, 19__ ("Lease") by and between _________________________________
as lessor ("Landlord") and __________________________________________ as tenant
("Tenant"), covering certain premises commonly known and designated as
Space _____, ___________________________________________________________________
("Premises").
2. The Lease has not been modified, changed, altered, assigned,
supplemented or amended in any, respect except as indicated below (if none,
state "none"). The Lease is valid and in full force and effect on the date
hereof. The Lease, as modified by the amendments or assignments listed below, if
any, represents the entire agreement between Landlord and Tenant with respect to
the Premises.
________________________________________________________________________________
________________________________________________________________________________
______________________
3. Tenant is not entitled to, and has made no agreement with Landlord,
or its agents or employees, concerning free rent, partial rent, rebate of rent
payments, credit or offset or reduction in rent, or any other type of rental
concession including, without limitation, lease, support payments or lease
buy-outs, except as indicated below, (if none, state "none").
________________________________________________________________________________
________________________________________________________________________________
______________________
4. The Lease term began on _______________, 19__, and the termination
date of the present term of the Lease, excluding unexercised renewals, is
_______________, 19__.
5. Tenant has paid rent for the Premises for the period up to and
including ____________, 19__. No such rent (not including security deposits) has
been paid more than one (1) month in advance of its due date, except as
indicated below, (if none, state "none"). The Tenant's security deposit is
$_______________.
1
<PAGE> 60
________________________________________________________________________________
________________________________________________________________________________
______________________
6. No event has occurred and no condition exists which, with the giving
of notice or the lapse of time or both, will constitute a default by Tenant or,
to Tenant's best knowledge, by Landlord, under the Lease. To the best knowledge
of Tenant, Tenant has no existing defenses or offsets against the enforcement of
the lease by Landlord.
7. All required contributions by Landlord to Tenant on account of
Tenant's tenant improvements have been completed in accordance with the terms of
the Lease, except as indicated below (if none, state "none").
8. Except as set forth in the Lease, Tenant has no outstanding options,
rights of first refusal or rights of first offer to purchase the Premises or any
part thereof or all or any part of the real property of which the Premises are a
part.
9. No action, whether voluntary or otherwise, are pending against
Tenant under the bankruptcy laws of the United States or any state thereof.
10. Tenant has not sublet the Premises to any sublessee and has not
assigned any, of its rights under the Lease, except as indicated below (if none,
state "none"). No one except Tenant and its employees occupies the Premises.
________________________________________________________________________________
________________________________________________________________________________
______________________
11. The address for notice to be sent to Tenant is as set forth in the
Lease. (If not, indicate correct address below.)
________________________________________________________________________________
________________________________________________________________________________
______________________
12. The Premises have not been used by Tenant and Tenant does not plan
to use the Premises for any activities which, directly or indirectly, involve
the use, generation, treatment storage, transportation or disposal of any
petroleum product or any toxic or hazardous chemical material, substance,
pollutant or waste in violation of any applicable law.
13. Tenant has not received any written notice from any government
authority of violation of any federal, state, county or local statutes, laws,
rules or regulations of area governmental authorities relating to environmental,
health or safety matters and, to Tenant's actual knowledge, there are no writs,
injunctions, decrees, orders or judgments outstanding lawsuits, claims,
proceedings or investigations pending or threatened, relating to Tenant's use,
maintenance or operation of the Premises.
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14. The undersigned is authorized to execute this Tenant Estoppel
Certificate on behalf of Tenant.
Dated: _______________, 1998.
[NAME OF TENANT]
By: ___________________________________________
Its: __________________________________________
3
<PAGE> 62
SCHEDULES
4
<PAGE> 63
AMENDMENT NO. 1
TO CONTRIBUTION AGREEMENT
(SMUDIK DEVELOPMENT, L.L.C.)
This Amendment No. 1 to Contribution Agreement ("Amendment No. 1")
is entered into as of October 30, 1998 by and among (i) PAN PACIFIC (PORTLAND),
LLC, a Delaware limited liability company, and its assignees (the "Company") and
(ii) PORTLAND FIXTURE LIMITED PARTNERSHIP, an Oregon limited partnership, and
INDEPENDENT MEMBER CORP., an Oregon corporation, BYRON P. HENRY, an individual,
and STEVEN J. OLIVA, an individual (individually, a "Contributor" and
collectively, the "Contributors"), and amends the Contribution Agreement entered
into as of September 23, 1998 by and among the Company and the Contributors (the
"Contribution Agreement"). All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Contribution
Agreement.
WHEREAS, the Company and the Contributors have entered into the
Contribution Agreement, which provides, among other things, for the transfer
from the Contributors to the Company of all of the outstanding ownership
interests in Smudik Development, L.L.C., an Oregon limited liability company, in
exchange for units of non-managing member interest in the Company in accordance
with the terms and subject to the conditions of the Contribution Agreement; and
WHEREAS, the Company and the Contributors desire to amend the
Contribution Agreement to clarify an ambiguity in Section 11.7(a) thereof.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Restrictions on and Information Regarding Beneficial Ownership
of LLC Units; Publicly Traded Partnership Representation. Section 11.7(a) of the
Contribution Agreement is amended to read in its entirety as follows:
"Notwithstanding anything to the contrary contained in this
Agreement or the Company Operating Agreement, without the consent of the
Company, which consent may be given or withheld in the Company's sole and
absolute discretion, in no event shall the Contributors or any transferees or
prospective transferees of such persons own or transfer Exchange Units such that
the number of such holders (or such prospective holders) of Exchange Units
together with the number of holders of units of non-managing member interest in
the Company, if any, issued pursuant to the Related Purchase Agreements, would,
in the aggregate, exceed thirty-five (35) (including as holders any person (a
"BENEFICIAL OWNER") owning an interest in a partnership, a limited liability
company, a grantor trust, or an S corporation (a "FLOW-THROUGH ENTITY"), that
would own, directly or through other Flow-Through Entities, an interest in the
Company where substantially all the value of the Beneficial Owner's interest in
the Flow-Through Entity would be attributable to the Flow-Through Entity's
interest (direct or
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indirect) in the Company (a "SPECIAL PURPOSE FLOW-THROUGH ENTITY"), and treating
the Contributors as Special Purpose Flow-Through Entities for purposes of this
paragraph."
2. Counterparts. This Amendment No. 1 may be executed in one or
more counterparts, each of which shall be deemed to constitute an original, but
all of which, when taken together, shall constitute one and the same instrument,
with the same effect as if all of the parties to this Amendment No. 1 had
executed the same counterpart. Any signature page of any counterpart of this
Amendment No. 1 may be detached and reattached to any other counterpart of this
Agreement.
3. Ratification. Except as modified hereby, all of the terms and
conditions of the Contribution Agreement are hereby ratified and confirmed.
[SIGNATURE PAGE FOLLOWS]
2
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 as of the day and year first above written.
"COMPANY"
PAN PACIFIC (PORTLAND), LLC,
a Delaware limited liability company
By: Pan Pacific Retail Properties, Inc.
Its: Managing Member
By: STUART A. TANZ
---------------------------------------
Stuart A. Tanz
President and Chief Executive Officer
"CONTRIBUTORS"
PORTLAND FIXTURE LIMITED
PARTNERSHIP, an Oregon limited partnership
By: PFMGP, Inc.
Its: General Partner
By: /s/ DAVID P. ZIMEL
----------------------------------------
Its: PRESIDENT
----------------------------------------
INDEPENDENT MEMBER CORP.,
an Oregon corporation
By: /s/ DAVID P. ZIMEL
----------------------------------------
Its: PRESIDENT
----------------------------------------
/s/ BYRON P. HENRY
------------------------------------
Byron P. Henry
individually and as attorney in fact
for Steven J. Oliva
------------------------------------
Steven J. Oliva
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<PAGE> 66
AMENDMENT
This Amendment is made effective as of _____________, 1998, by and among
the parties set forth below.
A. On September 23, 1998, (i) Pan Pacific (Portland), LLC, a Delaware
limited liability company (the "COMPANY") and (ii) Portland Fixture Limited
Partnership, an Oregon limited partnership, Independent Member Corp., an Oregon
corporation, Byron P. Henry, an individual, and Steven J. Oliva, an individual
(individually, a "CONTRIBUTOR" and collectively, "CONTRIBUTORS") entered into a
Contribution Agreement (the "AGREEMENT") regarding the acquisition by the
Company from Contributors of 100% of the ownership in Smudik Development,
L.L.C., an Oregon limited liability company (the "LLC"). Capitalized terms used
but not defined herein shall have the meanings ascribed to them in the
Agreement.
B. The parties hereto wish to amend the Agreement in order to provide
that Pan Pacific (Clackamas), Inc., a Delaware corporation ("PPCI"), shall
become a party to the Agreement for purposes of purchasing an interest in the
LLC from one of the Contributors and the Company is willing to transfer its
acquisition rights under the Agreement to PPCI to the extent necessary to
accomplish the transactions contemplated by this Amendment.
NOW THEREFORE, the parties agree as follows:
1. Purchase of Interest by PPCI. The parties hereby agree that the
Agreement is hereby amended to the extent necessary to provide that at the
Closing, PPCI will purchase from Independent Member Corp. all of Independent
Member Corp.'s ownership interest in the LLC simultaneously with the acquisition
by the Company from the other Contributors of all other ownership interests in
the LLC. The purchase price payable at the Closing by PPCI to Independent Member
Corp. shall be equal to 1% of the aggregate exchange consideration otherwise
payable to Contributors pursuant to Section 3.1 of the Agreement (net of the
costs, prorations and adjustments contemplated by the Agreement) and shall be
paid via immediately available funds delivered to the Escrow Holder as an
additional delivery pursuant to Section 7.3 of the Agreement. The Company shall
acquire all remaining ownership interests in the LLC from the remaining
Contributors for an acquisition price equal to the remaining 99% of the
aggregate exchange consideration otherwise payable to Contributors pursuant to
Section 3.1 of the Agreement, which acquisition price shall continue to be paid
via the delivery to such remaining Contributors of Exchange Units at an exchange
price of $21.125 per Exchange Unit.
2. Apportionment of Costs and Fees. The PPCI shall be responsible for
and cause to be delivered to the Escrow Agent its ratable proportion of the
amounts described in Section 7.3 otherwise payable by the Company.
3. No Other Changes. Other than to the extent set forth herein, all
provisions of the Agreement shall remain in full force and effect and are
incorporated herein by reference.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
"COMPANY" "CONTRIBUTORS"
PAN PACIFIC (PORTLAND), LLC PORTLAND FIXTURE
LIMITED PARTNERSHIP
BY: PAN PACIFIC RETAIL PROPERTIES, INC.
ITS: MANAGING MEMBER BY: PFMGP, INC.
ITS: GENERAL PARTNER
By: __________________________________
Stuart A. Tanz By: ________________________________
President and Chief Its: ________________________________
Executive Officer
By: __________________________________ INDEPENDENT MEMBER CORP.
David L. Adlard
Executive Vice President and
Chief Financial Officer By: ________________________________
Its: ________________________________
"PPCI"
PAN PACIFIC (CLACKAMAS), INC. _____________________________________
BYRON P. HENRY
By: __________________________________
Stuart A. Tanz _____________________________________
President and Chief STEVEN J. OLIVA
Executive Officer
By: __________________________________ "ESCROW HOLDER"
David L. Adlard
Executive Vice President and
Chief Financial Officer By: _________________________________
Print Name: _________________________
Print Title: ________________________
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